Regulatory reporting is an important tool for detecting market abuse and effectively monitoring markets. However, few areas generate as much cost and complexity for firms as transaction reporting.
Over time, the EU’s transaction reporting regime has evolved in a piecemeal fashion. Investment firms have to juggle multiple, overlapping reporting regimes - most notably MiFID II/MiFIR, EMIR, and SFTR - often reporting the same trade several times.
The result? A tangle of data, systems, and operational costs. Such complexity raises a key question: is the current transaction reporting regime fit for purpose and has it truly delivered the intended regulatory objectives? A more streamlined and proportionate regime would not only reduce the compliance burden but could also improve data quality – giving regulators better tools to supervise markets and shape policy effectively.
This is why ESMA’s decision in the summer to pause its technical work on MiFIR transaction reporting is so significant. For the first time in years, European policy makers have a chance to take a holistic look at reporting and to fundamentally simplify the EU’s reporting framework - cutting duplication, improving data quality, and streamlining what has become one of the most extensive and intricate set of obligations for financial market participants. This is a complex set of requirements that is long overdue a more rational and coherent approach.
Pragmatic, cost-efficient simplification should be the guiding principle for reform. This can deliver the same, or better, outcomes for supervisors while freeing up resources that firms can use to support clients and capital markets.
Simplification starts with a true “report once” logic
Currently, the same derivative transaction may need to be reported under MiFIR, EMIR, and REMIT, creating unnecessary duplication and inefficiency. A clear delineation of reportable instruments - with exchange-traded derivatives reported only in MiFIR and OTC derivatives only in EMIR - would ensure each transaction is reported under a single regime only.
Simplification requires focusing on what matters
Our ‘report once’ recommendation should be accompanied by a critical review of the reportable fields ensuring that only the information essential for regulators to perform their supervisory function is required. This would sharpen the usefulness of reports and can ensure that regulators receive what is truly necessary for supervisory purposes. Quality matters more than quantity.
Simplification also means moving to a clear single-sided reporting model
Under EMIR, both counterparties to a trade must submit transaction reports, even though the information is the same. This significantly increases reporting volumes and introduces unnecessary reconciliation challenges. Adopting a single-sided approach, with clear rules on which counterparty reports, would promote greater consistency and align Europe with other jurisdictions. Of course there are challenges posed by this approach therefore it is important the industry is engaged on practical means to implement these changes.
Simplification calls for predictability
Frequent and unsynchronised rule changes have forced firms to rebuild complex and expensive systems incrementally. Establishing predictable change cycles would allow firms to plan ahead and reduce implementation costs - an efficiency gain for both regulators and the industry.
Ultimately, complexity hurts customers too
The heavy costs of duplicative reporting are not borne by firms alone - they are passed on to end users of financial services through higher trading costs, fewer product choices, and slower market innovation. Smaller firms, in particular, may struggle to compete, reducing the diversity of services available to investors. At the same time, regulators risk being inundated with low-value or inconsistent data, diluting their ability to spot risks. Simplification is therefore not just about easing firms’ compliance burdens, but about creating a more competitive and innovative financial system for customers.
The smarter path is to build a simpler, more coherent framework that focuses on outcomes, not volume. Meaningful simplification of transaction reporting would lower costs for firms, improve data quality for regulators and strengthen the competitiveness of EU capital markets. As the EU advances its Savings and Investment Union agenda, this is an opportunity policymakers cannot afford to miss. By embracing pragmatic, cost-effective simplification, Europe can transform transaction reporting from a burdensome and costly compliance exercise into a smarter, more effective supervisory tool while significantly improving the reporting experience for firms. The ESMA review is a key moment to make that shift.
