ESMA has also published a reporting manual and detailed instructions to issuers to facilitate the implementation of the regulatory technical standards.

Steven Maijoor, ESMA chair, said: ‘The draft regulatory technical standards published today is a significant step forward in the digitalisation of financial information of European issuers. The introduction of the new reporting format in 2020 will make financial statements more accessible and more easily comparable for investors across the EU, supporting transparency and contributing to increased investor protection.’

ESMA says the European single electronic format detailed in the regulatory technical standards allows the analysis of large amounts of financial information without extensive and burdensome manual processing, and will provide users of financial data with financial information that can be easily compared and transformed to other formats.

Starting in 2020, all annual financial reports need to be prepared in XHMTL. This format can be opened with standard web browsers and can be prepared and displayed depending on the preferences of an individual issuer, ESMA says.

Where the annual financial report contains IFRS consolidated financial statements, these should be labelled with XBRL tags, making the labelled disclosures structured and machine-readable.

ESMA says this facilitates software supported analysis and comparison of different reports, granting investors a key tool to support their investment decisions. Furthermore, as XBRL taxonomies can contain labels in several languages, users can compare numerical information in the financial statements across issuers even though the issuers prepare their financial statements in different languages.

In addition, for individual users of financial data, the machine-readable XBRL information is easily transformable to other formats such as SQL or Excel, avoiding manual rekeying. The XBRL tags will be embedded in the XHTML document using Inline XBRL.

To allow for structured electronic reporting using XBRL, European single electronic format uses an extension of the IFRS taxonomy, issued by the IFRS Foundation. This taxonomy provides issuers with a set hierarchical structure to be used to classify financial information.

ESMA says that, once implemented, European single electronic format could serve as a potential reference point for further EU wide initiatives to make company data more comparable, transparent and digitally accessible, as envisaged in the Tallinn declaration on e-government signed by all EU member states and EFTA countries earlier this year.

Final Report on the RTS on the European Single Electronic Format is here.