The issue of how such information is stored is crucial for the development of EU financial markets. For the first time, there is a requirement to ensure that EU investors have easy access to information about all EU issuers on a pan EU basis, irrespective of where they are located. This will enable investors to better evaluate investment opportunities and make informed assessments of an issuer’s business performance and assets. The storage system is intended to become a key tool in the integration of EU financial markets, fostering investor confidence.
In accordance with the relevant mandate, CESR provides its advice and its opinion in relation to both the development of the national storage mechanisms and the creation of an EU network of these national mechanisms.
The content of CESR’s final advice and opinion reflects comments received during the consultation on CESR’s draft technical advice on the storage and filing of the regulated information. The responses to this consultation have been largely supportive of the CESR approach. Moreover, it reflects comments that CESR received during the Investors’ Hearing that it organised in March 2006, as well as the comments of the Consultative Working Group on Transparency. CESR has modified its advice in response to comments received as a result of the consultation and the investor hearing and takes this opportunity to describe fully how it has adapted its advice in response to these comments in a Feedback Statement (Ref. CESR/06- 293), also published today.
The CESR paper on storage encompasses CESR’s advice and CESR’s preliminary opinion and more particularly it contains four parts, the main issues of which are analysed below:
CESR’s final advice on the minimum quality standards of the national storage systems
The first part of the consultation paper relates to the national storage mechanisms called Officially Appointed Mechanisms (the “OAM”). CESR sets out some minimum ‘quality standards’ that such mechanisms would need to meet. The main standards are:
- assurance of adequate security of the IT systems such as, an effective validation procedure, availability of the stored information, acceptance of waivers and recovery and back-up systems;
- certainty as to the information source and authenticity of origin of the information stored (authentication procedures);
- easy access by end-users, this includes for example ensuring the search functions can operate in different languages.
CESR’s opinion on establishing the interoperability amongst national storage systems (EU network)
The second part of the mandate deals with the architecture of the EU network of national storage systems (national OAMs).
CESR also considers how a network model could be implemented. To this end, CESR describes three alternative approaches. The first and preferred approach is based on the development of a binding provision, by which the model of network will be defined and an oversight responsibility would be assigned, Member States will ensure that the OAMs to be appointed, abide by an interoperability agreement and that co-ordination is ensured. This structure will be complemented with an interoperability agreement to be drafted by the competent authorities and to be followed by the OAMs. According to the second approach, interoperability could be achieved with stand alone agreements among Member States alone and the third possible approach proposes that interoperability could be achieved with stand alone agreements between the OAMs themselves.
CESR presents four possible network models as a basis for its work on developing a system which can link the national OAMS, these models range from the most centralised of systems to the least centralised and can be summarised as follows:
- Model A: A Central Access Point (CAP) which is based on a central application server, which collects the search requests coming from a web page available to the users and dispatches these requests to the OAM(s) of each Member State;
- Model B : A De-centralised system under which an application server is located in each OAM;
- Model C: A Central list of issuers option which would operate as if there is a central server hosting an application, containing a complete list of issuers and the links to each OAM holding information on that issuer; and,
- Model D: Basic Access Model which would require every national competent authority to publish on its website a list of hyperlinks to every OAM in the EU.
The main functionalities of the four network systems are presented in a user friendly comparative table attached as an Annex to the opinion.
Although CESR has not been mandated to opt for a preferred network model, it expresses a preference for Model C, which was also the one that gathered most support from consultees who expressed views on these issues. It is also the model that, in accordance with preliminary cost estimates, has proved to have adequate functionalities with lower costs.
CESR also presents the possible content of the interoperability agreements, which will cover government and technical issues. For the more advanced network models, the technical issues would be common reference data items, common interface and communication standards as well as common search keys.
CESR’s final advice on the technical issues in relation to the role of the competent authority and on the standards of filing of the regulated information with the competent authority
Finally, CESR’s paper also addresses a number of technical issues regarding the role of the national competent authority as well as CESR’s technical advice on the filing standards of the regulated information with the competent authority such as, standards in relation to security and certainty as to the information source and in relation to time recording and examined possible ways of alignment of the filing with the storage procedures.
