FCA Trade Monitoring Could be Improved, Says ESMA Review

24 October 2019: The European Securities and Markets Authority (ESMA) has found that a review of the way the UK’s Financial Conduct Authority (FCA) monitors trades to spot potential risks could be improved. 

The comments come after ESMA conducted a review of the reporting systems used by six national watchdogs across the EU. Specifically, the review related to the EMIR requirement that all derivative trades in the bloc are reported to one of seven trade repositories. 

Singling out Britain and Germany in particular, ESMA chair Steven Maijoor commented that the review “identified the FCA as having developed an insufficient supervisory approach to EMIR data quality supervision based on the size, scale and complexity of the UK’s derivative market.”

On a more general note, Maijoor added that EMIR comprises a complex reporting regime, but “only consistently high-quality data reported by counterparties enables regulators to identify systemic and counterparty risks.”

The FCA commented that it disagreed with the findings, noting that they do “not fairly account for the way in which EMIR data has been and is used across different areas of the FCA – such as internal analysis and policy research, public discussion and research papers, or as part of prudential supervision.”