Thank FESE – Federation of Euroepan Securities Exchanges – for inviting the Commission to talk about the XBRL – the Extensible Business Reporting Language. XBRL – a universal financial reporting framework adopted by several major jurisdictions in the World. My name is Piotr Madziar and I represent the European Commission – Direction General Internal Market and Services. Despite the official invitation from your side I must recall that all that I say here is my personal opinion and can not be taken for the official of the European Commission.
Despite the fact that I have been asked to talk about the outcome of the consultation on the Review of the Accounting directives: - The Council Directive of 25 July 1978 based on Article 54 (3) (g) of the Treaty on the annual accounts of certain types of companies (78/660/EEC). , and - The Council Directive of 13 June 1983 based on the Article 54 (3) (g) of the Treaty on consolidated accounts (83/349/EEC), in the XBRL aspect, I decided to provide an overview of the Commission’s and other Institutions’ initiatives that, either explicitly or implicitly (potentially) identify XBRL and common business reporting format as means to deliver in several policy areas. That includes in particular the recent prominent policy to regulate financial markets in the wake of the financial crisis, the European simplification and reduction of administrative burden program, a number of initiatives oriented ot restoration of confidence in the financial markets of the investors, citizens and institutions and, finally numerous measures to streamline the initiatives in the area of information society , ICT infrastructure and access to it.
We all operate in a complex multi-facetted and multi-layered but networked environment , in which stakeholders of regional or global dimension provide the input to the dialogue. That’s the way of doing the European Institutions must accept in order not only to get their power respected but also to let the other players comprehend the nature and agenda of our European processes (including democratic processes).
Here my intention was to depict main EU policies driving the concept of harmonizing the business data and identifying XBRL as the only available, royalty-free, quality, global standard, notably the Simplification policy and the crisis-related measures. (click) The Barroso Commission, on its outset, decided to provide a meaningful follow-up on the Simplification initiative (on the left), by targeting the 25% administrative burden reduction for businesses as one of the measures to deliver on the Lisbon 2000 agenda. A specialized HLG consisting of high profile individuals and chaired by Mr Stoiber was created by the Commission. Also the MS used various opportunities to contribute to this initiative, providing policy initiatives and their expertise enriching the EU approach. (click) The financial crisis , looming since early 2008, provided new challenges the EU institutions were expected to confront: the global and European supervisory structure, market transparency and confidence. Other institutions made significant contributions towards forging a common view: the Council and the Parliament . We received an initial input from the de Larosiere Group, and subsequently the G20 recommendations as regards the anti-crisis measures to follow. (click) Other important policies also constitute important potential for XBRL use. Company disclosures, part of the corporate governance framework provide another vast opportunity for alignment between existing jurisdictions, frameworks and systems. (click) Last but not least, European institutions provide selective measures to boost European competitiveness by automation of business processes, harmonisation of standards and education, within the Lisbon agendas.
On this slide I again indicate the policy driving forces and major implications. The measures to regulate anew the financial markets in Europe, here in the first column, are driven by the request of the treasuries and taxpayers who are concerned about the massive bailouts and huge budget deficits that potentialy destabilise economies and may require more taxation. The draft legislation, to be adopted by the Commission tomorrow, creates new regulatory authorities, provide them with appropriate powers and funding schemes; and forge their links with the international standard setter. The technical standards which are to be decided either by the community legislators or by the authorities themselves, are supposedly providing for effective exchange of regulatory information, at appropriate confidentiality level with an aim to build modern regulatory systems. XBRL meets these criteria. The measures to simplify the business environment, here on the second column, driven by the business community, small and medium businesses in particular, identified and prioritized by Mr Stoiber and his team, are expected to deliver 25% reduction of administrative burden by 2012. The initiative supported strongly XBRL as SBR that allows so called “once only” reporting, to a information broker, who then is querried by all those who need and use the information provided: tax authorities, business registers, creditors, clients and suppliers etc. It is in the process of HLG on simplification that the Commission initiated the review of the Accounting directives. There are other measures needing international formats for business information. In the area of corporate governance, multiple disclosure frameworks will require speedy modernisation in the wake of the financial turmoil. They express serious concerns by the citizens verbalized by the unions and responsive governments urging the business community to give away the formerly heavily guarded secrets, including bonuses seen by many as excessive risk boosters. The picture is completed by the set of measures, here on the fourth column, driven by, as I call it, the young and smart . Those are the individuals, businesses and even governments that build their competitive advantages on the capacity to process business information. Now, the projects of this group of measures benefit from the EU framework Programme financing but in the future, they will facilitate appropriate technical standards to emerge, leading to greater interoperability.
First, let’s have a closer look at the set of of measur by which the Eu regulator attempts to re-regulate the financial markets.
I propose you first to go back to Febuary 2008 when EU Commissioner Charlie McCreevy, addressing a seminar in Washington, mentione a wide-ranging discussion on XBRL dzvelopments with his US counterparts, then US SEC’s Christopher Cox.
Sbr Poland October 9, 2009 Warsaw
EU’s XBRL perspective Piotr Madziar – European Commission 9 October 2009, Warsaw – SBR
Topics <ul><li>XBRL – areas of potential application </li></ul><ul><li>Regulate future financial markets </li></ul><ul><li>Simplify - Get economy restart by business friendly environment </li></ul><ul><li>Disclose - Restore confidence in markets and institutions </li></ul><ul><li>Automate - Make the knowledge society work </li></ul><ul><li>Conclusions </li></ul><ul><li>Next steps? </li></ul>
1970’s ………… Regulator Taxman Bank Social Security
E-gov in 1990’s ………… Digitalized paper = electronic documents Taxman Regulator Bank Social Security …… .. Reporting entities Social Security Reports e-Taxation Electronic Data Gathering Credit Reports ………………
XXI century – Business Info Broker Reporting entities ………… Standardized XBRL reports XBRL data repository One Stop Shop Single Access Point Regulator Taxman Bank Social Security …………
Europe – are we ready? European Institutions L3C Industry MS professions IT Financial Real economy IT Financial EU Internal Market Int’l Regulatory Standard setting IOSCO Basel IASB IFAC Third countries FSF WB IMF
XBRL driving forces XBRL Simplification Crisis Stoiberg De Larosiere G20 EU Council EP COM MS E-Gov, Information Society, EU Competitivenss Corporate governance and transparency Simplification - Reduction of Admin Burden De Larosiere Reform
Measures <ul><li>Regulate </li></ul>Simplify Automate Disclose HLG Stoiber Opinions Studies Accounting Review Transparency Direcitve FP7/Cordis Grants Technical Standards Interoperability CESR TG Commission Communication IFRS for SME? ? To: SBR - EU taxonomy? SME Citizens, Unions Young&Smart Now: L3 legislation In Future: New L3: Authorities, Budgets,Tech standards Request by: Treasuries Taxpayers
Christopher Cox and Charlie McCreevy <ul><li>Statement of 1 February 2008: </li></ul><ul><li>Wide-ranging discussion on XBRL developments </li></ul><ul><li>Cooperative approach to reducing regulatory friction </li></ul><ul><li>Enhancing investor protection </li></ul><ul><li>XBRL will let investors take full advantage of IFRS (in the speech) </li></ul>
European Parliament <ul><li>Resolution on Lamfalussy follow-up: future structure of supervision (September 2008) </li></ul><ul><li>Calls upon the L3 Committees to design common reporting standards </li></ul><ul><li>Multi-purpose format such as XBRL </li></ul><ul><li>Throughout the EU </li></ul><ul><li>Calls upon the Commission to submit adequate legislative proposals </li></ul>
XBRL for IFRS <ul><li>Commission works with: </li></ul><ul><li>IASCF XAC </li></ul><ul><li>XBRL EU </li></ul><ul><li>FEE XBRL WG </li></ul>
De Larosiere Reform <ul><li>Financial crisis driven </li></ul><ul><li>Position of national regulators? </li></ul><ul><li>Global aspect </li></ul><ul><li>Commission absolute priority </li></ul>
De Larosiere proposal <ul><li>Commission’s proposal in late September 2009 </li></ul><ul><li>ESRC and ESFS = ECB + ESAs + national regulators+… </li></ul><ul><li>Banking: FCD, CRD, DGSD, fund transfer reg,…? </li></ul><ul><li>Insurance: FCD, IORP Dir, Insurance and Reinsurance Directives, Solvency II, Anti Money Laundering Dir (AMLD),…? </li></ul><ul><li>Securities & Markets: TD, MiFID, MAD, PD, UCITS, CRA Reg., Take-over Bids Dir, Settlement Finality Dir (SFD), Financial Collateral Arrangements Dir….? </li></ul><ul><li>Technical standards,…? XBRL? </li></ul><ul><li>Links to international standard setters,…? XBRL? </li></ul><ul><li>Financial assistance 50 M€ </li></ul>
Simplification and reduction of administrative burden <ul><li>Citizen well-being and SME driven </li></ul><ul><li>EU initiative </li></ul><ul><li>Open formula (all ideas welcomed) </li></ul><ul><li>High priority for Barroso 1 Commission (and next Commission?) </li></ul>
European Parliament <ul><li>Resolutions on simplified business environment (January 2008, May 2008) </li></ul><ul><li>It should be easier to prepare, file and publish statutory information </li></ul><ul><li>Electronically </li></ul><ul><li>Strongly promotes the use of new technology such as XBRL </li></ul><ul><li>Such information easily accessible for investors, creditors and employees </li></ul><ul><li>Throughout the EU </li></ul><ul><li>Invites the Commission to present a roadmap for introducing XBRL in the EU </li></ul>
Simplification initiatives <ul><li>Stoiber HLG Opinion on annual accounts (XBRL, pull model) of 10/07/2008 </li></ul><ul><li>Study identifying simplification areas </li></ul><ul><li>Report on Simplification in Accounting </li></ul><ul><li>Study on prudential reporting </li></ul><ul><li>Commission at XBRL Int’l Conference – 24/06/2008 </li></ul><ul><li>Review of Accounting Directives 2009 </li></ul><ul><li>Business Registers </li></ul>
Other <ul><li>XBRL taxonomy for IFRS for SME, by IASCF </li></ul><ul><li>X-DIS (XML for Data Interoperability in Statistics) is the statistical project in the IDABC programme </li></ul><ul><li>BRITE </li></ul>
Corporate disclosure <ul><li>Corporate governance in financial industries </li></ul><ul><li>Driven by transatlantic relations </li></ul><ul><li>Remuneration, bonus-malus </li></ul><ul><li>Position of business organisations, regulators? </li></ul><ul><li>Global aspect (G20), but MS strong interest (GE, FR,…) </li></ul>
Transparency Directive (2004/109/EC): <ul><li>Recitals (23) and (25): </li></ul><ul><li>One filing and storage system in each MS </li></ul><ul><li>Access to information more organized </li></ul><ul><li>Dissemination throughout the Community </li></ul><ul><li>Centralised dissemination in MS allowing a European network to be built up </li></ul><ul><li>Article 22: </li></ul><ul><li>MS to draw up public access guidelines </li></ul><ul><li>Aiming at creation of electronic networks at national level between regulators, operators, regulated markets and company registers </li></ul><ul><li>Aiming at creation of a single electronic network (or platform of networks) across MS </li></ul>
CESR <ul><li>Advice on storage and filing of regulated information (30 June 2006): </li></ul><ul><li>Questions: </li></ul><ul><li>Whether use of input standards (XBRL or similar) is desirable </li></ul><ul><li>Type of technology used in the interface with end users </li></ul><ul><li>Answers: </li></ul><ul><li>MS to designate Officially Appointed Authorities (OAMs) </li></ul><ul><li>Quality standards to be compiled by OAMs </li></ul><ul><li>OAMs must be accessible through internet, receive electronic filings, store in electronic format </li></ul><ul><li>Electronic means must be: easily accessible, commonly used, widely available </li></ul><ul><li>Interoperability agreements between MS and between OAMs </li></ul><ul><li>New CESR advise by 2010 </li></ul>
Commission <ul><li>Recommendation (11 October 2007): </li></ul><ul><li>MS to mandate the competent authorities to prepare (within CESR) a governance agreement </li></ul><ul><li>It should address: </li></ul><ul><li>Creation of a network platform </li></ul><ul><li>Conditions to join </li></ul><ul><li>Sanctions </li></ul><ul><li>Network platform managing body </li></ul><ul><li>Funding </li></ul><ul><li>Functionalities of the electronic network: </li></ul><ul><li>Central list of issuers </li></ul><ul><li>Interface language directory </li></ul><ul><li>Security, certainty, time recording, accessibility, searchable </li></ul>
Council Conclusions of 22 and 23 November 2007 <ul><li>Europe must remain in the forefront </li></ul><ul><li>IT offers new set of tech instruments and business reporting languages </li></ul><ul><li>European Community and MS to improve competitiveness </li></ul><ul><li>Need to streamline reporting concerning the same type of data </li></ul><ul><li>Optimise the use of electronic means </li></ul><ul><li>Take into account the possibilities offered by the available technical standards </li></ul>
E-government initiatives <ul><li>Technology and competitiveness driven </li></ul><ul><li>Completion of (New?) Lisbon Agenda </li></ul><ul><li>EU and global dimension </li></ul>