Shearman & Sterling LLP | FinReg | European Commission Confirms Fitness of EU Supervisory Reporting Requirements for Financial Services
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  • European Commission Confirms Fitness of EU Supervisory Reporting Requirements for Financial Services

    The European Commission has published the results of its “fitness check” of EU supervisory reporting requirements.  The reporting requirements imposed by EU and national regulatory authorities require regulated institutions to provide information to their respective authorities regarding their financial condition and activities. The European Commission assessed the effectiveness, coherence, relevance and efficiency of existing reporting requirements in order to identify areas that may be simplified or streamlined.
    The Commission found that reporting requirements have improved supervisory authorities’ ability to monitor systemic risk in the EU, which has in turn enabled them to address risks to market integrity such as market abuse. Stakeholders have also benefited through improved internal control and risk management processes. The supervision of cross-border groups has also been enhanced by the greater comparability of data at an EU-wide level. The report did find that complying with increased supervisory reporting demands constituted a significant cost for firms, making up on average about 30% of total compliance costs. There were also some issues with data quality, in part due to the novelty of many reporting requirements but also because of their design and implementation. It was felt that the efficiency of reporting could be improved as well as the consistency of the reporting requirements themselves.
    Key areas the Commission considers it could follow up on include: (i) improving the design of primary legislation, including the introduction of clear empowerments for the European Supervisory Authorities to develop technical standards and better consideration of implementation timelines; (ii) reviewing the data that supervisors actually need and their intended use for it; (iii) enhancing the use of standards, including for identifiers and data formats; (iv) improving coordination and cooperation between stakeholders; and (v) utilizing technological developments to collect, transmit and process data more efficiently and effectively where possible.
    View the European Commission's Executive Summary of its Fitness Check of EU Supervisory Reporting Requirements.
    View the European Commission's full length Fitness Check of EU Supervisory Reporting Requirements.
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