EUROPEAN UNION: ESMA Publishes 2017 Supervision Plan for CRAs Trade Repositories and 3rd Country CCPs

Tuesday February 7 2017

The European Securities and Markets Authority (ESMA) has published its Annual Report and Supervision Work Programmes (Report) setting out its main areas of supervisory focus for credit rating agencies (CRAs), trade repositories (TRs), and third country central counterparties (CCPs) in the European Union (EU). The Report also details the actions ESMA has taken in 2016 in carrying out its supervisory role.

For TRs and CRAs, the key supervisory themes identified for 2017 are a result of ESMA’s risk-based supervisory approach. ESMA will continue to focus on the quality of the information produced by TRs – the quality of trade repository data – and its availability, given its critical importance to regulators and overall financial stability.

ESMA will also continue to focus on the quality of credit ratings. In particular, CRAs’ implementation of ESMA’s 2016 Guidelines, which clarify how CRAs should validate and review their methodologies, will be an important part of how ESMA ensures adequate validation practices across CRAs.

Common themes in supervising both CRAs and TRs will include business strategy in light of the UK exiting the EU, governance issues, the implementation of ESMA’s supervisory strategy on fees, internal controls and IT issues and trends.

ESMA’s monitoring of third country CCPs reinforces its capacity to identify and assess the related risks to EU investors and to financial stability in the EU. Its priorities for 2017 relate to pending requests by third country CCPs for recognition, as more countries are declared equivalent, and the finalisation of a risk framework to identify priorities for recognised third country CCPs.

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