Breaking down ESMA’s Annual Report

One of the key events in Q2 in regulatory reporting was the release of ESMA’s yearly Data Quality Report. Covering EMIR, SFTR and MIFIR, the 2025 report was anticipated by reporting firms as it was the first formal feedback from ESMA following the go-live of EMIR REFIT in April of last year. The annual review is structured across feedback on numerous DQIs that ESMA reviews for and shares findings with local NCAs. Key DQI feedback across the three regulations were as follows:

EMIR

Pairing & Matching: Prior to the go-live of REFIT, ESMA put emphasis on the importance of counterparties pairing their submissions by using the same UTI and having matching data in reported fields. Trade Level submissions saw pairing values increase to nearly 80% by the end of 2024 from about 64% in May 2024, and estimates of below 60% before the REFIT go-live. Similar improvements existed for Position Level submissions.

Non-Updated Valuations: Open UTIs without a new valuation message for over a month continued to be flagged by ESMA as a problem, with the issue getting worse post REFIT. ESMA reported that 16.19% of UTIs were missing a valuation update as of the end of 2024 compared to 12.2% at the end of 2023.

Abnormal Maturities: Among the DQIs being reviewed include values that are deemed anomalies. They include statistics on maturity date values that are well beyond expected ranges for various products. Improvement in the DQI was seen in 2024 with a range of 10-12% of abnormal maturities during the year compared to 10-16% for 2023.

Entity Responsible for Reporting Errors: A new DQI under EMIR with this year’s report are incorrect values for the Entity Responsible for Reporting field. The field was added to EMIR with the REFIT after it had previously been introduced by ESMA in 2021 for SFTR. According to ESMA, as of December 2024, 1.36% of eligible records included incorrect data for this field. ESMA stated in the Data Quality report that although the DQI was below their general 5% threshold, it was included in the report as the field is viewed as a “crucial addition under EMIR REFIT”.

File level rejections: One of the DQIs with positive findings were rejection levels of file submissions to trade repositories. With the REFIT, submissions in the ISO 20022 XML format became mandatory and created new complexities with creating a suitable file for submission. According to ESMA, by the end of February 2025, only 0.0047% of files were rejected due to file format issues.

SFTR

Pairing & Matching: Unpaired UTIs stood at 35% at the end of 2024. While the figure was lower than the 40% values in the middle of 2023, ESMA flagged it as an item they will work in tandem with NCAs to improve.

Securities Lending Non-Updated Valuations: Another DQI with high non-compliance values were securities lending transactions with missing valuation updates. The DQI registered at 26% for the end of 2024. This was well below the 41.4% rate from March 2023 but still well below ESMA’s 5% threshold.

Entity Responsible for Reporting Errors: Incorrect value in the Entity Responsible for Reporting field was at 1.9% at the end of 2024. According to ESMA, the DQI has been consistently above 1% since March 2023 and as an important field they want to see improvements taking place.

MIFIR

ARM Transactions: Transactions submitted through an ARM decreased slightly from 54.59% of total transactions in 2023 to 52.28% in 2024. The figure is worth watching to see if there is an overall trend taking place of firms moving towards submitting transactions directly to a NCA without the use of an ARM. Alternatively 2024 could be an anomaly caused by other factors such as higher or lower volumes of trading on specific reporting entities which may not carry over to 2025.

ARM Market Share: Roughly around 300 to 360 million transactions were reported using ARMs each month. ESMA reported that two of the five licensed ARMs dominated market share with over 90% of submissions.

Country Market Share: The report revealed that the majority of MIFIR submissions are concentrated among a small subset of countries. According to ESMA, 82% of total transactions where from four countries.

APA transactions: Transactions reported through an APA increased in 2024 due to higher trading volumes compared to 2023. For 2024, equity-like trades reported on an APA increased by 126% and non equity-like trades rose 20% versus 2023. According to ESMA, the increase in volumes was partially attributed to a rise in publication via an APA of fractional shares.

MIFIR Reporting Changes Delayed

Another key event occurred with the release by ESMA of a Call for Evidence paper on streamlining financial transaction reporting for MIFIR, EMIR and SFTR. As part of the request for feedback, ESMA stated that they were delaying the release of final changes to technical standards for RTS 22, 23 and 24 that were part of their MIFIR Review. The result is that any final proposals for these MIFIR reporting frameworks can only occur in 2026, pushing go-lives of new reporting technical standards to 2027 at the earliest. For RTS 22 T+1 transaction reporting, this replaces previous expectations of ESMA publishing a final proposed changes this year.