TechTalk Blog - European Financial Transparency Gateway Construction Moves Forward For Better EU Public Company Disclosures to Help Global Investors

By David Colgren posted 04-17-2018 01:49 PM

  

Watch out United States EDGAR Online – the European Union is building a “next generation” -- “EDGAR-LIKE” corporate disclosure platform to be used by 28 EU member states for global investors that will be built upon BLOCKCHAIN and global financial and non-financial data access standards like eXtensible Business Reporting Language (XBRL) to expedite investments from global investors.

The US Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the U.S. Securities and Exchange Commission (the "SEC"). The database is freely available to the public via the Internet (HTTPS).

By having better data and access to data for the public/investors -- the EU hopes that transparency and accountability will drive better investment and loyalty through sustainable relationships.

Public companies are disclosing additional information besides financial and new platform will take into consideration new data sets of information such as climate change, gender, racial, human trafficking and child labor to directly related public companies to relationships with important local and global stakeholders for better corporate governance. 

The United Nations is also interested in the European Financial Transparency Gateway that would allow public companies to disclosure data related to the sustainability development goals (SDGs) as interest in climate change disclosures etc. accelerates among investors worldwide. 

Great article from K&L Gates about the European Financial Transparency Gateway.

Great article from Dechert LLP law firm about the specifics of the European Financial Transparency Gateway (EFTG):

 The European Commission, as part of its efforts to create a “Digital Single Market” and further to build more competitive and innovative Capital Market Union, announced its FinTech Action Plan on March 8, 2018.1

The Action Plan sets out 23 steps to accomplish the following main objectives: enabling innovative business models to reach a European scale (based on a consistent licensing regime), supporting innovations and implementation of new technologies in the financial sector, and increasing its integrity and security.

 

Among the initiatives are:

  • A proposal for an EU Regulation on investment-based and lending-based crowdfunding service providers (ECSP) for business. The regulation aims to set an appropriate and proportionate framework enabling crowdfunding platforms to operate cross-border under a comprehensive passporting regime and unified supervision;2
  • An EU Public Blockchain initiative of the European Commission to develop a comprehensive strategy for implementation of distributed ledger technologies in all sectors of the economy, considering the associated legal implications;
  • A public consultation on further digitalization of regulated information about companies listed on EU regulated markets, considering a possible establishment of a European Financial Transparency Gateway based on distributed ledger technology; and
  • Hosting an EU FinTech Laboratory, which will serve as a platform for neutral exchange among European and national authorities with technology providers.

 As part of the Action Plan, in February 2018, the European Commission launched an EU Blockchain Observatory and Forum, as well as a feasibility study of an EU public blockchain infrastructure to develop cross-border services. As part of its efforts to evaluate legal, governance issues, any scale-up opportunities and in attempt to support “interoperability and standardization” across Europe, the European Commission will continue the work on further possible implementations of distributed ledger technologies in the second quarter of 2018.

It will utilise cooperation with standard-setting bodies, as well as other international authorities and organisations to attain its objectives.

Digital assets and initial coin offerings (ICOs) also attracted the focus of the European Commission. Together with the European Supervisory Agencies, the European Central Bank and the FSB, the European Commission will continue monitoring the developments in this subject area. Considering the risks associated with the digital assets transactions and the appropriateness of the regulatory framework, the European Commission will assess, by the fourth quarter of 2018, at what extend a regulatory action on an EU level is necessary.

In this context, last month the European Supervisory Agencies – EBA, ESMA and EIOPA – issued a coordinated warning to the consumers about the high risk of investment in virtual currencies associated with uncertainty in the regulation and their extreme volatility.3 This notification followed the alerts issued in November 2017 by ESMA to investors concerning the high risk of investing in ICOs and on the rules applicable to firms involved in ICOs.4

Additional aspects to consider when analysing digital assets include the impact of the General Data Protection Regulation (GDPR) entering into force in May 2018,5 the eIDAS Regulation6 and the recent proposal to extend the scope of the Anti-Money Laundering Directive to virtual currency exchanges and wallet providers.7

Finally, a further step forward in the regulation of digital assets and ICOs was taken outside the EU with the publication of the ICO Guidelines by FINMA (the Swiss Financial Market Supervisory Authority) on February 16, 2018. The document complements the FINMA Guidance 04/2017 and provides further information and clarification on how the authority aims to employ the financial markets legislation by dealing with ICO organisers.8

 

Footnotes

1) FinTech Action Plan: For a more competitive and innovative European financial sector

2) Proposal for a Regulation of the European Parliament and of the Council on European Crowdfunding Service Providers (ECSP) for Business

3) ESMA, EBA and EIOPA warn consumers on the risks of Virtual Currencies

4) ESMA Highlights ICO Risks for Investors and Firms

5) Regulation (EU) No. 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation)

6) Regulation (EU) No. 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC

7) Directive (EU) No. 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing

8) FINMA publishes ICO guidelines

Information about the use of XBRL for better access to financial and non-financial data for global investors:

The European Financial Transparency Gateway, is a proof of concept index for financial reporting being developed by the European Commission’s DG FISMA. Head of Unit Alain Deckers described the way that this distributed ledger powered system will allow users to obtain access to Inline XBRL based financial statements that will be filed from across the EU by public companies from April 2021. 

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