Feasibility Study for a pan-european storage system for information disclosed by issuers of securities - Final Report

Transcription

1 Feasibility Study for a pan-european storage system for information disclosed by issuers of securities - Final Report ACTICA/PB318D Keith Thomas Steve Gilbert 18 October 2011

2 Executive Summary This document has been prepared by Actica Consulting Ltd as the final report of the study into a pan- European storage system for regulated information disclosed by issuers of securities. It has been prepared for Internal Market and Services DG of the European Commission in delivery of Contract No. MARKT/2010/17/F. The European Commission (EC) Directive 2004/109/EC, the Transparency Directive, requires issuers of securities in regulated markets within the European Union (EU) to ensure appropriate transparency for investors. Article 21(1) of the Transparency Directive requires such information to be immediately available to investors and Article 21(2) requires each Member State to officially appoint at least one mechanism for the central storage of regulated information. The Directive encourages the establishment of some kind of interconnection of these officially appointed storage mechanisms (OAMs) across Member States. The purpose of this study is to identify and technically assess possible options for interconnecting the disclosed regulated information about issuers of securities at a pan-european level, beyond the existing situation which results from the implementation of the Directive rules on storage. In pursuit of the above, the Commission have specified the following objectives for the current study: examine the technical feasibility of an electronic storage system (dataset service) providing public access to pan-european regulated information about issuers of securities; evaluate the cost of such a system considering the different solutions available; provide analytical conclusions. In accordance with the expectations of the Commission, this study includes the following elements: examination of the technical characteristics of the existing national OAMs, including: how they are technically structured, including how the filing of documents is organised, how filers are identified, which types of documents are filed, and the facilities available to end users etc.; whether the OAMs comply with the quality standards in paragraphs 5 to 20 of the Commission Recommendation of 2007; how the national OAMs are supervised by the national competent authorities. examination of the technical feasibility of a storage system providing public access to pan- European regulated information about issuers of securities disclosed pursuant to the obligations of Directive 2004/109/EC and other Directives applicable to issuers of securities. The Commission have specified the characteristics required of such a system. The Commission has also required the examination of at least the three options below: o o o a central data set fed by the existing national OAMs; a network of harmonised national datasets; a single EU dataset; analysis of the costs of the storage system, including: o the costs involved in creating and running the existing national OAMs; Page ii Actica/PB318D

3 o o the expected development and on-going running costs and benefits associated with the options for the pan-european service; the expected sunk investments of national OAMs if a single EU dataset is created; analytical conclusions based on the technical examinations and cost analysis. A number of previous studies have been conducted to examine the options for creating a pan-european database of regulated information submitted by issuers of securities. The following points from these studies are relevant to the technical and cost assessment of feasible options to be undertaken here: The provisions of the Directive for the storage of regulated information are generally well understood and accepted by stakeholders. The 2007 Recommendations have defined, at a high level, common operational standards for all OAMs. A full or interim OAM service based on and, to varying levels, compliant with these standards is in place in all Member States. At the more detailed level, common standards have not been set covering the implementation of the OAM solution (for example covering technical architecture, common coding structures, and detailed process areas). As a result OAMs have developed independent solutions in these areas. Usage of OAMs by end users is limited. Most retail and institutional investors, analysts and other stakeholders traditionally use the issuers web site as their first source of information. Whilst the studies indicate that the OAM service is well regarded, market and issuer demand for increased services is limited. A light integration of information held by OAMs has been provided through the use of CESR s MiFID database but this does not fully meet the expectations of even the light integration model proposed by CESR in A number of options have been put forward to progress the pan-european network by both CESR and Mazars 2009 external study, but to date no consensus on a firm direction has been agreed and no progress has been made on moving forward from the current light integration position. There is no central list of issuers of all securities, a central list of issuers of shares only is available as part of the MiFID database. The development of a central database of issuers, with appropriate coding structures, is a prerequisite for development of an integrated OAM network; There is a view that an OAM based approach offers benefits compared to solutions based on a reliance on issuers web sites or purely relying on commercial data vendors. Summary of the current status quo position OAMs are operating in all Member States, although the types of services offered vary considerably, with some still operating interim solutions with limited facilities for end users. (Although some of these are due for imminent replacement at the time of this report.) The OAMs supplement, and are often closely integrated with, stock exchange and regulatory information filing services and systems. The OAM has not typically acted as a replacement repository for regulated information, and filings continue to be stored and disseminated through multiple channels. Issuers in several Member States make use of intermediaries or commercial data disseminators to manage their filings to both the OAM and other agencies. In these cases there are system-to-system interfaces to support the filing process. Actica/PB318D Page iii

4 Almost universally, the OAMs support the filing and storage of unstructured document formats. They provide user tools to search for and download documents, based on a limited set of descriptive metadata describing the nature of the document but not its detailed contents. (Some OAMs also provide full text search of the contents of documents.) The OAMs manage the filing process and ensure the safe storage of documents provided by issuers. Their role is to transparently present information provided by issuers. They are not involved in the interpretation, analysis or presentation of the information contained within the documents they manage. Commercial providers of financial information are typically seen as the providers of structured and analytical information regarding issuers. These providers make use of information typically obtained from regulatory filings but tend to have their own information channels and do not rely on the OAMs to source their data. There is very limited pan-european integration available through the ESMA (CESR) MiFID database. Neither this nor the national OAM services appear to be actively promoted or marketed to potential users. Most OAMs report very low volumes of end user/investor access to their services. Typically, such users either use the analytical tools and information available from the commercial providers or directly access information from issuers websites. The OAM acts as a repository of record for professionals to obtain official versions of key documents on an exception basis. Approach In order to meet the objectives of the study as set out above, the approach has included: desk research, including a review of the user facilities offered by the current OAM network; multi-stage online information gathering surveys of the OAM operators supplemented by follow up interviews; structured interviews with both representative OAMs and central bodies with a stakeholder interest, including Eurostat, ESMA and ECB; structured development and assessment of cost and benefit models for technical options for the development of a pan-european solution, compared to maintaining the status quo. Key findings for options analysis Although there are OAM services operating in all Member States, there exist varying degrees of readiness to begin further integration. Except in a few cases where interim solutions still exist this is not predominantly a technical issue, rather it reflects the varying interpretations of the Directive in business process, coding and detailed filing practices: OAMs have implemented different arrangements for the creation and storage of metadata, there are no common standards; OAM filing processes in several Member States are closely coupled with other exchange disclosure, regulatory and news dissemination processes and systems in these cases many issuers do not file direct to the OAM; Information held by the OAMs is often duplicated in other exchange or regulatory systems; OAMs do not have existing structured processes for handling notification of changes to voting rights. Page iv Actica/PB318D

5 Few end users make use of the OAM service in most Member States. The quality of the user experience offered to end users is good overall, but the services offered vary considerably: o o o o Web sites for OAMs can be difficult to find using commercial search engines; Users of the information held in the OAM repositories are mainly professional advisors and researchers; Individual investors tend to access commercial information services or the issuers web sites rather than OAMs, mainly due to the extra information and analysis available; The OAM service is of limited value to central bodies such as Eurostat and ECB because there is no structured or analytical data stored by the OAM that can be used by these organisations for statistical and analysis purposes. Technically, the OAMs are in a good position to respond to changes and extensions to the service they provide: Options o o o o Documents and metadata held by the OAMs are mainly stored in flexible SQL databases so can be updated relatively easily (although the contents of the documents is not structured); Similarly, OAMs can provide access to their back end databases in order to facilitate a central search tool relatively easily, although the scope and activities required would need to be agreed; OAM operators agree with the requirement for pan-european interconnections but are seeking clear long term direction on the way forward as they do not see market demand driving such an initiative; OAM operators have highlighted potential issues with significant change to current operations and processes. The options for implementing a pan-european database of securities information have been developed from a baseline that consists of the existing options as identified by previous studies conducted by CESR (now ESMA) and Mazars. The initial step in the options identification was to assess these options against the EC specified requirements of this study, and discard any options that do not meet the requirements. The remaining options were then reviewed to assess whether there were any gaps, including areas where new technologies could provide an option or areas where a different combination of local and central services provided a different option. The review also ensured that all options proposed by the EC in the scope of this review were included. There were eight options considered: a. Option 1: Single European OAM - Replace all national OAMs with one central OAM that stores all European data and provides all search facilities. b. Option 2: Central database for all data - Create a central European database for securities information which holds copies of all information stored by the national OAMs. c. Option 3: Central database for metadata - Create a central European database that holds metadata for all information held by the national OAMs d. Option 4: OAM web-ring - Standardise data storage across all national OAMs to enable all information to be searched by current national search tools Actica/PB318D Page v

6 Key requirements e. Option 5: Harmonised OAM network - Standardise data storage/metadata as for Option 4 above together with a central search capability searching all national datasets. f. Option 6: Central intelligent search - Make use of intelligent search tool to provide central search facility without using central database. g. Option 7: Combine current OAM operations with national business registers - Create a combined OAM and national business registers database and its operations to make use of the planned central access point for the business registers by linking it to the national OAM databases. This leverages economies of scale and the existing business registers European network to also provide OAM data centrally. h. Option 8: Maintain status quo - Continue to provide national OAM services using multiple different databases, with few interconnections. The external study, CESR s consultation and report and other work performed by the Commission have identified a number of elements required to be in place in order to build an effective pan-european storage network. The findings from the surveys and interviews conducted allow a number of key requirements to be identified. These are: Common filing standards and formats; Harmonised methods of classification and indexing; Interconnection with national company registers; Multiple country search from a single query; Standardisation of telecoms and database solutions. Initial options analysis A number of the options identified in Section 5 can be discounted at this stage on the basis that they clearly do not meet one or more of the requirements. The discounted options, and reasons for disqualification are listed below. Option 4: OAM web-ring - discounted at this stage because the EC requirements specify that a single, central search tool is required, that allows users to conduct pan-european searches from a single, central point. This option does not meet that requirement as no additional portals are created users would be able to use any of the existing OAM portals rather than being directed to a single, central portal. Option 6: Central search and index engine - discounted at this stage because use of an intelligent tool to index the data is seen as interpretation and carries a risk that data could be incorrectly or inappropriately indexed. Users conducting a search of information indexed in this fashion could therefore be presented with incorrect or inaccurate results which could be seen as the responsibility of the owner and supplier of the search tool. This could lead to complaints or more serious action being taken against the EC (or other central body that is responsible for the central search tool) to recover monies lost as a result of incorrect data being supplied. Option 7: Combine current OAM operations with national business registers - discounted at this stage for two reasons: The effort required to integrate OAM databases with the Business Registers to enable the existing international linkages to be used to share OAM information is likely to be prolonged. This extra effort is not likely to deliver additional benefits over the previous options; Page vi Actica/PB318D

7 The option does not increase the efficiency of the two separate databases due to a lack of synergy between them. The information held in the national business registers is different to that held in the OAMs, the only point of commonality is financial reports. It is therefore unlikely that a combined database would deliver any tangible savings and it is also unlikely that the combined database would be able to make use of the existing international linkages to search OAM data as these exist to share business register data rather than the different OAM data. Option 8: Maintain status quo - discounted as it does not meet the requirement for a single European access point and does not enable a pan-european search. Further options analysis A set of criteria by which the four options taken forward (Options 1,2,3 and 5) can be assessed has been developed based on assessing the overall suitability of each option to fulfil the requirement of enabling users to conduct pan-european searches of regulated information held on issuers of securities. These criteria are listed below: ability to meet the EC requirements as described in the ITT (Annex A); deliverability how easy is it to move from the current situation to that proposed by the option; ability to address concerns identified in previous reports; timescale how long is the option likely to take to be fully implemented; Cost; governance and resourcing How much will current governance and resourcing arrangements need to change to implement the option; standardisation to what level will the current national arrangements need to be standardised to implement the option; flexibility - how easily can the proposed system be changed to include new data, storage arrangements or processes (such as moving to XBRL); benefits and user experience what are the quantifiable and unquantifiable benefits of the option, including any improvements to the user experience; impact on other organisations, including 3rd party providers; impact on other government services such as information registers; risk the likely risk of implementing the option. Each option has been assessed against these criteria individually in order to understand how well that option is likely to meet the overall need. Cost model The table below summarises the full cost model for the options and shows the additional costs incurred centrally and the total costs associated with all four options, detailed over a 5 year period. Actica/PB318D Page vii

8 Year 1 Year 2 Year 3 Year 4 Year 5 Central costs Option 1 2,070, , , , ,000 Option 2 1,240, , , , ,000 Option 3 1,880, , , , ,000 Option 5 1,090, , , , ,000 Total costs Option 1 4,090,000 2,060,000 1,560,000 1,050, ,000 Option 2 3,260,000 2,320,000 2,320,000 2,320,000 2,320,000 Option 3 3,900,000 2,360,000 2,360,000 2,360,000 2,360,000 Option 5 3,110,000 2,280,000 2,280,000 2,280,000 2,280,000 Recommendation Cost model summary The options analysis does not identify a clear preferred option. All of the options identified are able to meet the majority of the requirements, have similar costs and similar timescales. It is clear that Option 1 best satisfies the requirements, but it is also clear that this option has the highest overall impact on users, issuers and existing OAMs, and thus is highly likely to take the longest time to implement. However, this option also presents the best opportunity to save costs based on the reduction of the number of national OAMs over time. The recommendation is therefore that Option 1 should be the long term solution, and that the EC seeks to evolve the current situation into a single, European OAM over time. Options 2 and 3 can then be used as steps which support this evolution and allow the costs and impact on stakeholders to be borne over time, and thus the impact and difficulty of change is reduced. It is recognised that the implementation of a pan-european OAM network meeting all the functional requirements specified will require progress through a number of steps and take some considerable time to deliver and manage transition. In order to maintain focus, and to show the market there is strong commitment to the longer term vision, we strongly recommend that a clear strategic roadmap and vision is agreed and published showing the proposed end target model, the proposed steps for moving towards this from the current position and the principles that will underpin this development. The other key activities that are needed to support the implementation of this roadmap are: Set up a central standards and protocol body to agree and implement standards Define a unique pan-european issuer code Standardise metadata held for issuers and filings, and harmonise coding Harmonise other key aspects of national OAM data and processes, including time stamping and version control Specify a standardised format for filing structured information Page viii Actica/PB318D

9 List of Contents Executive Summary ii 1 Introduction General Overall study context Purpose of the study Objectives of the study Key outcomes of the study Scope Acknowledgements Status Disclaimer: Structure of this report 3 2 Background Introduction The Transparency Directive rules on disclosure of regulated information Dissemination and storage of regulated information Progress on creating a pan-european network Commission 2007 Recommendation and standards The current position Recommendations and findings of the 2009 External Study Cross-border access to regulated information on SMEs Interconnection with company registers and unique company identifier EC 2010 consultation on the Transparency Directive CESR 2010 consultation and report on development of pan-european access Summary 12 3 Methodology Introduction Review of user facilities offered by current OAM network Online information gathering surveys and follow up interviews Structured interviews for impact assessment of options Assessment of options 14 4 Findings Introduction Overview of the national OAM network Technical structure of the national OAMs Common code for identification of issuers Consolidation of information on voting rights Visibility of small listed companies Alert systems Integration with business registers Compliance with quality standards End user access to OAMs Current pan-european integration Use of issuers web sites as a source of information The role of the OAM and interpretation of data Relationship between OAMs and third party vendors 28 Actica/PB318D Page ix

10 4.15 Summary of the current status quo position Key findings for options analysis 29 5 Options Identification Introduction Methodology Options identified Option descriptions 33 6 Options Analysis Introduction Key requirements Initial analysis Further analysis methodology Cost model Detailed analysis Other considerations 51 7 Recommendation Introduction Recommendation Other recommendations Summary of recommendations 56 A Characteristics of a pan-european storage system 59 Page x Actica/PB318D

11 INTENTIONALLY BLANK Actica/PB318D Page xi

12

13 1 Introduction 1.2 General This document has been prepared by Actica Consulting Ltd as the final report of the study into a pan-european storage system for regulated information disclosed by issuers of securities. It has been prepared for Internal Market and Services DG of the European Commission in delivery of Contract No. MARKT/2010/17/F. 1.3 Overall study context The European Commission (EC) Directive 2004/109/EC, the Transparency Directive, requires issuers of securities in regulated markets within the European Union (EU) to ensure appropriate transparency for investors. This is achieved through a regular flow of information by disclosing periodic and on-going regulated information and by disseminating such information to the public throughout the Community Article 21(1) of the Transparency Directive requires such information to be immediately available to investors and Article 21(2) requires each Member State to officially appoint at least one mechanism for the central storage of regulated information. The Directive encourages the establishment of some kind of interconnection of these officially appointed storage mechanisms (OAMs) 1 across Member States. The Directive does not however make such networks compulsory The transposition deadline of the Transparency Directive was 20 January On 27 May 2010 the Commission published its report on the application of the Transparency Directive, which included a review of the operation of the OAM network. In the report, the Commission indicated that progress towards the establishment of a pan-european system of storage of regulated information had been slow and the impact of the Directive in this area had been insufficient. 1.4 Purpose of the study The purpose of this study is to identify and technically assess possible options for interconnecting the disclosed regulated information about issuers of securities at a pan- European level, beyond the existing situation which results from the implementation of the Directive rules on storage. 1.5 Objectives of the study In pursuit of the above, the Commission have specified the following objectives for the current study: a. examine the technical feasibility of an electronic storage system (dataset service) providing public access to pan-european regulated information about issuers of securities; 1 The acronym OASM is also used. Actica/PB318D Page 1

14 b. evaluate the cost of such a system considering the different solutions available; c. provide analytical conclusions. 1.6 Key outcomes of the study In accordance with the expectations of the Commission, the study includes the following elements: 1.7 Scope a. examination of the technical characteristics of the existing national OAMs, including: 1. how they are technically structured, including how the filing of documents is organised, how filers are identified, which types of documents are filed, and the facilities available to end users etc.; 2. whether the OAMs comply with the quality standards in paragraphs 5 to 20 of the Commission Recommendation of ; 3. how the national OAMs are supervised by the national competent authorities. b. examination of the technical feasibility of a storage system providing public access to pan-european regulated information about issuers of securities disclosed pursuant to the obligations of Directive 2004/109/EC and other Directives applicable to issuers of securities. The Commission have specified the characteristics required of such a system. These are summarised in Appendix A of this report. The Commission has also required the examination of at least the three options below: 1. a central data set fed by the existing national OAMs; 2. a network of harmonised national datasets; 3. a single EU dataset; c. analysis of the costs of the storage system, including: 1. the costs involved in creating and running the existing national OAMs; 2. the expected development and on-going running costs and benefits associated with the options for the pan-european service; 3. the expected sunk investments of national OAMs if a single EU dataset is created; d. analytical conclusions based on the technical examinations and cost analysis The OAMs in scope for this study are those run by all 27 EU Member States plus Iceland and Norway, making a total of 29 OAMs. Three of those OAMs are managed by a single operator and there are therefore 27 OAM operators in total. 2 Commission Recommendation 2007/657/EC of 11 October Page 2 Actica/PB318D

15 1.8 Acknowledgements Actica would like to thank all representatives from national OAMs and operators, the EU, Eurostat and the ECB who contributed to this study. 1.9 Status This is the final version of this report Disclaimer: The views expressed in this document are purely those of the writer and may not, in any circumstances, be interpreted as stating an official position of the European Commission The European Commission does not guarantee the accuracy of the information included in this study, nor does it accept any responsibility for any use thereof. Reference herein to any specific products, specifications, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the European Commission All care has been taken by the author to ensure that he has obtained, where necessary, permission to use any parts of manuscripts including illustrations, maps, and graphs, on which intellectual property rights already exist from the titular holder(s) of such rights or from his or their legal representative Structure of this report The remainder of this report is structured as follows: a. Section 2 details background information; b. Section 3 outlines the methodology used to conduct this study; c. Section 4 details the findings from the information gathering stage; d. Section 5 provides information on the options identified; e. Section 6 analyses the options; f. Section 7 presents the recommendations and next steps Details of the surveys carried out as part of the study, together with tabulations and analyses of the responses to the survey questions, are presented in the Survey Analysis Annex to this report and issued as a separate document. Actica/PB318D Page 3

16 INTENTIONALLY BLANK Page 4 Actica/PB318D

17 2 Background 2.1 Introduction This section details the background to this study. It outlines the EC Transparency Directive as it applies to issuers of securities and how this requirement is being met by the current situation. It also summaries a number of previous studies that have been conducted in this area, including their conclusions. Lastly, this section contains a summary of the relevant information that is carried forward to the findings and analysis stage of this report. 2.2 The Transparency Directive rules on disclosure of regulated information Directive 2004/109/EC (the "Transparency Directive") requires issuers of securities in regulated markets within the EU to ensure appropriate transparency for investors. This is achieved through a regular flow of information by disclosing periodic and on-going regulated information and by disseminating such information to the public throughout the Community. Regulated information consists of financial reports, information on major holdings of voting rights and information disclosed pursuant to the Market Abuse Directive (2003/6/EC). Shareholders, or natural persons or legal entities holding voting rights or financial instruments that result in an entitlement to acquire existing shares with voting rights, should also inform issuers of the acquisition of, or other changes in, major holdings in companies so that issuers are in a position to keep the public informed The Transparency Directive contains rules on: g. disclosure of information (such as deadlines, content, formats, language etc); h. dissemination of information to the public and the competent authorities; i. storage of disclosed information by the officially appointed storage mechanisms (OAMs); j. liability of issuers regarding disclosed information; k. supervision by competent authorities and penalties for lack of compliance The Directive determines which national law is applicable; the home/host Member State rule is irrespective of the place of listing of the issuer. The Directive also contains provision for the treatment of issuers whose registered office is in a third country. The transposition deadline of the Transparency Directive was 20 January Dissemination and storage of regulated information The Directive requires issuers to disclose regulated information in a manner ensuring fast access to such information on a non-discriminatory basis and without charging investors any specific cost. According to the Directive, the home Member State shall require the issuer to use an appropriate media that may reasonably be relied upon for the effective dissemination of the information to the public throughout the EU, but may not impose an obligation to use only media whose operators are located in the home Member State With respect to regulated information access over time, the Transparency Directive has established a specific regime providing for a publicly accessible registry on disclosed Actica/PB318D Page 5

18 information. Article 21(2) of the Transparency Directive requires each Member State to officially appoint at least one "mechanism for the central storage of regulated information" an OAM. The Directive tries to establish some centralisation at Member State level, not at European level. The Directive is not prescriptive as to the practical solutions In addition to the creation of national OAMs, the Directive encourages the establishment of an interconnection across Member States: l. electronic networks at national level connecting OASMs to existing national business registers; m. the connection of those national electronic networks at European level However, the Directive is neutral as regards the architecture of OAMs and it does not directly make those networks compulsory. 2.4 Progress on creating a pan-european network Upon request of the Commission, CESR (the Committee of European Securities Regulators) prepared, in 2005, a Progress Report 3 on the implementation of the network of national OAMs. This Progress Report was followed by a Report on cost issues in 2006 which provides estimates in relation to the cost of setting up a national OAM and the cost of setting up a European network of national OAMs. Finally, later in 2006, CESR delivered formal advice on the possibility of implementing measures on storage of regulated information and filing with the competent authority 4. In its advice, CESR: n. presents 4 alternative models (A to D) for the European network with varying degree of centralisation; o. suggests the minimum standards to be respected by each national OAM; p. describes the funding implications of setting up and operating a national OAM; q. evaluates the role of the Competent Authority in the supervision of the OAM and in adopting the standards; r. provides an opinion in relation to the filing of regulated information by electronic means with the Competent Authorities The alternative models proposed by CESR in its advice were as follows: a. Model A proposes that there is a "Central Access Point" ("CAP") application that is used by end users to search the OAM network. The CAP is an application that sits on a central server outside all OAMs that allows end users to search the OAM network. b. Model B proposes that the end users use the software application of any one OAM to search the entire OAM network. In this model, each OAM implements a common search engine. An end user may choose to use the OAM that he or she prefers to search the network. 3 4 CESR (March 2005), Progress Report regarding possible implementing measures of the Transparency Directive on the role of the Officially Appointed Mechanism and the setting up of a European Electronic Network of information about Issuers and electronic filing. CESR (June 2006) Final technical advice on possible implementing measures concerning the Transparency Directive Storage of regulated information and filing of regulated information Page 6 Actica/PB318D

19 c. Model C proposes that there is a central server hosting an application, containing a complete list of issuers and the links to the OAM(s) holding information on that issuer. The list is used by end users to access the OAM that stores information related to the selected issuer. d. Model D proposes that each competent authority carry a list of links to all the national OAMs on its website. An end user must then select the appropriate OAM and access it directly through the web link In its advice, CESR expressed a preference for the Model C option, a simple network model. In accordance with the preliminary cost estimates made by CESR in 2006, the model was considered to have adequate functionalities with lower costs than other options. Under Model C, the pan-european network would consist of a common single interface for end users (e.g. a website) containing a central list of all EU issuers with, for each issuer, a hyperlink to the relevant national storage system in which regulated information can be found. By clicking on the name of the relevant issuer, the user would be directed to the site of the relevant storage mechanism to carry out a detailed search for the document(s) required. All data and documents would remain at national level and the only common element would be the list of issuers. 2.5 Commission 2007 Recommendation and standards Building on the CESR advice, in 2007 the Commission adopted a non-binding Recommendation 5 on the network of national mechanisms storing regulated information. The main aim of the recommendation was to give support to work undertaken by CESR regarding the pan-european network, and to its suggested way forward. Hence, this recommendation suggests that Member States should take steps to set up the network model proposed by CESR and requested CESR to draw up guidelines regarding the future development of the electronic network. The Recommendation also contains suggestions regarding the minimum quality standards with which OAMs should comply. Paragraphs 5 to 20 of the Recommendation include standards covering: a. security; b. certainty as to information source; c. time recording; d. ease of access by end users. 2.6 The current position CESR has set up an initial network of OAMs using CESR s MiFID database on shares admitted to trading on EU regulated markets. Clicking on the share s name displayed on the database search screen directs users to the corresponding national OAM. The MiFID database is designed with a focus on the issued instrument rather than the issuer and excludes issuers of securities other than shares. Currently a list of issuers of securities other than shares is not available centrally. As a result, the solution does not fully meet the expectations of the original Model C and is referred to by CESR as Model C-. 5 Commission Recommendation 2007/657/EC of 11 October Actica/PB318D Page 7

20 2.7 Recommendations and findings of the 2009 External Study The application of the Transparency Directive was evaluated by an external study undertaken by Mazars in Concerning the dissemination and storage of regulated information, the study outlined the objective of the Directive to ensure that such information can be: a. rapidly accessed by investors; b. provided on a non-discriminatory basis; c. provided at no cost to investors The review noted that the new elements introduced by the Directive were the requirements for an EU wide dissemination of information and for filing to the appointed OAM as well as the regulator of the issuers market. As a result, the role of Supervisors and/or Exchanges in the overall dissemination of this information was changing and was not stable Relevant findings from the extensive survey carried out as part of the external study were as follows: a. The vast majority (85%) of stakeholders consider the storage of historical information to be useful, with 70% agreeing it should be stored for a minimum of 5 years. 50% of stakeholders consider that the information stored is relevant and investors would be in favour of storing more information. b. 70% of stakeholders using the information believed issuers used the appropriate media to disseminate the information they produce and 45% did not believe the Directive had changed the way it is made public. c. Half of the users of information feel the information easily reached both the retail and institutional investor, not only intermediaries. d. Almost two thirds (60%) of users believed the Supervisor or Exchange should be the central access point for stored information, with a preference for the Supervisor, but in general these bodies are reticent to play such a role. e. Issuers continue to use data disseminators to ensure a wide distribution of regulated information. There are electronic systems available in some Member States to facilitate this, and the integration of the OAM. f. SMEs expressed the view that posting the information on their website should be sufficient to comply with the dissemination obligation of the Directive. g. While many stakeholders did not express an opinion on the effectiveness of the national OAMs, when an opinion was expressed it was clearly positive. h. The current national OAMs are not well known. Only 5% of users resort to them as a primary source of information regarding a specific company, with 68% of users indicating their first source of information was the company web site, although 38% of investors have more confidence in the information available through an OAM. i. Almost two thirds (63%) of stakeholders who expressed an opinion would be in favour of a central EU storage system to facilitate cross-market searches for information The external study concluded that, two years after the introduction of the Directive, there appeared to be no stable and consensual vision emerging on the manner in which stored Page 8 Actica/PB318D

21 information may be accessed on a national and EU level. The study derived three possible scenarios from the opinions expressed by stakeholders: a. rely exclusively on the issuers websites, with harmonised publication in a specific section of the issuers website made compulsory at EU level; b. improve the functioning and visibility of national OAMs through more streamlined and harmonised technical requirements to allow efficient interconnection, and more flexibility in the way in which such systems are run to improve their business case; c. create an EU single entry point, possibly by CESR maintaining a list of EU listed companies with direct links to the specific section of each company s website storing the regulated information As a result, the study suggested the following improvement A single EU access to Regulated Information: The time has come for the EU to set up a single access point for stored information, based on a serious cost benefit analysis while taking into account recent advances in technology The study goes on to suggest progressing the third option above, noting that the storage of regulated information on the issuers website is already compulsory in several Member States. 2.8 Cross-border access to regulated information on SMEs The Mazar s external study in 2009 highlighted the poor cross-border dissemination of regulated information by SMEs, and the low interest shown by analysts and investors in those companies (the black hole ). The majority of issuers and users of financial information either thought the Directive had had no effect or had no opinion. There appears to be a Catch 22 situation SMEs regret the low level of cross-border interest, so are unwilling to spend money to ensure wider dissemination (e.g. by translation of their information into English) whilst the analysts and investors believe they do not receive sufficient information from non-domestic SMEs, and so are reluctant to invest in them The study suggested that only a change in the behaviour of the markets participants would fill this gap. The specific initiatives suggested by the study to effect this change in behaviour are outside the scope of this work. 2.9 Interconnection with company registers and unique company identifier The 2010 CESR report and consultation also considered interconnection with the network developed by national company registers. Whilst considering the link to such registers not to be of the highest priority (a view endorsed by the proposed amendments to the Directive on the interconnection of these registers) CESR recognised the value of defining a common company identifier for both networks (for example the REID code developed by the BRITE project) EC 2010 consultation on the Transparency Directive The 2010 Commission report on the application of the Transparency Directive 6 also addressed the development of the OAM network. The report states that progress towards the establishment 6 COM(2010)243 final Actica/PB318D Page 9

22 of a pan-european network of OAMs has been slow, and the impact of the Directive in this area has been insufficient The issue was further addressed in the Commission s consultation on the modernisation of the Transparency Directive held between 28 May 2010 and 23 August Question 9.3 of the consultation paper asks: a. Do you think that the development of an EU database storing regulated information on all issuers of securities in the EU will facilitate research and create interest/result in greater attention in small listed companies by financial analysts, financial intermediaries and investors? of the responses received to the consultation included comments regarding the development of an EU database. Responses were mixed as to the market demand for such a database and the relative cost and value to be derived from such a development. Some respondents favoured solutions providing a portal to issuers websites or national databases CESR 2010 consultation and report on development of pan-european access In response to the request in the 2007 Commission Recommendation asking CESR to draw up appropriate guidelines for the future development of the network, in 2010 CESR produced a report to the European Commission 7 setting out its proposals for the onward development required to address the features described in the Recommendation The final CESR report was based on a public consultation held between 2 August 2010 and 24 September CESR received 34 responses to the consultation which were considered generally supportive of the proposals put forward in the consultation paper, and specifically to the two proposed models for the integration of the OAM network: a. Option 1 - A network model which would gradually develop the functionality of the current linked model in a 3 step approach. Step 1 would extend the current solution to cover all issuers of securities; Step 2 would enhance searching capabilities by storing more items of metadata on issuers and filings at the Central Access Point (CAP). National OAMs would provide harmonised metadata to the CAP and the CAP would provide end users with a hyperlink to the stored documents in the OAMs. Finally Step 3 would allow searching of information from documents filed in the OAM network and assumes the need for harmonised filing formats across the network. (Note Steps 2 and 3 above reflect the revised proposals in the report following analysis of the consultation responses.) b. Option 2 A single European OAM replacing the national OAM network. All issuers would be expected to file regulated information to this single point in a standardised way In the consultation paper, CESR preferred Option 1 and the responses to the consultation broadly supported this. 7 CESR/ December 2010 Development of Pan-European Access to Financial Information Disclosed by Listed Companies. Page 10 Actica/PB318D

23 In analysing the two options CESR made the following observations: a. The creation of a database of the home member state of all issuers is a prerequisite for the development of either option; as such a database does not currently exist. b. Both options require amendments to the Transparency Directive before a fully integrated network could be created. The network model of Option 1 does however allow development to begin before such changes are made, as it is based on the existing provision. c. The network model has a closer connection to local markets. Most of the national OAMs are operated by institutions with which issuers are in any case required to file regulated information (e.g. competent authorities and stock exchanges). Filing with a single, central OAM would need to be aligned with these national institutions to avoid increased administrative burdens for issuers required to file the information twice. d. Should future large scale development projects be anticipated, the aggregated costs of changes to all OAMs would be more than for a single OAM, increasing the benefits of the latter approach. Conversely, the initial implementation costs of a single European OAM would be high and consideration would need to be taken of the aggregated investments already made in the national OAMs In the report, CESR considered that an OAM based approach offered added value when compared with options reliant on issuer s websites. The relative merits of the OAM approach included: a. OAMs provide comprehensive, free of charge coverage of historical information; b. the information remains publicly available even if an issuer ceases to exist; c. OAMs enforce non-repudiation and information cannot be changed after it has been filed; d. OAMs provide easier access to regulated information for some issuers who may not have their own websites (e.g. Special Purpose Vehicles and corporate subsidiaries) The report also recognised the benefits of the OAM as a source of regulated data compared to commercial data vendors, considering the approach to be: a. non-discriminatory; b. independent; c. providing full coverage; d. at no cost to end users CESR did however share the conclusion made in the 2009 external study that the OAMs seem to lack visibility. While national OAMs may be widely used at national level, CESR considered that they are not always easy to access for investors in another country Despite suggestions from some respondents to the consultation paper, CESR did not consider that issuers should be required to disclose information in English. They did, however, state that where issuers voluntarily disclose information in more than one language the OAMs should make all language versions available Overall, CESR considered that the attractiveness and visibility of the national OAMs and the OAM network could be enhanced through developing search facilities at both national and network level. Actica/PB318D Page 11

24 2.12 Summary The following points from the previous studies are relevant to the technical and cost assessment of feasible options to be undertaken here: a. The provisions of the Directive for the storage of regulated information are generally well understood and accepted by stakeholders. b. The 2007 Recommendations have defined, at a high level, common operational standards for all OAMs. A full or interim OAM service based on and, to varying levels, compliant with these standards is in place in all Member States. c. At the more detailed level, common standards have not been set covering the implementation of the OAM solution (for example covering technical architecture, common coding structures, and detailed process areas). As a result OAMs have developed independent solutions in these areas. d. Usage of OAMs by end users is limited. Most retail and institutional investors, analysts and other stakeholders traditionally use the issuers web site as their first source of information. Whilst the studies indicate that the OAM service is well regarded, market and issuer demand for increased services is limited. e. A light integration of information held by OAMs has been provided through the use of CESR s MiFID database but this does not fully meet the expectations of even the light integration model proposed by CESR in f. A number of options have been put forward to progress the pan-european network by both CESR and the external study, but to date no consensus on a firm direction has been agreed and no progress has been made on moving forward from the current light integration position. g. There is no central list of issuers of all securities, a central list of issuers of shares only is available as part of the MiFID database. h. The development of a central database of issuers, with appropriate coding structures, is a prerequisite for development of an integrated OAM network; i. There is a view that an OAM based approach offers benefits compared to solutions based on a reliance on issuers web sites or purely relying on commercial data vendors. Page 12 Actica/PB318D

25 3 Methodology 3.1 Introduction In order to meet the objectives of the study as set out above, our approach has included: a. desk research, including a review of the user facilities offered by the current OAM network; b. multi-stage online information gathering surveys of the OAM operators supplemented by follow up interviews; c. structured interviews with both representative OAMs and central bodies with a stakeholder interest, including Eurostat, ESMA and ECB; d. structured development and assessment of cost and benefit models for technical options for the development of a pan-european solution, compared to maintaining the status quo. 3.2 Review of user facilities offered by current OAM network As part of the desk research carried out for the study review, we accessed the internet sites providing the user portal into every national OAM, as well as the CESR/ESMA MiFID database proving the central hub of the current loosely coupled Model C- network. In undertaking this work we evaluated, from a user perspective: a. Was the site easily accessible from the published URL 8 and reasonably easy to find using public internet search engines? b. Did the web site make it clear that it is presenting information from the official repository of regulated information for the market? c. Did the functionality of the user interface provide appropriate functionality and was it easy to use, with reference to the 2007 standards on ease of use by end users? 3.3 Online information gathering surveys and follow up interviews The Actica team issued three online surveys to 28 OAM operators - the operator of the Italian interim OAM service requested not to be included in the study. The three surveys covered the following subject areas: a. basic information on the nature and operations of the OAM; b. details of the OAM business processes and compliance with quality standards; c. technical details of the IT solution used to deliver the OAM service The surveys were supplemented by face to face interviews with the operators of 9 of the national OAMs. The OAMs interviewed were selected to reflect both the range of operator type and size of local market across Member States. 8 The URL s of the sites were as published by CESR in their 2010 report. Actica/PB318D Page 13

26 3.3.3 Full details of the surveys can be found in the Survey Analysis Annex to this report. 3.4 Structured interviews for impact assessment of options In developing the long and short list of viable technical options for assessment, we produced overview statements of the technical, operational and procedural implications of the development and future operation of each potential solution. These scenarios were then used as input to structure interviews with representatives of OAM operators and interested central bodies Input was obtained as part of the follow-up interviews with OAMs and with other central stakeholders. The questioning covered the following areas: a. implications on relationships with other OAMs, financial bodies etc.; b. impact on existing national services and filing requirements; c. perceived feasibility and challenges of such a project; d. approach to engagement and delivery of OAM driven elements of solution; e. desirability of such a system (impact on local market/users); f. issues and concerns with future service; g. regulatory and data protection considerations. 3.5 Assessment of options Each technical option identified was reviewed against the same set of criteria to determine its technical and financial feasibility in a two stage approach. Following an initial assessment of the long list of options a detailed cost and feasibility analysis and assessment of potential benefits of each of the short listed options was carried out Full details of the approach are described in Section 6. Page 14 Actica/PB318D

27 4 Findings 4.1 Introduction This section presents the key results of the three surveys conducted and the key findings from the interviews with OAMs, Eurostat and the European Central Bank. Full details of the survey results can be found in the Survey Analysis Annex to this report, published separately The findings cover a number of areas, including the following: s. existing technical structure of OAMs; t. compliance with quality standards; u. supervision and organisation of OAMs. 4.2 Overview of the national OAM network This section brings together our findings on the nature and size of the current network of national OAMs. Type of operator Most OAMs are operated by the Competent Authority (Regulator) or National Stock Exchange, with almost half of the operators having been legally assigned the responsibility for performing the role. There are varying local arrangements in place for the management and control of the services by the Competent Authority. Operator No. of OAMs Commercial operator 1 Competent Authority 14 National Stock Exchange 10 Other/Official Journal 1 Private Entity 2 Total Responses 9 28 Year of first operation Table 4-1: Organisation operating OAM Eleven of the OAMs responding have been operating since 2007 or earlier. A further eight began operation in Others have been coming online, replacing interim solutions through to Four of the OAM operators consider their services to be interim solutions (Cyprus, Finland, Ireland and Slovak Republic). Ireland, however, has no plans to replace the current service and 9 Data for 2 operators is based on information from CESR. Actica/PB318D Page 15

28 state it could continue to provide the service indefinitely. Of the remainder, two state they are planned to be replaced by full services later in 2011 or Size of OAM - No. of issuers Size (Issuers) No. of OAMs Small (1-100) 9 Medium ( ) 15 Large ( >600) 4 Total Responses 28 Table 4-2: Size based on no. of issuers In total, the OAM network contains information on approximately 11,000 issuers 10. More than half of the OAMs are of Medium 11 size, but it should be noted that the 4 Large OAMs manage almost 60% of the total number of issuers 12. No. of documents held Documents held No. of OAMs <5, ,000-10, ,001 20, , , , , , ,000 1 >500,000 1 Total Responses 22 Table 4-3: Total documents held Given the range of dates at which the OAMs began operation, there is a wide variation in the number of documents held by OAMs, but the 22 respondents represent a combined knowledge base of over 1,600,000 documents, growing at a rate of approximately 250,000 documents a year. Technology used at national OAMs Almost all OAMs responding to the survey have adopted the approach of using a SQL database (SQL Server, Oracle or MySQL) as the basis of the document repository. Of these, six indicate that the database stores only the metadata and a lookup reference to the filed document held in an external file system. 10 For three OAM s that did not respond to the survey, the size is based on review of the public website. 11 The sizing bands used follow the convention in CESR s earlier reports. 12 Issuers that make filings to more than one OAM are counted multiple times in this total. Page 16 Actica/PB318D

29 4.2.8 There is more variation in the approaches that have been adopted to the provision of the webbased user interface. Some OAMs have based their solution on proprietary web portal or content management solutions; others have developed a bespoke coded solution using a range of different technologies On the basis of the responses provided, the technologies adopted by OAMs are up-to-date and form an appropriate basis for the OAM services and a platform for further development and enhancement. Standardisation of telecommunications and database solutions should not be a major issue for technical delivery of a pan-european service with modern technology. Current internet and non-homogeneous search technology allow technical interconnection and interrogation of any relational/sql database. This is further supported by the OAM operators positive responses to questions regarding the flexibility of their systems to accommodate extensions to the scope of the documents and metadata held While the technologies present no major barriers to the extension of the OAM network, the variation in approach to the storage of the filed documents may present challenges to the development of a distributed system implementation. There may also be issues regarding implementation of trusted connections between systems to allow system-to-system searches or automated transfer of data in some architectures The survey replies also indicate there should be sufficient capacity in place at the national OAMs to cope with any increased filing volumes generated by adding new document types or metadata or for transferring of information to a secondary central repository. Connectivity and processing capacity also appears sufficient to allow for further growth in data transfers or searches generated from any of the potential pan-european service models which retain local OAMs In summary, the responses indicate that implemented solutions are generally well architected and scalable and have capacity to allow for further development of integration capability without the need for major redevelopment or technical change. Development and operational costs The figures provided by OAMs for the development and ongoing operating costs of the OAM vary considerably, reflecting local conditions and the approach taken to both development and operation. Questioning indicated that a typical development route was to base the OAM system and service on an existing filing or news dissemination system already in use, which was not directly included in the OAM cost base. Many OAMs have also used in-house resources for either development or operation and have no firm basis for measuring full costs Based on the information received, we have estimated that total development costs across the network have been of the order of 7million Euros with annual operating costs of approximately 2 million Euros. Given the variation in the costing basis across the network, we recognise that these figures are order of magnitude estimates and should be used with caution. Supervision of OAMs and issuers All OAMs are supervised locally by the national Competent Authority. In cases where this body is also the OAM operator internal control and audit processes apply. The Competent Authority is also responsible for the enforcement of national filing processes for issuers. Actica/PB318D Page 17

30 Since the establishment of ESMA there is now a central body which could facilitate the development and enforcement of technical standards for national OAMs as well as supervise the operation of common elements of the pan-european network Cooperation with national Competent Authorities or changes in legislation would be required to implement and manage solutions which involved issuers making direct filings to a central OAM service. 4.3 Technical structure of the national OAMs This section details our findings in a number of areas pertaining to the current technical operations of the national OAMs Filing processes Most OAMs responding accept online submissions through uploading of individual documents from a web portal. Few OAMs allow batch transfer direct from issuers. Accepted filing channel No. of OAMs submission 11 Upload via extranet or other online submission portal 21 Batch or mass transfer from issuers 2 Automatic transfer from other filing system (e.g. Stock Exchange) 13 Other (e.g. from third party/intermediary systems) 7 Total Responses 25 Table 4-4: Filing channels accepted In addition to the standard web portal, over half of the OAMs responding have implemented some form of system-to-system connectivity with other filing or news/data dissemination systems. These remove the requirement for issuers to make multiple filings to different systems within the Member State, and can streamline the filing process by allowing bulk filing from intermediaries systems rather than online web forms for manual upload of documents Several OAMs comment that such integrated filing approaches account for almost all of their filings (e.g. Denmark and the NASDAQ operated OAMs for Finland, Iceland and Lithuania) Such an approach is a key enabler for the effective implementation and operation of a pan- European OAM service. That such approaches are already in place at some OAMs illustrates that the technology adopted is capable of supporting such functionality and indicates that there already exists a body of knowledge and expertise on its use within the current operators An implication of the integration with such systems is that the OAM is often not the only source of regulated information within a Member State. Other sources may be better known to end users or provide additional information and services. Page 18 Actica/PB318D

31 Organisation of filing process OAMs have implemented systems and procedures to ensure that filings are only accepted from valid sources the issuers, their appointed agents or other trusted information dissemination systems. The most commonly implemented approach, adopted by over 80% of the OAMs responding, is to use access codes, usernames and passwords, usually in combination with one or more additional facilities. Typically, issuers register with the OAM operator and their status is confirmed before they are issued with the necessary codes to be able to submit filings to the system OAMs have implemented a range of approaches to the management of the end-to-end filing process once a submission from an issuer had been accepted. Whilst some OAMs automatically accept electronic filings and make these available with limited additional validation, others have implemented processes involving checking and review This variation is reflected in the variability in the delay between a filing being received and being made available to end users in different OAMs. As summarised below, whilst over 60% of respondents make the information available in less than a minute, others can take much longer, sometimes several days. Delay before filing is available to end users No. of OAMs Immediately or less than 1 minute 16 1 minute to 1 hour 3 Same day 1 Next working day or longer 5 Total responses 25 Table 4-5: Time from receipt to publication Any delay to information being available is significant as typically end-users are interested in current, up to date information. Where the delay implies publication of information on the OAM is delayed relative to other sources, users will tend to discount the OAM as a source of relevant information and rely on issuers or other market or commercial information sources. Formats accepted and use of XBRL, templates or input forms A total of 25 OAMs provided details of the filing formats accepted for both financial information and details of voting rights. Filing Type Voting Rights Financial Accepted Required Accepted Required Plain Text HTML PDF XBRL Other electronic formats (e.g. MS Word) Actica/PB318D Page 19

32 Filing Type Voting Rights Financial Accepted Required Accepted Required Paper 4 4 Others (please specify) 1 (XML) 1 (web form) 3 (XML) Information not stored 3 Table 4-6: Filing formats accepted The PDF format is used across most of the OAM network; it is either Required or Accepted by all but three OAMs. Where the OAM does not accept the PDF format then the standard is XML (with attachments) (Bulgaria, Czech Republic and Germany). Only Spain requires XBRL filings (these are also accepted in Germany but not required) Four OAMs require plain text submission of filings, although most of these will also accept copies in PDF or other formats Several OAMs use structured forms and templates to manage the filing process. Typically these are used to capture the required metadata associated with the filing. The filed document is then attached but remains an unstructured document. Apart from where XBRL is used the OAMs did not report any use of templates to manage the structure of the content of filed documents Several OAMs see the long term benefit of moving to the use of XBRL as the standard for structuring filings, but point out the need to agree the basic structures, coding and harmonisation required before it could be effectively implemented. Some proposal that it could be introduced in a phased manner (large issuers first, eventually moving to all), following other standardised coding and harmonisation being in place An option to build on existing capability would be to focus on perhaps 10 or so key pieces of required information where structured filing is required and either introduce standard structured electronic templates or require a limited amount of internal tagging in existing unstructured (PDF) documents as currently stored by the OAMs. The tagging would indicate where data, such as ownership details were held in the document. The OAM need not extend its remit to the processing and presentation of this information, but make it available to third parties and end users to extract and consolidate and analyse using third party tools. Regulated information stored OAMs were surveyed on the types of information stored based on the category labels proposed by CESR in Annex 3 of their 2010 report. All respondents store annual reports, but there is more limited coverage for several other items of information. Thirteen (50%) of the OAMs responding also store further information in addition to the regulated information set out in the Transparency Directive. Type of document held No. of OAMs Annual Financial Reports 26 Interim Financial Reports - Half Yearly 25 Interim Financial Reports - Quarterly (if available) 25 Interim Management Statements (if available) 24 Page 20 Actica/PB318D

33 Type of document held No. of OAMs Price Sensitive Information 23 Corporate Governance Statements 20 Major Shareholding Notifications 23 Trading on Own Shares (Acquisition/Disposal) 24 Total number of voting rights and capital 24 Changes in rights attaching to shares or securities 23 New Loan issues 20 Choice of Home Member State 18 Take over bid announcements 21 Prospectuses 14 Other additional information 14 Total Responses 26 Table 4-7: Regulated information held by OAMs Almost half of Member States use the filed information for purposes additional to meeting the needs of the Transparency Directive predominantly for Regulatory or Supervisory purposes. In the UK the commercial entity operating the service uses the information captured as a direct source for other value added information products In their report, CESR recognise that the definition of regulated information is not fully harmonised in the Transparency Directive and a common list of types of regulated information, based on the categorisation above, would allow uniform classification and allow EU-wide searches on the basis of type of information. The implementation of this classification is a prerequisite to the successful technical development of a pan-european system meeting the target functionality. Metadata held and common specification Most OAMs store the six metadata items recommended as the minimum standard in Section 5 of the Commission s 2007 Recommendation. Eleven respondents already store all the additional metadata proposed in CESR s 2010 consultation and report. Metadata item Items in 2007 Recommendation No. of OAMs Regulated information indicator 21 Name of issuer 25 Title of the filed document 25 Time and date information was disseminated 25 Language of filed document 23 Type of regulated information that filing relates to 23 Additional items proposed by CESR Actica/PB318D Page 21

34 Metadata item No. of OAMs Name of issuer in all languages used by issuer 12 Unique issuer identifier or code 17 Country of incorporation 16 Home Member State of issuer 16 Regulated markets where issuer's securities are admitted to trading Industry code of the issuer's principal activities 11 ISIN codes for the issuer's securities 17 Reporting period to which a specific filing relates (e.g. Q4/2010) ISIN codes for the securities covered by the individual filing 11 Total responses 25 Table 4-8: Descriptive metadata held concerning issuers and filings With the exception of the use of the international standard ISIN code, there was no indication that the OAMs had adopted a common specification for the metadata stored, or that coding structures used were aligned with other storage mechanisms or other repositories of financial information. We agree with CESR s 2010 findings that the agreement and mandatory use of common metadata specifications across the OAM network would be an important enabler to the development of a pan-european system Common code for identification of issuers As recognised by CESR in their 2010 report, the development of any form of central access point requires that a unique issuer identifier is defined at a European level. At present each OAM uses locally defined codes to identify the issuers in their markets. Our interviews with OAMs reinforced CESR s finding that there was strong demand for such a common identifier. They also indicated that OAMs did not believe any existing standards were suitable and required a lead on these We consider the definition and implementation of such a unique code is a pre-requisite to the successful technical development of a system offering pan-european searches. We endorse CESR s view that a code should be jointly agreed which could enable the interconnection of the OAM and company register networks, and also provide the means for interlinking with other national and international securities databases One potential candidate for such a code is the REID code developed by the BRITE research project (Business Register Interoperability Throughout Europe BRITE) 13. The REID code is based on the registration ID assigned to a company in the national Business Register, with the ISO national identifier and the Register ID from the Directory of Registered appended. As such it has the advantage that no new code needs to be allocated to companies with records already held by their local business register. Such a code could form the basis of providing a unique key 13 See Page 22 Actica/PB318D

35 for all company entities across Member States, however there are considerations regarding its potential application to all issuers of securities: a. We understand from OAMs not all issuers are covered by the scope of the business registers so would not have a REID code. We do not have information on whether the number of such issuers is significant. b. Assuming business register operators remain responsible for issuing the registration ID for new entities, there may be considerations regarding alignment of business processes, approvals and timing with national securities listing authorities. c. The structure of the REID code does not allow for the identification of national branches of the same organisation. (Although this may be resolved by other initiatives being put forward such as the proposal to amend Directive 89/666/EEC to uniquely identify branches of companies across the European Economic Area 14.) d. There may be practical implications in cases where the same entity is listed on multiple national exchanges. 4.5 Consolidation of information on voting rights The requirement, set out in the terms of reference for this study, that the pan-european OAM solution be able to consolidate information on corporate ownership to give views of disclosed holdings of voting rights by issuer and by investor requires the storage and processing of structured information on changes to shareholdings. At present this is not directly supported by any OAM responding to the surveys Almost all of the national OAMs operate as repositories holding unstructured documents. This meets the requirements of the Transparency Directive for the publication of regulated information but does not provide a resource suitable for the extraction or consolidation of numerical information. Typically, OAMs accept and store unstructured documents, be they in PDF, Word or other format (only one requires filing in XBRL format and one other accepts it). These documents have no defined internal structure to identify the information they contain, for example, on ownership or turnover or other financial data. Value added commercial operators may, in some markets and/or for some issuers, extract and make this information available commercially, but the current OAM process does not make such capability available to its user community Whilst the current OAM filing processes remains, there is only limited progress that can be made in meeting this or any other requirements which imply the need for such structured information. Extending the metadata stored regarding an issuer or filing simply improves the search capability available to return the documents, but does nothing to allow the extraction and consolidation of the information they contain. The filing requirements and processes in Member States would need to be amended to require issuers to provide structured information using a centrally defined standard or template. These could be XBRL documents or standard forms or templates for the notification of major holdings defined by ESMA in pursuit of Article 12.9 of the Transparency Directive. The OAM would store these documents in the same way they do today and either provide tools for their analysis and consolidation or (more simply) allow them to be downloaded and analysed by interested parties using 3 rd party software. Actica/PB318D Page 23

36 4.5.4 In addition, to allow consolidation of the information, Europe-wide codes would need to be adopted and used in all template filings to uniquely identify both the issuing and investing entity Experience in Belgium, where shareholding information is provided using a structured (Excel) file format based on the European Standard form, has highlighted the difficulties in ensuring quality, consistency and the need for interpretation of such information. Whilst all shareholders use the centrally defined form to submit information to issuers and the Regulator, it is not directly filed to the Belgian OAM. The issuer uses the information in the structured filing to create a return of regulated information, and this is then submitted to the OAM in unstructured PDF format Technically, most OAM databases are capable of receiving different file types. It should therefore be possible to simply extend the OAM databases to store structured document filings as additional database objects. Searching for and downloading files containing structured data could use the capabilities already in place at OAMs. Additional OAM development, either at national or local level would, however, be required to present analyses and consolidations, but a decision could be made to leave this to end-users or third party service vendors interested in such information Subject to the definition and adoption of such standard forms as part of the scope of the OAM service, technically, any of the options for a pan-european service could deliver the building blocks for the consolidation of information on voting rights. 4.6 Visibility of small listed companies As referenced in Section 2, earlier studies have identified the black hole of apparently poor cross-border visibility and access to regulated information on SMEs. The 2010 consultation received mixed responses on whether the development of an EU wide database would improve this situation All of the options considered by the study could positively impact the visibility of small listed companies. By making high quality, standardised and reliable information more widely available through a central service there is the potential to promote and encourage greater use by end investors. The existence of a free to use, centralised, open standard data source should lower barriers and entry costs for new commercial information providers that may wish to enter the market to focus on addressing the gap in the provision of information on smaller companies. Equally, SMEs themselves may also be encouraged to invest in producing improved information and document formats targeted at cross border investors As such, in the longer term, improved visibility may be best delivered through the development of an open, accessible source of information and its promotion to potential information vendors More immediately, we note the NASDAQ operated OAMs allow end users to select and search for documents from issuers by size of their market capitalisation (Small is considered less than 150 million Euros). The availability of such a search can assist interested investors to focus on information from such companies. In the short term, a similar approach could be adopted across the network or included in the services provided by a central access point, subject to capturing metadata on market capitalisation for issuers. Page 24 Actica/PB318D

37 4.7 Alert systems Two further requirements set out in the terms of reference for the study are for requirements for the pan-european system to integrate alert systems on information filed for the benefit of supervisory authorities and to allow for the possibility to integrate notification or alert systems on information filed for the benefit of market participants Our research has indicated that several national OAMs already offer market participants (end users) the ability to sign up to notifications or RSS feeds in order to receive information when new filings are received from selected issuers. The technology involved is a straightforward extension of the filing process, although it does require the service to accept and store user information/ addresses. This type of service could be further extended using modern Web 2.0 technologies and approaches to streaming and provision of data feeds for integration with users apps or widgets to push information to subscribers Such technical solutions could easily be incorporated into any of the options considered for the European service. A central access point would allow users to register once and receive alerts from one source whenever information of interest was received from any member state Technically, a similar approach could be adopted for the benefit of supervisory authorities. A centralised alert system could benefit Europe-wide authorities wishing to obtain an overview of an issuer s activities. As regards national supervisors, a central service may provide limited additional value over a service provided by their national OAM, covering the markets for which they are directly responsible. It remains questionable whether provision of alerts at national or European level would contribute towards removing the need for issuers to file with both the OAM and the national supervisor in parallel. At present several OAM services receive their filings via the supervisor s filing mechanism rather than directly from the issuers. 4.8 Integration with business registers As regards the integration of OAMs with the network of national business/company registers we endorse CESR s view in their 2010 report that a common company identifier across both networks would provide a valuable foundation for such integration. Business registers typically contain information on many more entities than the corresponding OAMs, as the number of unlisted companies held in the registers far exceeds the number of listed companies It is not clear what value the link from an OAM to a Business Register would provide to either issuers or end users as there is little extra data held on the Register that is not available in the OAM. The reverse link however could allow users of the Registers to access more in depth information held by the OAM on a listed company and potentially allow the Registers to rely on information filed at the OAM and reduce the need for parallel filing. On this basis, the focus for the development of the integration would be with the Registers, based on an agreed mechanism for sending web-based queries to either local or central OAMs and the aforementioned common company identifier. Such integration would be most appropriately developed through the integration of the proposed Business Register central access point with an OAM central access point, using a single integration standard. Actica/PB318D Page 25

38 4.9 Compliance with quality standards Paragraphs 5 to 20 of the Commission Recommendation of include General Standards for OAMs as well as specific standards covering: a. security; b. certainty as to information source; c. time recording; d. ease of access by end users Of the 23 OAM operators providing a response, 17 (75%) rated themselves as either fully or mostly compliant with both the General Standards and also the standards in all four of the areas listed above specified in the Commission Recommendation. Our analysis of other technical responses, desk research and follow-up interviewing generally supports this position Of the OAMs with lower stated compliance levels, the main area highlighted is in ensuring certainty of information source. This may be an issue where is used as a significant filing mechanism and there is less opportunity to implement strong authentication as to source Further details of our findings regarding the facilities available for end users and their ease of use follow in the next section End user access to OAMs During interviews several operators expressed the view that the OAM was not seen as a prime source of investor information and this view is supported by the very low usage statistics for several of the OAMs. OAMs do not have detailed statistics on types of user but believe they are mainly professional advisors and researchers The low levels of use also reflect the availability of other more established information sources within the market and the visibility of the OAM services. It is, however, noticeable that this is not a universal position and some Member States report very high usage, for example, Germany where the OAM is integrated with other register searches, Spain and Portugal Central bodies such as Eurostat and ECB make limited use of information from OAMs due to difficulty of searching for and extracting information from within the documents. They also experience difficulty consolidating information from multi-national issuers and have commercial arrangements with third party suppliers to get the data they require All OAMs provide search screens in the language of the home Member State and 80% also provide a version of the search screen in English. Several OAMs also provide the screen in additional languages. Users can obtain online access to the search screens through the public internet, without the need for registering with the OAM. It is possible for users to view, download or print stored documents through their web browser Whilst user search screens are not standardised across the network, our own usability research indicates that, with some exceptions, they are intuitive to use for the casual user, especially one already familiar with the facilities in another OAM. 15 Commission Recommendation 2007/657/EC of 11 October Page 26 Actica/PB318D

39 Most OAMs which responded meet the recommended standard of accepting and storing multiple language filings if submitted by the issuer. A number of OAMs note that many issuers voluntarily file in English even where this is not required Current pan-european integration At present the interconnection of national OAMs is delivered through the CESR (ESMA) MiFID database ( The database is structured to report on securities rather than issuers/companies. There is a limited user search capability and the ability to sort results by any displayed field. Securities where there is a link available are highlighted and users can click-through to the home page of the relevant OAM to search for further information on the issuer Maintenance and update of the service appears to be an issue. The links provided from the securities sometimes point to an unavailable, incorrect or out of date location, or the generic home page for the OAM operator rather than the specific OAM page. For some OAMs and some issuers there is no link available from the MiFID database The utility of the current level of integration for pan-european searches is limited. There is no common coding to identify issuers across different OAMs, hence users must rely on full or partial ISIN code or name of the security to determine if there are multiple filings across the OAM network Use of issuers web sites as a source of information Several Member States have introduced a requirement for issuers to maintain a copy of regulated information on their web sites and the Mazars external report of 2009 identified the option of extending this approach to form the basis of a pan-european system. Under this model a list of all European issuers would be maintained presumably coordinated from submissions from Regulators in Member States or via extensions to a consolidated Business Register, and central metadata would be limited to a link to a defined area on the issuer s website which would contain all the appropriate regulated information The CESR report of 2010 highlighted a number of issues with this approach, including: a. comprehensive coverage of historical information; b. information remains publicly available even if issuer ceases to exist; c. non-repudiation; information cannot be changed after it has been filed; d. OAM provides easier access to regulated information for some issuers who may not have their own websites (e.g. Special Purpose Vehicles and corporate subsidiaries) The Belgian OAM operator, until early 2011, relied on the publication on issuers websites as an interim solution. Issuers were required to maintain a designated area of their website for this purpose and there were periodic checks by the Regulator on compliance. Despite these arrangements there were issues and problems with the approach: a. The information is controlled by the issuers webmasters and there were instances of information being expired or moved in line with internal procedures rather than in accordance with specified requirements for the maintenance of regulated data. b. Each issuer developed their pages for regulated information separately there were issues with consistency and it was difficult to compare across issuers sites. Actica/PB318D Page 27

40 c. It was difficult to police to ensure information was not edited or removed after publication and ensure non-repudiation In light of the above, there appears to be a case for not considering the use of issuers web sites as a primary source of regulated information moving forward. In any case without a consolidated source of metadata provided by national or central OAMs, useful search or alerts as defined in the reference requirements for this study would be all but impossible The role of the OAM and interpretation of data OAM operators have made the point that their role is to manage the filing, storage and access to information as provided by issuers, but not its interpretation. The OAM is seen as responsible for checking adherence to filing standards (for example that a valid, uncorrupted file is received) but not for validating or endorsing the accuracy of the content of the filing. There is concern that any involvement would leave them open to legal challenge and the liability implied would be significant. By extension, any potential technical solutions involving the use of software to interpret the content of filings, for example to establish where multiple filings refer to branches of a multinational or to generate additional descriptive metadata not directly provided by the issuers, may raise issues of liability for the operator Relationship between OAMs and third party vendors The results of our survey and interviews with OAM operators have indicated that generally the OAM is seen as a useful repository of the definitive version of regulated information, but it is little used by investors for active searches. Rather it is a source to resolve legal issues or for other specialised professional uses Interviewees also expressed the view that commercial data vendors have their own channels to obtain and process information and do not tend to use the OAM data as a prime source for their products. (An exception is the UK, where such a provider is the operator of the national OAM.) As a result, many potential operators did not see a business case for providing the OAM service when it was set up The position put to us was that most institutional or individual investors will rely on existing exchange electronic news services, 3 rd party added value tools and commercial data vendors to present information on which to base investment decisions. If this is the case, there is a view that OAMs should focus on ways of making the information they hold more attractive to such 3 rd parties, rather than attempting to develop more sophisticated tools in order to attract additional end users The above approach is consistent with the wider end-user marketplace for the provision of added-value IT services and applications and recognises that OAM providers would be unlikely to be willing or able to compete with the major suppliers of such tools. A more appropriate business model for OAMs might be to focus on ensuring that the information they hold is made available to third parties to integrate and deliver added value through their existing platforms. The OAMs could focus on delivering a core filing process and structured repository with open links to enable 3 rd parties to access and present the data stored. The key here will be to make the information easy to access through open standards and then to encourage (or mandate) the value added data and applications vendors to use the OAM as the prime source of the raw information rather than using other parallel information feeds. Such a market driven Page 28 Actica/PB318D

41 approach may be most likely to deliver the greatest value to end investors and aid the visibility of information on small companies Following this model the OAM network need not invest in improving its end user search and query features (several OAMs commented these were little used by active investors) but retain the ability for professionals to obtain official versions of key documents on an exception basis (for e.g. legal purposes) using the relatively simple tools available at present Summary of the current status quo position OAMs are operating in all Member States, although the types of services offered vary considerably, with some still operating interim solutions with limited facilities for end users. (Although some of these are due for imminent replacement at the time of this report.) The OAMs supplement, and are often closely integrated with, stock exchange and regulatory information filing services and systems. The OAM has not typically acted as a replacement repository for regulated information, and filings continue to be stored and disseminated through multiple channels Issuers in several Member States make use of intermediaries or commercial data disseminators to manage their filings to both the OAM and other agencies. In these cases there are system-tosystem interfaces to support the filing process Almost universally, the OAMs support the filing and storage of unstructured document formats. They provide user tools to search for and download documents, based on a limited set of descriptive metadata describing the nature of the document but not its detailed contents. (Some OAMs also provide full text search of the contents of documents.) The OAMs manage the filing process and ensure the safe storage of documents provided by issuers. Their role is to transparently present information provided by issuers. They are not involved in the interpretation, analysis or presentation of the information contained within the documents they manage Commercial providers of financial information are typically seen as the providers of structured and analytical information regarding issuers. These providers make use of information typically obtained from regulatory filings but tend to have their own information channels and do not rely on the OAMs to source their data There is very limited pan-european integration available through the ESMA (CESR) MiFID database. Neither this nor the national OAM services appear to be actively promoted or marketed to potential users Most OAMs report very low volumes of end user/investor access to their services. Typically, such users either use the analytical tools and information available from the commercial providers or directly access information from issuers websites. The OAM acts as a repository of record for professionals to obtain official versions of key documents on an exception basis Key findings for options analysis Although there are OAM services operating in all Member States, there exist varying degrees of readiness to begin further integration. Except in a few cases where interim solutions still exist Actica/PB318D Page 29

42 this is not predominantly a technical issue, rather it reflects the varying interpretations of the Directive in business process, coding and detailed filing practices: a. OAMs have implemented different arrangements for the creation and storage of metadata, there are no common standards; b. OAM filing processes in several Member States are closely coupled with other exchange disclosure, regulatory and news dissemination processes and systems in these cases many issuers do not file direct to the OAM; c. Information held by the OAMs is often duplicated in other exchange or regulatory systems; d. OAMs do not have existing structured processes for handling notification of changes to voting rights Few end users make use of the OAM service in most Member States. The quality of the user experience offered to end users is good overall, but the services offered vary considerably: a. Web sites for OAMs can be difficult to find using commercial search engines; b. Users of the information held in the OAM repositories are mainly professional advisors and researchers; c. Individual investors tend to access commercial information services or the issuers web sites rather than OAMs, mainly due to the extra information and analysis available; d. The OAM service is of limited value to central bodies such as Eurostat and ECB because there is no structured or analytical data stored by the OAM that can be used by these organisations for statistical and analysis purposes Technically, the OAMs are in a good position to respond to changes and extensions to the service they provide: a. Documents and metadata held by the OAMs are mainly stored in flexible SQL databases so can be updated relatively easily (although the contents of the documents is not structured); b. Similarly, OAMs can provide access to their back end databases in order to facilitate a central search tool relatively easily, although the scope and activities required would need to be agreed; c. OAM operators agree with the requirement for pan-european interconnections but are seeking clear long term direction on the way forward as they do not see market demand driving such an initiative; d. OAM operators have highlighted potential issues with significant change to current operations and processes. Page 30 Actica/PB318D

43 5 Options Identification 5.1 Introduction This section presents the methodology used to identify the initial options for a pan-european database of securities information and outlines the options identified using this methodology. 5.2 Methodology The options for implementing a pan-european database of securities information have been developed from a baseline that consists of the existing options as identified by previous studies conducted by CESR (now ESMA) and Mazars (as detailed in Section 2). The initial step in the options identification was to assess these options against the requirements of this study as detailed in Appendix A, and discard any options that do not meet the requirements. Summaries of these options and the results of the initial verification can be seen in table 5-1 below. Source Option Comments Review result CESR 2006 CESR 2006 Model A Central dataset fed by existing OAMs Model B Network search across OAMs Architecture is as proposed for CESR Network Model (Option 1) Uncoordinated development of national OAMs makes such a solution technically challenging. Progress with Model C now makes reversion to such an approach unattractive. CESR 2006 Model C central list of links Remains the current extant solution although without full coverage. Forms the starting point for CESR Network Model (Option 1) CESR 2006 Mazars 2009 Mazars 2009 Mazars 2009 Model D light touch approach with each OAM publishing links to all other OAMs on its site A Rely on issuers web sites B - Improve the functioning and visibility of national OAMs C - An EU single entry point maintaining a list of EU listed companies with links to each company s website Such a limited approach will not meet the aspiration for pan-european searches Not recommended by the external study and offers Addresses some recommendations whilst retaining the current solution Relies in individual issuers keep websites updated Remains valid taken forward as option 2 below Remains valid taken forward as option 4 below Remains valid taken forward as option 8 below Discounted as this does not provide a mechanism for creating a pan- European search Discounted as this does not provide for a pan-european search Remains valid taken forward as part of Option 8 below Discounted as this would not enable a pan-european search CESR 2010 Option 1 Network model Makes use of central search Remains valid Actica/PB318D Page 31

44 facility using OAM databases CESR 2010 Option 2 Central European OAM Replaces all OAMs with single European OAM taken forward as option 5 below Remains valid taken forward as option 1 below Table 5-1: Review of existing options 5.3 Options identified The remaining options were then reviewed to assess whether there were any gaps, including areas where new technologies could provide an option or areas where a different combination of local and central services provided a different option. The review also ensured that all options proposed by the EC in the scope of this review were included The elements of the service that were reviewed to ascertain what different combinations of local and central provision could be provided were: a. the user-facing portal that allows users to search for and view documents; b. the database that holds all documents submitted by issuers including what information should be held in the database; c. the search facility that allows users to conduct a pan-european search This review highlighted a further three options that were not included in any of the previous studies. These were: a. implementation of a central database to hold metadata only, rather than a duplicate of all OAM documents. This is taken forward as Option 3 below; b. making use of intelligent search technology to automatically index all documents currently held by OAMs. This is taken forward as Option 6 below; c. combining OAM operations with national business registers to make use of the existing pan-european links created for business registers. This is taken forward as Option 7 below There were therefore eight options considered: a. Option 1: Single European OAM; b. Option 2: Central database for all data; c. Option 3: Central database for metadata; d. Option 4: OAM web-ring; e. Option 5: Harmonised OAM network; f. Option 6: Central intelligent search; g. Option 7: Combine current OAM operations with national business registers; h. Option 8: Maintain status quo These options are now described in more detail. Page 32 Actica/PB318D

45 5.4 Option descriptions Option 1: Central EU dataset Summary: Replace all national OAMs with one central OAM that stores all European data and provides all search facilities Detail: This option involves the total replacement of all 29 OAMs in the scope of this study with one, central OAM that holds all of the data and offers the same basic functionality as all of the current organisations. Issuers would be required to file information directly with this central OAM and all users would access data and search facilities through a portal provided by the central OAM rather than the current, national websites Impact on OAMs: The 29 current OAMs would be closed down, transferring all data and responsibilities to the new, central OAM Impact on issuers: Issuers would be required to file data directly with the new central OAM rather than with the current national OAMs. This may require effort and resources to be used to change any automated process to send data to different systems, and may also require training where manual processes exist to send the data to the OAM. Issuers may also need to change the format in which they send data, depending on how the central OAM is set up and how data is stored and accessed. This could require significant effort from issuers Impact on private sector: This option would deliver a pan-european search of all regulated information. Currently, users can only get this from 3 rd party data providers and so implementation of this option may provide competition for these providers, particularly as the OAM information is free. However, the range of services provided by 3 rd parties will remain much greater than that provided by the consolidated OAM service and so it is not anticipated that this option will create issues for the 3 rd party providers. This view has been confirmed during interviews with a number of these providers Impact on users: Users will need to access data through a different portal, going to a web address for the new central OAM rather than existing national ones. They may also take time to learn how to use the new portal, depending on how different the navigation and search tools are from a users current OAM. Users will be able to search all European data easily through the new portal, and may be offered improved and increased functionality compared to their existing OAM website Infrastructure: It is expected that the infrastructure for this option will be provided as a managed service, hosted as a private cloud in a data centre. The infrastructure for this option would consist of: a. 4 quad-core web servers running Windows Server 2008; b. 2 quad-core database servers running Oracle enterprise edition; c. 2 five Tb data storage arrays; d. Suitable PKI-based security software; e. A suitable piece of bespoke software allowing issuers to submit documents Potential costs: This option is likely to require significant expenditure to implement new IT systems, to change existing submission processes and to close down the existing OAMs, including potentially very large costs associated with terminating existing staff contracts, Actica/PB318D Page 33

46 decommissioning existing systems and communicating the changes to users. There will also be costs associated with recruiting and training new staff, and in creating any interfaces required between the new OAM systems and external systems such as stock exchanges and financial institutions Potential timescales: This option is likely to take a number of years to implement, mainly due to the activities and costs associated with closing down the existing OAMs. The likelihood is that this option would be implemented in stages, creating the new IT systems first and then transferring the data and responsibilities for individual OAMs over time. It is anticipated that this process would take up to five years Option 2: Central dataset fed by existing OAMs Summary: Create a central European database for securities information which holds copies of all information stored by the national OAMs Detail: For this option the national OAM services continue to operate as at present. The OAM will continue to accept filings of regulated information from issuers, for which they are the home member state, storing the information and providing search and query services on this database. In addition the OAM will forward a copy of each filing to a central OAM service managing an aggregated database across all states. The central OAM will provide search and query facilities across all records in its own database, allowing search on a pan-european level. Additional flexible search and indexing of the central database may be added as users demand, without further impacting the national OAMs Impact on OAMs: Whilst the OAMs will continue to operate as they do now there will be additional requirements to forward information to the central OAM in specified formats, utilising a common filing platform. (Assuming the responsibility for multiple concurrent filing is not devolved to data disseminators or issuers.) The OAMs may also have to change the metadata associated with filings (or provided by the issuer) in order to conform to a common central model. Depending on the degree of match to the metadata held, this may involve levels of change ranging from translation of the data in the sent files to a redesign of the national OAM database and metadata information required from filers. There may be a reduction in the number of visits and queries to the national OAM web sites as the services of the central OAM develop Impact on issuers: Issuers would continue to follow current filing procedures. While procedures will be unchanged, the need of the central OAM to provide a harmonised pan- European database may result in requirements for revised or additional metadata to be placed upon the issuer, data disseminator or other intermediary. Potentially the responsibility for concurrent filing to national and central OAM could be passed on to the issuer. As the central OAM service develops some issuers may also take advantage of the wider visibility of the service to make information available in multiple languages Impact on private sector: This option would deliver a pan-european search of all regulated information currently held by OAMs. This is a similar provision to Option 1, although with potentially less information due to differences in the amount of regulated information currently held by OAMs. It is therefore expected to have a similar impact on the private sector i.e. their current business will be unlikely to be impacted. Page 34 Actica/PB318D

47 Impact on users: Users will have the choice of continuing to use national OAM services or make use of the central service to query copies of information from one, some or all of the national OAMs Infrastructure: It is expected that the infrastructure for this option will be provided as a managed service, hosted as a private cloud in a data centre. The infrastructure for this option would consist of: a. 4 quad-core web servers running Windows Server 2008; b. 2 quad-core database servers running Oracle enterprise edition; c. 2 five Tb data storage arrays; d. Suitable PKI-based security software; e. A suitable piece of bespoke software allowing OAMs to copy documents to the database Potential costs: The creation and operation of the central service would involve similar costs to Option 1 above. While there would be no costs for decommissioning the existing national OAMs, each national OAM would have the additional cost of implementing and operating the dataset feed interface to the central service. There would also be costs for resourcing a central implementation team to co-ordinate and manage the integration of the 29 national OAMs Potential timescales: Given the range of existing national solutions the overall timescale for delivering a fully pan-european service with feeds from all 29 national OAMs could be significant. Experience from the integration of electronic Business Registers indicates that whilst the effort required to integrate a single national service may be modest (30-80 person days) other factors lead to a delivery timescale of between 3 and 18 months per integration. As such a timescale of 3 to 5 years to manage take on of all 29 national OAMs may be a reasonable expectation Option 3: Central metadata store Description: Create a central European database that holds metadata for all information held by the national OAMs Detail: This option is identical to Option 2 above except the national OAMs forward only the metadata concerning each filing to the central OAM service. The central database does not hold the filed document itself and is hence much smaller, but still provides the basis of pan-european searches and queries against the metadata stored there. When a user requires viewing of a document the central service retrieves the document from the national OAM, which holds the sole master version of the document Impact on OAMs: Compared to Option 2 the meta-data only interface to the central OAM may be less onerous to implement and operate. It may also be a more appropriate requirement to be passed on to the issuer to manage as a message that a submission has been made to the national OAM. Whatever the approach taken, the national OAMs will have the requirement to respond to system-to-system requests for documents from the central OAM, potentially requiring systems development and changes in operational services Impact on users: As Option Impact on Issuers: As Option 2. Actica/PB318D Page 35

48 Impact on private sector: As Option Infrastructure: It is expected that the infrastructure for this option will be provided as a managed service, hosted as a private cloud in a data centre. The infrastructure for this option would consist of: a. 4 quad-core web servers running Windows Server 2008; b. 2 quad-core 1Tb database servers running SQL server 2008 enterprise edition; c. Suitable PKI-based security software; d. A suitable piece of bespoke software allowing OAMs to copy metadata to the database and searches of all current in scope OAM databases to be conducted Potential costs: These would be higher than Option 2, given the additional requirement to manage distributed data requests to the OAMs Potential timescales: similar to Option Option 4: Web ring (no central portal) Summary: Standardise data storage across all national OAMs to enable all information to be searched by current national search tools Detail: This option involves ensuring that all OAMs store their data in a similar fashion, to allow the current search tools in use to be modified to search either the national data (as now) or all European data by connecting to the other national databases. This would allow users to create a Europe-wide search if need and would preserve the current functionality Modifications would be needed to many of the databases currently in use, and agreement would need to be reached on a set of data standards that every national OAM would adhere to. All data currently stored would then need to be updated to make sure it met the new data standards, and every national database would have to ensure that others could easily and securely connect to it in order to search the data when needed Impact on OAMs: This option could have a significant impact on OAMs as they would potentially need to update all their data according to the new standards, and would need to modify their database access controls to allow other OAMs search tools to connect. This could involve a lot of change Impact on users: This option would allow users to search Europe-wide data as needed, based on selecting search parameters from centrally defined metadata. These searches may be slow as a result of the large amount of data needed to move across international networks, and the large number of individual databases that would need to be searched. It is also possible that the different search tools in use would mean that variations were seen in searches done using different tools Impact on issuers: Issuers would not be impacted by this option as they would continue to file their information with the national OAMs. The OAMs would be responsible for converting the data into the required format for international searches Impact on private sector: This Option would be unlikely to impact the private sector as the increase in functionality is small given that no new central facility is created. Page 36 Actica/PB318D

49 Infrastructure: No new, central infrastructure would be required for this option Potential costs: This is likely to be a costly option due to the amount of change that may be required for each OAM, to ensure compatibility with others. There may also be a large cost associated with educating users about the new search facilities, including how to interpret the results Potential timescales: This is likely to require a number of years to implement on the basis that the majority of OAMs will need to make changes to their systems Possible challenges: The major challenge for this option will be getting agreement from the national OAMs to the data standards to be used. There may also be a technical challenge associated with making searches across 29 different databases Option 5: Network of harmonised national OAMs Summary: Standardise data storage/metadata as for Option 4 above together with a central search capability searching all national datasets Detail: This option is very similar to Option 4. The difference is that a central portal is created that has the capability to search the national OAM databases, rather than using the existing search functions. Users will be able to conduct national searches from the existing OAM portals, as now, but will need to go through the central portal to conduct a Europe-wide search. No metadata or documents are held at the central access point. The portal generates search requests which are sent to multiple national OAMs, which then return the results of the local searches to the centre Impact on OAMs: As option 4. There may be a small amount of difference as OAMs will not need to modify their search facility but this is a minor difference the effort required from OAMs is still likely to be high Impact on users: This option would allow users to conduct Europe-wide searches, based on selecting search options from centrally defined metadata. These searches are likely to be quicker than the search in Option 4, but may still take some time due to having to query a large number of databases for each search. Users may also have trouble understanding the difference between the central portal and national OAM portals Impact on Issuers: No impact, as Option Impact on private sector: As Option Infrastructure: The infrastructure for this option would need to be capable of sending search requests to multiple OAM databases, receiving these results and them combining them into a single result to be displayed to the user. It is expected that this infrastructure will be provided as a managed service, hosted as a private cloud in a data centre. The infrastructure for this option would consist of: a. 4 quad-core web servers running Windows Server 2008; b. A suitable piece of bespoke software allowing searches of all current in scope OAM databases to be conducted. Actica/PB318D Page 37

50 Potential costs: The costs for this option are likely to be higher than Option 4 as development work will still be needed for the majority of the OAMs, and additionally the central portal will need to be created Potential timescales: This option is also likely to take a number of years to implement due to the work needed within the OAM operations as in Option 4, followed by the development and implementation of the central search portal Option 6: Central search and index engine Summary: Make use of intelligent search tool to provide central search facility without using central database Detail: This option involves setting up a central portal which is connected to all of the national OAM databases. This portal would make use of an intelligent search tool to automatically index all of the content of the national portals, and enable this data to be searched. The Europe-wide search facility will make use of the indexed information, and the information in the national databases Impact on OAMs: This option would have little or no impact on OAMs. The search would be optimised if national OAMs allowed the search tool direct access to their databases, but the tool would still work if it used the current portals to find and index all information Impact on users: This option is likely to provide users with the most functionality due to the rich functionality of the search tool and the use of indexing to make searches quick. Users would have to be educated on the difference between the central search tool and the national portals Impact on Issuers: This option would not impact issuers they would still send information to the national OAMs Impact on private sector: As Option 1, however there is a potential to use the intelligent search software to index the content of the documents in addition to the documents themselves. This functionality would duplicate an increased proportion of the functionality provided by 3 rd party providers and may start to erode their income. Is it still anticipated that this would be a small proportion of income on the basis that no analysis of the information could be provided by the search tool, and that the total information available from the OAM portal would still be limited Infrastructure: It is expected that the infrastructure for this option will be provided as a managed service, hosted as a private cloud in a data centre. The infrastructure for this option would consist of: a. 4 quad-core web servers running Windows Server 2008; b. 4 quad-core web servers running the intelligent search tool c. 2 quad-core 1Tb database servers running SQL server 2008 enterprise edition; d. Suitable PKI-based security software; e. A suitable piece of bespoke software allowing OAMs to copy metadata to the database and searches of all current in scope OAM databases to be conducted Potential costs: Not clear as these costs depend on what services are provided and what supplier is chosen. Page 38 Actica/PB318D

51 Potential timescales: This option is likely to be quick to implement as there is no involvement needed from the OAMs Option 7: Combine current OAM operations with national business registers Summary: Create a combined OAM and national business registers database and its operations to make use of the planned central access point for the business registers. This leverages economies of scale and the existing business registers European network to also provide OAM data centrally Detail: This option involves making use of the existing European interconnections for business registers and looking for synergies between the national business register databases and OAM databases in order to combine the two to deliver a central OAM and business registers database which reduces overall costs through economies of scale. The proposed central access point for Business Registers would be extended to also search regulated information on issuers held in the national OAM databases based on making use of the existing business registers interconnections to search and share OAM information from different countries. This would be achieved by linking the proposed central access point to the national OAM databases Impact on OAMs: This option would require all national OAM operations to provide access to the business registers operations at a process and ICT infrastructure level. This would have a large impact on OAMs, potentially impacting both staff and contracts with 3 rd party suppliers Impact on users: Integrating the OAM and Business Register central access points would provide a one stop shop for interested users. This may generate more interest and increased user volumes compared with two separate services. It would also provide a common user interface to two sources of financial information. It will provide users with more information on companies, and will potentially have benefits for national business register users as well as OAM users Impact on Issuers: This option may impact issuers if the combined databases require different input arrangements to the current national databases issuers may then need to change their submission processes Impact on private sector: This option would have minimal impact on the private sector as no new information is being provided to users Infrastructure: The infrastructure required for this option is not known, as it depends on the current infrastructure in place for both the national OAMs and the national business registers. The infrastructure to be used would need to be agreed as part of the implementation planning process. The infrastructure required for the proposed Business Register central access point would need to take into account the integration of the OAM databases Potential costs: The costs of this option are likely to be higher than Option 5 but lower than Option 1 due to the degree of national change involved. There are some minor central costs for this option associated with updating the central access point to include data from OAMs Potential timescales: This option is likely to take a number of years to implement, mainly due to the activities and costs associated with linking 29 different national processes and services. The likelihood is that this option would be implemented in stages, creating the new IT systems first and then transferring the data and responsibilities over time. It is anticipated that this process would take up to five years. Actica/PB318D Page 39

52 5.4.8 Option 8: Maintain status quo Summary: Continue to provide national OAM services used different databases, with few interconnections Detail: This option involves making no change to the existing arrangements and continuing to develop international linkages between OAM databases over time. Existing users will continue to access OAM information where they are aware of its existence and it meets their needs, and will continue to make use of commercial data providers to access pan-european information or to access more detailed information about issuers that is no held by the OAMs. This will include central organisations such as Eurostat and ECB who will continue to have to pay for this information Impact on OAMs: This option would have no impact on OAMs, as no changes are being made Impact on users: This option will have no impact on users, the current provision will continue to be supplied, and users will continue to have to pay for information that is not held by OAMs or for access to pan-european information Impact on Issuers: This option would not impact issuers they would still send information to the national OAMs Impact on private sector: This option would also have no impact on the private sector Infrastructure: The current implementation using different databases to provide national OAM services would not be changed Potential costs: There are no costs associated with this option as no changes are being made Potential timescales: This is the current situation, so there are no associated implementation timescales. Page 40 Actica/PB318D

53 6 Options Analysis 6.1 Introduction This section carries forward the options from Section 5 and analyses these at a high level to produce a short-list of preferred options. This short list is then analysed in detail to produce a recommendation. 6.2 Key requirements The external study, CESR s consultation and report and other work performed by the Commission have identified a number of elements required to be in place in order to build an effective pan-european storage network The findings from the surveys and interviews conducted allow a number of key requirements to be identified. These are: a. Common filing standards and formats; b. Harmonised methods of classification and indexing; c. Interconnection with national company registers; d. Multiple country search from a single query; e. Standardisation of telecoms and database solutions. 6.3 Initial analysis A number of the options identified in Section 5 can be discounted at this stage on the basis that they clearly do not meet one or more of the requirements. The discounted options and reasons for disqualification are listed below. Option 4: OAM web-ring This option proposes that the data storage standards and search tools are harmonised across all current OAMs to allow users to easily conduct searches across all OAM databases from any national OAM portal It is discounted at this stage because the EC requirements specify that a single, central search tool is required, that allows users to conduct pan-european searches from a single, central point. This option does not meet that requirement as no additional portals are created users would be able to use any of the existing OAM portals rather than being directed to a single, central portal. Option 6: Central search and index engine This option proposes to implement an intelligent search tool within a central portal that can automatically search and index all data held in OAM databases. This indexed data can then be searched by users to effectively conduct a pan-european search The option is discounted at this stage because use of an intelligent tool to index the data is seen as interpretation and carries a risk that data could be incorrectly or inappropriately indexed. Users conducting a search of information indexed in this fashion could therefore be presented Actica/PB318D Page 41

54 with incorrect or inaccurate results which could be seen as the responsibility of the owner and supplier of the search tool. This could lead to complaints or more serious action being taken against the EC (or other central body that is responsible for the central search tool) to recover monies lost as a result of incorrect data being supplied. Option 7: Combine current OAM operations with national business registers This option involves creating a single database by combining the information contained in the current OAM databases with that contained in the national business registers. This would make best use of the existing European linkages between national business registers This option is discounted at this stage for the following reasons: a. The effort required to integrate OAM databases with the Business Registers at a national level to enable the existing international linkages to be used to share OAM information is likely to be prolonged. This extra effort is not likely to deliver additional benefits over the previous options; b. The option does not increase the efficiency of the two separate databases due to a lack of synergy between them. The information held in the national business registers is different to that held in the OAMs, the only point of commonality is financial reports. It is therefore unlikely that a combined database would deliver any tangible savings and it is also unlikely that the combined database would be able to make use of the existing international linkages to search OAM data as these exist to share business register data rather than the different OAM data. Option 8: Maintain status quo This option does not involve making any changes to the current situation. The national OAMs will continue to provide national databases and facilitate national searches, and will continue to make slow progress in forging European linkages to share regulated information This situation allows all member states to manage their OAM operations separately, and to coordinate OAM operations with national regulators as needed. This has resulted in a large number of different approaches to the storage of regulated information and many areas where this data is duplicated across a number of systems to fit with existing national processes Maintaining the sataus quo means that users will continue to rely on commercial data providers to provide consolidated, cross-european access to regulated information in addition to analysis and non-regulated information about issuers of securities. This will mean that central organisations such as Eurostat and the European Central Bank will have to continue to pay for all the information that they need, and individual users will also continue to pay for their information due to the lack of understanding about what is available from OAMs as well as the lack of analysis available from the OAMs This option would be the easiest to implement as it does not involve making any changes, however it would not meet the requirements of the Transparency Directive, or the other requirements as stated in Appendix A This option is discounted as it does not meet the requirement for a single European access point and does not enable a pan-european search. Page 42 Actica/PB318D

55 6.4 Further analysis methodology A set of criteria by which the four options taken forward (Options 1,2,3 and 5) can be assessed has been developed based on assessing the overall suitability of each option to fulfil the requirement of enabling users to conduct pan-european searches of regulated information held on issuers of securities. These criteria are listed below: a. ability to meet the EC requirements as described in the ITT (Annex A); b. deliverability how easy is it to move from the current situation to that proposed by the option; c. ability to address concerns identified in previous reports; d. timescale how long is the option likely to take to be fully implemented; e. Cost; f. governance and resourcing How much will current governance and resourcing arrangements need to change to implement the option; g. standardisation to what level will the current national arrangements need to be standardised to implement the option; h. flexibility - how easily can the proposed system be changed to include new data, storage arrangements or processes (such as moving to XBRL); i. benefits and user experience what are the quantifiable and unquantifiable benefits of the option, including any improvements to the user experience; j. impact on other organisations, including 3 rd party providers; k. impact on other government services such as information registers; l. risk the likely risk of implementing the option Each option is then assessed against these criteria individually in order to understand how well that option is likely to meet the overall need Table 6-1 summarises how each option performs against these criteria, in comparison with the current situation (Option 8). Actica/PB318D Page 43

56 Current Situation Option 1: Central everything Option 2: Central copy of documents and search Option 3: Central metadata and search Option 5: Central search only Fit with EC requirements Provides limited single access point via Mifid Provides multi-lingual single access point Provides multi-lingual single access point Provides multi-lingual single access point Provides multi-lingual single access point Not all OAMs hold all regulated information required Is extensible Very partial search facilities Current databases can accept minor changes required for standardisation of finance and voting rights Can t consolidate info on corporate ownership and voting rights Could provide alerts some provided already Partially meets quality standards Can provide access to all regulated information dependent on common standards, regulation and compliance process, and unique ref number for issuers Extensible Complete search facilities as needed Allows for input standards to be used (need to be mandated on issuers) Cannot consolidate information on corporate ownership without interpretation or increased document tagging (not in current functionality anywhere) Could provide alerts (users only register in one place) Respects quality standards due to regulation and enforcement Cannot provide access to all regulated information as dependent on compliance processes being implemented locally Extensible Complete search facilities as needed Allows for input standards to be used (need to be mandated on issuers) Cannot consolidate information on corporate ownership without interpretation or increased document tagging (not in current functionality anywhere) Could provide alerts (users only register in one place) Partially meets quality standards due to local variation Cannot provide access to all regulated information as dependent on compliance processes being implemented locally Extensible Complete search facilities as needed Allows for input standards to be used (need to be mandated on issuers) Cannot consolidate information on corporate ownership without interpretation or increased document tagging (not in current functionality anywhere) Could provide alerts (users only register in one place) Partially meets quality standards due to local variation Cannot provide access to all regulated information as dependent on compliance processes being implemented locally Extensible Complete search facilities as needed Allows for input standards to be used (need to be mandated on issuers) Cannot consolidate information on corporate ownership without interpretation or increased document tagging (not in current functionality anywhere) Could provide alerts (users only register in one place) Partially meets quality standards due to local variation Deliverability Already implemented and working Likely to need legislation change Could base on existing national solution Need to inform issuers and change dissemination Need to consult and agree integration and duplication process with all in scope OAMs Need to consult and agree integration process with all in scope OAMs Most technically complicated of 2,3 and 5 May need to consult and agree integration process with all in scope OAMs tool may be able to index without any involvement from current OAMs Page 44 Actica/PB318D

57 process (sign up process) Need to consult and agree integration process with 29 states Addresses concerns No, by definition Addresses all concerns Does not address all concerns local autonomy remains Does not address all concerns local autonomy remains Does not address all concerns local autonomy remains Timescales Already implemented Last current contract expires in 2014 for services and 2018 for infrastructure Exclude lead times for agreeing this is solution 1 year procurement Concurrent year to agree standards for metadata and pragmatic unique ref number (mention EBR etc) 1 year procurement Concurrent year to agree standards for metadata and pragmatic unique ref number (mention EBR etc) 6 month procurement Concurrent year to agree standards for metadata and pragmatic unique ref number (mention EBR etc) 1 year procurement 6 months to implement 6 months to implement 3 months to implement Concurrent year to agree standards for metadata and pragmatic unique ref number (see findings section) 2 years integration and initial population (1 per month) 3.5 years total 2 years integration and initial population (1 per month) 3.5 years total 1 year to implement 3 years transition / migration (1 per month) 5 years total (+ EC agreement s) Governance / resourcing Weak governance and limited adherence to OAM quality standards. High regulation due to close linkages to local regulators. Limited interconnections between OAMs Need to work out how to manage pan-euro governance and compliance, and how this may apply to issuers Need Euro governance for standards and network Need Euro governance for standards and network applied to OAMs Need Euro governance for standards and network applied to OAMs No Euro governance for standards needed although would improve indexing performance Standardisation No enforced standardisation of metadata Enforced standardisation of issuer ref number and metadata Enforced standardisation of issuer ref number and metadata Enforced standardisation of issuer ref number and metadata Enforced standardisation of issuer ref number and metadata through indexing Actica/PB318D Page 45

58 Flexibility Low European flexibility due to requirement to change all databases etc. in order to effect change High flexibility as all info in one place = easy to change Low European flexibility due to requirement to change all databases etc. in order to effect change Low European flexibility due to requirement to change all databases etc. in order to effect change Very flexible due to low impact of implementation Benefits / user experience Zero benefit. Users tend not to find docs on OAM, except professional finance / lawyer types who need original source and historical info Save operating costs of local OAM model Delivers most functionality required Of benefit to ECB and Eurostat but does not meet all requirements Would still not provide any analysis on information submitted Quick search as all data held centrally Can easily index document as / when needed Would still not provide any analysis on information submitted Quick search of metadata but slow search for document as required to go to local OAM Will not miss documents as all information on docs held centrally Would still not provide any analysis on information submitted Potentially very slow search as required to search all OAMs for documents Unreliable search may miss documents due to service issues etc Would still not provide any analysis on information submitted Quick search as all data centrally Increased compliance Relationship with 3 rd party providers Issuers work with disseminators. Disseminators file with SE/OAM/market simultaneously. May also file with 3 rd party at same time, or 3 rd party picks up from market / SE feed. May be more attractive to 3 rd party providers as source of information May remove some simple value add of 3 rd parties through improved company linking etc. May be more attractive to 3 rd party providers as source of information May remove some simple value add of 3 rd parties through improved company linking etc. May be more attractive to 3 rd party providers as source of information May remove some simple value add of 3 rd parties through improved company linking etc. Unlikely to be attractive to 3 rd party providers due to long search timescales and potential difficulty of consolidating results. 3 rd parties do not use OAM as source of regulated info. Most investors use 3 rd party as source of regulated and other information rather than OAM. Relationship with business registers No relationship with EBR No relationship with Ability to introduce common filing processes May be able to link central database to business Unlikely to be able to link OAM data to business Unlikely to be able to link OAM data to business Page 46 Actica/PB318D

59 national business register No commonality in filing processes across BRs and OAMs and coding as required registers in order to add value registers as data is still held in national databases. Likely to be more effective to pursue national linkages registers as data is still held in national databases. Likely to be more effective to pursue national linkages Risks Zero no change Lose extended local storage currently in place or countries have to store elsewhere Duplicate dataset created therefore risk of incorrect duplication and risk of incorrect timing Risks slow search results for users, and potential user confusion Risk of very slow search results, and variety of presentation of documents returned may confuse users Lose ability to easily search historic data as difficult to codify to new standards without interpretation Actica/PB318D Page 47

60 6.5 Cost model A full cost model, including a detailed list of assumptions made and details of costs over 5 years for all four options has been developed as an annex to this report. Table 6-2 below summarises this model and shows the additional costs incurred centrally and the total costs associated with all four options, detailed over a 5 year period. Central costs Year 1 Year 2 Year 3 Year 4 Year 5 Option 1 2,070, , , , ,000 Option 2 1,240, , , , ,000 Option 3 1,880, , , , ,000 Option 5 1,090, , , , ,000 Total costs Option 1 4,090,000 2,060,000 1,560,000 1,050, ,000 Option 2 3,260,000 2,320,000 2,320,000 2,320,000 2,320,000 Option 3 3,900,000 2,360,000 2,360,000 2,360,000 2,360,000 Option 5 3,110,000 2,280,000 2,280,000 2,280,000 2,280,000 Table 6-2: Cost model summary 6.6 Detailed analysis Option 1: Central EU dataset Implementation of this option would be the most efficient way of storing and allowing users to search the information across Europe. This is because it is a single large database, rather than multiple separate databases and hence would realise a number of efficiencies around operational costs, such as improved used of IT infrastructure and reduced complexity of management processes (as compared to multiple individual instances) Implementation of this option would meet the majority of the requirements listed in Appendix A and would also lead to a number of cost savings when aggregating costs of OAM provision across all countries in the scope of this study. The cost savings are likely to come from economies of scale in the use of ICT infrastructure, reduced management and operational resource costs and improved flexibility and ease of change It would not meet the requirement to consolidate information on corporate ownership as this would require the information submitted to be analysed and consolidated in a different form. For this reason none of the potential options will meet this requirement This option was considered by CESR in their report of 2010 and was rejected due to the noted difficulty and complexity of moving from the current arrangement directly to a single, European OAM. Page 48 Actica/PB318D

61 It can be seen from the cost model above that the initial costs of this option are high, this is due to the large requirement for change in IT systems, central processes and national processes. However, the total costs associated with this option decrease quickly and by year 2 this becomes the cheapest of the options to run because it involves cutting the costs associated with running the national OAMs It is also very likely that there will be high degrees of change associated with this option, mostly associated with agreeing the process changes needed to allow issuers to provide data centrally for OAM purposes, and locally for change to national regulatory processes such as those maintained by national stock exchanges. Current OAMs will also need to make plans to maintain information currently stored by the OAM that is not regulated by the UE It is therefore considered that this option should be seen as the best long term option in order to realise the cost saving benefits whilst providing opportunities and time for the processes changes needed to be discussed and agreed Option 2: Central dataset fed by existing OAMs This option retains the national OAMs and provides a central database and search facility that holds copies of all documents held by them. Implementation of this option would meet many of the EC requirements, but these would be subject to local variations in the types of documents held and in the filing processes in use This option would provide a very quick and efficient search across all data held by OAMs, but would not necessarily provide access to all required information across Europe as provision of this information would still be dependent on national compliance to the quality standards. It is envisaged that the level of compliance would increase over time There are also concerns with this option around the timeliness of data held in the central database. National OAMs have different timescales for making documents filed public, for example publishing documents 24 hours after they are submitted by issuers to allow for quality checks. It is therefore possible that information found in the central database will be different from information available to users searching national facilities. It is also possible that the process used to copy documents from the national OAM databases to the central database may take some time and hence users may receive different results when searching central or local databases This option would therefore require a number of additional UE processes to be created in order to effectively manage and maintain standards around the provision of information to the central database The initial costs for this option are likely to be lower than Option 1 as less process change is required and fewer resources will be needed to manage relationships as the central team will only need to manage relationships with the OAMs rather than with all EU issuers. The technical costs are likely to be similar on the basis that both options will require creation of a searchable database that holds all pan-european regulated information This option will require less total change than Option 1, and is therefore appealing as it delivers a similar level of functionality for users, although does not deliver the cost saving benefits associated with Option 1. It is therefore only likely to be a good option if the level of change associated with Option 1 is not acceptable. Actica/PB318D Page 49

62 6.6.3 Option 3: Central metadata store This option is similar to Option 2 the only difference is that the searchable central database only holds metadata about documents contained in the national OAM databases rather than copies of the documents themselves This means that there are not likely to be any issues around different copies of documents being available to users conducting searches in different places. There are also not likely to be any timing issues as the metadata about the documents can be sent to the central database as soon as it is submitted by the issuer, rather than waiting for any quality checks to be performed This option also does not ensure that all regulated information is available as this is still dependent on local quality standards, as for Option This option is likely to be the most technically complicated of the potential options, on the basis that it requires the central database to hold copies of information (metadata) held by the national OAMs and also requires the central service to be able to link back to documents held in national databases rather than centrally. This is likely to require some development by all OAMs in addition to central development. The amount of this development work required is likely to be less than Option 2 as less information needs to be exchanged between the local and central OAM databases The technical complexity of this option can be seen in the costs for this option the initial costs are higher than Option 2 on the basis that more development and integration with existing OAM systems will be required. The ongoing costs for this option are very similar to Option 2. This is because less software is required for this option as the database for metadata is far smaller than the full database of Option 2, but additional resource is required to manage a more complex overall system, balancing out the reduced software cost The risk of incorrect documents being provided to users associated with this option is less than that for Option 2 because the OAM documents are not duplicated. The overriding requirement for accuracy and timeliness of data held by OAMs is such that this option is likely to represent a better approach to providing a central search facility than Option 2 as the costs are similar but the overall level of risk is lower Option 5: Network of harmonised national OAMs This option only provides a central search tool, no central database is specified. This would mean that when a user conducts a pan-european search, the central search engine is required to search for the required information in all of the current national databases, formatting the search query as needed to make use of each individual database This is likely to require a technically complex solution as the central search tool will need to interface with the existing databases, which is likely to require creation of a large number of subtly different interfaces in order to ensure the searches created are effective The pan-european searches conducted using this central tool are also likely to take some time compared to other options due to the requirement to conduct multiple individual searches to build up the central search result. Every time a user conducts a central search, each of the OAM databases will need to be queried in order to compile a pan-european result, and therefore this search is likely to take longer than searching a single database (as in Options 2 and 3) as 27 individual searches are needed. The total time to complete a search is therefore dependent on Page 50 Actica/PB318D

63 network performance across Europe and on the time taken to complete 27 individual searches of the individual OAM databases The costs of this option are the lowest of the four options considered as fewer ICT infrastructure resources are required to provide the solution and the level of additional operational resources required is lower than Option 3 as the relationships required with OAMs are slightly less complex This option is unlikely to meet the requirements of users based on the likely long search times and the difficulty of comparing results retrieved from a number of different databases. The costs are also not significantly lower than the other options proposed and therefore this option is discounted at this stage. 6.7 Other considerations There are a number of baseline standards and protocols which need to be in place in order to implement any of the four options above to deliver a solution which meets all the EC requirements. Without such changes, any pan-european searches conducted would not be effective and the value of the technical development adversely impacted The changes identified, based on our findings, are listed below and discussed further in the Recommendations section following: a. definition of a unique pan-european issuer code; b. standardisation of the metadata held on issuers and filed documents; c. standardisation, or harmonisation, of approach to time stamping and versioning In addition, in order to meet the requirement for, consolidation of information on corporate ownership, standardised structured formats for filing such information will need to be defined and implemented. Actica/PB318D Page 51

64 INTENTIONALLY BLANK Page 52 Actica/PB318D

65 7 Recommendation 7.1 Introduction This section makes a number of technical recommendations to implement a pan-european search of regulated information on issuers of securities. The recommendations take account of the European Commission s requirements, of the previous studies as detailed in Section 2 and of the findings of this report as detailed in Section 4. The recommendations are based on the Options Analysis in Section 6 above. 7.2 Recommendation Summary The options analysis does not identify a clear preferred option. All of the options identified are able to meet the majority of the requirements, have similar costs and similar timescales It is clear that Option 1 best satisfies the requirements, but it is also clear that this option has the highest overall impact on users, issuers and existing OAMs, and thus is highly likely to take the longest time to implement. However, this option also presents the best opportunity to save costs based on the reduction of the number of national OAMs over time The recommendation is therefore that Option 1 should be the long term solution, and that the EC seeks to evolve the current situation into a single, European OAM over time. Options 2 and 3 can then be used as steps which support this evolution and allow the costs and impact on stakeholders to be borne over time, and thus the impact and difficulty of change is reduced Publish a strategic roadmap for the future storage of regulated information It is recognised that the implementation of a pan-european OAM network meeting all the functional requirements specified will require progress through a number of steps and take some considerable time to deliver and manage transition The effective delivery of such a major programme of change will involve the management of technical, legislative and organisational dependencies and change streams In order to maintain focus, and to show the market there is strong commitment to the longer term vision, we strongly recommend that a clear strategic roadmap and vision is agreed and published showing the proposed end target model, the proposed steps for moving towards this from the current position and the principles that will underpin this development The recommendation is that the roadmap shows the pre-work needed to support the implementation of any of these options (as discussed below), and then details the order in which the options could be implemented. The recommendation of this report is that Option 3 could be implemented first to ensure that the standardisation works and to allow users initial access to a pan-european search. This implementation of a central search tool holding metadata from all current OAMs could then be upgraded to also hold copies of the documents held by OAMs on a country-by-country basis. This will lead to Option 2 being fully implemented when all documents are stored in both the originating countries OAM and the central database. Actica/PB318D Page 53

66 These initial steps will then facilitate Option 1 being rolled out as circumstances allow by redirecting individual country OAM pages to the central facility, for both users and issuers We consider the publication of a strategic roadmap to be an early key requirement and prerequisite for success, without which there will be little basis on which to build the onward development or gain the active engagement of key market participants required in order to deliver the stated requirements Align roadmap, standards and delivery with proposals for interconnection of business registers Coordinate development, and approach, with proposals for business registers to set common coding and interconnection standards and manage and coordinate the impact of changes on issuers and listed companies Develop main strands of the roadmap There are three strands which need to be progressed in order to reach a full solution: a. specification and procurement of central access functionality; b. agreement and implementation of common metadata, coding standards and process standards; c. implementation and migration planning The following points form a recommended way forward to manage central standards and governance Set up a central standards and protocol body to agree and implement standards A central body will be needed to bring together OAMs and other interested parties to agree and enforce technical and data/metadata standards. The body should also determine transfer protocols to apply to metadata and filings and develop interoperability agreements if required Such a body may also be assigned the responsibility for the project management of the implementation and migration to the pan-european service We note the comments in CESR s 2010 report regarding the potential future role of ESMA in these areas Define a unique pan-european issuer code We consider the definition and implementation of such a unique code is key to the successful technical development of pan-european searches across the OAM network and endorse CESR s view in their 2010 report that a single code should be agreed for use by both the OAM and company register networks. We also note the recent endorsement by the International Standardization Organization of the Society for Worldwide Interbank Financial Telecommunications (SWIFT) as the registration authority to create and distribute global legal entity identifiers (LEIs). Page 54 Actica/PB318D

67 Link between business registers and unique issuer code The business registers project aims to create a unique identification number for legal entities across Europe, potentially based on adding a country code to the current national identifiers. However, there is not a direct relationship between legal entities and issuers of securities, and hence this project cannot guarantee that each issuer of securities will have a unique identification number National business registers provide a unique identification number to all legal entities created in that nation, whether or not the legal entity is able to issue securities. There are therefore many legal entities with an identification number that are not able to issue securities (because they are not publically listed) but still have a name and identification number and hence may drive confusion. Of greater importance, there are also organisations that are able to issue securities which are not registered in national business registers A further issue is that the national business registers do not consolidate information, as noted in the BRITE project details. A multi-national issuer of securities is likely to have entries in many different national business registers. These are unlikely to have the same company name and will have different identification numbers which are not linked. In order to ensure the integrity of the pan-european OAM data search, these multi-national entities must be linked together by assigning a single pan-european identification number to the issuer, in addition to the multiple national identification numbers Standardise metadata held for issuers and filings, and harmonise coding The enhanced metadata proposed in the 2010 CESR report should be adopted as a common standard across Member States. Where required, the OAM filing processes should enhanced to capture this information from issuers. This should include a common definition of the types of regulated information stored (also see CESR 2010 proposals) The metadata held should be based on a common coding structure to allow cross country searches to be based on these codes rather than text/names. For example, by introducing a common code for a type of regulated information (1=Annual Report for example) as well as ISIN code for security etc.) This standardisation and code based search could be introduced at the central CAP/hub not necessarily required at national OAM level Harmonise other key aspects of national OAM data and processes In order to move the OAM network forward, and allow effective high quality searching across the network, there is a need to introduce a minimum set of common definitions of the key data items and basic rules of processing. These need not be extensive or onerous, but need to cover the following: a. A common approach to docketing/time stamping across the network; b. A harmonised approach to management of versioning where issuers submit revised versions of a document Specify a standardised format for filing structured information The current OAM technology and filing processes could be extended without, in most cases, major re-engineering, to include acceptance and storage of filings containing structured information, for example for holdings of voting rights. In order to achieve this, a common Actica/PB318D Page 55

68 format needs to be developed which could provide comprehensible and usable information which could be made available to end users without further processing or interpretation by the OAM operator. The specification of the format would need to be centrally driven, perhaps by ESMA, and the responsibility for compliance placed with issuers. In regards to notification of major holdings, these could be XBRL documents or standard forms or templates defined by ESMA in pursuit of Article 12.9 of the Transparency Directive. 7.3 Other recommendations Promotion of current OAM services The OAM services currently provided by the 29 countries included in this study would benefit from increased marketing and promotion to ensure that all potential users are aware of their existence and of the services and information that can be provided. This marketing and promotion could include: a. Improving the search rankings when searching for OAM in popular internet search engines; b. Promoting OAM services on other financial services web pages such as those of national regulators; c. Linking to OAM sites from related services such as national business registers; d. Advertising on popular share dealing portals. 7.4 Summary of recommendations 1 Publish a strategic roadmap for the future storage of regulated information 2 Align roadmap, standards and delivery with proposals for interconnection of business registers 3 Develop main strands of the roadmap Including: 4 Specify requirements of central access functionality (CAP) 5 Plan implementation, migration and/or integration of CAP service 6 Set up a central standards and protocol body to agree and implement standards 7 Define a unique pan-european issuer code 8 Standardise metadata held for issuers and filings and harmonise coding 9 Harmonise other key aspects of national OAM data and processes 10 Specify a standardised format for filing structured information Table 7-1: Summary of recommendations Page 56 Actica/PB318D

69 INTENTIONALLY BLANK Actica/PB318D Page 57

70

71 A Characteristics of a pan-european storage system A.1 Each of the potential options for the pan-european system must be assessed against achievement of the following functional characteristics, as specified by the Commission and set out in Box 2 on Page 21 of the study Invitation to Tender MARKT/2010/17/F: a. A single access point with a multilingual interface; b. Access to ALL regulated information; c. Allow for extension to cover other related areas not covered by the current Directive; d. Offer searching facilities based on a wide range of reference data; e. Allow the imposition of the use of input standards for the filing of financial information (e.g. statements prepared with XBRL){eXtensible Business Reporting Language - }; f. Allow the imposition of the use of input standards for the filing of information on corporate ownership (e.g. standard electronic forms); g. Consolidate information on corporate ownership to give views of disclosed holdings of voting rights by issuer and by investor; h. Integrate alert systems on information filed for the benefit of supervisory authorities to avoid the need for parallel filing to these authorities; i. Allow for the possibility to integrate notification or alert systems on information filed for the benefit of market participants; j. Reflect the quality standards in the Commission s Recommendation of 2007; k. Other enhancements to improve the visibility of small listed companies. Actica/PB318D Page 59

72 Page 60 Actica/PB318D