ESMA Targets €4 Billion Efficiency Gain with New EMIR 3 Reporting Standards

The European Securities and Markets Authority (ESMA) has initiated a strategic consultation aimed at refining the regulatory framework for Post-Trade Risk Reduction (PTRR) services, signaling a significant potential reduction in compliance costs for the European derivatives and Forex markets.

Streamlining Market Infrastructure

Under the newly drafted standards for the European Market Infrastructure Regulation 3 (EMIR 3), ESMA is exploring a conditioned exemption from clearing obligations for trades executed via PTRR services. The primary objective is to address systemic inefficiencies, specifically the reporting overlaps between EMIR and the Markets in Financial Instruments Regulation (MiFIR).

Current estimates from the regulator suggest that approximately one-third of all EMIR reports duplicate MiFIR data, burdening the financial industry with aggregate costs estimated between €1 billion and €4 billion annually. To combat this, ESMA is proposing two simplification models, including a “report once” mechanism, designed to significantly lower operational overhead for Forex and derivatives brokers.

• Estimated annual cost savings: €1 billion to €4 billion
• Reporting overlap: Approximately one-third of EMIR reports duplicate MiFIR data

PTRR Framework and Safeguards

The consultation introduces draft Regulatory Technical Standards (RTS) covering three primary activities within the new PTRR framework. While administrative burdens are targeted for reduction, ESMA imposes rigorous algorithm transparency and internal controls to ensure the exemption is not used to circumvent clearing obligations.

• Portfolio Compression
• Portfolio Rebalancing
• Basis Risk Optimization

Implementation Timeline

• Feedback deadline for reporting simplification: September 19, 2025
• Input deadline for broader PTRR technical standards: April 20, 2026
• Final RTS submission to European Commission: Q4 2026