ESMA Call for Evidence: Interim Report Signals Direction of Travel for Transaction Reporting Reform

• ESMA signals major changes ahead for EU transaction reporting rules
• Scenario 1a is the leading near-term option for reform
• Change will depend on EU legislative updates

ESMA has set a course towards a more streamlined and efficient trade and transaction reporting regime across European markets with the publication today of its Interim Report on the Call for Evidence on a comprehensive approach for the simplification of financial transaction reporting.

It has now been ten months since the Call for Evidence (CfE) was launched and five months since ESMA’s Data Day. The interim report summarises feedback from 108 written responses to the CfE, alongside separate insights gathered from 14 meetings involving 25 stakeholders.

This is not the end of the consultation process nor even the beginning of the end. Rather, it marks the end of the beginning. There is now clear acknowledgement that the current framework is not where the industry or regulators want it to be and that significant change is inevitable. However, that change will neither be quick nor straightforward.

Cost-benefit analysis

Much of the report consolidates existing themes; a restatement of the current challenges, a reframing of the objectives and detailed analysis of stakeholder views on the options originally presented in June 2025.

Given the need for a thorough cost-benefit analysis (CBA), the report does not yet contain policy recommendations. As a next step, ESMA will continue to engage with market participants, including through an open hearing on 28 May before moving towards final recommendations expected by the middle of the year.

An independent entity is currently conducting an extensive CBA involving 30 participants across four sectors; buy-side firms, sell-side firms, market infrastructure providers and non-financial corporates. In parallel, ESMA is assessing the impact on the public sector through input from National Competent Authorities (NCAs) and other stakeholders. The results of both CBAs will feed into the Final Report, expected in July 2026.

Key developments

Despite its interim nature, several clear markers provide greater certainty regarding the direction of travel, if not the final destination:

• Of the four scenarios originally presented, Scenario 1b (event-based delineation) and Scenario 2b (expanded “report once”) have been ruled out due to limited support.
• Scenario 1a is emerging as a viable near-term option; offering limited structural change, lower implementation costs and shorter timelines. It may also serve as a phased pathway towards Scenario 2a, which is increasingly viewed as the longer-term target.

By way of reminder:

• Scenario 1a – delineation by instrument: separation of ETDs and OTC derivatives across EMIR and MiFIR, alongside revisions to dual-sided reporting
• Scenario 2a – “report once”: a unified MiFIR framework incorporating EMIR and SFTR within a single reporting template.

Stakeholders consistently emphasised the need to reduce the burden associated with dual-sided reporting under both EMIR and SFTR while preserving the principle of maintaining the full scope of information.

Focus on Scenario 1a “sub-variants”:

Looking ahead to the Final Report, ESMA is expected to select one of the following of Scenario 1a:

• Option 1ai (with schema changes):
  Retains the CfE approach with targeted schema modifications to preserve supervisory capabilities (e.g. market abuse monitoring and systemic risk oversight). Includes expansion of mandatory delegated reporting and removal of reconciliation processes linked to dual-sided reporting.
• Option 1aii (without schema changes, no delineation):
  Focuses on reducing costs associated with dual-sided reporting through expanded delegated reporting, without introducing ETD/OTC delineation.
• Option 1aiii (without schema changes, with delineation):
  Introduces partial separation between ETDs and OTC derivatives (e.g. excluding EU ETDs from EMIR), while maintaining current MiFIR scope. Also includes expanded delegated reporting and associated reconciliation processes.

Direction of travel

Across all variants, there is a consistent trajectory:

• Expansion of delegated reporting obligations
• Removal of reconciliation requirements linked to dual-sided reporting
• Continued emphasis on data quality through mechanisms ensuring alignment between counterparties.

Importantly, these sub-variants are not alternatives to Scenario 2a, but potential intermediate steps designed to deliver earlier relief while preserving a path towards a more comprehensive “report once” framework.

While the longer-term end-state of Scenario 2a remains even less precisely defined, ESMA has been clear that intermediate steps will not be reversed as the framework evolves.

Critical dependency: Level 1 change

A key takeaway from the report is ESMA’s explicit acknowledgement that meaningful reform will require Level 1 legislative change, “provided that the relevant changes to the Level 1 framework are made to enable ESMA to progress this simplification exercise”.

This means that while the Final Report will set out policy recommendations, implementation will depend on action by the European Commission, Parliament, and Council. As such, timelines are for now uncertain and will be measured in years. 

Final thoughts

We have deliberately avoided speculation at this stage as the Final Report is on the horizon and this is when ESMA will provide more concrete proposals. We need to bear in mind that these will be policy recommendations not legal change. We are also deliberately avoiding specific analysis vis-a-vis the FCA’s agenda in the UK although it is clear that both regulatory bodies have a very similar objective in mind.

A key difference in the EU is that political will and space in the legislative timetable is also required, whereas the FCA can, for the most part, act without recourse to Parliament.  

Momentum is building but this will play out over years not months.

• Read the report in full on ESMA’s website
• For a conversation with Matthew or one of our regulatory specialists to discuss your regulatory change challenges, please get in touch.