The Information Challenge
The European Commission capital markets union project has included many initiatives aimed at ensuring that investors have as much relevant information as possible, including Directive 2014/50/EU (the "Transparency Directive"). Nevertheless, EU legislation does not yet provide a simple mechanism giving access to a comprehensive range of information about European companies, the securities they issue and the financial products they offer. Instead, data is mostly stored in local national databases, using different infrastructure and formats. Plans are being implemented to try and change this situation.
European Single Electronic Format ("ESEF")
In 2013 the Transparency Directive was amended to include, amongst other things, a requirement for issuers to prepare their annual financial reports ("AFRs") in a single electronic reporting format. The European Securities and Markets Authority ("ESMA") was assigned the responsibility to develop regulatory technical standards ("RTS") to specify this electronic reporting format.
Commission Delegated Regulation (EU) 2018/815 on the ESEF was published in December 2018. Subject to the completion of the legislative process by the European co-legislators, the ESEF will enter into force on the twentieth day following that of its publication in the Official Journal of the European Union (expected to be in 2021) and will apply to AFRs containing consolidated financial statements for financial years beginning on or after 1 January 2020.
ESMA updated the related ESEF Reporting Manual on 12 July 2019.
European Electronic Access Point ("EEAP")
The EEAP was mandated by the Transparency Directive, but has not yet been implemented. It is intended to be a web portal providing easy and fast access to regulated information. The system is intended to allow easier cross-border access to regulated information, lower the search time and, potentially, reduce the information access costs. Investors should obtain faster results because they will no longer have to search through 28 different Officially Appointed Mechanisms ("OAMs") such as stock exchanges, regulators or any other designated institutions, but rather go to a single entry point.
ESMA submitted draft RTSs to the European Commission ("EC"), but the process is currently stalled. The summary of conclusions dated 18 January 2019 from a meeting of ESMA's management board noted that the EC observer expressed disappointment that the EEAP project had been de-prioritised.
European Financial Transparency Gateway ("EFTG")
Another approach using more innovative technology to implement the EEAP is being explored. The directorate general for financial stability, financial services and capital markets union ("DG FISMA") is running an EFTG pilot project to test whether distributed ledger technology ("DLT") could provide an effective implementation solution. An initial 'proof of concept' phase concluded that the use of DLT was feasible.
The EFTG pilot project aims to provide increased accessibility to public regulated information provided by the participating OAMs, and also a search capability among Member States' data. The benefits of utilising DLT could be numerous; the flexible nature of DLT means it could be extended to cover any type of public financial information.
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