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FRC responds to ESMA's consultation paper on ESEF

  • FRC comment letter Image

21 Jan 2016

The Financial Reporting Council (FRC) has published its comment letter on the European Securities and Markets Authority's (ESMA's) public consultation paper regarding the European single electronic format (ESEF).

The FRC supports the ESMA consultation and considers that “providing access to company information in a digital format can improve the overall transparency and lead to positive outcomes for both companies and investors”.  In responding to the ESMA consultation, the FRC draws on its own experience of promoting the development of iXBRL tagging through taxonomy development for UK entities and exploring how corporate reporting will develop in a digital world through its Financial Reporting Lab.

The FRC considers that the development of a mandatory ESEF and its implementation “should be limited to those entities subject to the Transparency Directive”.  However, it does indicate that it expects non-mandatory “good practice” to develop.  It indicates that in the UK there has been a “positive experience” with the adoption of iXBRL on a mandatory basis for reporting to HMRC and on a voluntary basis to Companies House.  While the FRC would “encourage ESMA to consider our experience in the UK of using Inline XBRL” it comments:

we also encourage ESMA to research thoroughly the experiences in other European countries to arrive at the best solution which is cost effective and does not introduce complexities for Member States such as the UK, who have already developed taxonomies.

Finally the FRC considers that application of the ESEF should be separately considered in the context of both “structured” and “unstructured” data.  For structured data, it considers iXBRL as being the best suited technology and for unstructured data, PDF.  The FRC does highlight that technology and practice will develop and encourages the ESMA “to consider developments in technology and practice throughout the development phase of the ESEF and to consider how the risk of stifling innovation through potentially too early standardisation may be addressed”.

Further comments are included in the full comment letter which is available on the FRC website.

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