Review of EMIR data’s usefulness
This is a view backed by the Financial Stability Board (FSB) who state in a recent report on the impacts of the G20 regulation reporting regime for OTC derivatives show that “Authorities are not aware of precise industry-wide estimates of compliance costs that disaggregate OTC derivatives reforms from other financial regulatory reforms. Generally, transitional implementation costs have been significant”
Additionally, “many authorities continue to report significant challenges in being able to compile and use fully (or in some cases use at all) TR data for their regulatory or supervisory mandates. These challenges include legal barriers to full reporting of and access to TR data, lack of harmonisation of data formats and data quality issues.“ Review of OTC derivatives market reforms – Effectiveness and broader effects of the reforms (FSB, Jun 17)
As part of the review, the FSB sent questionnaires to the authorities of each jurisdiction to gauge ongoing progress toward meeting the G20 Leaders’ objectives. “in response to the FSB questionnaire jurisdictions typically either indicated they lacked sufficient information to evaluate effectiveness of reforms against individual G20 objectives, or judged effectiveness to be partial.”
The response on trade reporting suggests only 15% of the FSB member authorities (http://www.fsb.org/about/fsb-members/) responded saying that trade reporting was “mitigating systemic risk, improving transparency and protecting against market abuse to a significant extent”.
Additionally, it appears data reported to Trade Repositories isn’t being fully utilised for market surveillance and supervising market participants. In June 2017, only 4 out of 23 authorities have automated queries set up on the data for the purposes of market surveillance.
However, “authorities typically reported that they expected the benefit they could derive from OTC derivatives data reported to TRs to increase by the end of 2018, following implementation of harmonisation of data elements, improvements in data quality” Review of OTC derivatives market reforms – Effectiveness and broader effects of the reforms (FSB, Jun 17)