The European Securities and Market Authority (ESMA) consultation on the European Single Access Point (ESAP) closed on 8 March 2024. The European Federation of Financial Analysts Societies (EFFAS) actively participated in the consultation.
EFFAS strongly supports the concept of the ESAP. “However, we do see an urgent need to supplement a quality assurance system”, says Thorsten Müller, Co-Chairman of the EFFAS Capital Markets Commission, and member of the EFFAS Executive Management Board.
All capital market related data from all listed companies in the 27 EU member states is to be made available on the ESAP. This includes financial data, ESG data and among others MiFID or MAR data. These are to be published via a central ESMA database the ESAP. This is a huge project with more than 200 different reporting obligations and more than 150,000 legal entities affected. The ESAP is to include more and more data in different phases. The launch is scheduled for 2024 and the start of data publication is scheduled for 2027. The project should then be completed in 2030.
The central ESAP database is a fundamental measure to achieve the goal of a capital markets union in Europe. The aim is to increase the transparency of capital market data, reduce information costs for data users and thus improve the inflow of capital. This will also benefit European micro, small and mid-cap companies.
Like the underlying EU Directive (EU 2023/2859 of 13 December 2023), ESMA’s current proposal contains a major weakness: it lacks a uniform EU-wide governance that would technically ensure that complex electronic reports, such as IFRS consolidated financial statements, have a uniform minimum quality throughout the EU. Thorsten Müller, co-chair of EFFAS’ Capital Markets Commission, and in charge of EFFAS’ ESMA consultation says: “In the age of automation, AI and complex electronic reports from issuers, such as IFRS consolidated financial statements and future reports in accordance with the European Sustainability Reporting Standards (ESRS), it is a conceptual mistake not to establish an EU-wide standardised quality assurance system. Without such a system, the risk of producing data scrap is very high!”
Already back in 2009 the US Securities and Exchange Commission (US SEC) experienced significant data quality problems with the introduction of structured reporting for financial reports of listed companies. In contrast to the EU’s approach, the US SEC’s filing interface now has comprehensive data validation rules that require data to be checked upon submission. Compared to the USA, the data quality situation in Europe is even more challenging due to the large number of national filing offices, each of which is also subject to national law. Barbara Cohen, co-chair of EFFAS’ Capital Markets Commission.
Press Statement – ESMA consultation on ESAP –
9th April 2024
Capital Markets Commission, adds: “We should learn from the experience of the US SEC with their initial problems of inadequate data quality governance. In analogy to the US validation engine, ESMA should develop a system to ensure homogenous data quality. This should be made available to the national filing authorities via an open-source licence for mandatory implementation in the filing interfaces”.
“We at EFFAS fully support the concept of the ESAP, but without the introduction of systematic processes, we are jeopardising data quality and stability and thus jeopardising the foundation of the Capital Markets Union,” says Barbara Cohen, summarising EFFAS’ position.
About the EFFAS Capital Market Commission
The role of the capital markets is key for the allocation of financial resources throughout modern economies and therefore to enable stronger growth and the long-term development of the European economies.
Over recent years and especially after the world financial crisis of 2007, which significantly affected the banking system in many countries, European authorities have placed the efficiency of capital markets at the centre of their priorities. This is demonstrated by the launch and implementation of the Capital Markets Union (CMU), a priority within the agenda of the EU Commission.
More about the commission here.
Contacts:
Thorsten Mueller, Co-chair, Capital Market Commission
Barbara Cohen, Co-chair, Capital Market Commission
Raquel Zaragoza Marti, EFFAS Managing Director
Alvaro Wagener Diez, Marketing & Communication, Manager
