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25 November 2021 Benjamin Maconick - Elliot Jack Financial Regulation

European Commission publish proposals on establishing a European single access point

The European Commission has published proposals for a Regulation to establish a European Single Access Point (“ESAP”) to “improve public access to entities’ financial and non-financial information”. This proposal may be helpful to financial services firms (in providing centralised access to some useful information), but will also impose new compliance obligations to submit information to the ESAP.

What is the ESAP?

The ESAP is intended to provide an easy centralised point of access to information about financial services, capital markets and sustainability, that entities and competent authorities are required to make public. According to the Commission’s proposal, the information required to be made publicly accessible on ESAP will be collected by designated “collection bodies”. The collection bodies will then make the information available to ESAP in automated ways through a single application programming interface. For the information to be digitally usable, entities will have to submit the required information to the collection body in a data extractable format or in a machine-readable format, where required under EU law, simultaneously to its publication.

What information must be published on ESAP?

The Annex to the proposed ESAP Regulation sets out a list of EU Regulations and Directives in scope of the ESAP. The Commission has also proposed an amending Regulation and an amending Directive to introduce the ESAP requirements to relevant Union legislation. In short, any information, document and report that is “made public” under EU law by an entity (including issuers of securities, auditors, funds and fund managers, insurance companies, companies, institutions, investment firms, or credit institutions, as applicable), will have to be submitted to the collection body. ESAP will also provide access to information relevant to financial services and capital markets that is made public on a voluntary basis by any EU entity.

Any information, document or report that is to be made public under the relevant EU legislation, must be accompanied by a qualified electronic seal and must include specific metadata (to be further detailed in technical standards).

Some examples of the information that is in scope on ESAP under the current proposals:

Various regulatory registers and databases under MiFIR – e.g. financial instrument reference data and registers of SIs.
RTS 28 best execution reporting under MiFID II.
Inside information required to be made public by an issuer under Article 17 of MAR.
Entity-level sustainability risk policies, PASI disclosures and remuneration policies under Arts 3-5 of the Sustainable Finance Disclosure Regulation (“SFDR”), as well as product-level website disclosures under Article 10 of SFDR.
Disclosures under Article 8 of the Taxonomy Regulation as to the extent to which an undertaking’s economic activities are Taxonomy-aligned.

What is the practical impact on financial services firms?

From one perspective, the ESAP may be helpful in centralising and standardising information that financial services firms may rely on (e.g. certain regulatory registers and databases and disclosures they may consume from other firms).

However, on the other side, financial services firms will need to undertake a significant systems and controls update to ensure all required information, documents and reports are submitted to the relevant collection bodies – in the appropriate format and at the appropriate time – for submission to ESAP.

We also expect there to be debate as to when information is actually “made public” pursuant to an EU regulatory obligation. For example, website disclosures required in relation to financial products under Article 10 of SFDR are in-scope of the ESAP proposal (clearly on the assumption they are “made public”), but in practice (and as supported by guidance from the EU Commission) are often uploaded onto password-protected client websites, due to confidentiality, commercial and data protection concerns. Therefore, it will be important to follow the ESAP proposals and consider their impact on individual disclosures in detail.

Next steps

The College of Commissioners adopted the proposals on 25 November 2021. The proposals will be subject to the EU’s ordinary legislative procedure, so the next step is for the European Parliament and the Council to negotiate a final legislative text on the basis of the proposals. The average length of the ordinary legislative procedure is around 18 months. The proposals envisage the first submissions to ESAP being phased-in between 2024 – 2026.