Euroshore: EU Regulatory Round-Up

Updates at the European Securities and Markets Authority (ESMA)

New Chair of ESMA

ESMA's new Chair is Verena Ross. The appointment was confirmed by the Council of the European Union and Verena Ross took up her position on 1 November 2021.

She replaces Steven Maijoor, the former Chair, and is appointed for a five-year term, renewable once. A German national, she was Executive Director at ESMA from 2011 to 2021, having previously held regulatory and supervisory roles in London. Anneli Tuominen, Vice Chair of ESMA and Director-General at the FIN-FSA of Finland, has acted as Interim Chair since 1 April 2021 and relinquished this position on 31 October 2021.

ESMA's Spotlight on Markets Newsletter

ESMA (the European Securities and Markets Authority) has published the September Issue of its Spotlight on Markets Newsletter highlighting:

• ESMA's 2022 Annual Work Programme (AWP)
• ESMA's enforcement action against the trade repository UnaVista for EMIR data failures
• cloud outsourcing concerns and financial stability risks

ESMA's 2022 AWP

Each year, ESMA publishes its AWP which sets out its priority work areas for the following 12 months. ESMA's 2022 AWP highlights that ESMA will focus on:

• the exercise of new, and existing, supervisory powers for benchmarks and data service providers (DRSPs) as well as central counterparties (CCPs)
• its contribution to the EU priorities on the development of the Capital Markets Union (CMU), sustainable finance and innovation; and
• the convergence of supervisory and regulatory practices across the EU.

ESMA will continue to monitor the impact of Brexit on the evolution of EU and global capital markets.

Enforcement action against the trade repository UnaVista

ESMA details the EUR 238,500 fine which it imposed on UnaVista for eight breaches of EMIR. The breaches related to:

• failure to ensure the integrity of the data reported to it due to various data processing incidents, including incorrect mapping rules and cross date boundaries; and
• failure to provide direct and immediate access to regulators, by generating incorrect and unreliable reports and not providing access to trade state reports.

Cloud outsourcing and financial stability risks

As discussed in ESMA's September 2021 Report on Trends, Risks and Vulnerabilities (TRV) (and highlighted in our October Euroshore Newsletter), outsourcing, and particularly outsourcing to cloud service providers (CSPs) is an area of particular concern to ESMA and other EU regulators. In particular, the concentration risk caused by a large number of financial institutions using a small number of CSPs creates financial stability risks in case of outage. ESMA's analysis, previously reported in its TRV, finds that:

• CSPs can best address systemic risk by strongly reducing the time it takes to resolve incidents, rather than reducing their frequency; and
• Financial institutions can mitigate systemic risk by using a back-up CSP.

From an EU perspective, the proposed Digital Operational Resilience Act (DORA) will allow the European Supervisory Authorities to oversee third party providers of critical financial services to address related systemic risks.  

EU regulatory round up - by topic

The table below contains our recent EU regulatory round up by topic.