European Securities Watchdog Fine Highlights Importance of Data Integrity and Regulatory Access
The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, recently announced that it fined UnaVista Limited, a UK-based trade repository, €238,500 ($280,000) for eight breaches of the European Market Infrastructure Regulation (EMIR). The EMIR includes rules regulating the conduct of trade repositories, and in conjunction with its role as the supervisor of trade repositories under EMIR, ESMA is empowered to file enforcement actions in response to infringements of EMIR by trade repositories.
Under the EMIR, trade repositories are required to provide data to regulators, including access to details of derivatives contracts in the form of periodic and ad hoc open trade state reports. According to the Public Notice, between 2016 and 2018 the trade repository failed to:
Ensure the integrity of its data by providing incorrect field ordering logic, mapping rules, and crossed date boundaries, which led to generating incorrect or unreliable reports for regulators; and
Provide regulators with direct and immediate access to trade state reports and historic trade state reports, due to missed data exports and to non-existent functionality.
Based on these failures, the Board of Supervisors found that UnaVista did not meet the special care expected from a trade repository as a professional firm in the financial services sector, and had committed the infringements negligently and was liable to a fine. UnaVista may appeal against this decision to the Joint Board of Appeal of the European Supervisory Authorities.
Putting it into Practice. This case highlights the importance of complying with obligations of data integrity and regulatory access. Companies would be well-served to review their controls and procedures, including performing risk-based data validation to reveal potential systemic weaknesses in your organizations, and ensuring the provision of timely and accurate data to regulators.