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ESMA and Digital Transformation of Finance


For most Finance teams across Europe, now is the time to kick their ESMA project into action. 2019 reporting is complete and it’s time to look forward to preparing for the 2020 filing, and the opportunities and challenges this brings.

For most, the issue of ESMA compliance was a challenge parked up during 2019, as the perception was that no action was needed yet as 2020 filing is a long way away and there are many more pressing issues to address before ESMA.

It is now time to start assembling the team who will ensure compliance with ESMA and avoid any last-minute challenges in 2021, which would cause the filing for 2020 to be delayed.

As with most new software and process changes, the best practice scenario is to pressure test the systems before the actual event. This is especially true with testing for ESMA compliance. From experience gained with other Regulatory changes across the globe, we strongly recommend that at least one quarter is reserved for testing when the demands on the Finance team are at a lower level. No point testing during half-year returns as this will result in time and project challenges. The good news is that testing can be run on 2019 figures, which should enable compliance confidence when the 2020 return is required.

From an external perspective, the requirements around the new legislation might appear challenging with the need for iXBRL reporting, applying the ESMA taxonomy, working with tagging and anchoring. However, by applying a comprehensive software solution to manage the reporting and leveraging the setup knowledge and expertise of the vendor, the road to compliance may well be a much more rewarding experience than originally envisaged.

By way of illustration, take a look at the infographics below.

Illustration 1 shows the simplicity of taking the output from your various systems of record, incorporating, in this instance, into the Certent Disclosure Management (CDM) software as a dynamic connection, and generating your ESMA compliant reports.

The challenges of integrating the various sources of data developing reports, designing a process flow, tagging, and extending/anchoring are all handled by the software.

Fast forward to next year - ESMA has updated their taxonomy and there are other material changes to your reporting, the software will again handle all the complexity of these changes and leave you free to concentrate on the content of reports.

Illustration 2 shows that the same platform will additionally fulfill your other external and internal narrative and regulatory reporting requirements.

With one source of the truth and dynamic data flow into the reports, the Regulatory and External reporting requirements are met and you have the opportunity to update old manual processes and bring a whole new dynamic of efficiency and accuracy to the reporting process.

For more insight into the ESMA solutions offered by Certent, take a look at our ESMA insight page


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