ESMA Direct Supervision DRSPs Under MiFIR: Enhanced Transparency for EU Markets

• As of January 2022, ESMA has direct responsibilities for authorising and supervising DRSPs, except for those APAs and ARMs subject to derogation.
• ESMA applies a risk-based approach when supervising DRSPs, combining desk-based activities with investigations and on-site inspections.
• DRSPs are required to submit periodic information in accordance with the Guidelines on Periodic Information, using templates finalised in November 2025.
• ESMA has the power to take enforcement action where necessary, including imposing fines or withdrawing registration.

The transfer of supervisory responsibilities from NCAs to ESMA is rooted in Regulation (EU) No 600/2014 on markets in financial instruments (MiFIR), as amended by Regulation (EU) 2019/2175.

As of January 2022, the European Securities and Markets Authority (ESMA) has taken on direct responsibilities for authorising and supervising Data Reporting Services Providers (DRSPs), with some exceptions. This shift in responsibility was driven by the need to enhance transparency and effective supervision of financial markets. ESMA's direct supervision aims to ensure that DRSPs comply with MiFIR requirements, including submitting accurate and comprehensive trading data to national competent authorities (NCAs) and investors.

The authorisation process involves a formalised assessment of applicants' information, which is then evaluated against MiFIR requirements. ESMA applies a risk-based approach when supervising DRSPs, combining desk-based activities with investigations and on-site inspections. The authority expects DRSPs to submit periodic information in accordance with the Guidelines on Periodic Information, using templates finalised in November 2025.

ESMA has the power to take enforcement action where necessary, including imposing fines or withdrawing registration. However, certain APAs and ARMs are exempt from ESMA's supervision due to derogation, subjecting them instead to national competent authorities.

The transfer of supervisory responsibilities from NCAs to ESMA is rooted in Regulation (EU) No 600/2014 on markets in financial instruments (MiFIR), as amended by Regulation (EU) 2019/2175. MiFIR provides for the categorisation of DRSPs, including those subject to direct supervision by ESMA. The European Commission has defined derogation criteria for APAs and ARMs with limited relevance to the EU market, taking into account factors such as data reporting services provision and trade report publication.

ESMA's role in supervising DRSPs is further clarified through relevant technical standards on authorisation and organisational requirements. These standards outline the information required from applicants during the authorisation process. ESMA also publishes annual reports and work programmes, detailing its current supervisory focus and enforcement actions.

The shift in responsibility for DRSP supervision has significant implications for firms relying on these services. Compliance obligations may change as a result of ESMA's direct involvement. Lawyers should note that the transfer of responsibilities is effective as of January 2022, and ESMA's powers include imposing fines or withdrawing registration where necessary.

Investors and national competent authorities also benefit from ESMA's direct supervision, receiving accurate and comprehensive trading data. The authority's risk-based approach ensures ongoing compliance with MiFIR requirements, enhancing transparency and effective market supervision.

Lawyers should note that as of January 2022, ESMA has direct responsibilities for the authorisation and supervision of Data Reporting Services Providers (DRSPs), except for those APAs and ARMs subject to derogation. This may impact compliance obligations for firms relying on these services.

Source: Original reporting via European Securities and Markets Authority