The European Association of Co-operative Banks (EACB) has submitted today its reply to the consultation paper of the European Securities and Markets Authority (ESMA) on Technical standards on reporting, data quality, data access and registration of Trade Repositories under EMIR REFIT. The main responses relate to the proposals under Section 4 – Reporting, but our key messages are the following:
(i) The detailed technical requirements in Section 4 (and the paper in general) will lead to an extensive analysis in the detection and implementation of such proposed changes. We wish to highlight that this is in complete contradiction of what a REFIT under the Better Regulation Agenda is meant to be – a regulatory change that should lead to reduced costs. Automation to comply with current regulation has already been up and running, but the new proposals and the suggestion of more precise interpretations will only lead to higher project costs and implementation efforts;
(ii) The consultation paper provides for changes in the mandatory delegated reporting by FCs on behalf of NFCs, of which draft RTS was meant to be delivered by ESMA to the European Commission by 18 June 2020. Considering the delayed timeline, these details come far too late to be able to act accordingly and have no legal status. Implementation of the EMIR REFIT has thus been carried out under different logic. For example, ESMA states in the consultation that parties require written procedures or agreements covering mandatory delegated reporting arrangements. However, several banks have decided to terminate delegated reporting agreements with their clients because it becomes mandatory for the FC to report on behalf of its NFC- clients. This approach on mandatory delegated reporting is contrary to the relief EMIR Refit is intended to provide. By way of example, it should be sufficient for FCs to inform their clients that it becomes mandatory to perform delegated reporting and that the client is required to provide the relevant data or inform them of a upcoming change to NFC+, rather than requiring setting up new written agreements; and
(iii) The proposed draft RTS is detailed yet still unclear of what the proposals would entail in practice. It would be more useful for market participants, for example, if elements of the current regulation such as the Delta could be better shown, which makes impact assessment and implementation much easier.