On 12 January 2023, the FCA published Consultation Paper 23/2 ‘Streamlining our rules on structured digital reporting of financial statements’ (CP23/2).
Introduction
In CP23/2 the FCA is consulting on changes to streamline their existing rules that require in-scope companies with securities admitted to UK regulated markets to prepare, publish and file with the regulator their annual financial report in an electronic format, and for the financial statement within it to be in a ‘structured digital format.’
Structured digital reporting can enhance the transparency of existing market disclosures by applying digital ‘tags’ or ‘labels’ to the information, allowing it to be more easily extracted, compared and analysed by market participants using computer software. As such, structured digital reporting should support efficient price formation and investors’ decision-making, which in turn promotes market integrity in line with the FCA’s operational objective.
Proposals
The FCA proposes to simplify the arrangement of its existing rules by revoking the Technical Standards (where they are currently set out) and putting the key provisions directly in the Disclosure, Guidance and Transparency Rules (DTRs). This aligns with the UK Government’s proposed wider Future Regulatory Framework reform for financial services, whereby provisions in retained EU regulations (which include the Technical Standards) are to be replaced with regulator rules.
The FCA proposes to make a new rule in the DTRs requiring issuers to tag their annual financial statements (where they are prepared in accordance with International Financial Reporting Standards) using a ‘generally accepted taxonomy’ for annual corporate reporting in UK regulated markets. The FCA proposes new guidance on what it considers to be generally accepted taxonomies for this purpose in a Technical Note, which it will keep updated as new taxonomies emerge.
Next steps
The deadline for responding to CP23/2 is 24 February 2023.
The FCA will publish final rules and guidance later in 2023.
