The European Securities and Markets Authority (ESMA) has published its credit rating agencies (CRAs) and trade repositories (TRs) for the year ahead, plus its annual report summarising its key supervisory work and actions during 2015.
ESMA said that it had seen various changes in both industries over the year, with new applicants for registration in both sectors, and current authorised entities seeking to develop their businesses. This included CRAs providing credit ratings on new asset classes or in new geographic areas, and TRs offering trade reporting services for other instrument types.
The Authority added that its regular risk assessment exercises conducted over the year identified high levels of governance and strategy risk, and operational risk in the CRA industry and high levels of risk associated with TRs’ data and systems. ESMA’s supervisory activities in 2016 would focus on:
• CRA governance and strategy and the quality of credit ratings.
• TR data quality and data access.
• Fees charged and information security for all supervised entities.
“The credit rating and trade repository industries continue to evolve and develop,” said Steven Maijoor, ESMA chair. “We are receiving new applications for registration and existing entities are seeking to develop their businesses by expanding into new areas. ESMA supports these developments where they contribute to the maintenance of stable and orderly financial markets.
“For this reason, in 2016 ESMA will focus its work on the quality of the services being provided by supervised entities. This means we will concentrate on issues surrounding CRA governance, strategy and ratings quality, along with data quality and access to TRs’ data with a broad focus on the fee structures and information security in both industries.”
The US Commodity Futures Trading Commission approved LedgerX as the first regulated clearing house for derivatives contracts settling in digital currencies.
The European police agency recorded an 11% increase in incidents worldwide over the 12 months to March this year.
Businesses must have a broad investment portfolio and a range of trading relationships to survive in today's volatile economic climate.
Government intervention means that new regulations pave the way for a competitive regulatory and tax regime.