ESMA’s 2025 Data Quality Report: An Opportunity Missed
A broader report but less EMIR detail
As an important publication in the world of regulatory reporting, ESMA’s 2025 Report on Quality and Use of Data (DQR) provides useful context on the growing importance of high-quality regulatory data and how that data is used by supervisors and other authorities.
However the increased scope of this year’s report appears to have come at a cost. By widening the number of regulatory regimes included, the level of detailed data quality analysis provided for each regime has been reduced. For EMIR, this is particularly noticeable.
This is potentially a missed opportunity by ESMA to drill down into key data quality concerns and give firms a clearer view of where remediation should be prioritised in the year ahead. It is also disappointing that several EMIR issues discussed in last year’s report receive limited follow-up.
The result is a report that is broader and more accessible, but arguably less useful for firms looking for detailed EMIR insight.
Starting with the positives
This year’s DQR feels a lot more thought-out in terms of writing style and layout. This improvement is most welcome, and coupled with topics such as regulatory history and regulatory justification, makes the report accessible to regulatory newcomers, as well as those of us who have been here for too long.
For EMIR Reporting, and other regimes, ESMA stresses the importance of high data quality, stating that it ‘plays a central role across all regulatory datasets’ (P.14) quantifying such statements with extensive examples of where data is used and by whom. Twelve years after EMIR Reporting went live, firms still question the use of collected data so such comments from ESMA are useful.
The DQR describes EMIR as having reached a ‘steady state, with stable reporting rules and reconciliation requirements’ (P.76), which I doubt many firms would agree with.
Whilst we are two years on from EMIR Refit go-live, firms are still dealing with the hangover of process change and issues arising from that wholesale implementation requirement. As a result, many continue to find data quality process concerns within their reporting when checking data on an independent basis.
Adding to this are the various Q&A updates from ESMA to be interpreted and adhered to, as well as preparation for the volume of fields now included within the Inter-TR reconciliation, rising to around 150 of 204, and many firms will feel this reporting regime is far from ‘stable’.
‘Charting’ success
Previous iterations of the DQR turned our attention to a series of metrics that sought to provide empirical justification to the statements and opinions voiced throughout the report. This year’s report dances the same dance, but with a different tune.
Previous versions gave detailed and direct statistics relating to individual data quality indicators (DQIs). This year’s song is being sung at a much higher level, with sweeter tones, as the charts deployed only show improvement in DQIs at a high level.
This can be seen in Charts 1 and 2 below, which show a smooth decrease in DQI issues overall. It is a positive message, and one ESMA will understandably want to highlight, but it tells firms relatively little about where specific issues remain.
I fully agree these two charts show positive improvement and this should be applauded by all stakeholders. But in the age of granular reporting detail requirements, generative AI and the much-welcomed use of SupTech expertise across NCAs (see page 12 of the DQR for ESMA’s commentary on both), ESMA has a wealth of data and information at a lower level that would permit a far more targeted picture of where data quality is today for EMIR Reporting.
Charts 3 and 4 below are thankfully more detailed, and indeed Chart 3 shows a topic scrutinised in last year’s report: valuations and maturity dates. This shows a welcome improvement for a key reporting theme that has continued to frustrate NCAs across the global scope of derivatives reporting. The way these statistics are displayed complements the improved writing style of the report well – a clear and useful set of statistics and aims.
But just as the going is getting good, the usefulness of the EMIR report appears to be pulled back. Chart 5 below brings the reader back to another interesting, but high-level view, showing an improvement in data quality per country, without including the level of detail that would help firms understand where specific issues remain.
2024 vs 2025: the missing follow-up from last year’s concerns
Several issues highlighted in last year’s report receive little or no follow-up this year. Gone are the details teased last year such as TR challenges on porting, LEI and merger issues, Inter-TR reconciliation delays and providing complete reports to NCAs.
Gone are the issues regarding trade populations still not upgraded to the post-refit reporting format.
And gone is the opportunity to provide simple yet helpful statistics and commentary on the many tricky DQIs that are monitored on a near-automated basis by ESMA and NCAs via the Data Quality Dashboard Framework.
Given that ESMA specified these topics last year, I would have expected at least a nod towards whether these key data quality themes had been resolved or improved or remain areas of concern.
The importance of the 28 data quality indicators
In my opinion, the DQR itself risks overshadowing the importance of the simultaneously released update regarding the Data Quality Indicators (DQIs) from ESMA. This second document is extremely useful and provides firms with a true base-level ‘cheat sheet’ for what their focus must be to ensure data quality, as well as reducing the chances of regulatory scrutiny on their derivatives population. Used properly, it should also improve the quality and usefulness of captured exposures for all market participants.
In this second document, ESMA split the DQIs into themes, which I’ve summarised here:
- Number of outstanding trades
- Number of outstanding positions
- Number of reports with AT=NEWT
- Number of reports with AT=POSC
- Unpaired reports
- Reconciliation
- Valuation Reconciliation
- Consistent Margins (pre-haircut)
- Consistent Margins (post-haircut)
- Consistent Notional
- Rejections
- Late Reports
- Missing Valuation
- Outdated Valuations
- Missing collateral data
- Missing variation margin
- Outdated collateral
- Blank/abnormal maturity date
- Lack of LEI
- Entity Responsible for Reporting
- Entity Responsible for Reporting is not within the EEA
- Counterparty Nature
- Corporate Sector
- Anomalies
- Duplicate Reports
- Not updated derivatives
- Reporting obligation of counterparty 2
- Placeholder values
In short, this list displays the exact reporting areas being analysed by NCAs on a regular and maintained basis through the Data Quality Dashboard Framework. These areas are likely to act as the key initial criteria for EMIR reporting and as a gateway to further regulatory scrutiny, should firms fall foul of those topics included.
It seems certain that if the automated flags are being raised for these areas for a firm, the NCA will be keen to scrutinise other aspects of the 204 fields available under EMIR and to assess further regulatory processes and frameworks at that firm.
A notable mention goes to the ‘Anomalies’ DQI, which impacts quite a wide range of issues within a firm’s reporting, and may prove hard for firms to monitor fully and successfully.
So while the flow and style of the DQR itself has notably improved for the reader, the level of data quality feedback has been reduced, and now sits at a higher-level. For me this conflicts with the wide volume of DQIs. The 28 DQIs provide a much wider range of topics on which ESMA could have provided simple statistics and commentary that could truly assist firms with their remediation efforts, notably where resources across market participants are limited in nature.
A lesson learnt for one and documented here is a lesson learnt for all.
Easily missed from the Data Quality Dashboard for EMIR
The Data Quality Dashboard for EMIR also discusses additional data quality concerns, not mentioned in the DQR, notably submissions by CCPs and Clearing Members (CMs).
ESMA specifies that they account for a ‘high volume of [reports] submitted..’ as well as the ‘reliance of other reporting counterparties … for [the] provision of certain reportable information.’ (Dashboard P.1). ESMA concludes that ‘additional output results focused on CCPs and CMs will be provided.’ which will make for both interesting and perhaps nervous reading for firms, not least the CCPs and CMs.
What firms should do now
Overall, the increased scope of this year’s DQR comes at the cost of pushing the actual data quality findings to a far higher level. This is a shame, given the noted improvement in the report’s style and background context and the positive message of improved data quality metrics at that higher level.
Firms would be wise to pay close attention to the less high profile Data Quality Dashboard for EMIR report, and target their technology, controls and understanding towards the 28 listed EMIR DQIs. These indicators provide an excellent starting point for proactively monitoring, improving and maintaining the reporting areas that are firmly in the sights of NCAs across the European Union.
- To discuss your EMIR data quality position, how best to prepare for regulatory scrutiny or your team’s training plans, please get in touch.
- Read Jonathan Lee’s analysis of the SFTR aspects of the report here.
