ESMA releases first report on penalties imposed under EMIR
14 June 2018 Paris
Image: Shutterstock
The European Securities and Markets Authority (ESMA) has issued its first annual report regarding supervisory measures and penalties imposed by national competent authorities (NCAs) under the European Market Infrastructure Regulation (EMIR).
ESMA is charged under EMIR with drafting and submitting an annual report on penalties imposed by National Competent Authorities (NCAs), including supervisory measures, fines and periodic penalty payments to the European Parliament, the Council and the Commission.
Specifically, it covers provisions related to the clearing obligation (Article 4 of EMIR); the reporting obligation, non-financial counterparties (Article 10); and the risk mitigation techniques (Article 11).
ESMA has stated the report will help to gradually identifying best practices and potential areas that could benefit from a higher level of harmonisation.
According to ESMA, this report serves as a good basis for NCAs to share information on their practices in their supervisory activities and, more broadly, to raise awareness on the supervisory approaches followed in the different countries, said ESMA in its concluding remarks in the paper.
It helps understand the information checked by NCAs (from trade repositories (TRs) and in combination with information submitted by counterparties) and its use for a range of supervisory measures.
The report also shows that the majority of NCAs share similar competences (or responsibilities in standard non-EU English) in their supervision and enforcement of the articles in question.
ESMA said that from the information analysed it has identified a large range of practices being applied by NCAs across the EU.
It said that, overall, it appears that there has been initially an important focus on raising awareness on EMIR requirements. This has then gradually shifted to the monitoring and the enforcement of, first, the implementation of the requirements, and then of the ongoing compliance.
Some areas appear to be highly harmonised, such as the sources of information used by NCAs with the purpose of verifying the compliance with EMIR provisions, or the supervisory competencies to which the different NCAs are entitled, according to their respective national regulations.
Other areas, such as enforcement procedures, although following different systems, do show a common underlying pattern, said ESMA.
However, it added, the aspect that appears less unified concerns the amounts of the fines, where the level of harmonisation is very low, with amounts ranging between a minimum of €125 and a maximum of €100 million.
In addition, in terms of criminal sanctions related to EMIR infringements, seven countries envisage this possibility in their legislation. In terms of sanctions, just three have so far been imposed.
Covip in Italy (Commissione di vigilanza sui fondi pensione) imposed two sanctions fines in connection with both articles nine and 11 (amounting to €105,000 and €60,000 respectively); and the Financial Conduct Authority in the United Kingdom imposed a sanction fine of £35 million for an infringement of article nine.
ESMA said it expects this first report to be the baseline for future reports on penalties and supervisory measures.
These reports will help monitor compliance in the different member states and possibly identify areas where a higher level of harmonisation could be considered to ensure a level playing field, it added.
ESMA has sent its report to the European Parliament, the Council and the European Commission, informing them about the findings.
ESMA is charged under EMIR with drafting and submitting an annual report on penalties imposed by National Competent Authorities (NCAs), including supervisory measures, fines and periodic penalty payments to the European Parliament, the Council and the Commission.
Specifically, it covers provisions related to the clearing obligation (Article 4 of EMIR); the reporting obligation, non-financial counterparties (Article 10); and the risk mitigation techniques (Article 11).
ESMA has stated the report will help to gradually identifying best practices and potential areas that could benefit from a higher level of harmonisation.
According to ESMA, this report serves as a good basis for NCAs to share information on their practices in their supervisory activities and, more broadly, to raise awareness on the supervisory approaches followed in the different countries, said ESMA in its concluding remarks in the paper.
It helps understand the information checked by NCAs (from trade repositories (TRs) and in combination with information submitted by counterparties) and its use for a range of supervisory measures.
The report also shows that the majority of NCAs share similar competences (or responsibilities in standard non-EU English) in their supervision and enforcement of the articles in question.
ESMA said that from the information analysed it has identified a large range of practices being applied by NCAs across the EU.
It said that, overall, it appears that there has been initially an important focus on raising awareness on EMIR requirements. This has then gradually shifted to the monitoring and the enforcement of, first, the implementation of the requirements, and then of the ongoing compliance.
Some areas appear to be highly harmonised, such as the sources of information used by NCAs with the purpose of verifying the compliance with EMIR provisions, or the supervisory competencies to which the different NCAs are entitled, according to their respective national regulations.
Other areas, such as enforcement procedures, although following different systems, do show a common underlying pattern, said ESMA.
However, it added, the aspect that appears less unified concerns the amounts of the fines, where the level of harmonisation is very low, with amounts ranging between a minimum of €125 and a maximum of €100 million.
In addition, in terms of criminal sanctions related to EMIR infringements, seven countries envisage this possibility in their legislation. In terms of sanctions, just three have so far been imposed.
Covip in Italy (Commissione di vigilanza sui fondi pensione) imposed two sanctions fines in connection with both articles nine and 11 (amounting to €105,000 and €60,000 respectively); and the Financial Conduct Authority in the United Kingdom imposed a sanction fine of £35 million for an infringement of article nine.
ESMA said it expects this first report to be the baseline for future reports on penalties and supervisory measures.
These reports will help monitor compliance in the different member states and possibly identify areas where a higher level of harmonisation could be considered to ensure a level playing field, it added.
ESMA has sent its report to the European Parliament, the Council and the European Commission, informing them about the findings.
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