Golden Copy: The €64,000 Question

The €64,000 fine levied by the European Securities and Markets Authority (ESMA) on the Depository Trust and Clearing Corporation (DTCC) on March 31 is a curious action indeed for a regulatory body whose lack of preparedness recently led to a one-year delay in the effective date of the revised Markets in Financial Instruments Directive (MiFID II) regulation.

ESMA stated that the fine was issued because the DTCC was negligent in failing to set up systems and, in turn, provide derivatives data to the authority as required under the European Market Infrastructure Regulation (EMIR).

Last year, a Dutch regulator, speaking about ESMA and EMIR issues, said there were issues with the quality of data provided to repositories, but at the same time said the volume of the data was so great that it was difficult to sort through it all and make sense of it. European regulators, in this instance, as with MiFID II reporting, lack the systems, personnel and wherewithal to handle what their rules demand.

To qualify as noteworthy, regulatory fines against the financial industry usually are in the millions or even billions of dollars. So, in that context, a €64,000 fine is significant because it's so low. One could read into this that ESMA leaders are conflicted about really punishing the DTCC for faults that their own organization has on an even bigger scale.