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As of May 1, 2025, the key upcoming guidelines for transparency of IT (likely referring to OTC) derivatives in the EU are primarily driven by the MiFIR Review (Regulation (EU) 2024/7913) and related initiatives by the European Securities and Markets Authority (ESMA). Here’s a breakdown of the significant developments and what to expect:
1. ESMA Consultation on Transparency Requirements (MiFIR Review – Consultation Package 4):
* On April 3, 2025, ESMA launched a public consultation on draft Regulatory Technical Standards (RTS) concerning transparency for derivatives, package orders, and input/output data for the derivatives consolidated tape under the revised MiFIR.
* This consultation specifically addresses the mandates given to ESMA under the new Articles 8a (pre-trade transparency) and 11a (post-trade deferrals) of MiFIR.
* Scope of Derivatives: The proposals set out a new scope of derivatives that will be subject to transparency requirements.
* Liquidity Determination: ESMA proposes to apply a new liquidity determination methodology for pre-trade waivers. They are suggesting potentially granular static liquidity determinations for in-scope derivatives.
* Post-Trade Transparency: The consultation includes amendments to post-trade transparency fields and flags, specifying transaction size thresholds and setting price/volume deferral periods based on liquidity and transaction size.
* Derivatives Consolidated Tape: ESMA is also consulting on data quality requirements for prospective consolidated tape providers (CTPs) and data contributors for the OTC derivatives tape. This includes the relevant data fields.
* Timing: The consultation period closes on July 3, 2025. ESMA aims to publish its final report and submit the draft technical standards to the European Commission by the end of Q4 2025.
2. European Commission Delegated Act on OTC Derivatives Reference Data Identifier:
* The European Commission adopted a Delegated Regulation supplementing MiFIR regarding the identifying reference data for OTC derivatives to be used for transparency reporting under Article 8a(2) and Articles 10 and 21 of MiFIR.
* This regulation specifies the reference data for OTC interest rate swaps and credit default swaps, including data to be assigned to the ISO 6166 International Securities Identification Number (ISIN).
* The aim is to ensure the cross-border aggregation of transparency reports by including the ISO 4914 Unique Product Identifier (UPI).
* Application Date: This Delegated Act will apply from September 1, 2026, to allow sufficient time for ESMA to specify reporting data standards and formats and for market participants to adjust their IT systems.
Key Themes and Objectives of these Upcoming Guidelines:
* Enhanced Transparency: The overarching goal is to increase transparency in the OTC derivatives markets, aligning with the objectives of EMIR and MiFIR to reduce systemic risk and improve market oversight.
* Standardization: The focus on unique identifiers like UPI aims to standardize the reporting of derivative products, facilitating more accurate data aggregation and analysis.
* Data Quality: The guidelines emphasize the importance of data quality for the derivatives consolidated tape, ensuring reliable information for market participants and regulators.
* Harmonization: ESMA aims for a consistent approach to transparency regimes across different asset classes, although the current consultation focuses specifically on derivatives.
* Market Efficiency: By providing more granular details on liquidity and transaction sizes, the new rules intend to make the transparency regime more efficient and tailored to different market segments.
In summary, the near future will see significant developments in the transparency requirements for IT (OTC) derivatives in the EU, driven by the ongoing MiFIR Review and the recently adopted Delegated Act. Market participants should closely monitor ESMA’s consultation and prepare for the implementation of these new rules, particularly regarding data reporting and system adjustments for unique product identifiers.

Video courtesy of KDPW

Video courtesy of KDPW