Response to consultation Paper on Draft Implementing Technical Standards on reporting requirements for investment firms under Article 54(3) and on disclosures requirements under Article 49(2) of Regulation (EU) 2019/2033
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Fist submission of the reports: We would like to request the EBA to clarify the expected first deadlines for the first submission for all investment firms (Class 2 and 3). The EBA had stated at the hearing that the deadline for the first submission of quarterly reports by Class 2 investment firms to supervisors should be the 30 September 2021. We understand this to mean that the reporting reference date is to be 30 September 2021 (cf. Article 2(1)(a) of the Draft ITS), but that the reporting remittance date is then only 11 November 2021 (cf. Article 3(1)(a) of the Draft ITS).
For small and non-interconnected investment firms (Class 3), it was not clear at the EBA hearing whether they should submit their annual reports for the first time also on the reference date of 30 September 2021 (with the reporting remittance date of 11 November 2020) or on the reference date of 31 December 2021 (with the reporting remittance date of 11 February 2022). In our view, the first annual report of Class 3 firms should be submitted for the first time on the reference date of 31 December. That would be in line with the proposed reporting reference and remittance dates for the annual reporting in Articles 2(1)(b) and 3(1)(b) of the Draft ITS.
Formats of the reports: We support the proposed approach in Article 9 of the Draft ITS that the data exchange formats and representations should be specified by competent authorities. In particular, the very reduced reporting requirements for small-sized investment firms do not justify high standardised IT solutions. In that context, we are very concerned with the announcement of the EBA to introduce additional XBRL taxonomies at a later stage which are not part of the consultation paper (cf. paragraph 12 of the explanations of the consultation paper). This could involve additional administrative burden for a binding IT implementation with a high cost and manpower effect (in particular, for small-sized investment firms) that should be avoided.
Moreover, the implementation of high standardised XBRL taxonomies could also affect the question when investment firms must provide the first reports. Therefore, the implementation of the XBRL reporting format might not be feasible for the first round of reporting starting in September 2021 depending on the final EBA approach to the transitional period and the availability of the complete programming template sufficiently in advance. In any case, we believe that the EBA should grant then certain leeway for submissions of regulatory reports in the first two years.
2. Disclosure
Scope of the disclosure requirements: We strongly disagree with the proposed detailed disclosure requirements suggested in Article 11 of the Draft ITS with reference to the templates of Annex VI and the relevant instructions set out in Annex VII. We cannot see that the content has been significantly simplified compared to the CRR rules and that the disclosure framework will bring simpler and more proportionate requirements for investment firms relative to their size and complexity in comparison with the CRR/CRD framework. We are aware that the EBA states at its hearing that the CRR requirements will be used as a basis for orientation and that the implementation effort on disclosure will therefore be less complex. Such an approach is reasonable for all investment firms which are currently subject of the disclosure requirements of the CRR.
However, limited licence firms such as portfolio managers which will qualify as class 2 firms under the new IFD/IFR framework are not required to disclose certain information under the CRR. The implementation of disclosure processes will therefore be a completely new requirement for them. Rather, these new disclosure requirements are very extensive and require new internal control and quality assurance processes, which can also run automatically. Such an implementation process is very complex and will lead to an administrative effort that should be limited to the most necessary. We therefore urge the EBA to reduce the templates in an appropriate way.
First submission of disclosure: The requirements in the Draft ITS on the disclosure requirements for own funds are to apply as early as 26 June 2021, whereby, according to Art. 46(1) and (2) IFR, these are to take place simultaneously with the publication of the annual financial statements. We therefore request the EBA to clarify when the investment firms must submit their first annual disclosure
Question 1: Are the instructions and templates clear to the respondents?
1. Reporting Fist submission of the reports: We would like to request the EBA to clarify the expected first deadlines for the first submission for all investment firms (Class 2 and 3). The EBA had stated at the hearing that the deadline for the first submission of quarterly reports by Class 2 investment firms to supervisors should be the 30 September 2021. We understand this to mean that the reporting reference date is to be 30 September 2021 (cf. Article 2(1)(a) of the Draft ITS), but that the reporting remittance date is then only 11 November 2021 (cf. Article 3(1)(a) of the Draft ITS).
For small and non-interconnected investment firms (Class 3), it was not clear at the EBA hearing whether they should submit their annual reports for the first time also on the reference date of 30 September 2021 (with the reporting remittance date of 11 November 2020) or on the reference date of 31 December 2021 (with the reporting remittance date of 11 February 2022). In our view, the first annual report of Class 3 firms should be submitted for the first time on the reference date of 31 December. That would be in line with the proposed reporting reference and remittance dates for the annual reporting in Articles 2(1)(b) and 3(1)(b) of the Draft ITS.
Formats of the reports: We support the proposed approach in Article 9 of the Draft ITS that the data exchange formats and representations should be specified by competent authorities. In particular, the very reduced reporting requirements for small-sized investment firms do not justify high standardised IT solutions. In that context, we are very concerned with the announcement of the EBA to introduce additional XBRL taxonomies at a later stage which are not part of the consultation paper (cf. paragraph 12 of the explanations of the consultation paper). This could involve additional administrative burden for a binding IT implementation with a high cost and manpower effect (in particular, for small-sized investment firms) that should be avoided.
Moreover, the implementation of high standardised XBRL taxonomies could also affect the question when investment firms must provide the first reports. Therefore, the implementation of the XBRL reporting format might not be feasible for the first round of reporting starting in September 2021 depending on the final EBA approach to the transitional period and the availability of the complete programming template sufficiently in advance. In any case, we believe that the EBA should grant then certain leeway for submissions of regulatory reports in the first two years.
2. Disclosure
Scope of the disclosure requirements: We strongly disagree with the proposed detailed disclosure requirements suggested in Article 11 of the Draft ITS with reference to the templates of Annex VI and the relevant instructions set out in Annex VII. We cannot see that the content has been significantly simplified compared to the CRR rules and that the disclosure framework will bring simpler and more proportionate requirements for investment firms relative to their size and complexity in comparison with the CRR/CRD framework. We are aware that the EBA states at its hearing that the CRR requirements will be used as a basis for orientation and that the implementation effort on disclosure will therefore be less complex. Such an approach is reasonable for all investment firms which are currently subject of the disclosure requirements of the CRR.
However, limited licence firms such as portfolio managers which will qualify as class 2 firms under the new IFD/IFR framework are not required to disclose certain information under the CRR. The implementation of disclosure processes will therefore be a completely new requirement for them. Rather, these new disclosure requirements are very extensive and require new internal control and quality assurance processes, which can also run automatically. Such an implementation process is very complex and will lead to an administrative effort that should be limited to the most necessary. We therefore urge the EBA to reduce the templates in an appropriate way.
First submission of disclosure: The requirements in the Draft ITS on the disclosure requirements for own funds are to apply as early as 26 June 2021, whereby, according to Art. 46(1) and (2) IFR, these are to take place simultaneously with the publication of the annual financial statements. We therefore request the EBA to clarify when the investment firms must submit their first annual disclosure