ESMA becomes supervisor of EU Data Reporting Service Providers

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, on 1 January 2022 took on its new mandate as direct supervisor of the largest EU Data Reporting Service Providers (DRSPs). Its new role gives ESMA direct authorisation and supervisory powers over DRSPs, except for those entities that, due to more limited market impact, will continue to be supervised by their Member State authority.

The DRSPs are entities defined by the MiFIR Regulation 600/214, updated by Regulation 2019/2175 which provide the following services:

• approved reporting mechanisms (ARMs): entities providing the service of reporting details of transactions to competent authorities or to ESMA on behalf of investment firms
• approved publication arrangements (APAs): entities providing the service of publishing trade reports on behalf of investment firms
• consolidated tape providers (CTPs): entities providing the service of collecting trade reports from trading venues and APAs, consolidating them into a continuous electronic live data stream providing price and volume data per financial instrument.

Supervisory responsibility for DRSPs was transferred from national competent authorities (NCAs) to ESMA due to:

• the cross-border dimension of data handling,
• the aim of achieving economies of scale, and
• facilitating data quality convergence for all market participants.

ESMA aims to ensure the effective and consistent application of a data-driven, risk-based and outcome focused supervisory framework for the DRSPs under its supervision and will continue actively engaging with the:

1. supervised entities;
2. national competent authorities; and
3. data users to ensure a smooth and orderly functioning of EU financial markets.

To support its new supervisory task, ESMA has developed an IT system based on big data technologies that will facilitate processing, storage and supervisory analysis of large volumes of MiFIR transaction data.

The 2022 Annual Work Programme outlines ESMA’s supervision priorities for 2022 under the DRSPs’ supervision mandate.

Source: ESMA, press-news