Money Market Statistical Reporting (MMSR) regime expansion goes live

As of July 1, 2024, the European Central Bank (ECB) has implemented revised guidelines for Money Markets Statistical Reporting (MMSR). Twenty-four new firms, including some of the world’s largest and global systemically important banks (G-SIBs), are joining the 46 that are already navigating MMSR, bringing the total to 70 entities. Post-Brexit, these institutions have become key players in the EU money markets, making their inclusion essential.

Why MMSR matters

MMSR is crucial in providing data on daily money market transactions. This isn’t just about ticking regulatory boxes – this is about giving the ECB the insights it needs to steer the Eurozone economy through monetary policy. Secured and unsecured transactions, foreign exchange swaps, overnight index swaps (OIS) – the ECB relies on this granular data to make decisions that impact us all.

What are the consequence of getting it wrong?

The ECB expects accuracy, promptness, and transparency. If firms don’t comply, the consequences can be severe – hefty fines can be imposed (as much as 10% of a bank’s total annual turnover) and there can be reputational damage too. Inaccurate reporting can ripple out, leading to flawed policy decisions that affect the entire economy. The ECB’s data quality checks ensure that firms maintain high standards, but the responsibility ultimately lies with the reporting firms.

What errors do we find?

At Kaizen, our testing of the accuracy of MMSR data has uncovered common issues such as incorrect rates, misinterpretation between collateral nominal and transaction nominal, inaccurate haircuts, misreported execution times, and variations in FX forward points and OIS rates. These errors can stem from manual mistakes, system glitches, or misinterpretations of the guidelines. Identifying and correcting these issues is essential for maintaining the integrity of MMSR data.

Are you ready?

The inclusion of 24 new firms into the MMSR fold is a significant development. The enhanced dataset arising from the additional firms’ reporting will offer a richer, more diverse view of the market but also ramps up the pressure on firms to deliver good quality reports. For new reporting agents, this means upgrading systems, implementing new validation processes, and ensuring staff are up to speed.

At Kaizen, our ReportShield™ quality assurance services are designed to help you navigate these changes. Combining the deep expertise of our regulatory experts with advanced technology, our solutions provide robust controls, continuous independent testing, and validation of submitted data. We leave no stone unturned, meticulously testing every data field on every report.

Final thoughts

Today marks a new era in MMSR reporting. The revised guidelines present challenges and opportunities for firms.  The expanded scope necessitates a renewed focus on data quality and firms’ control frameworks to ensure they are meeting the new requirements.

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