ESMA Moves to Simplify Transaction Reporting. Full Report.

This initiative forms part of a broader EU effort to improve capital markets competitiveness and reduce unnecessary regulatory burdens. Over time, policymakers have recognised that reporting frameworks, while essential, have become overly complex and costly to maintain.

In particular, transaction reporting has developed in silos. MiFIR, EMIR, and SFTR were introduced with different objectives and timelines, but now overlap significantly in scope. This has resulted in multiple reporting obligations for the same activity, often differing only in minor data fields or formats.

ESMA’s objective is not to eliminate reporting, but to ensure that it remains fit for purpose in a digital, cross-border market environment, where scalability and automation are increasingly important.

ESMA’s findings confirm that the main inefficiencies are structural. Firms are not struggling because reporting requirements exist, but because the same data is processed repeatedly across disconnected systems.

The most common issues can be summarised as follows:

What stands out is that these issues are interconnected. Fragmentation leads to duplication, duplication leads to reconciliation, and all of this increases both cost and operational risk.

As a result, firms often maintain redundant infrastructure, not because it adds value, but because the regulatory framework requires it.

To address these challenges, ESMA is proposing a phased approach that balances short-term relief with long-term transformation. This reflects industry feedback, which generally supports simplification but emphasises the need for predictability and manageable implementation timelines.

Step 1: Fix What’s Broken (Short Term)

The first phase focuses on improving the existing system rather than replacing it. The objective is to remove the most obvious inefficiencies while minimising disruption.

Key priorities include:

• Reducing duplication between EMIR and MiFIR
• Clarifying reporting scope, particularly between OTC and exchange-traded derivatives
• Revisiting dual-sided reporting obligations
• Simplifying overlapping requirements

These changes are expected to deliver incremental but tangible benefits, particularly in terms of reducing operational costs and simplifying system maintenance.

Step 2: Move to “Report Once” (Long Term)

The longer-term vision is more ambitious and aims to address the root cause of duplication. Under the “report once” model, firms would submit a single, harmonised report that satisfies all relevant regulatory frameworks.

This would enable data to be shared across authorities, rather than submitted multiple times. In theory, it could eliminate duplication entirely and significantly improve data consistency.

However, achieving this will require substantial changes to data models, governance structures, and reporting infrastructure. ESMA therefore views this as a multi-year transition rather than an immediate reform.

Among the identified issues, dual-sided reporting stands out as the most immediate opportunity for simplification. While originally intended to improve data quality, it has become a source of inefficiency and operational friction.

In practice, requiring both counterparties to report the same trade often leads to discrepancies. These mismatches then trigger reconciliation processes, which consume significant time and resources without necessarily improving the underlying data quality.

ESMA’s analysis confirms that:

• Reconciliation is a major cost driver
• Data mismatches are frequent
• The benefits of dual reporting are often limited in practice

As a result, there is strong momentum toward alternative models, such as single-sided or delegated reporting. While regulators remain cautious, this is widely seen as an area where meaningful cost reductions can be achieved relatively quickly.

A move toward centralisation and harmonisation could significantly change how reporting flows are structured. Instead of multiple submission points, firms may interact with fewer, more standardised channels.

Despite the overall direction toward simplification, ESMA highlights several risks that could influence how the reforms unfold.

One key concern is maintaining data quality. Simplifying reporting must not compromise the ability of authorities to monitor markets effectively. This creates a delicate balance between efficiency and supervisory capability.

Other important risks include:

• Governance challenges in a more centralised model
• Implementation complexity across multiple regimes
• Potential fragmentation during the transition phase

These factors suggest that while the end state is clear, the path toward it will require careful coordination between regulators and industry.

Taken together, ESMA’s findings point to a gradual but clear shift in the evolution of transaction reporting.

ESMA is not reducing the scope of reporting. It is redefining how reporting functions. The future framework is likely to move away from fragmented, duplicated processes toward a system in which data is reported once and reused across the regulatory ecosystem. For firms, this means fewer redundant processes, but also greater responsibility for accuracy, consistency, and control.

Those that approach this as a strategic transformation, rather than a series of regulatory updates, will be better positioned to manage costs and adapt as the new model takes shape.