ESMA Fines DTCC Derivatives Repository Plc for Infringements of European Market Infrastructure Regulation

Red Card Penalty Fine InfractionThe European Securities and Markets Authority (ESMA), the European Union’s securities markets regulator, has reportedly fined DTCC Derivatives Repository Plc (DDRL) a total of €408,000 for seven infringements of the European Market Infrastructure Regulation (EMIR).

The violations are related to (or involve) data confidentiality, data integrity, and direct and immediate access to data.

The breaches specifically relate to granting certain fund managers access to data that they were not entitled or approved to receive; establishing its IT system in a manner that altered or changed the substance of certain information reported to DDRL; and also for failing to offer regulatory authorities with direct and immediate access to appropriate data.

The breaches, which were allegedly committed between 2014 and 2018, were determined to have resulted from negligence on the part of DDRL.

Anneli Tuominen, Interim Chair, stated:

“Today’s action against DDRL emphasises the importance ESMA places on trade repositories complying with their obligations on data confidentiality, integrity and access. The provision of timely, accurate and confidential data to CCP and derivatives markets supervisors is an essential requirement in facilitating the monitoring and identification of systemic risk in EU derivatives markets.”

Anneli added:

“ESMA will continue to monitor this area and take the necessary action to promote stable and orderly financial markets.”

EMIR aims to provide for the protection of the confidentiality and integrity of data obtained by trade repositories (TRs) and mandates TRs to offer this type of data to regulatory agencies. This is a primary requirement to enhance overall transparency while facilitating the monitoring of systemic risks in the derivatives markets. This was notably the first time ESMA discovered breaches in relation to a TR’s obligation to maintain the confidentiality and the integrity of the data being reported under EMIR.

DDRL specifically failed to offer direct and immediate access to regulatory authorities by producing reports for regulators that included incorrect or inaccurate data; failing to offer certain regulatory authorities the data they were entitled to obtain in line with their duties and mandates.

DDRL also reportedly failed to offer regulatory agencies with all transaction data pertaining to OTC derivatives contracts that were opened and exited, cancelled or matured on the same working day.

In determining the fine, ESMA looked into aggravating and mitigating factors provided for in EMIR.

DDRL has the opportunity to appeal against this decision to the Board of Appeal of the European Supervisory Authorities. But this type of appeal will not have have suspensive effect, even though it’s possible for the Board of Appeal to suspend the application of the decision (which would be in accordance with or consistent Article 60(3) ESMA Regulation).

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