Interactive Data To Improve Financial Reporting, 32794-32832 [E8-12596]
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Federal Register / Vol. 73, No. 112 / Tuesday, June 10, 2008 / Proposed Rules
SECURITIES AND EXCHANGE
COMMISSION
17 CFR Parts 229, 230, 232, 239, 240
and 249
• Use the Federal eRulemaking Portal
(https://www.regulations.gov). Follow the
instructions for submitting comments.
revise Forms S–3,15 S–8,16 and F–3 17
under the Securities Act and Forms 20–
F 18 and 6–K 19 under the Exchange Act.
Paper Comments
Table of Contents
I. Introduction and Background
A. Introduction
B. Current Filing Technology and
Interactive Data
C. The Commission’s Multiyear Evaluation
of Interactive Data and Overview of
Proposed Rules
II. Discussion of the Proposed Amendments
A. Submission of Financial Information
Using Interactive Data
B. Phase-In Under the Proposed Rules
1. Overview
2. Companies and Filings Covered by the
Proposed Rules and Phase-In
3. Documents and Information Covered by
the Proposed Rules
a. Financial Statements and Financial
Statement Schedules
b. Registration Statements Covered by the
Proposed Rules
4. Initial Filing Grace Period
5. Web Site Posting of Interactive Data
C. Accuracy and Reliability of Interactive
Data
1. Voluntary Program
2. Use of Technology To Detect Errors
3. Integration of Interactive Data and
Business Information Processing
4. Continued Traditional Format and
Interactive Data Cautionary Disclosure
D. Required Items
1. Data Tags
2. Regulation S–T and the EDGAR Filer
Manual
E. Consequences of Non-Compliance and
Hardship Exemption
III. General Request for Comments
IV. Paperwork Reduction Act
V. Cost-Benefit Analysis
VI. Consideration of Burden on Competition
and Promotion of Efficiency,
Competition and Capital Formation
VII. Initial Regulatory Flexibility Act
Analysis
VIII. Small Business Regulatory Enforcement
Fairness Act
IX. Statutory Authority and Text of Proposed
Amendments
[Release Nos. 33–8924; 34–57896; 39–2455;
IC–28293; File No. S7–11–08]
RIN 3235–AJ71
Interactive Data To Improve Financial
Reporting
Securities and Exchange
Commission.
ACTION: Proposed rule.
AGENCY:
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SUMMARY: We are proposing rules
requiring companies to provide
financial statement information in a
form that would improve its usefulness
to investors. Under the proposed rules,
financial statement information could
be downloaded directly into
spreadsheets, analyzed in a variety of
ways using commercial off-the-shelf
software, and used within investment
models in other software formats. The
rules would apply to domestic and
foreign public companies that prepare
their financial statements in accordance
with generally accepted accounting
principles as used in the United States
(U.S. GAAP), and foreign private issuers
that prepare their financial statements
using International Financial Reporting
Standards (IFRS) as promulgated by the
International Accounting Standards
Board (IASB). Companies would
provide their financial statements to the
Commission and on their corporate Web
sites in interactive data format using the
eXtensible Business Reporting Language
(XBRL). The interactive data would be
provided as an exhibit to periodic
reports and registration statements, as
well as to transition reports for a change
in fiscal year. The proposed rules are
intended not only to make financial
information easier for investors to
analyze, but also to assist in automating
regulatory filings and business
information processing. Interactive data
has the potential to increase the speed,
accuracy, and usability of financial
disclosure, and eventually reduce costs.
DATES: Comments should be received on
or before August 1, 2008.
ADDRESSES: Comments may be
submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/proposed.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number S7–11–08 on the subject line;
or
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• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number S7–11–08. This file number
should be included on the subject line
if e-mail is used. To help us process and
review your comments more efficiently,
please use only one method. The
Commission will post all comments on
the Commission’s Internet Web site
(https://www.sec.gov/rules/
proposed.shtml). Comments are also
available for public inspection and
copying in the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. All comments received
will be posted without change; we do
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT:
James C. Lopez, Legal Branch Chief,
Division of Corporation Finance at (202)
551–3790; Mark W. Green, Senior
Special Counsel (Regulatory Policy),
Division of Corporation Finance at (202)
551–3430; Jeffrey W. Naumann,
Assistant Director, Office of Interactive
Disclosure at (202) 551–5352; or
Melanie Jacobsen, Office of the Chief
Accountant at (202) 551–5300, U.S.
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–3628.
SUPPLEMENTARY INFORMATION: We
propose to add Rules 405 and 406 to
Regulation S–T,1 and revise Item 601 2
of Regulation S–K,3 Rules 11,4 201,5
202,6 305,7 401,8 and 402 9 of Regulation
S–T, Rule 144 10 under the Securities
Act of 1933 (Securities Act),11 and Rules
13a–14 12 and 15d–14 13 under the
Securities Exchange Act of 1934
(Exchange Act).14 We also propose to
1 17
CFR 232.10 et seq.
CFR 229.601.
3 17 CFR 229.10. et seq.
4 17 CFR 232.11.
5 17 CFR 232.201.
6 17 CFR 232.202.
7 17 CFR 232.305.
8 17 CFR 232.401.
9 17 CFR 232.402.
10 17 CFR 230.144.
11 15 U.S.C. 77a et seq.
12 17 CFR 240.13a–14.
13 17 CFR 240.15d–14.
14 15 U.S.C. 78a et seq.
2 17
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I. Introduction and Background
A. Introduction
Over the last several decades,
developments in technology and
electronic data communication have
significantly decreased the time and
cost of filing disclosure documents with
us. Technological developments also
have facilitated greater transparency in
the form of easier access to, and analysis
of, financial reporting and disclosures.
Most notably, in 1993 we began to
require electronic filing on our
Electronic Data Gathering, Analysis and
15 17
CFR 239.13.
CFR 239.16b.
17 17 CFR 239.33.
18 17 CFR 249.220f.
19 17 CFR 249.306.
16 17
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Federal Register / Vol. 73, No. 112 / Tuesday, June 10, 2008 / Proposed Rules
Retrieval System (EDGAR).20 Since
then, widespread use of the Internet has
vastly decreased the time and expense
of accessing disclosure filed with us.
We continue to update our filing
standards and systems as technologies
improve. These developments assist us
in our goal to promote efficient and
transparent capital markets. For
example, since 2003 we have required
electronic filing of certain ownership
reports 21 filed on Forms 3,22 4,23 and
5 24 in a format that provides interactive
data, and recently we adopted similar
rules governing the filing of Form D.25
In addition, recently we have
encouraged, and in some cases required,
public reporting companies and mutual
funds to provide disclosures and
communicate with investors using the
Internet.26 Now, as part of our
continuing efforts to assist filers as well
as investors who use Commission
disclosures, we propose to require that
financial statements be provided in a
format that makes the information they
contain interactive.
Our proposal builds on our voluntary
filer program, started in 2005,27 that
allowed us to evaluate the merits of
interactive data. The voluntary program
allows companies to submit financial
statements on a supplemental basis in
interactive format as exhibits to
specified filings under the Exchange Act
and the Investment Company Act of
1940 (Investment Company Act).28
Companies that participate in the
program still are required to file their
financial statements in American
Standard Code for Information
Interchange (ASCII) or HyperText
Markup Language (HTML).29
In 2007, we extended the program to
enable mutual funds voluntarily to
submit in interactive data format
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20 In
1993, we began to require domestic issuers
to file most documents electronically. Release No.
33–6977 (Feb. 23, 1993) [58 FR 14628]. Electronic
filing began with a pilot program in 1984. Release
No. 33–6539 (June 27, 1984) [49 FR 28044].
21 Release No. 33–8230 (May 7, 2003) [68 FR
25788 and 37044 (correction)] (required electronic
filing of ownership reports) and Release No. 33–
8891 (Feb. 6, 2008) [73 FR 10592] (required
electronic filing of Form D [17 CFR 239.500]).
22 17 CFR 249.103 and 274.202.
23 17 CFR 249.104 and 274.203.
24 17 CFR 249.105.
25 17 CFR 239.500.
26 See, e.g., Release No. 34–56135 (July 26, 2007)
[72 FR 42222]; Release No. 34–55146 (Jan. 22, 2007)
[72 FR 4148]; Release No. 34–52056 (July 19, 2005)
[70 FR 44722]; Release No. 33–8861 (November 21,
2007) [72 FR 67790]; and Release No. 34–57172
(Jan. 18, 2008) [73 FR 4450].
27 Release No. 33–8529 (Feb. 3, 2005) [70 FR
6556].
28 15 U.S.C. 80a–1 et seq.
29 HTML is a standardized language commonly
used to present text and other information on Web
sites.
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supplemental information contained in
the risk/return summary section of their
prospectuses.30 Over 75 companies have
participated in the voluntary program.
These companies span a wide range of
industries and company characteristics,
and have a total public float of over $2
trillion.
Financial reporting based on
interactive data would create new ways
for investors, analysts, and others to
retrieve and use financial information in
documents filed with us. For example,
users of financial information could
download it directly into spreadsheets,
analyze it using commercial off-theshelf software, or use it within
investment models in other software
formats. Through interactive data, what
is currently static, text-based
information can be dynamically
searched and analyzed, facilitating the
comparison of financial and business
performance across companies,
reporting periods, and industries.
Interactive data also could provide a
significant opportunity to automate
regulatory filings and business
information processing, with the
potential to increase the speed,
accuracy, and usability of financial
disclosure. Such automation could
eventually reduce costs. A company that
uses a standardized interactive data
format at earlier stages of its reporting
cycle could reduce the need for
repetitive data entry and, therefore, the
likelihood of human error. In this way,
interactive data may improve the quality
of information while reducing its cost.
Also, to the extent investors currently
are required to pay for access to annual
or quarterly report disclosure that has
been extracted and reformatted into an
interactive data format by third-party
sources, the availability of interactive
data in Commission filings could allow
investors to avoid additional costs
associated with third party sources.
We believe that requiring issuers to
file their financial statements using
interactive data format would enable
investors, analysts, and the Commission
staff to capture and analyze that
information more quickly and at less
cost than is possible using the same
financial information provided in a
static format. Any investor with a
computer would have the ability to
acquire and download interactive
financial data that have generally been
available only to large institutional
users. The proposed interactive data
requirements would not change what is
currently reported, but would add a
requirement to include financial
30 Release No. 33–8823 (July 11, 2007) [72 FR
39290].
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statements in a new format as an
exhibit. Thus, the proposal to require
that filers provide financial statements
using interactive data will not alter the
disclosure or formatting standards of
periodic reports, registration
statements,31 or transition reports,32
which would continue to be available as
they are today for those who prefer to
view the traditional text-based
document.
Throughout this release, we solicit
comment on many issues concerning
the use of interactive data, including
specifically whether financial
information in interactive data format
should be required as exhibits to
Securities Act registration statements
and Exchange Act periodic and
transition reports filed with us. We are
seeking comment from investors,
registrants, accountants, analysts and
any other parties or individuals who
may be affected by the use of interactive
disclosure in Commission filings, and
any other members of the public.
B. Current Filing Technology and
Interactive Data
Companies filing electronically are
required to file their registration
statements, quarterly and annual
reports, and transition reports in ASCII
or HTML format.33 Also, to a limited
degree, our electronic filing system uses
other formats for internal processing
and document-type identification. For
example, our system uses eXtensible
Markup Language (XML) to process
reports of beneficial ownership of equity
securities on Forms 3, 4, and 5 under
section 16(a) of the Exchange Act.34
31 Although registration statements can be filed
under federal securities laws other than the
Securities Act, we use the term ‘‘registration
statement’’ in this release only to refer to those filed
under the Securities Act unless we expressly state
otherwise.
32 Transition reports generally must be filed when
an issuer changes its fiscal closing date. The
transition report covers the resulting transition
period between the closing date of its most recent
fiscal year and the opening date of its new fiscal
year. Rule 13a–10 [17 CFR 240.13a–10]; Rule 15d–
10 [17 CFR 240.15d–10]. Unless otherwise stated,
when we refer to Exchange Act reports, periodic
reports, or ‘‘reports,’’ we mean quarterly and annual
periodic reports as well as transition reports.
33 Rule 301 under Regulation S–T [17 CFR
232.301] requires electronic filings to comply with
the EDGAR Filer Manual, and Section 5.1 of the
Filer Manual requires that electronic filings be in
ASCII or HTML format. Rule 104 under Regulation
S–T [17 CFR 232.104] permits filers to submit
voluntarily as an adjunct to their official filings in
ASCII or HTML unofficial PDF copies of filed
documents. Unless otherwise stated, we refer to
filings in ASCII or HTML as traditional format
filings.
34 15 U.S.C. 78p(a).
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Electronic formats such as HTML,
XML, and XBRL are open standards 35
that define or ‘‘tag’’ data using standard
definitions. The tags establish a
consistent structure of identity and
context. This consistent structure can be
recognized and processed by a variety of
different software applications. In the
case of HTML, the standardized tags
enable Web browsers to present Web
sites’ embedded text and information in
predictable format. In the case of XBRL,
software applications, such as
databases, financial reporting systems,
and spreadsheets, recognize and process
tagged financial information.
XBRL was derived from the XML
standard. It was developed and
continues to be supported by XBRL
International, a collaborative
consortium of approximately 550
organizations representing many
elements of the financial reporting
community worldwide in more than 20
jurisdictions, national and regional.
XBRL U.S., the international
organization’s U.S. jurisdiction
representative, is a non-profit
organization that includes companies,
public accounting firms, software
developers, filing agents, data
aggregators, stock exchanges, regulators,
financial services companies, and
industry associations.36 In 2006, the
Commission contracted with XBRL U.S.
to develop the standard list of tags
necessary for financial reporting in
interactive format consistent with U.S.
GAAP and Commission regulations.
Financial reporting in interactive
format requires a standard list of tags.
These tags are similar to definitions in
an ordinary financial dictionary, and
they cover a variety of financial
concepts that can be read and
understood by software applications.
For financial statements prepared in
accordance with U.S. GAAP, a filer
would use the list of tags for U.S.
financial statement reporting.37 This list
of tags contains descriptive labels,
definitions, authoritative references to
U.S. GAAP and Commission regulations
where applicable, and other elements,
all of which provide the contextual
information necessary for interactive
35 The term ‘‘open standard’’ is generally applied
to technological specifications that are widely
available to the public, royalty-free, at minimal or
no cost.
36 XBRL U.S. supports efforts to promote
interactive financial and business data specific to
the U.S., including U.S. GAAP.
37 Unless stated otherwise, when we refer to the
‘‘list of tags for U.S. financial statement reporting’’
we mean the interactive data taxonomy as approved
by XBRL U.S. that is based on U.S. GAAP,
Commission regulations, and common financial
reporting practices used in the preparation of
financial statements in the U.S.
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data 38 to be recognized and processed
by software.39
Applying data tags to financial
statements is accomplished using
commercially available software that
guides a preparer in mapping
information in the financial statements
to the appropriate tags in the standard
list. Each element in the standard list of
tags has a standard label. A company
can therefore match the standard labels
to each caption in its financial
statements. Occasionally, because filers
have considerable flexibility in how
financial information is reported under
U.S. reporting standards, it is possible
that a company may wish to use a nonstandard financial statement line item
that is not included in the standard list
of tags.40 In this situation, a company
would create a company-specific
element, called an extension.
For example, what a company
identifies in its traditional format
financial statements as ‘‘operating
revenues’’ may be associated with an
element that has ‘‘net revenues’’ as the
standard label. In this situation, a
company would need to change, or
extend, the standard label to become
‘‘operating revenues’’ when tagging that
disclosure with the element.41
A company may choose to tag its own
financial statements using commercially
available software, or it may choose
instead to outsource the tagging process.
In the event a company relies upon a
service provider to tag the company’s
financial statements, the company
would want to carefully review the
tagging done by the service provider in
order to make sure that the tagged
financial statements are accurate and
consistent with the information the
38 The proposed rules would define the
interactive data necessary to create human-readable
disclosure as the ‘‘interactive data file,’’ which
would be required with every interactive data
submission. The EDGAR Filer Manual would
identify any necessary supporting files.
39 For example, contextual information would
identify the entity to which it relates, usually by
using the filer’s CIK number. A hypothetical filer
converting its traditional electronic disclosure of
$1,000,000 of net sales would have to create
interactive data that identify what the 1,000,000
represents, net sales, and the currency in which it
is disclosed, dollars. The contextual information
would include other information as necessary; for
example, whether it relates to an annual report or
quarterly report, the financial reporting period,
continuing or discontinued operations, or actual,
restated, forecast, pro forma or other type of
disclosure.
40 In other cases, without a relevant and
appropriate tag in the list of tags, a company would
be required to create an extension in order to
provide interactive data that appears the same as
the corresponding portion of traditional format
filing.
41 Unless otherwise stated, extensions, whether
relating to an element or a label, are not part of the
standard list of tags.
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company presents in its traditional
format filing.
Similarly, to create interactive dataformatted financial statements prepared
in accordance with IFRS as issued by
the IASB, a filer would use the IFRS list
of tags.42 The IFRS list of tags contains
descriptive labels, authoritative
references to IFRS where applicable,
and other elements and concepts that
provide the contextual information
necessary for interactive data to be
recognized and processed by software.
The International Accounting Standards
Committee Foundation (IASCF) has
developed the IFRS list of tags.43 To
create interactive data using the IFRS
list of tags, an issuer generally would
need to follow the same mapping,
extension and tagging process as would
a company that uses the list of tags for
U.S. financial statement reporting. As
further discussed below, the IASCF is
collaborating with XBRL U.S. and other
parties to align practices designed to
develop the IFRS list of tags. This
collaboration involves the development
of the appropriate scope for the IFRS list
of tags’ content and technology
architecture.44
Because financial statements in
interactive data format, referred to as the
interactive data file,45 are intended to be
processed by software applications, the
unprocessed data is not readable. Thus,
viewers are necessary to convert the
interactive data file to human readable
format. Some viewers are similar to Web
browsers used to read HTML files.
The Commission’s Web site currently
provides links to four viewers that allow
the public to easily read company
disclosures filed using interactive
data.46 These viewers demonstrate the
capability of downloading interactive
data into software such as Microsoft
Excel as well as into other applications
that are widely available on the Internet.
In addition, we are aware of other
applications under development that
may provide additional and advanced
functionality.
42 Unless stated otherwise, when we refer to the
‘‘IFRS list of tags’’ we mean the list of tags for
financial statements prepared in accordance with
IFRS as issued by the IASB.
43 See https://www.iasb.org/xbrl/. The
IASCF released the 2008 taxonomy (list of tags) on
March 31, 2008. See IASB Press Release, The IASC
Foundation publishes IFRS Taxonomy 2008,
(March 31, 2008).
44 As previously noted, in 2006 we contracted
with XBRL U.S. to develop the standard tags
necessary for financial reporting in interactive
format consistent with U.S. GAAP and Commission
regulations. That contract has been completed.
45 See note 40 above.
46 See viewers available at https://www.sec.gov/
xbrl.
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C. The Commission’s Multiyear
Evaluation of Interactive Data and
Overview of Proposed Rules
In 2004, we began assessing the
benefits of interactive data and its
potential for improving the timeliness
and accuracy of financial disclosure and
analysis of Commission filings.47 As
part of this evaluation, we adopted rules
in 2005 permitting filers, on a voluntary
basis, to provide financial disclosure in
interactive data format as an exhibit to
certain filings on our electronic filing
system. The voluntary program has been
based on an earlier version of the list of
tags for U.S. financial statement
reporting, which does not include a full
array of standard elements for financial
statement footnotes and schedules. After
more than two years of increasing
participation, over 75 companies have
chosen to provide interactive data
financial reporting.48
During this time, we have kept
informed of technology advances and
other interactive data developments. We
note that several U.S. and foreign
regulators have begun to incorporate
interactive data into their financial
reporting systems. The Federal Deposit
Insurance Corporation (FDIC), the
Federal Reserve, and the Office of the
Comptroller of the Currency (OCC)
require the use of XBRL.49 As of 2006,
approximately 8,200 U.S. financial
institutions were using XBRL to submit
quarterly reports to banking
regulators.50 Countries that have
required or instituted voluntary or pilot
programs for XBRL financial reporting
include Australia, Belgium, Canada,
China, Denmark, France, Germany,
Ireland, Israel, Japan, Korea,
Luxembourg, the Netherlands, New
Zealand, Norway, Singapore, Spain,
Sweden, Thailand and the United
Kingdom.51
47 See
Press Release No. 2004–97 (July 22, 2004).
viewer for the voluntary program is available
at https://www.sec.gov/spotlight/xbrl/
xbrlwebapp.shtml. This viewer, one of several
funded by the Commission to demonstrate
interactive data, maintains a running total of
companies and filers submitting data as part of the
voluntary program. As of April 17, 2008, 78
companies had submitted 350 interactive data
reports.
49 Since 2005, the FDIC, Federal Reserve, and the
OCC have required the insured institutions that
they oversee to file their quarterly Consolidated
Reports of Condition and Income (called Call
Reports) in interactive data format using XBRL. Call
Reports, which include data about an institution’s
balance sheet and income statement, are used by
these federal agencies to assess the financial health
and risk profile of the financial institution.
50 See Improved Business Process Through XBRL:
A Use Case for Business Reporting, available at
https://www.xbrl.org/us/us/
FFIEC%20White%20Paper%2002Feb2006.pdf.
51 See XBRL International Progress Report
(November 2007), available at https://
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We also have kept informed of
relevant advances and developments by
hosting roundtables on the topic of
interactive data financial reporting,52
creating the Commission’s Office of
Interactive Disclosure,53 and meeting
with international securities regulators
to discuss, among other items,
timetables for implementation of
interactive data initiatives for financial
reporting.54 Also, staff of the
Commission have attended meetings of
the Advisory Committee on
Improvements to Financial Reporting
(CIFiR) in which the committee
discussed proposals for financial
reporting using interactive data.55 We
also have reviewed written statements
and public comments received by CIFiR
on its XBRL developed proposal.56
Building on our experience
monitoring the voluntary program, and
our participation in the other initiatives
described above, we are now proposing
rules to require financial reporting using
interactive data. The proposed rules
would apply to domestic and foreign
public companies that prepare their
financial statements in accordance with
U.S. GAAP, and foreign private
issuers 57 that prepare their financial
www.xbrl.org/ProgressReports/
2007_11_XBRL_Progress_Report.pdf.
52 See materials available at https://www.sec.gov/
spotlight/xbrl/xbrl-meetings.shtml.
53 See Press Release No. 2007–213 (October 9,
2007).
54 See Press Release No. 2007–227 (November 9,
2007).
55 For example, CIFiR conducted an open meeting
on March 14, 2008 in which it heard reactions from
an invited panel of participants to CIFiR’s
developed proposal regarding required filing of
financial information using interactive data. An
archived webcast of the meeting is available at
https://sec.gov/about/offices/oca/cifir.shtml. The
March 14, 2008 panelists presented their views and
engaged with CIFiR members regarding issues
relating to requiring interactive data tagged
financial statements, including tag list and
technological developments, implications for large
and small public companies, needs of investors,
necessity of assurance and verification of such
tagged financial statements, and legal implications
arising from such tagging. Also, CIFiR has provided
to the Commission an interim progress report that
contains a developed proposal that the
Commission, over the long term, require the filing
of financial information using interactive data once
specified conditions are satisfied. See Progress
Report of the Advisory Committee on
Improvements to the Financial Reporting to the
United States Securities and Exchange Commission
(Feb. 14, 2008) (Progress Report), available at
https://www.sec.gov/about/offices/oca/acifr/
acifr-pr-021408-final.pdf. CIFiR’s developed
proposal is discussed more fully in Part II.C.2
below.
56 The XBRL developed proposal appears in
chapter 4 of the Progress Report. Written statements
of panelists at the March 14, 2008 meeting and
public comments received on the Progress Report
are available at https://sec.gov/comments/265-24/
265-24.shtml.
57 Exchange Act Rule 3b–4(c) [17 CFR 240.3b–
4(c)] defines ‘‘foreign private issuer’’ as a foreign
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statements in accordance with IFRS as
issued by the IASB. Interactive data
would be required to be provided on a
company’s Web site 58 and with the
filer’s Securities Act registration
statements,59 annual reports, quarterly
reports if applicable,60 and transition
reports.61 We believe this has the
potential to provide advantages for the
investing public by making financial
data more accessible, timely,
inexpensive and easier to analyze.
By enabling filers to further automate
their financial processes, interactive
data may eventually help filers improve
the speed at which they generate
financial information, while reducing
the cost of filing and potentially
increasing the accuracy of the data. For
example, with standardized interactive
data tags, registration statements and
periodic reports may require less time
for information gathering and review.
Also, standardized interactive data
tagging may enhance the ability of an
issuer’s in-house financial professionals
to identify and correct errors in the
issuer’s registration statements and
periodic reports filed in traditional
electronic format. Filers also may gain
benefits not directly related to public
financial disclosures. For example, filers
that use interactive data may be able to
consolidate enterprise financial
issuer other than a foreign government that either
has 50 percent or less of its outstanding voting
securities held of record by U.S. residents or, if
more than 50 percent of its outstanding voting
securities are held by U.S. residents, about which
none of the following is true: (1) A majority of its
executive officers or directors are U.S. citizens or
residents; (2) more than 50 percent of its assets are
located in the U.S.; or (3) the issuer’s business is
administered principally in the U.S.
58 The proposed Web site posting requirement
would apply only to the extent a filer already
maintains a corporate Web site.
59 Interactive data would be required as an exhibit
to a Securities Act registration statement that
contains financial statements, such as a Form S–1
[17 CFR 239.11] used in connection with an initial
public offering. Interactive data would not be
required as an exhibit to a Securities Act
registration statement that does not contain
financial statements, such as a Form S–3 filed by
an issuer that is eligible to and does incorporate by
reference all required financial statements from its
periodic reports.
60 Foreign private issuers filing on Form 10–Q
would be required to provide financial statements
in quarterly reports using interactive data.
61 The proposed rules would not include any
investment company that is registered under the
Investment Company Act or any ‘‘business
development company,’’ as defined in Section
2(a)(48) of that Act [15 U.S.C. 80a–2(a)(48)].
Business development companies are a category of
closed-end investment companies that are not
required to register under that Act. The proposed
rules also would not include any entity that reports
under the Exchange Act and prepares its financial
statements in accordance with Article 6 of
Regulation S–X [17 CFR 210.6–01 et seq.]. The
proposed rules would not apply to these entities
because the standard list of tags for investment
management is not yet fully developed.
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information more quickly and
potentially more reliably across
operating units with different
accounting systems. However, we
recognize that at the outset, filers would
most likely prepare their interactive
data as an additional step after their
financial statements have been
prepared.
The principal elements of the
proposal are as follows:
• Domestic and foreign large
accelerated filers 62 that use U.S. GAAP
and have a worldwide public common
equity float above $5 billion 63 as of the
end of their most recently completed
second fiscal quarter would provide to
the Commission a new exhibit.64 The
exhibit would contain their financial
statements,65 and any applicable
financial statement schedules in
interactive data format. The requirement
would apply beginning with fiscal
periods ending on or after December 15,
2008.66
• All other domestic and foreign large
accelerated filers using U.S. GAAP
would be subject to the same interactive
data reporting requirements the
following year, beginning with fiscal
periods ending on or after December 15,
2009.
• All remaining filers using U.S.
GAAP, including smaller reporting
companies,67 and all foreign private
62 Exchange Act Rule 12b–2 [17 CFR 240.12b–2]
generally defines ‘‘large accelerated filer’’ as an
issuer that has common equity held by unaffiliated
persons with a value of at least $700 million, has
been subject to the Exchange Act’s periodic
reporting requirements for at least 12 months, has
filed at least one annual report, and is not eligible
to use the disclosure requirements available to
smaller reporting companies for its periodic reports.
63 As of the end of 2006, the $5 billion cutoff
would establish a category of approximately 500
filers.
64 The exhibit would be required with such filers’
registration statements, quarterly, if applicable, and
annual reports, and transition reports.
65 When we refer to financial statements, we
mean the face of the financial statements and
accompanying footnotes. The face of the financial
statements refers to the statement of financial
position (balance sheet), income statement,
statement of comprehensive income, statement of
cash flows, and statement of owners’ equity, as
required by Commission regulations. References to
the financial statements as required for interactive
data reporting include any required schedules to
the financial statements, unless we expressly state
otherwise.
66 The proposed schedule is premised on the
rules being adopted this fall in time for affected
filers to implement this schedule, and could be
adjusted depending on when the Commission
adopts any final rules.
67 Item 10(f)(1) of Regulation S–K [17 CFR
229.10(f)(1)], Rule 405 under the Securities Act [17
CFR 230.405] and Rule 12b–2 under the Exchange
Act [17 CFR 240.12b–2] define the term ‘‘smaller
reporting company,’’ in general, as a company that
has common equity securities held by non-affiliates
with a market value of less than $75 million or, if
that value cannot be calculated, had less than $50
million in revenue in the prior fiscal year.
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issuers that prepare their financial
statements in accordance with IFRS as
issued by the IASB,68 would be subject
to the same interactive data reporting
requirements beginning with fiscal
periods ending on or after December 15,
2010.69
• Filers providing financial
statements in interactive data format
would be required to use the most
recent and appropriate list of tags
released by XBRL U.S. or the IASCF as
required by the EDGAR Filer Manual.
Filers also would be required to tag a
limited number of document and entity
identifier elements, such as the form
type, company name, and public float.
As with interactive data for the financial
statements, these document and entity
identifier elements would be formatted
using the appropriate list of tags as
required by the EDGAR Filer Manual.70
• A filer required to provide financial
statements in interactive data format to
the Commission also would be required
to post those financial statements in
interactive data format on its corporate
Web site on the same day it filed or was
required to file the related registration
statement or report with the
Commission, whichever is earlier.71
• The proposed rules would not alter
the requirements to provide financial
statements and any required financial
statement schedules with the traditional
format filings.72
68 The proposed rules would not require foreign
private issuers that prepare their financial
statements in accordance with a variation of IFRS
as issued by the IASB to provide interactive data.
69 We do not propose to require foreign private
issuers to provide in interactive data format interim
financial information contained in Form 6–K or any
financial information prepared in accordance with
non-U.S.GAAP that must be reconciled to U.S.
GAAP in the foreign private issuer’s Exchange Act
reports.
70 The appropriate list of tags for document and
entity identifier elements would be a list released
by XBRL U.S., but would not be specific to U.S.
GAAP or IFRS as issued by the IASB and would be
required to be used by all issuers required to submit
interactive data regardless of whether reporting in
U.S. GAAP or IFRS as issued by the IASB.
71 The day the registration statement or report is
submitted electronically to the Commission may
not be the business day on which it was deemed
officially filed. For example, a filing submitted after
5:30 p.m. generally is not deemed officially filed
until the following business day. Under the
proposed rules, the Web posting would be required
to be posted at any time on the same day that the
related registration statement or report is deemed
officially filed or required to be filed, whichever is
earlier.
72 When we established the voluntary program,
we stated in the adopting release that the interactive
data submission would be supplemental to filings
and not replace the required traditional electronic
format of the financial information it contains. We
also said that volunteers would be required to
continue to file their traditional electronic filings.
See Part II.D of Release No. 33–8529 (Feb. 3, 2005)
[70 FR 6556, 6559].
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• Financial statements in interactive
data format would be provided as
exhibits identified in Item 601(b) of
Regulation S–K and Form 20–F.
• Financial statement footnotes and
financial statement schedules initially
would be tagged individually as a block
of text. After a year of such tagging, a
filer also would be required to tag the
detailed disclosures within the
footnotes and schedules.
• Viewable interactive data as
displayed through software available on
the Commission’s Web site, and to the
extent identical in all material respects
to the corresponding portion of the
traditional format filing, would be
subject to all the same liability
provisions of the federal securities laws
as the corresponding data in the
traditional format part of the official
filing.
• Data in the interactive data file
submitted to us generally would be
subject to the federal securities laws in
a manner similar to that of the voluntary
program and, as a result, would be
Æ Excluded from the officer
certification requirements under Rules
13a–14 and 15d–14 of the Exchange
Act; 73
Æ Deemed not filed for purposes of
specified liability provisions; and
Æ Protected from liability for failure
to comply with the proposed tagging
and related requirements if the
interactive data file either
b Met the requirements; or
b Failed to meet those requirements,
but the failure occurred despite the
issuer’s good faith and reasonable effort,
and the issuer corrected the failure as
soon as reasonably practicable after
becoming aware of it.
• The proposed rules would require
the financial information and document
and entity identifier elements to be
tagged according to Regulation S–T and
the EDGAR Filer Manual.74
• The initial interactive data exhibit
of a filer would be required within 30
days of the earlier of the due date or
filing date of the related report or
registration statement, as applicable. In
year two, a filer would have a similar 30
day grace period for its first interactive
data exhibit that includes detailed
tagging of its footnotes and schedules.
All other interactive data exhibits would
be required at the same time as the rest
of the related report or registration
statement.
73 17
CFR 240.13a–14 and 17 CFR 240.15d–14.
Rule 405 of Regulation S–T would
directly set forth the basic tagging requirements and
indirectly set forth the rest of the tagging
requirements through the requirement to comply
with the EDGAR Filer Manual. Consistent with
proposed Rule 405, the Filer Manual would contain
the technical tagging requirements.
74 Proposed
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• Filers that do not provide or post
required interactive data on the date
required would be deemed not current
with their Exchange Act reports and, as
a result, would not be eligible to use the
short forms S–3, F–3, or S–8, or elect
under Form S–4 or F–4 to provide
information at a level prescribed by
Form S–3 or F–3. Similarly, such filers
would not be deemed to have available
adequate current public information for
purposes of the resale exemption safe
harbor provided by Rule 144.75 A filer
that was deemed not current solely as a
result of not providing an interactive
data exhibit when required would be
deemed current and timely upon
providing the interactive data. Therefore
it would regain the ability to incorporate
by reference, short form registration
statement eligibility, and current status
for purposes of determining adequate
current public information under Rule
144. As such, it would not lose its status
as having ‘‘timely’’ filed its Exchange
Act reports solely as a result of the delay
in providing interactive data.
• Although we have not proposed at
this time to require interactive data for
executive compensation disclosure
because a definitive list of tags for this
purpose is not yet completed, we are
soliciting comment on the usefulness to
investors and others of such interactive
data, as well as the extent of the related
costs and associated questions.
• We anticipate that if the proposed
rules become effective, companies that
are not required to provide interactive
data until a later time would have the
option to do so earlier.
• We also anticipate that the
voluntary program would be modified,
if the proposed rules are adopted, to
permit investment companies to
participate, but to exclude noninvestment company participation. As a
result, the voluntary program would
continue for the financial statements of
investment companies that are
registered under the Investment
Company Act, and business
development companies and other
entities that report under the Exchange
Act and prepare their financial
statements in accordance with Article 6
of Regulation S–X. The voluntary
program also would continue for the
risk/return summary section of mutual
fund prospectuses.76
75 17
CFR 230.144.
Release No. 33–8823 (July 11, 2007) [72 FR
39290]. On May 21, 2008, the Commission voted to
propose rules that would require interactive data for
the risk/return summary section of mutual fund
prospectuses. See Press Release No. 2008–94 (May
21, 2008).
76 See
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II. Discussion of the Proposed
Amendments
A. Submission of Financial Information
Using Interactive Data
For several years XBRL U.S. and its
related entities have developed and
refined the list of tags to classify and
define financial information in
accordance with U.S. financial reporting
practices and Commission regulations.77
Many investors, auditors, accountants,
and others, including companies that
have been providing interactive data
disclosure in the voluntary program,
have helped in this process.
Interactive data financial statements
using the list of tags for U.S. financial
statement reporting have been
submitted voluntarily to us by over 75
companies, some of which have done so
since the start of the voluntary program
approximately three years ago. The list
of tags for U.S. financial statement
reporting has improved significantly
since the original version available for
the voluntary program.78 During this
period, there has been a growing
development of software products for
users of interactive data, as well as of
applications to assist companies to tag
their financial statements using
interactive data.79 The growing number
of software applications available to
preparers and consumers is helping
make interactive data increasingly
useful to both institutional and retail
investors, as well as to other
participants in the U.S. and global
capital markets. On this basis, we
believe interactive data, and in
particular the XBRL standard, have
become widespread and that the
updated list of tags for U.S. financial
statement reporting is now sufficiently
advanced to require that U.S. GAAPreporting companies provide their
interactive financial statements in
interactive data format.80
With respect to the list of tags for
IFRS financial reporting, the IASCF has,
over several years, developed a list of
tags designed to classify and define
financial information in accordance
with international accounting standards
77 See Press Release No. 2006–158 (Sept. 25,
2006).
78 When we adopted the voluntary program, the
list of tags for U.S. GAAP financial statement
reporting contained approximately 4,000 data
elements. The list of tags released on April 28, 2008
contains approximately 13,000 data elements, with
the most significant additions relating to the
development of elements for standard U.S. GAAP
footnote disclosure.
79 See Press Release No. 2007–253 (Dec. 5, 2007).
80 As previously noted in Part I.C, however, the
proposed rules would not apply to investment
companies registered under the Investment
Company Act and other entities. See footnote 61
above.
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as promulgated by the IASB. Over the
course of the past year, the IASCF has
worked to strengthen the development
of its list of tags by forming an XBRL
Advisory Committee and an XBRL
Quality Reporting Team, both consisting
of international representatives from
investors, auditors, accountants,
regulators and others. On March 31,
2008, the IASCF published a near final
version of the list of tags for IFRS
financial reporting,81 which is subject to
public comment through May 30,
2008.82 In addition, the IASCF is
collaborating with XBRL U.S. and other
parties to align practices designed to
develop the IFRS list of tags. This
collaboration involves the development
of the appropriate scope for the IFRS list
of tags’ content and technology
architecture. On this basis, we believe
that the updated IFRS list of tags will be
sufficiently advanced to require that
foreign private issuers that prepare their
financial statements in accordance with
IFRS as issued by the IASB provide
their financial statements in interactive
data format under the phase-in schedule
we are proposing.
As discussed in more detail below,
our proposed rules would set forth a
phase-in period beginning with
domestic and foreign large accelerated
U.S. GAAP filers with a worldwide
public common equity float above $5
billion as of the end of their most
recently completed second fiscal
quarter. These large accelerated filers
would be subject to the proposed rules
beginning with their Securities Act
registration statements, periodic reports,
and transition reports that contain
financial statements for fiscal periods
ending on or after December 15, 2008.
Although it would not be required, we
encourage other U.S. GAAP filers to
provide financial information in
interactive data format during the
phase-in period. We also encourage
foreign private issuers that prepare their
financial statements in accordance with
IFRS as issued by the IASB to provide
financial information in interactive data
format during the phase-in period. In
each instance, these filers’ voluntary
interactive data submissions would be
under the proposed rules instead of the
existing rules of the voluntary program.
81 Unless stated otherwise, when we refer to the
‘‘list of tags for IFRS financial reporting’’ we mean
the interactive data taxonomy that is based on IFRS
as issued by the IASB.
82 See Press Release, The IASC Foundation
publishes IFRS Taxonomy 2008 (March 31, 2008),
available at https://www.iasb.org/News/
Press+Releases/
The+IASC+Foundation+publishes+IFRS
+Taxonomy+2008.htm.
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We are proposing that filers be
required to provide the same
information in interactive data format
that companies have been providing in
the voluntary program,83 together with
the following items: The footnotes to the
financial statements; any applicable
schedules to the financial statements;
financial statements for Securities Act
registration statements; and document
and entity identifier tags, such as
company name and public float. As was
the case in the voluntary program, the
proposed requirement for interactive
data reporting is intended to be
disclosure neutral. We do not intend the
rules to result in companies providing
more, less, or different disclosure for a
given disclosure item depending upon
the format whether ASCII, HTML, or
XBRL.
We propose to continue requiring the
existing electronic formats now used in
filings because we believe it is necessary
to monitor the usefulness of interactive
data reporting to investors and the cost
and ease of providing interactive data
before attempting further integration of
the interactive data format. However,
the proposed rules would treat viewable
interactive data as displayed through
software available on the Commission’s
Web site, and interactive data
generally,84 as part of the official filing,
instead of a supplement as is the case
in the voluntary program. Further
evaluation will be useful with respect to
the availability of inexpensive,
sophisticated interactive data viewers.
Currently there are many software
providers and financial printers that are
developing interactive data viewers. We
anticipate that these will become widely
available and increasingly useful to
investors.
We expect that the open standard
feature of XBRL format will facilitate the
development of applications and
software, and that some of these
applications may be made available to
the public for free or at a relatively low
cost. The expected continued
improvement in this software would
give the public increasingly useful ways
to view and analyze company financial
information. After evaluating the use of
the new interactive data technologies,
software, and lists of tags, we may
consider proposing rules to eliminate
financial statement reporting in ASCII
83 Unlike the voluntary program, unless otherwise
stated, an interactive data file would be required to
be provided with the traditional format filing to
which it relates. Companies would not be permitted
to provide the interactive data file with a Form 8–
K or 6–K.
84 As further discussed below in Part II.C,
interactive data generally would be deemed not
filed for purposes of specified liability provisions.
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or HTML format. Or we may consider
proposing rules to require a filing format
that integrates ASCII or HTML with
XBRL.
We believe XBRL is the appropriate
interactive data format with which to
supplement ASCII and HTML. Our
experience with the voluntary program
and feedback from company, audit, and
software communities point to XBRL as
the appropriate open standard for the
purposes of this rule. As a derivative of
the XML standard, XBRL data would be
compatible with a wide range of open
source and proprietary XBRL software
applications. As discussed above, many
XBRL-related products exist for
analysts, investors, public and private
companies, and others to more easily
create and compare financial data; still
others are in development, and that
process would likely be hastened by
public company reporting using
interactive data. Comments on our 2004
concept release and proposed rules in
2004 and 2007 generally supported
interactive data and XBRL in
particular.85 Several other factors
support our views regarding XBRL’s
broad and growing acceptance,
internationally as well as in the U.S. For
example, as noted above, in addition to
the use of XBRL by other U.S.
agencies,86 several foreign securities
regulators have adopted voluntary or
required XBRL financial reporting.87 We
understand that several U.S. public and
private companies use XBRL in
connection with financial reporting or
analysis.88
85 Release No. 33–8497 (Sept. 27, 2004) [69 FR
59111] (Concept Release); Release No. 33–8496
(Oct. 1, 2004) [69 FR 59098]; Release No. 33–8781
(Feb. 12, 2007) [72 FR 6676]. See, e.g., letter from
Deloitte & Touche LLP regarding the Adopting
Release and letter from PR Newswire Association
LLC regarding the Concept Release. We also note
that participants in the voluntary program provided
positive feedback with respect to possible required
use of XBRL. For example, the vast majority of
voluntary program participants that submitted
responses and views to a questionnaire answered in
the affirmative to the question ‘‘Based on your
experience to date, do you think it would be
advisable for the Commission to continue to explore
the feasibility and desirability of the use of
interactive data on a more widespread and,
possibly, mandated basis?’’ See question V.f in the
Interactive Data Voluntary Program Questionnaire
available at https://www.sec.gov/cgi-bin/
XBRL_Questionnaire.
86 See note 49 above. Also we note CIFiR’s
support of XBRL as referenced above in Part B.2
87 For example, such countries include Canada,
China, Israel, Japan, Korea and Thailand.
88 Whenever we seek comment in this release, we
request that commenters distinguish in their
responses, as appropriate, between the proposed
requirements applicable to U.S. GAAP filers and
those applicable to foreign private issuers that
prepare their financial statements in accordance
with IFRS as issued by the IASB, regardless of
whether our question distinguishes between or
references one or both of these types of issuers.
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Request for Comment:
• Should we adopt rules that require
each filer’s financial statements to be
provided in interactive data format? If
we do so, should we include a phasein period or temporary exception for
detailed tagging of the financial
statement footnotes? Should schedules
to the financial statements be tagged?
What are the principal factors that
should be considered in making these
decisions? Is it useful to users of
financial information to continue to
have, in addition to interactive data,
duplicate, human-readable financial
statements in ASCII or HTML format?
• What opportunities exist to improve
the display of financial statements
prepared using interactive data? For
example, if the technology is
sufficiently developed, should we
propose rules to encourage or require a
format that embeds interactive data tags
in HTML so that the entire set of
financial statements can be viewed in a
browser? How should these affect any
continued requirement to file ASCII- or
HTML-formatted financial statements?
What obstacles exist to making such
improvements in the display of XBRL
information?
• Is it appropriate to require public
companies to provide interactive data
using XBRL? Alternatively, in place of
such a requirement, should the
Commission instead wait to see whether
interactive data reporting by public
companies is voluntarily adopted?
Without a requirement, would the
development of products for producing
and using interactive data from private
and public companies meet the needs of
investors, analysts, and others who seek
interactive data? Would a large
percentage of public companies provide
interactive data voluntarily, and
following the same standard, if not
required to do so?
• If we do not adopt the proposed
rules and instead wait to see whether
companies on their own expand their
use of interactive data, would such data
be less comparable among companies?
Is there a ‘‘network effect,’’ such that
interactive data would not be useful
unless many or all filers provide their
financial statements using interactive
data? Would the development of
software for retail investors to obtain
and make use of such data be slowed
without a requirement that companies
provide interactive data?
• What advantages are there to
investors having the company
responsible for preparing financial
information in interactive data format,
as opposed to a model in which third
parties independently prepare the
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information in interactive format and
charge a fee for it?
• Do commenters agree that
compared to reports using ASCII and
HTML, interactive data would require
less manually-transferred data? If so, do
commenters believe that the proposed
rules would result in less human error
and therefore contribute to reduced
costs?
• If we require interactive data
reporting and the proposed rules result
in more effective and efficient financial
reporting with reduced human error and
cost, would fees charged by financial
printers or other service providers be
likely reduced to reflect such lower
costs?
• If we adopt rules requiring
interactive data financial reporting, is
the XBRL standard the one that we
should use? Are any other standards
becoming more widely used or
otherwise superior to XBRL? What
would the advantages of any such other
standards be over XBRL?
• Is the XBRL format for interactive
data sufficiently developed to require its
use at this time with regard to both U.S.
GAAP and IFRS as issued by the IASB?
If not, what indicators should we use to
determine when it has become
sufficiently developed to require its use?
• Are vendors likely to develop and
make commercially available software
applications or Internet products that
will be able to deliver the functionality
of interactive data to retail investors?
• How important is it that many
different types of viewers with varying
levels of sophistication and
functionality be available to investors?
In addition to the free viewer provided
on the SEC Web site, are there likely to
be other such products available at low
or no cost?
• If we require interactive data
financial reporting, what are the
principal challenges facing the eventual
integration of such reporting with the
current filing formats, ASCII and HTML,
so that filing in all three formats would
no longer be necessary?
B. Phase-In Under the Proposed Rules
1. Overview
The proposed rules initially would
require interactive data reporting only
by domestic and foreign large
accelerated filers that use U.S. GAAP
and have a worldwide public common
equity float above $5 billion as of the
end of their most recently completed
second fiscal quarter.89 If the rules are
adopted by this fall, we anticipate that
the first required submissions would be
for periods ending on or after December
15, 2008. For calendar year companies,
this would first apply to their December
31, 2008 annual reports filed on Form
10–K or 20–F and any Securities Act
registration statement that contains
financial statements for a period ended
on or after December 15, 2008.90 We are
sensitive to concerns that undue
expense and burden should not
accompany the adoption of required
interactive data financial reporting. We
therefore propose a 30-day grace period
for each filer’s initial interactive data
submission, and a 30-day grace period
in year two of each filer’s interactive
data reporting when its footnotes and
schedules initially would be required to
be tagged in detail.91
Filers under the proposed rules would
be required to convert their financial
statements into an interactive data file
using the list of tags for U.S. financial
statement reporting or the IFRS list of
tags, in either case as approved for use
by the Commission. The submission
also would be required to include any
supporting files as prescribed by the
EDGAR Filer Manual. Interactive data
would be required for the entirety of the
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Domestic and Foreign Large Accelerated Filers Using U.S. GAAP
with Worldwide Public Common Equity Float above $5 Billion as
of the End of Their Most Recently Completed Second Fiscal Quarter.
All Other Large Accelerated Filers Using U.S. GAAP ..........................
89 This would amount to approximately 500
companies. We propose the end of the most
recently completed second fiscal quarter because
that date is consistent with when a filer is required
to determine its status as an accelerated and large
accelerated filer.
90 For companies with a September 30 fiscal year
end, the requirement would first apply to their
December 31, 2008 quarterly report filed on Form
10–Q and any Securities Act registration statement
that contains financial statements for a period
ended on or after December 15, 2008.
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financial statements, although tagging of
the footnotes and schedules by
increasing level of detail would be
phased in the following year. We are not
proposing at this time that filers be
required to provide interactive data for
their Management’s Discussion and
Analysis, executive compensation, or
other financial, statistical or narrative
disclosure. We solicit comment,
however, on the advisability of
permissible optional interactive data for
financial disclosures that are not part of
the current lists of tags for U.S. GAAP
financial statement reporting and IFRS
financial reporting.
We also solicit comment on the
usefulness to investors of interactive
data of executive compensation and the
burden such reporting would have on
companies. For example, we solicit
comment on whether the scope of
interactive data available on the
Executive Compensation Reader, which
we posted on our Web site on December
21, 2007, 92 would be an appropriate
level of executive compensation data.
Our requests for comment regarding
interactive data and executive
compensation follow up and expand on
previous requests in 2006.93 We also
note substantial interest in interactive
disclosure of executive compensation,
for example a draft list of tags for
executive compensation that has been
made available for public comment 94
and financial Web pages that link to our
Executive Compensation Reader to
provide streamlined Internet viewers of
executive compensation. We ask
detailed questions at the end of Part
II.B.3.a.95
The following tables identify the
registration statements and periodic
reports that would be required to
include interactive data according to the
company’s filing status.96
Registration statements containing financial statements for a period
ending on or after December 15, 2008, Form 10–Q 97 for quarterly
periods or Form 10–K 98 or 20–F 99 for annual periods ending on
or after December 15, 2008.
Registration statements containing financial statements for a period
ending on or after December 15, 2009, Form 10–Q for quarterly
periods or Form 10–K or 20–F for annual periods ending on or
after December 15, 2009.
91 We discuss more fully at Part II.C liability
related to required submissions of interactive data
in general and the continuation of some of the
limitations on liability used in the voluntary
program in particular.
92 See Press Release No. 2007–268 (Dec. 21,
2007).
93 Release No. 33–8655 (Jan. 27, 2006). Two
commenters addressed this series of questions. One
commenter supported tagging executive
compensation disclosure using XBRL; the other
commenter believed it would not be helpful.
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94 See ‘‘Broadridge Releases Draft XBRL Proxy
Statement Taxonomy for Public Comment,’’ Reuters
December 4, 2007.
95 See Part II.B.3.a, below.
96 Transition reports that contain financial
statements of the type and for the periods specified
also would be required to be submitted in
interactive data format under the proposed rules.
Note that these dates apply to the initial required
interactive data disclosure and that detailed tagging
of the financial statement footnotes and schedules
would not be required for an additional year, as
described below in section II.B.3.a.
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All Remaining Filers Using U.S. GAAP .................................................
Foreign Private Issuers with Financial Statements Prepared in Accordance with IFRS as Issued By the IASB.
2. Companies and Filings Covered by
Proposed Rules and Phase-In
The proposed rules would cover all
companies reporting in either U.S.
GAAP, including smaller reporting
companies and foreign private issuers
that report in U.S. GAAP or, in the case
of foreign private issuers, in accordance
with IFRS as issued by the IASB.100 The
proposed phase-in would require
domestic and foreign large accelerated
filers that report in U.S. GAAP and meet
the minimum worldwide common
equity float of greater than $5 billion to
provide their initial interactive data
submissions in year one of the phase-in
period discussed above. All other U.S.
GAAP filers that meet the definition of
large accelerated filer would be required
to provide their initial interactive data
submissions in year two of the phase-in
period. All remaining U.S. GAAP filers,
including smaller reporting companies
and companies not previously subject to
periodic reporting requirements, would
be required to provide their initial
interactive data submissions in year
three of the phase-in period.
Foreign private issuers that prepare
their financial statements in accordance
with IFRS as issued by the IASB would
be required to provide their initial
interactive data submissions in year
three of the phase-in period.
The additional phase-in time for all
but the largest accelerated filers is
intended to permit companies to plan
and implement their data tagging with
the benefit of the experience of year one
filers. It also is intended to enable us to
monitor implementation and, if
necessary, make appropriate
adjustments during the phase-in period.
In the case of IFRS filers, the phase-in
also would provide the necessary time
for development and testing of the list
of tags for IFRS financial reporting.
Our multiyear experience with the
voluntary program has helped us
understand the extent to which a filer
would incur additional costs to create
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97 17
CFR 249.308a.
CFR 249.310.
99 17 CFR 249.220f.
100 As noted in Part I.C, however, the proposed
rules would not apply to investment companies
registered under the Investment Company Act,
business development companies, or other entities
that report under the Exchange Act and prepare
their financial statements in accordance with
Article 6 of Regulation S–X.
98 17
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Registration statements containing financial statements for a period
ending on or after December 15, 2010, Form 10–Q for quarterly
periods or Form 10–K or 20–F for annual periods ending on or
after December 15, 2010.
Registration statements containing financial statements for a period
ending on or after December 15, 2010 or Form 20–F for annual
periods ending on or after December 15, 2010.
and submit its existing financial
disclosures in interactive data format.
Based on that experience, we believe
that the process of converting a filer’s
existing ASCII or HTML financial
statements into interactive data would
not impose a significant burden or cost.
The voluntary program clearly
demonstrated that companies can, if
they choose, tag their financial
statements using currently available
software without need of outside
services or consultants; alternatively,
they could rely on financial printers,
consultants, and software companies for
assistance, although they would retain
ultimate responsibility for both their
financial statements and their tagged
data. As discussed in more detail in the
cost-benefit analysis below,1101 we
believe that modest first-year costs for a
company would decrease in subsequent
periods, particularly once footnote
tagging is implemented. We also believe
that these costs would be justified by
interactive data’s benefits. As with
domestic registrants, we believe foreign
private issuers that report in U.S. GAAP
or prepare their financial statements in
accordance with IFRS as issued by the
IASB would be able to comply with the
rules without incurring significant costs.
We expect that smaller companies,
which generally are disproportionately
affected by regulatory costs, also would
be able to provide their reports in
interactive data format without undue
effort or expense. While interactive data
reporting involves changes in reporting
procedures mostly in the initial
reporting periods, we expect that these
changes would provide efficiencies in
future periods. As a result, there may be
potential net savings to the filer,
particularly if interactive data become
integrated into the filer’s financial
reporting process. While we recognize
that requiring interactive data financial
reporting would likely result in start-up
expenses for smaller companies, these
expenses may be substantially lower
than those of larger filers, given that
smaller filers tend to have simpler
financial statements than larger
companies, with fewer elements and
disclosures to tag. In addition, we
expect that both software and thirdparty services will be available to help
meet the needs of smaller filers. We also
101 See
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intend that the third year phase-in for
smaller reporting companies would
permit them to learn from the
experience of the earlier filers. It would
also give them a longer period of time
across which to spread first-year data
tagging costs.
As noted above,102 CIFiR has issued a
Progress Report that contains a
developed proposal that the
Commission phase in the requirement
that companies file financial statements
using interactive data after the
satisfaction of specified preconditions
relating to:
• Successful testing of the list of tags
for U.S. financial statement reporting;
• The capacity of reporting
companies to file interactive data using
the new list of tags for U.S. financial
statement reporting; and
• The ability of the Commission’s
electronic filing system to provide an
accurate human-readable version of the
interactive data.103
The Progress Report’s developed
proposal recommends that we phase in
financial statements using interactive
data by requiring the largest 500
domestic registrants,104 as determined
by the value of shares held by
unaffiliated persons, to furnish (rather
than file) interactive data for the face of
their financial statements and, in blocktagged form,105 the footnotes to the
financial statements. The Progress
Report’s developed proposal also
102 See
Part I.C above.
are giving careful consideration to CIFiR’s
developed proposal. We believe that the factors
they cite as preconditions will occur before the start
of a requirement to provide interactive data. We
expect to consider the factors in connection with
determining whether to adopt the proposed
interactive data submission requirements with
regard to companies that prepare their financial
statements in accordance with U.S. GAAP. We also
expect to consider the same factors for companies
that prepare their financial statements in
accordance with IFRS as issued by the IASB.
104 The developed proposal does not address
foreign companies. We do not believe that whether
a U.S. GAAP reporting company is domestic or
foreign should determine the applicability of the
proposed rules, and therefore foreign companies
using U.S. GAAP would be included in the phasein schedule along with their domestic counterparts.
As noted, foreign private issuers that prepare their
financial statements in accordance with IFRS as
issued by the IASB also are included in the
proposal, although they would not be phased in
until year three.
105 By ‘‘block’’ text we mean that the entire
footnote or other discrete item, such as a schedule
or table, would be tagged as an individual element.
103 We
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recommends that, one year after we
impose this requirement on the first
group of registrants, we impose the
same requirement on the remaining
domestic registrants that fall within the
definition of ‘‘large accelerated filer.’’
Finally, the Progress Report’s developed
proposal recommends that, once the
specified conditions have been satisfied
and the second phase-in period has
been implemented, we evaluate whether
and when to require that the domestic
large accelerated filers file rather than
furnish financial statements in
interactive data format, as well as the
inclusion of all other reporting
companies.
We have carefully considered the
Committee’s thoughtful developed
proposal, including the recommended
phase-in of 500 initial companies and
delayed consideration of nonaccelerated and other filers until after
two years. We propose a phase-in
schedule similar to the one for which
the Committee calls.106 However,
instead of waiting until after the second
year to determine whether to propose
extending the applicability of the rules
to all filers, the proposed rules would
establish a phase-in for the remaining
companies’ required interactive data
submissions that would begin in the
third year. Based on participants’
experience with the voluntary program
and our consultations with filers,
software providers and filing
intermediaries, we believe the proposed
rules would accelerate the improvement
and availability of inexpensive software.
This, in turn, would generate more
options and assistance for nonaccelerated filers, smaller reporting
companies, and foreign private issuers
so that they could become proficient in
the use of interactive data without
undue burden.
Although including a larger number
of filers in the initial phase-in might
increase the overall commercial and
analytical value of the interactive data,
which in turn would likely increase the
supply of software for analyzing and
presenting interactive data to analysts
and investors, we believe the
establishment of a firm schedule for all
U.S. GAAP- and IFRS-reporting
companies to file their financial
statements using interactive data would
serve nearly as well to stimulate the
further development of interactive datarelated software and services while also
affording most companies additional
106 As
previously noted, the proposed worldwide
public float cutoff of $5 billion would result in
approximately 500 companies subject to the
proposed rules in year one.
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time to learn from the experience of
others.
We also believe that concurrently
adopting a phase-in for non-accelerated
filers, smaller reporting companies, and
foreign private issuers using IFRS as
issued by the IASB would establish an
appropriate and measured timeline,
which we would be able to monitor and,
if necessary, reconsider during the first
two years of the phase-in.
Request for Comment:
• Is the proposed schedule for
implementation of interactive data
tagging appropriate?
• Should we delay the first required
interactive data submissions until the
second half of 2009 or later? What
benefits would there be to advancing or
delaying implementation of the
proposed rules? How much lead time do
large accelerated filers need to
familiarize themselves with interactive
data and the process of mapping
financial statements using the list of tags
for U.S. financial statement reporting or
IFRS financial reporting?
• Should the initial submission
required by the proposed rules be a
periodic report? If so, should it be a
Form 10–Q for domestic issuers? 107
Would this be an easier report for
companies to prepare, or would it be
best for companies to begin providing
interactive data with respect to the fiscal
year end financial statements?
• Instead of a cut-off using a
worldwide public common equity float
of $5 billion at the end of the issuer’s
most recently completed second fiscal
quarter, would an initial phase-in
including all large accelerated filers or
large accelerated filers with a smaller
public float better accomplish the goals
outlined in the release? If we use a
public float, should it be $5 billion or
some other amount lower or higher than
the proposed cut-off, such as $3 billion
or $10 billion? Would some other cutoff, or some other schedule be
preferable? Would it be better to
measure the public float as of a time
other than the end of the issuer’s most
recently completed second fiscal quarter
and, if so, when?
• Would the initial phase-in include
enough companies to encourage
potential vendors of interactive data
products and services to invest in the
development and marketing of new and
improved products and services? If not,
how would such a level affect the
markets for both filer and investor
products and services?
107 We note that when the Commission adoped
the electronic filing requirements, the first required
electronic filing was a Form 10–Q rather than a
registration statement or Form 10–K. Release No.
33–6977 (Feb. 23, 1993) [58 FR 14628].
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• Should the phase-in schedules
differ as between U.S. GAAP nonaccelerated and smaller reporting
companies and foreign private issuers
that prepare their financial statements
in accordance with IFRS as issued by
the IASB?
• Is the proposed third-year phase-in
approach for companies other than large
accelerated filers necessary or sufficient
for them to familiarize themselves with
interactive data and the process of
mapping financial statements using the
list of tags for U.S. financial statement
reporting or IFRS financial reporting?
• Is the proposed third-year phase-in
sufficient for smaller reporting
companies and foreign private issuers to
allocate the necessary resources and
meet the proposed requirements, or
would a more delayed schedule be
appropriate?
• Should smaller reporting
companies and foreign private issuers
reporting in U.S. GAAP be subject to the
proposed rules at all? Should
compliance with the proposed rules be
solely voluntary for smaller reporting
companies or foreign private issuers
reporting in U.S. GAAP?
• Would requiring interactive data
from foreign private issuers reporting in
U.S. GAAP create a disincentive for
these issuers to use U.S. GAAP in
preparing their financial statements? Is
this offset by the proposed requirement
that foreign private issuers reporting in
IFRS as issued by the IASB use
interactive data within three years?
Should the requirements extend only to
foreign private issuers reporting in U.S.
GAAP that file on domestic forms?
• Should foreign private issuers that
prepare their financial statements in
accordance with IFRS as issued by the
IASB be subject to the new rules, as
proposed? Should the proposed rules
also apply to foreign private issuers that
prepare their financial statements in
their local GAAP and reconcile to U.S.
GAAP for Exchange Act reporting
purposes if their home jurisdictions
have developed interactive data
reporting programs? Would the
proposed rules’ current exclusion of
such issuers create a disincentive for
foreign private issuers to use IFRS as
issued by the IASB for their Exchange
Act reporting?
• Are there extra burdens that foreign
private issuers reporting in U.S. GAAP
or IFRS as issued by the IASB would
incur under the proposed rules? Do any
such burdens necessitate a one year or
other delay in the proposed phase-in
requirement as and when it otherwise
would apply to them?
• Do foreign private issuers using
foreign filing agents have comparable or
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sufficient access to interactive data
software and support services?
• Should the proposed new rules
apply to a Canadian issuer’s financial
statements prepared in accordance with
U.S. GAAP and filed with the
Commission under cover of Form 40–
F? 108 Should the proposed new rules
apply to a Canadian issuer’s registered
offering on Form F–9 109 or F–10, or any
other forms available under the
Multijurisdictional Disclosure
System? 110
• Should we permit or require foreign
private issuers filing their annual
financial statements using U.S. GAAP
also to provide in interactive data
format any interim financial information
that they furnish on Form 6–K? If so,
what factors should we consider in
determining whether to require or
permit such submissions? Should such
a requirement be phased in? What are
the answers to these questions if the
foreign private issuer uses IFRS as
issued by the IASB?
• Should investment companies
registered under the Investment
Company Act, business development
companies or other entities that report
under the Exchange Act and prepare
their financial statements in accordance
with Article 6 of Regulation S–X be
subject to the proposed rules? Is the
current investment management list of
tags sufficiently developed for required
use by these companies?
• The Commission recently proposed
to accelerate the filing deadline for
annual reports filed on Form 20–F by
foreign private issuers under the
Exchange Act by shortening the filing
deadline from 6 months to within 90
days after the foreign private issuer’s
fiscal year-end in the case of large
accelerated and accelerated filers, and to
within 120 days after a foreign private
issuer’s fiscal year-end for all other
issuers, after a two-year transition
period.111 In light of this rule proposal,
should we lengthen the proposed phasein deadlines for foreign private issuers,
for example, by one year if the issuer is
not a large accelerated filer?
a. Financial Statements and Financial
Statement Schedules
The proposed rules would require
interactive data tagging of a filer’s
complete financial statements and any
required financial statement
schedules.112 As with the voluntary
program, the proposed rules would
require companies to provide the
interactive data in an exhibit. Interactive
data would be required for all periods
included in the filer’s financial
statements. The proposed rules would
not, however, require interactive data
submissions for other financial
statements that may be required of
filers, including those provided
pursuant to Rules 3–05, 3–09, 3–10, 3–
14, and 3–16 of Regulation S–X.113
As with the voluntary program, the
proposed rules would require that the
line item descriptions and amounts
presented on the face of the financial
statements in the traditional format
filing be the same as in the interactive
data format. Also, the rules would
prohibit partial presentation of face
financial statements in interactive data
format. For example, excluding
comparative financial information for
prior periods would not be permitted.
Unlike the voluntary program, our
proposed rules require companies using
U.S. GAAP or foreign private issuers
using IFRS as issued by the IASB to
provide tagged data for the footnotes
and schedules to the financial
statements. At the time of our adopting
release for the voluntary program in
2005, we stated that we recognized
technical issues made it difficult to tag
the notes to the financial statements. We
did, however, provide volunteers with
the option of tagging the notes to the
financial statements.114 Since the time
of the adopting release, the necessary
list of tags has been completed and the
available software has advanced
sufficiently to require that the financial
statement footnotes and schedules be
included in the proposed rules.
The voluntary program adopting
release recommended that if
participants voluntarily provided
footnotes in interactive data format,
108 17 CFR 249.240f. Certain Canadian foreign
private issuers file registration statements and
annual reports under the Multijurisdictional
Disclosure System, which permits eligible Canadian
companies to use their disclosure documents
prepared in accordance with Canadian
requirements in filings with the Commission.
109 17 CFR 239.39.
110 17 CFR 239.40.
111 Release No. 33–8900 (Feb. 29, 2008) [73 FR
13404].
112 As previously noted, proposed Rule 405 of
Regulation S-T would directly set forth the basic
tagging requirements and indirectly set forth the
rest of the tagging requirements through the
requirement to comply with the EDGAR Filer
Manual. Consistent with proposed Rule 405, the
EDGAR Filer Manual would contain the detailed
tagging requirements.
113 17 CFR 210.3–05, 17 CFR 210.3–09, 17 CFR
210.3–10, 17 CFR 210.3–14, 17 CFR 210.3–16.
114 See section II.E. of Securities Act Release No.
8529 (February 3, 2005) [70 FR 6556, 6559].
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3. Documents and Information Covered
by the Proposed Rules
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then they should provide enough detail
so that the tagging would be of practical
value to users. The release stated that a
single tag for the entire group of
footnotes in a filing would cover too
much information to be useful to the
user. We still believe that one tag for the
entire group of footnotes would be
confusing and provide little benefit.
Tagging each footnote separately,
however, would allow users the ability
to compare footnote disclosure between
periods and across filers while
minimizing the burden on preparers.
We are therefore proposing that the
footnote disclosures in the traditional
format filing be the same as in the
interactive data format. This would be
accomplished by tagging the footnotes
using four different levels of detail:
(i) Each complete footnote tagged as a
single block of text;
(ii) Each significant accounting policy
within the significant accounting
policies footnote tagged as a single block
of text;
(iii) Each table within each footnote
tagged as a separate block of text; and
(iv) Within each footnote, each
amount (i.e., monetary value,
percentage, and number) separately
tagged and each narrative disclosure
required to be disclosed by U.S. GAAP
(or IFRS as issued by the IASB, if
applicable), and Commission
regulations separately tagged.
To allow filers time to become
familiar with tagging footnotes, we are
proposing that in each filer’s first year
of interactive data reporting only level
(i) would be required. All four levels
would be required starting one year
from the filer’s initial required
submission in interactive data. In year
two, when a filer would first be required
to tag its footnotes and schedules using
multiple levels of detail, the filer would
be given an additional 30 days beyond
the due date or filing date of its report
or registration statement to file the
interactive data exhibit. Subsequent
interactive data exhibits using all of the
levels would be required at the same
time as the rest of the related report or
registration statement. We believe the
one-time 30-day grace period would
help a filer comply with the more
detailed tagging requirements.
We propose requiring these various
levels of detailed tagging for the
financial statement footnotes after
considering the range of needs of
investors, analysts, and other consumers
of financial information. We believe the
block-text tagging required under levels
(i) through (iii) would satisfy the need
of those who desire disclosures within
the context of an entire footnote or an
entire table. The detail tagging of
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individual amounts and narrative
disclosures within the footnotes
required under level (iv) would satisfy
the need of those who desire to analyze
specific pieces of information or data.
The requirement that in the second
year a filer tag separate each amount
within a footnote (i.e., monetary value,
percentage, and number) and each
narrative disclosure required to be
disclosed by U.S. GAAP (or IFRS as
issued by the IASB, if applicable), and
Commission regulations should not
affect a filer’s decisions regarding what
to disclose in its traditional format
filing. We are aware of questions as to
whether the contextual information or
data elements chosen from the standard
list of tags could potentially reveal
information that the rest of the related
registration statement or periodic report
would not otherwise make known.
However, we do not believe that the
contextual information or data elements
chosen should provide any additional
substantive disclosure.
To clarify the intent of the rules, we
propose to include an instruction to
proposed Rule 405 of Regulation S–T
stating that the rules require a
disclosure format, but do not change
substantive disclosure requirements.
The rules also would state clearly that
the information in interactive data
format should not be more or less than
the information in the ASCII or HTML
part of the related registration statement
or report.
In connection with their annual and
transition reporting on Forms 10–K or
20–F, filers may be required under
existing financial reporting
requirements to include certain
supplementary financial statement
schedules with their financial
statements. The form and content of
these schedules are governed by Article
12 of Regulation S–X.115 The list of tags
for U.S. financial statement reporting
enables companies to tag individual
facts in these financial statement
schedules, or to block tag each entire
schedule.
We propose that filers also be
required to include with their
interactive data any financial statement
schedules prescribed by Article 12 of
Regulation S–X. These financial
statement schedules would be tagged
using two different levels of detail; only
the first level would be required in the
first year. Both levels would be required
starting one year from the filer’s initial
required submission in interactive data
format. Similar in concept to the tagging
approach proposed for the financial
115 See Rules 5–04 and 7–05 of Regulation S–X
and Items 17 and 18 of Form 20–F.
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statement footnotes, the required levels
of detail would be: (i) Each complete
financial statement schedule tagged as a
block of text; and (ii) each amount (i.e.,
monetary value, percentage, and
number) separately tagged and each
narrative disclosure required to be
disclosed by Commission regulations
separately tagged.
A filer may revise its previously filed
financial statements for a variety of
reasons, such as the retrospective
application of a new accounting
principle or the correction of an error.
Our proposed rules would require a filer
to provide revised interactive data at the
same time it files the revised financial
statements with the traditional format
filing.116 Under the proposed rules,
filers also would be required to provide
interactive data for transition reports on
Forms 10–Q, 10–K, or 20–F.
Request for Comment:
• Are the proposed four levels of
detail appropriate for footnote tagging?
What alternative footnote disclosure
items or criteria do commenters
recommend we establish for tagging
footnotes? Why would those be more
appropriate than what we propose?
• Should we require all four levels for
footnotes in the first year instead of
using the phase-in approach for the
more detailed tagging? Should detailed
tagging of a filer’s footnotes and
schedules not be required until more
than one year after its initial interactive
data submission, for example, in year
three or four?
• Are the proposed two levels of
detail appropriate for financial
statement schedule tagging? If not, what
alternatives would be more appropriate?
• Should we require both levels for
financial statement schedules in the first
year instead of using the phase-in
approach for more detailed tagging?
• Is the most detailed level of tagging
too prescriptive, or is it too broad?
Would it help to achieve comparability
among filers? Would it impose an
unnecessary burden on filers in
preparing their XBRL data compared to
the potential benefit to consumers of
data? What problems or obstacles may
be encountered in applying the
proposed requirement?
• Would the most detailed level of
tagging result in the creation of a high
number of company-specific
extensions? If so, would the additional
116 Revised interactive data would be required so
that the financial information would be the same in
both the traditional format filing and the interactive
data file. If the financial statements are not revised
in connection with an amended registration
statement, periodic report, or transition report, the
exhibit index would indicate that the interactive
data file was already provided.
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effort needed to create new extensions
diminish once a filer has tagged at this
level of detail? Should the tagging
requirement instead be only to require
detailed tagging to the extent a standard
tag already exists in the standard list of
tags?
• Does the proposed rule provide
adequate and effective guidance on how
to tag information in the footnotes to the
financial statements? For example,
would it be feasible for companies to
identify the narrative disclosure
required by U.S. GAAP or IFRS as
issued by the IASB that needs to be
tagged separately? Should it be more
principles-based? If so, what should
those principles be?
• Do the standards we propose for
tagging provide clear enough guidance
for preparers so that we can expect to
achieve consistency among filers?
• Should schedules to the financial
statements be omitted from our
proposed rule? If so, why?
• What additional costs and burdens
would there be with detailed tagging of
the financial statement footnotes and
financial statement schedules as
opposed to ‘‘block’’ tagging?
• Would investors and other users of
tagged data benefit from the tagging of
individual amounts (i.e., monetary
values, percentages, and numbers) and
narrative disclosures within each
footnote together with block text?
• Should we require that filers
reporting in U.S. GAAP, or in IFRS as
issued by the IASB, tag their document
and entity 117 information? Would this
information be useful in interactive data
format?
• Is it reasonable to expect that
requiring interactive data-formatted
financial statements in general or
footnotes in particular will not change
the discretionary content that
companies provide in the traditional
format filing? Would the availability of
tagged data possibly cause competitive
pressures on filers to choose to make
more disclosures that are permissible,
encouraged, or otherwise not required
by Commission regulations?
Alternatively, might the availability of
tagged data possibly cause filers to
choose to curtail such disclosures? What
types of disclosures would those be?
• Should transition reports not be
subject to the proposed rules? If not,
why not?
• Would users of financial
information find tagged financial
statement schedules useful for
analytical purposes?
• Should the proposed rules require
interactive data submissions for a filer’s
117 See
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financial information provided under
Forms 8–K and 6–K, such as earnings
releases or interim financial
information? If so, what level of tagging
detail would be appropriate, and would
a reasonable grace period from the date
of the Form 8–K or 6–K to the deadline
for interactive data (e.g., one, three, or
five days) address concerns that filers
require additional time to provide
interactive data for such financial
information? Does financial information
provided under Form 8–K or 6–K, such
as earnings releases, present additional
burdens compared to other forms that
would warrant excluding them from the
proposed rules?
• Should the proposed rules require
interactive data submissions for other
financial statements that may be
provided by filers, including those
provided pursuant to Rules 3–05, 3–09,
3–10, 3–14 and 3–16 of Regulation S–X?
If so, how should a requirement be
phased in?
• Should we provide an opportunity
for non-investment company issuers to
submit voluntarily interactive data
format information other than that
which they would be required to submit
as interactive data? If so, should we
permit such interactive data format
information to be subject to provisions
governing the proposed required filing
of interactive data? Should we instead
permit such interactive data format
information to be submitted under a
modified voluntary program that would
apply to such information in a manner
similar to the way it applies to XBRLRelated Documents under the current
voluntary program?
• Should we require or permit
interactive data submissions for
executive compensation? Would
interactive data of executive
compensation be useful to investors?
Approximately how much additional
cost would interactive reporting of
executive compensation require of
companies?
• If we were to require or permit
interactive data for executive
compensation, should all narrative and
numerical disclosure required in the
traditional electronic filing 118 be
required in interactive data format? If
we were to require only a subset of the
required disclosure, what subset should
be required? For example, would it be
appropriate to required tagging of only
the Summary Compensation Table and
other tables as applicable? Would it
present an accurate picture of the
compensation? How should an
interactive data requirement for
118 See Item 402 of Regulation S–K, 17 CFR
229.402.
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executive compensation treat the
footnotes and narrative disclosure?
• If we were to require or permit
interactive data for executive
compensation, should we require the
same data provided by the Executive
Compensation Reader currently
available on our Web site? 119
• If we were to require or permit
interactive data for executive
compensation, should the interactive
data be filed with the proxy statement,
which often contains the executive
compensation disclosure, or as an
amendment to the Form 10–K, which
often incorporates the executive
compensation disclosure by
reference? 120 Would it diminish
significantly the value to investors if
interactive data for executive
compensation were not required to be
submitted until, for example, 30 or 45
days after it was required to be
submitted in traditional format? If there
were such a 30- or 45-day delay in the
requirement, would it be advisable to
permit the delayed submission to be
made in an exhibit to a Form 8–K or to
an amendment on Form 10–K?
• How should a requirement to
provide interactive data for executive
compensation apply to foreign private
issuers? 121
• Should we require or permit
interactive data submissions for other
financial, statistical or narrative
disclosure, such as beneficial ownership
of management and five percent or
greater shareholders or tabular
disclosure of contractual obligations? 122
b. Registration Statements Covered by
the Proposed Rules
We are proposing that, subject to the
phase-in period described above, all
registration statements filed under the
Securities Act, including initial public
offerings, be required to include
interactive data when financial
statements are included directly in the
registration statement, rather than being
incorporated by reference. This would
include all periods included in the
registration statement as required by
119 The
Executive Compensation Reader displays
the Summary Compensation Table disclosure of 500
large companies that followed the new executive
compensation rules in reporting 2006 compensation
information in their proxy statements filed with the
Commission. By using the reader, an investor can
view amounts included in the Summary
Compensation Table Stock Awards and Option
Awards columns based on either the full grant date
fair value of the awards granted during the fiscal
year, or the compensation cost of awards recognized
for financial statement reporting purposes with
respect to the fiscal year, and recalculate the Total
Compensation column accordingly.
120 General Instruction G.3. to Form 10–K.
121 Item 6.B of Form 20–F.
122 17 CFR 229.403, 17 CFR 229.303(a)(5).
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Regulation S–X and our rules. We
believe analysts, investors, the public,
and others would benefit from the
enhanced ability of interactive data to
locate and compare financial data
included in registration statements.
Under the proposed rules, interactive
data would be required for the acquiring
company, the filer, but not for the
company being acquired, in the context
of a business combination. The
additional burden of configuring
disclosure from traditional electronic
format into interactive data format in
the context of a registered offering is not
anticipated to significantly add to the
time or expense of companies filing
registration statements.123
Request for Comment:
• Should registration statement
financial information be subject to the
new rules, as proposed? In particular,
should registrants making initial public
offerings in year three (and later years)
of the phase-in period be required to
provide interactive data if, as would be
typical, they were not already required
to file periodic reports subject to the
requirement to submit an interactive
data exhibit? 124 Should we permit
rather than require interactive data to be
provided in initial public offerings or
other registration statements?
• If we require interactive data,
should the proposed rules apply to
registration statement financial
information based on the size of the
registrant (for example, distinguishing
between large accelerated filers and
smaller reporting companies)?
• Should the proposed rules require
filers to include interactive data with
respect to all filings of the registration
statement when the registration
statement is filed multiple times due to
amendments? If not, which filings of the
registration statement should be subject
to the interactive data submission
requirement? Should we, for example,
limit the Securities Act filings that
would require interactive data to those
that contain a preliminary prospectus
that is circulated? 125 Should the
123 As noted above, if an amended registration
statement is filed that does not involve any change
in the financial statements, the interactive data
exhibit would not be required to be re-filed. The
exhibit index would simply note that the exhibit
had already been filed.
124 An issuer might already be required to submit
periodic reports subject to the requirement to
submit an interactive data exhibit without ever
having made an initial public offering registered
under the Securities Act. An issuer could be in that
position, even during year one of the phase-in, for
example, if the issuer became publicly held as a
result of the type of spin-off Staff Legal Bulletin No.
4 (Sept. 16, 1997) describes as not requiring
registration under the Securities Act.
125 The instruction to Item 501(b)(3) of Regulation
S–K [17 CFR 229.501(b)(3)] addresses disclosure
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proposed rules apply to a final
prospectus supplement filed under
Securities Act Rule 424? 126 If we
require interactive data with filings that
do not currently include exhibits, such
as final prospectuses, should we require
that the interactive data be provided as
schedules or exhibits? Once interactive
data are provided with a registration
statement, should we limit the
requirement to provide interactive data
for amendments to only the
amendments that reflect substantive
changes from or additions to the
financial information? Would revising
interactive data that previously were
provided in connection with a
registration to reflect changes to the
registration statement involve much
burden?
• Should interactive data be required
only in connection with initial public
offering registration statements under
the Securities Act, rather than, as
proposed, all Securities Act registration
statements?
• In a registration statement on Form
S–4 or F–4, or proxy statement relating
to a proposed merger, should interactive
data be required for the company being
acquired as well as the acquiring
company? Should interactive data of the
company being acquired be required
only if that company already is subject
to interactive data reporting under the
proposed rules?
• Should we also require interactive
data to be provided in connection with
Exchange Act registration statements on
Form 10 and Form 20–F?
4. Initial Filing Grace Period
As noted above, interactive data
would be required at the same time as
the rest of the filing to which it relates.
Each company’s initial interactive data
submission, however, would be
permitted as an amendment to a
registration statement within 30 days of
the date of filing or as an amendment to
Form 10–K, 20–F, or 10–Q within 30
days of the due date for filing of the rest
of the related report. In addition, as
discussed above in Part II.B.3.a, in year
two when a filer would first be required
to tag its footnotes and schedules using
all levels of detail, the interactive data
exhibit would be required within 30
days of the due date or filing date of the
related report or registration statement,
as applicable.
Currently in the voluntary program,
filers may provide the interactive data at
requirements applicable to specified circulated
preliminary prospectuses.
126 17 CFR 230.424. Currently, Rule 424
prospectuses do not have a provision for exhibits,
so additional EDGAR programming would be
needed.
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the time of filing or at any later time,
without a deadline.127 We believe that,
consistent with our view regarding the
value of widespread market use of the
interactive data, companies should be
required to provide the interactive data
at the time the registration statement or
report is required to be filed. We do not
believe this timing requirement would
place undue pressure on filers. We
believe, for example, based on our
experience with the voluntary program,
that the time period for the quarterly or
annual report is sufficient for filers to
convert their ASCII or HTML financial
statements into interactive data format.
Request for Comment:
• Should we permit interactive data
information to be provided later than
the related filing for the first year, rather
than just the first filing? Should we
provide a grace period for the first filing
as to which the issuer is required to tag
financial statement footnotes in detail?
Is a grace period not needed?
• Should any grace period either for
the first filing or for subsequent filings
be for fewer or more than 30 days, such
as five, 20 or 45 days? What would the
impact of a grace period be on the
usefulness of interactive data?
5. Web Site Posting of Interactive Data
We believe interactive data, consistent
with our proposed rules, should be
easily accessible for all investors and
other market participants. As such
disclosure becomes more widely
available, advances in interactive data
software, online viewers, search engines
and other Web tools may in turn
facilitate access and usability of the
data. Encouraging widespread
accessibility to filers’ financial
information furthers our mission to
promote fair, orderly, and efficient
markets, and facilitate capital formation.
We believe Web site availability of the
interactive data would encourage its
widespread dissemination, thereby
contributing to lower access costs for
users. We therefore propose that each
filer covered by the proposed rules be
required to provide the same interactive
data on its corporate Web site, if it has
one, that would be required to be
provided to the Commission on the
earlier of the day it filed or was required
to file the related registration statement
or report, as applicable.128
127 The voluntary program permits filers to
provide the initial and any such restated financial
information in interactive data format using Form
8–K. The proposed rules, however, would require
that interactive data be provided as an exhibit to the
filing itself, including any restated Forms 10–K, 10–
Q, or 20–F.
128 Proposed Rule 405 would contain the Web site
posting requirement. We also propose to provide,
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We believe access to the interactive
data on corporate Web sites would
enable search engines and other data
aggregators to more quickly and cheaply
aggregate the data and make them
available to investors because the data
would be available directly from the
filer, instead of through third-party
sources that may charge a fee. To help
further our goals of decreasing user cost
and increasing availability, we do not
propose to allow companies to comply
with the Web posting requirement by
including a hyperlink to the documents
available electronically on the
Commission’s Web site.
We believe this requirement would be
consistent with the increasing role that
corporate Web sites perform in
supplementing the information filed
electronically with the Commission by
delivering financial and other disclosure
directly to investors. For example, we
note that since 2003 issuers with
corporate Web sites have been required
to post on their Web sites beneficial
ownership reports filed with respect to
their securities on Forms 3, 4, and 5
under Section 16(a) of the Exchange
Act.129 We also note that many
companies provide on their Web sites
access to their periodic reports, proxy
statements, and other Commission
filings.130 This proposal would expand
such Web site posting by requiring
companies with Web sites to post their
interactive data as well.131
Request for Comment:
• Should we adopt rules that require
each filer to post interactive data from
however, that Web site posting of the interactive
data would not be required until the end of any
applicable grace period that would apply to the
submission of the interactive data to the
Commission. Similarly, we propose to provide that
Web site posting of the interactive data would not
be required before submission of the interactive
data when submission of the data is delayed in
accordance with and during the term of any
applicable hardship exemption provided under
Rule 201 or 202 as proposed to be revised. Proposed
revisions to Rules 201 and 202 are more fully
discussed below in Part II.E.
129 Section 16(a)(4)(C) [15 U.S.C. 78p(a)(4)(C)],
Rule 16a–3(k) [17 CFR 240.16a–3(k)].
130 Companies filing registration statements and
accelerated filers and large accelerated filers in their
periodic reports are required to disclose whether or
not they make available free of charge on or through
their Web site, if they have one, their annual report
on Form 10–K, quarterly reports on Form 10–Q,
current reports on Form 8–K, and amendments to
those reports. Companies that do not make their
reports available in that manner also must disclose
the reasons they do not do so and whether they
voluntarily provide electronic or paper copies of
their filings free of charge upon request. See Item
101(e) of Regulation S–K.
131 As further discussed in Part II.E, we propose
that a company that failed to post its interactive
data as required would be deemed ineligible to use
short form registration Forms S–3, S–8, and F–3 and
would be deemed not to have adequate public
information available for purposes of Rule 144(c)(1)
unless and until it posted.
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registration statements and periodic and
transition reports on its corporate Web
site, if it has one?
• What advantages, if any, would
dual Internet and EDGAR availability
have for users, search engines, software
developers, and others involved in the
extraction and processing of financial
data? Would it be helpful if our Web site
provided the option to download the
interactive data submission from our
Web site or the issuer’s Web site? Would
it add a significant burden if an issuer
were required to submit with its
interactive data the URL that would link
specifically to that interactive data as
posted on the issuer’s Web site or,
alternatively, link to a part of the
issuer’s Web site from which there
would be easy access to the interactive
data as posted there? What would
facilitate the realization of any
advantages of Web site posting, for
example the use of a standardized URL
for interactive data? Would a
standardized URL add significant cost to
posting?
• Instead of requiring Web site
posting, should we require that filers
disclose in their registration statements
or reports whether or not they provide
free access to their interactive data on
their corporate Web sites and, if not,
why not?
• What impact would be realized by
filers that do not currently provide Web
sites? Would the proposed rules affect
whether filers create or maintain Web
sites?
• Would Web site posting decrease
the time and cost required for
aggregators of financial information and
users to access disclosure formatted
using interactive data?
• If we require Web site posting of
interactive data, should we also require
that the Web site include language
stating that the entire registration
statement, or periodic report also is
available for free at the Commission’s
Web site?
• If we require Web site posting of
interactive data, should we require, as
proposed, that each filer provide the
interactive data on its corporate Web
site on the same day as the related
filing, instead of at the same time?
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C. Accuracy and Reliability of
Interactive Data
1. Voluntary Program
To help ensure the accuracy of
interactive data in the voluntary
program, the data has undergone
validation upon receipt by our
electronic filing system separate from
the normal validation of the traditional
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format filing.132 Potential liability also
helps ensure the accuracy and reliability
of the data. Although the voluntary
program has provided limited
protections from liability under the
federal securities laws 133 and excluded
interactive data from being subject to
officer certification requirements under
Exchange Act Rules 13a–14 and 15d–
14,134 interactive data in the voluntary
program are subject to the anti-fraud
provisions of the federal securities laws.
The voluntary program also encourages
participants’ efforts to create accurate
and reliable interactive data that is the
same as the corresponding disclosure in
the traditional electronic format filing
by providing that a participant is not
liable for information in its interactive
data that reflects the same information
that appears in the corresponding
portion of the traditional format filing,
to the extent that the information in the
corresponding portion of the traditional
format filing was not materially false or
misleading. To further encourage
reasonable efforts to provide accurate
interactive data, the voluntary program
treats interactive data that do not reflect
the same information as the official
version as reflecting the official version
if the volunteer meets several
conditions. The volunteer must have
made a good faith and reasonable
attempt to reflect the same information
as appears in the traditional format
filing and, as soon as reasonably
practicable after becoming aware of any
difference, the volunteer must amend
the interactive data to cause them to
reflect the same information.135
2. Use of Technology To Detect Errors
Complete, accurate, and reliable
financial statements and other
disclosures are essential to investors
and the proper functioning of the
securities markets. Our proposed
requirement to submit interactive data
with registration statements and reports
is designed to provide investors with
new tools to obtain, review, and analyze
information from public filers more
efficiently and effectively. To satisfy
these goals, interactive data must meet
investor expectations of reliability and
accuracy. Many factors, including
company policies and procedures
buttressed by incentives provided by the
132 If the traditional format filing meets its
validation criteria, but any interactive data fail their
own validation criteria, all interactive data are
removed and the traditional format filing is
accepted and disseminated without the interactive
data file.
133 Rule 402 under Regulation S–T provides these
liability protections.
134 See Rules 13a–14(f) [17 CFR 240.13a–14(f)]
and 15d–14(f) [17 CFR 240.15d–14(f)].
135 17 CFR 232.402(b).
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application of technology by the
Commission, market forces and the
liability provisions of the federal
securities laws, help further those goals.
Building on the validation criteria
referenced above for interactive data in
the voluntary program, we plan to use
validation software to check interactive
data for compliance with many of the
applicable technical requirements and
to help the Commission identify data
that may be problematic. For example,
we expect the validation software to
• Check if required conventions (such
as the use of angle brackets to separate
data) are applied properly for standard
and, in particular, non-standard special
labels and tags;
• Identify, count, and provide the
staff with easy access to non-standard
special labels and tags; 136
• Identify the use of practices,
including some the XBRL U.S. Preparers
Guide contains, that enhance
usability; 137
• Facilitate comparison of interactive
data with disclosure in the
corresponding traditional format filing;
• Check for mathematical errors; and
• Analyze the way that companies
explain how particular financial facts
relate to one another.138
The availability of interactive data to
the staff may also enhance its review of
company filings. After the FDIC
required submission of interactive data,
it reported that its analysts were able to
increase the number of banks they
reviewed by 10% to 33%, and that the
number of bank reports that failed to
fully meet filing requirements fell from
30% to 0%. These bank reports require
information that is more structured and
less varied than the information we
would require. As a result, the FDIC’s
efficiency gains from the use of
interactive data likely would be greater
than ours.
We believe analysts, individual
investors and others outside the
Commission that use the interactive
data submitted to us also will make use
of software and other tools to evaluate
the interactive data and, as a result,
market forces will encourage companies
136 For example, if a company uses the word
‘‘liabilities’’ as the caption for a value data tagged
as ‘‘assets,’’ the software would flag the filing and
bring it to the staff’s attention. In contrast, if the
company used ‘‘Total Assets’’ or ‘‘Assets, Total,’’
the software would identify the use of these terms
as a low risk discrepancy.
137 The XBRL U.S. Preparers Guide, available
from the XBRL U.S. Web site, would provide
guidance to facilitate preparing information in the
interactive data format that we propose to require.
138 The technology used to show these
relationships is known as a ‘‘linkbase.’’ The
Commission will seek to ensure that linkbases not
only comply with technical requirements but are
not used to evade accounting standards.
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to provide interactive data that
accurately reflects the corresponding
traditional format data in the traditional
format filing. For example, the use of
non-standard special labels or tags
(extensions) could introduce errors, but
we expect the open source and public
nature of interactive data and the list of
tags for U.S. financial statement
reporting would enable software easily
to detect and identify any modifications
or additions to the approved list of tags.
We believe such software and other
technology will be widely available for
free or at reasonable cost. Investors,
analysts, and other users therefore
would be able to identify the existence
and evaluate the validity of any such
modifications or additions. We also
anticipate that companies preparing
their interactive data and investors,
analysts, and other users would use
such devices to search for and detect
any changes made to the standard list of
tags. Because analysts and other users
would rapidly discover mistakes or
alterations not consistent with the
desired use of interactive data, filers
would have a powerful incentive to
prepare such data with care and
promptly correct any errors.
With this proposal, we seek the rapid
adoption and use of interactive data
without imposing unnecessary cost and
expense on filers. We therefore propose
that the interactive data itself provided
to us generally would be subject to a
liability regime under the federal
securities laws similar to that governing
the voluntary program. We also propose
that viewable interactive data as
displayed through software available on
the Commission’s Web site, as described
above and further discussed below,
would be subject to the same liability
under the federal securities laws as the
corresponding portions of the
traditional format filing.139
Interactive data would be subject to
the following liability-related
provisions:
• Deemed not filed or part of a
registration statement or prospectus for
139 Proposed Rule 406 of Regulation S–T would
set forth the liability applicable to interactive data
and viewable interactive data that is displayed
through software available on the Commission’s
Web site. Proposed Rule 406 also would clarify that
disclosures in the traditional format part of the
related official filing with which the interactive
data appear as an exhibit remain subject to the
federal securities laws as in the past and that
nothing in proposed Rule 405 of Regulation S–T
(setting forth content, format and other
requirements related to interactive data) or
proposed Rule 406 would affect the liability
otherwise applicable to the traditional format data.
Proposed revised Rules 13a–14(f) and 15d–14(f)
would exclude interactive data from the officer
certification requirements.
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purposes of sections 11 and 12 of the
Securities Act;
• Deemed not filed for purposes of
section 18 of the Exchange Act and
section 34(b) of the Investment
Company Act;
• Not otherwise subject to the
liabilities of these sections;
• Subject to other liability under
these Acts for the substantive content of
the financial disclosures (as distinct
from compliance with proposed Rule
405) in the same way and to the same
extent as the traditional format part of
the related official filing. The content of
the financial disclosure refers, for
example, to the numerical values in the
financial statements or footnotes and the
statements in the footnotes. The Rule
405 requirements generally refer to the
process of tagging and formatting the
content of the financial statements for
the interactive data file;
• Deemed filed for purposes of (and,
as a result, benefit from) Rule 103 under
Regulation S–T; 140
• Protected from liability under these
Acts for failure to comply with the
requirements of proposed Rule 405 if
the interactive data either:
Æ Met the requirements of proposed
Rule 405 of Regulation S–T; or
Æ Failed to meet those requirements
but the failure occurred despite the
issuer’s good faith and reasonable effort
and the issuer corrected the failure as
soon as reasonably practicable after
becoming aware of it; and
• Excluded from the officer
certification requirements under
Exchange Act Rules 13a–14 and 15d–14.
None of the proposed liability-related
provisions for interactive data submitted
to the Commission, however, would
affect the application of the anti-fraud
provisions under the federal securities
laws, whether the interactive data is
submitted to the Commission or posted
on an issuer’s Web site.
Rule 405 is being proposed, in part,
under the Commission’s authority to
specify information required to be
submitted to the Commission in, for
example, registration statements and
periodic reports. To encourage accurate
filing of interactive data without fear of
making good faith errors, the
Commission is proposing Rule 406.
Although not expressly addressed in
proposed Rule 406, the Commission
would have the authority to enforce
140 The viewed data would be deemed filed for
purposes of Rule 103 under Regulation S–T [17 CFR
232.103] and, as a result, in general, the issuer
would not be subject to liability for electronic
transmission errors beyond its control if the issuer
corrects the problem through an amendment as
soon as reasonably practicable after the issuer
becomes aware of the problem.
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compliance with proposed Rule 405
because it has the authority to enforce
compliance with any of its rules.
We believe these liability-related
provisions strike an appropriate balance
between avoiding unnecessary cost and
expense and encouraging accuracy in
light of the nature of the interactive data
to which they apply and the additional
accuracy incentives that may be
provided by our validation software and
market forces.
Other aspects of the proposal would
supplement the Commission’s objective
of supplying reliable and accurate
information to investors. First, the
financial statements and other
disclosures in the traditional format part
of the related official filing with which
the interactive data appear as an exhibit
would continue to be subject to the
usual liability provisions of the federal
securities laws. For example, the
traditional format part of the related
official filing would continue to be
subject to section 10(b) and Rule 10b–
5 141 of the Exchange Act and, in the
appropriate circumstance, to section 11
of the Securities Act. Form 10–K would
continue to be considered filed, while
the information required by Items 1, 2,
and 3 of Form 10–Q would continue to
be considered furnished for purposes of
section 18 of the Exchange Act.142
Second, we propose that the usual
liability provisions of the federal
securities laws also would apply to
human-readable interactive data that is
identical in all material respects to the
corresponding data in the traditional
format filing 143 as displayed by a
viewer that the Commission provides.
Under these circumstances, for example,
a Form 10–K’s viewable interactive data
would be deemed filed and subject to
section 18 of the Exchange Act,
consistent with the liability applicable
to the corresponding part of the
traditional format Form 10–K, and a
Form 10–Q’s viewable interactive data
would be deemed furnished and not
subject to section 18 of the Exchange
Act, consistent with the liability
applicable to the corresponding part of
the traditional format Form 10–Q. And
a Securities Act registration statement’s
viewable interactive data as displayed
through software available on the
Commission’s Web site and identical in
all material respects to the
corresponding data in the traditional
141 17
CFR 240.10b–5.
Instruction F. Form 10–Q: ‘‘Filed
Status of Information Presented.’’
143 The human-readable interactive data would be
identical to the corresponding data in the
traditional format filing if the filer complied with
the interactive data tagging requirements of
proposed Rule 405.
142 General
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format filing would be subject to section
11 of the Securities Act. In that regard,
such viewable interactive data
disclosure therefore would have exactly
the same potential liability as the
corresponding portions of the
traditional format part of the filing. We
believe applying liability for such
viewable interactive data displayed
through software on the Commission’s
Web site would further investors’
interests in filers providing accurate
interactive data under our proposal.
We expect that each filer would be in
the best position to determine the
appropriate manner in which to assure
the accuracy of the interactive data it
would be required to submit and the
viewable interactive data that would
result. We also expect that software
providers and other private sector third
parties would help develop procedures
and tools to help in that regard. As an
adjunct to those private sector efforts,
we plan to make available to filers, on
an optional basis, the opportunity to
help assure accuracy by making a test
submission with the Commission or
using software we provide to create
viewable interactive data.
A filer would have the opportunity to
submit an interactive data exhibit as
part of a test submission just as a filer
can make test submissions today.144 The
validation system would process the test
submission with an interactive data
exhibit similar to the way it processes
test submissions today. If it found an
error, it would advise the filer of the
nature of the error and as to whether the
error was major or minor. As occurs in
the voluntary program, a major error in
an interactive data exhibit that was part
of a live filing would cause the exhibit
to be held in suspense in the electronic
filing system while the rest of the filing
would be accepted and disseminated if
there were no major errors outside of the
interactive data exhibit. If that were to
happen, the filer would need to revise
the interactive data exhibit to eliminate
the major error and submit the exhibit
as an amendment to the filing to which
it is intended to appear as an exhibit. A
minor error in an interactive data
exhibit that was part of a live filing
would not prevent the interactive data
exhibit from being accepted and
disseminated together with the rest of
the filing if there were no major errors
in the rest of the filing. We believe it
would be appropriate to accept and
disseminate a filing without the
interactive data exhibit submitted with
it if only the exhibit has a major error,
in order to disseminate at least as much
144 The
EDGAR Filer Manual addresses test
submissions primarily at Section 6.6.5 of Volume II.
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information as timely as would have
been disseminated were there no
interactive data requirement.
We are not proposing that filers be
required to involve third parties such as
auditors or consultants in the creation of
the interactive data provided as an
exhibit to a filer’s periodic reports or
registration statements, including
assurance. We are taking this approach
after considering various factors,
including:
• The availability of a comprehensive
list of tags for U.S. financial statement
reporting from which appropriate tags
can be selected, thus reducing a filer’s
need to develop new elements; 145
• The availability of user-friendly
software with which to create the
interactive data file;
• The multi-year phase-in for each
filer, the first year of which entails the
relatively straightforward process of
tagging face financial statements, as was
done during the voluntary program, and
block tagging footnotes and financial
statement schedules;
• The availability of interactive data
technology specifications, and of other
XBRL U.S., and XBRL International
resources for preparers of tagged data;
• The advances in rendering/
presentation software and validation
tools for use by preparers of tagged data
that can identify the existence of certain
tagging errors;
• The expectation that preparers of
tagged data will take the initiative to
develop sufficient internal review
procedures to promote accurate and
consistent tagging; and
• The filer’s and preparer’s liability
for the accuracy of the traditional format
version of the financial statements that
will also be provided using the
interactive data format.
Request for Comment:
• Do the proposed rules strike an
appropriate balance to promote the
availability of reliable interactive data
without imposing undue additional
costs and burdens? If not, what balance
of liability will best encourage filers to
prepare reliable interactive data without
subjecting them to undue fear of mistagging? How does the ‘‘extensibility’’ of
interactive data, i.e., a filer’s ability to
customize the standard list of tags to
correspond more closely to the
company’s particular financial
information, affect your answer?
• What are the risks to investors
under the proposed liability rules? Will
investors still find the interactive data
sufficiently reliable to use it?
145 We expect the same would be true with
respect to the tags for reporting under IFRS as
issued by the IASB.
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• Should interactive data be subject
to liability if a filer does not tag its
financial information in a manner
consistent with the standards approved
by the Commission, irrespective of the
filer’s good faith effort? If the answer is
yes, what should the filer’s liability be
for such errors, and should liability
attach even if the mistake is
inadvertent? What if the error is the
result of negligent tagging practices, but
there was no affirmative intent to
mislead?
• If interactive data are subject to
liability as proposed, is it necessary or
appropriate for viewable interactive data
to be subject to liability as and to the
extent proposed or otherwise? Should
the answer depend on the degree of
liability to which the interactive data
are subject? Should viewable interactive
data be subject to liability in a manner
or to an extent different than as
proposed?
• Should any or all interactive data be
encompassed within the scope of officer
certifications? Is there any reason to
treat interactive data differently from
traditional format data in this respect?
• Should any or all interactive data be
deemed filed for purposes of Section
34(b) of the Investment Company Act
and, if so, should it be regardless of
compliance with proposed rule 405 or a
filer’s good faith and reasonable efforts
to comply?
• Should the liability for interactive
data be exactly the same as it is for
XBRL-Related Documents under the
voluntary program?
• Would software be commercially
available and reasonably accessible to
all required interactive data filers,
investors and analysts that would make
detection of tagging errors, such as the
use of inappropriate tags or improper
extensions, easy and cost-effective? If
so, would such monitoring by investors
and analysts likely discourage the
improper use of extensions or negligent
conduct in the tagging process?
• Would the use of software to search
for and detect any differences between
a filer’s interactive data and the
Commission-approved interactive data
tags, financial statement captions, and
other attributes depend on the degree of
analyst coverage or investor interest?
• Should a rule expressly state that
the Commission retains the authority to
enforce compliance with proposed Rule
405?
• Should we require the involvement
of auditors, consultants, or other third
parties in the tagging of data? If
assurance should be required, what
should be its scope, and should any
such requirement be phased in?
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• Should we phase in increasing
levels of liability over time? Are the
proposed limitations on liability
necessary and appropriate at the outset,
for example, the first year that a
company is subject to the interactive
data requirement, but inappropriate at a
later time? Should we require that
interactive data be subject to more
liability later?
• Should the validation software, as
contemplated, cause an interactive data
exhibit with a major error to be held in
suspense in the electronic filing system
while the rest of the filing would be
accepted and disseminated if there were
no major errors outside of the
interactive data exhibit? In that case,
should the validation software hold the
entire filing in suspense or reject or
accept the entire filing or interactive
data exhibit?
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3. Integration of Interactive Data and
Business Information Processing
As the technology associated with
interactive data improves, issuers may
integrate interactive data technology
into their business information
processing. When this integration
occurs, the preparation of financial
statements may become interdependent
with the interactive data tagging
process. As this occurs, an issuer and its
auditor should evaluate these changes
in the context of their reporting on
internal control over financial
reporting.146 However, the evaluation
would not require an auditor to
separately report on an issuer’s
interactive data provided as an exhibit
to a filers’ reports or registration
statements.
SAS 8 (AU Section 550) was issued in
December 1975 to address an auditor’s
consideration of information in addition
to audited financial statements and the
independent auditor’s report on the
audited financial statements included in
146 Exchange Act Rules 13a–15(f) [17 CFR
240.13a–15(f)] and 15d–15(f) [17 CFR 240.15d–
15(f)] define the term ‘‘internal control over
financial reporting,’’ in general, as a process
designed by or under the supervision of specified
persons and effected by the issuer’s board of
directors, management and other personnel ‘‘to
provide reasonable assurance regarding the
reliability of financial reporting and the preparation
of financial statements for external purposes in
accordance with [GAAP] and includes [specified]
policies and procedures.’’ Rules 13a–15 and 15d–
15 generally require specified issuers to maintain
internal control over financial reporting and require
the management of those issuers to evaluate the
effectiveness of the issuer’s internal control over
financial reporting. In addition, the certifications
specified by Item 601(b)(31) of Regulation S–K and
Instruction B(e) of Form 20–F that relate to these
specified issuers generally must address the
establishment, maintenance, design, changes in and
deficiencies and material weaknesses related to the
issuer’s internal control over financial reporting.
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documents that are published by an
entity (e.g., an annual periodic report).
Similarly, paragraph 18(f) of SAS 100
(AU Section 722) addresses an auditor’s
consideration of other information that
accompanies interim financial
statements included in quarterly
periodic reports. With respect to
registration statements, SAS 37 (AU
Section 711) was issued in April 1981
to address the auditor’s responsibilities
in connection with filings under the
federal securities statutes. With respect
to our proposed rules, an auditor would
not be required to apply AU Sections
550, 722, or 711 to the interactive data
provided as an exhibit in a company’s
reports or registration statements, or to
the viewable interactive data.
4. Continued Traditional Format and
Interactive Data Cautionary Disclosure
The proposed rules would not
eliminate or alter existing filing
requirements that financial statements
and financial statement schedules be
filed in traditional format. We believe
investors and analysts may wish to use
these electronic formats to obtain an
electronic or printed copy of the entire
registration statement or Form 10–Q,
10–K, or 20–F, either in addition to or
instead of disclosure formatted using
interactive data. In addition, we propose
to no longer require or permit the
cautionary disclosure from the
voluntary program for required
interactive data, which states that
investors should not rely on the
interactive data information in making
investment decisions. We believe that
such language would be inconsistent
with the proposal that interactive data
be part of the related registration
statement or report.
Request for comment:
• Should the proposed rules
eliminate the requirement that the
financial information be submitted in
traditional format, in addition to
interactive data format? Should
cautionary language from the voluntary
program be eliminated or modified and,
if not, why not?
D. Required Items
1. Data Tags
To comply with the proposed rules,
filers using U.S. GAAP would be
required to tag their financial
information using the most recent list of
tags for U.S. financial statement
reporting, as released by XBRL U.S. and
required by the EDGAR Filer Manual.147
147 The latest list of data tags for U.S. financial
statement reporting was released on April 28, 2008
and is available at https://xbrl.us/pages/usgaap.aspx. See XBRL U.S. Press Release, XBRL U.S.
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Each company would be required to use
one or more of the five standard
industry-specific lists identified in the
EDGAR Filer Manual, as is appropriate
for its business.148
Regular updates to the list of tags for
U.S. financial statement reporting will
likely be posted annually and be
available for downloading. In addition,
interim extensions may be made
available for download in order to
reflect changes in accounting and
reporting standards. To provide
companies sufficient time to become
familiar with any such updates, we
anticipate giving advance notice before
requiring use of an updated list of tags.
Based on experience to date with the
most recent update to the list of tags, we
believe that it is sufficiently developed
to support the interactive data
disclosure requirements in the proposed
rules.
Similarly, filers using IFRS as issued
by the IASB would be required to tag
their financial information using the
most recent list of tags for international
financial reporting, as released by the
IASCF and specified in the EDGAR Filer
Manual.149
One of the principal benefits of
interactive data is its extensibility—that
is, the ability to add to the standard list
of tags in order to accommodate unique
circumstances in a filer’s particular
disclosures. The use of customized tags,
however, may also serve to reduce the
ability of users to compare similar
information across companies. In order
to promote comparability across
companies, our proposed rules would
limit the use of extensions to
circumstances where the appropriate
financial statement element does not
exist in the standard list of tags. We are
also proposing that wherever possible,
preparers change the label for a
financial statement element that exists
in the standard list of tags, instead of
creating a new customized tag. For
example, the standard list of tags for
U.S. GAAP includes the financial
statement element ‘‘gross profit.’’ The
list does not include ‘‘gross margin,’’
because this is definitionally the same
Finalizes U.S. GAAP Taxonomies and Preparers
Guide with Delivery to SEC (May 2, 2008).
148 We note that the vast majority of companies
would fall under the Commercial and Industrial
industry group. Additional guidance on the
industry-specific lists is expected to appear in the
EDGAR Filer Manual.
149 The International Accounting Standards
Committee Foundation has been developing the
IFRS financial reporting tag list since 2002. See
https://www.iasb.org/xbrl/. The 2008
version of the IFRS financial reporting tag list is
planned to be finalized in June 2008 and updated
annually for changes in accounting and reporting
standards.
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as ‘‘gross profit’’—both are generally
used to mean ‘‘excess of revenues over
the cost of revenues.’’ A filer using the
label ‘‘gross margin’’ in its income
statement should use the tag
corresponding to the financial statement
element ‘‘gross profit.’’ It can then
change the label for this item on the
standard list to ‘‘gross margin.’’
Under Item 401(c) of Regulation S–T,
voluntary filers’ interactive data
elements must reflect the same
information as the corresponding
traditional format elements. Further, no
data element can be ‘‘changed, deleted
or summarized’’ in the interactive data
file. We do not propose to change this
equivalency standard for financial
statements provided in interactive data
format as required by the proposed
rules.
Request for Comment:
• Is our focus on comparability
appropriate? Instead of stressing ease of
financial statement comparability,
should our rules permit greater use of
customized data tags?
• Should we codify any other
principles to encourage comparability
without unduly reducing the
extensibility of interactive data?
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2. Regulation S–T and the EDGAR Filer
Manual
We propose to require that filers
provide interactive data in the form of
exhibits to the related registration
statements or reports.150 Interactive data
would be required to comply with our
Regulation S–T 151 and the EDGAR Filer
Manual. The EDGAR Filer Manual is
available on our Web site. It includes
technical information for making
electronic filings to the Commission.
Volume II of this manual includes
guidance on the preparation,
submission, and validation of
interactive data submitted under the
voluntary program. Before adoption of
our proposed rules, we plan to update
our manual with additional instructions
for filers of interactive data.
In addition to both Regulation S–T,
which would include the rules we are
proposing, and the instructions in our
EDGAR Filer Manual, filers may access
other sources for guidance in tagging
their financial information. These
include the XBRL U.S. Preparers Guide;
150 The requirement to submit XBRL data as an
exhibit would appear in Item 601(b)(101) of
Regulation S–K and Item 101 of the Instructions to
Exhibits of Form 20–F.
151 Proposed Rule 405 of Regulation S–T would
directly set forth the basic tagging and posting
requirements for the XBRL data and require
compliance with the EDGAR Filer Manual.
Consistent with proposed Rule 405, the EDGAR
Filer Manual would contain the detailed tagging
requirements.
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user guidance accompanying tagging
software; and financial printers and
other service providers. New software
and other forms of third-party support
for tagging financial statements using
interactive data are also becoming
widely available.
Request for Comment:
• What specific guidance should be
provided in Regulation S–T for
interactive data filers?
• Does the XBRL U.S. Preparers
Guide provide useful guidance to
promote consistent tagging between
periods and among various companies?
• Is the user guidance accompanying
tagging software, and the guidance
available from financial printers and
other service providers helpful for filers
to tag their financial statements? What
other sources of guidance might prove
useful?
E. Consequences of Non-Compliance
and Hardship Exemption
We propose that if a filer does not
provide the required interactive data
submission, or post the interactive data
on the company Web site, by the
required due date, the filer would be
unable to use short form registration
statements on Forms S–3, F–3, or S–
8.152 This disqualification would last for
so long as the interactive data are not
provided. During the period of
disqualification, the filer would be
deemed not to have available adequate
current public information for purposes
of the resale exemption safe harbor
provided by Rule 144.153 Once a filer
complies with the interactive data
152 Forms S–3, F–3, and S–8 are regarded as short
form registration statements because they enable
eligible issuers to register securities for offer and
sale under the Securities Act by providing
information in a more streamlined manner than
they otherwise could. In order to be eligible to use
these short forms, an issuer must meet specified
requirements, including being current in its filing
of Exchange Act reports. In general, an issuer is
current if it has filed all of its required Exchange
Reports for the twelve months before filing the
registration statement. Filers that are unable to use
short form registration also are unable to
incorporate by reference certain information into
Forms S–4 and F–4. See Item 12 of Form S–4 and
F–4.
153 Rule 144 under the Securities Act creates a
safe harbor for the resale of securities under the
exemption from Securities Act registration set forth
in Section 4(1) of the Securities Act [15 U.S.C.
77d(1)]. In order for some resales of securities to
comply with Rule 144, the issuer of the securities
must be deemed to have adequate current public
information available as specified by Rule 144(c)(1)
[17 CFR 230.144(c)(1)]. Rule 144(c)(1) deems an
issuer required to file reports under the Exchange
Act to have adequate public information available
if it is current in its filing of Exchange Act periodic
reports. In general, an issuer would be deemed
current for this purpose if it has filed all of its
required Exchange Act periodic reports for the
twelve months before the sale of securities for
which the Rule 144 safe harbor is sought.
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submission and posting requirements—
provided it previously filed its financial
statement information in traditional
format on a timely basis—it would be
deemed to have timely filed all of its
periodic reports.
We believe that precluding the use of
short form registration statements
during any period of failure to comply
would appropriately direct attention to
the proposed interactive data reporting
requirement. And allowing filers to
reestablish their current and timely
status by later complying with the
interactive data reporting requirement
would strike a reasonable balance of
negative consequences and recognition
that the company’s traditional format
reports would have been filed.
Consistent with the treatment of other
applicable reporting obligations, we
propose to provide hardship exemptions
for the inability to timely electronically
submit interactive data. Rule 201 under
Regulation S–T provides for temporary
hardship exemptions. Rule 202 under
Regulation S–T provides for continuing
hardship exemptions.
Rule 201 generally provides a
temporary hardship exemption from
electronic submission of information,
without staff or Commission action,
when a filer experiences unanticipated
technical difficulties that prevent timely
preparation and submission of an
electronic filing. The temporary
hardship exemption permits the filer to
initially submit the information in paper
but requires the filer to submit a
confirming electronic copy of the
information within six business days of
filing the information in paper. Failure
to file the confirming electronic copy by
the end of that period results in short
form ineligibility.154
We recognize the inherently
electronic nature of interactive data. In
light of this and the consequences to an
issuer of not timely submitting
interactive data, we propose to revise
Rule 201 to provide a temporary
hardship exemption. This exemption
would apply without staff or
Commission action if a filer experiences
unanticipated technical difficulties that
prevent the timely preparation and
electronic submission of interactive
data. The proposed temporary hardship
exemption would cause the filer to be
deemed current for purposes of
incorporation by reference, short form
registration, and Rule 144 for a period
of up to six business days from the date
the interactive data were required to be
154 Rule
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submitted.155 If the filer did not
electronically submit the interactive
data by the end of that period, from the
seventh business day forward the filer
would not be deemed current until it
did electronically submit the interactive
data.
Rule 202 permits a filer to apply in
writing for a continuing hardship
exemption if information otherwise
required to be submitted in electronic
format cannot be so filed without undue
burden or expense. If the staff, through
authority delegated from the
Commission, grants the request, the filer
must file the information in paper by
the applicable due date and file a
confirming electronic copy if and when
specified in the grant of the request.
We propose to revise Rule 202 to
provide that a grant of a continuing
hardship exemption for interactive data
would not require a paper submission
and that filer would be deemed current
until the end of the period for which the
exemption is granted. Rule 202 also
would provide that, if the exemption
was granted for only a specified period
rather than indefinitely, the filer would
be deemed current up to the end of that
period. If the filer did not electronically
submit the interactive data by the end
of that period, from the next business
day forward the filer would not be
deemed current until it did
electronically submit the interactive
data. Similarly, we propose to revise
Rule 202 to provide an essentially
mirror-image exemption from the
proposed requirement for an issuer that
has a corporate Web site to post the
interactive data on its Web site.
Request for Comment:
• Are the consequences for failure to
comply with the interactive data
submission requirements appropriate?
• Should the proposed rules treat
companies that do not comply as not
current? Should the proposed rules
provide similar treatment whether the
failure to comply relates to interactive
data submission, or to corporate Web
site posting?
• Alternatively, should the proposed
rules go further and treat companies that
do not comply as not timely?
• Should the proposed rules treat a
filer’s compliance with interactive data
reporting as an express condition to the
filer’s registration statement’s being
declared effective?
• Does our proposed rule strike the
correct balance of positive and negative
consequences when a filer meets its
requirements to provide traditional
155 The information would not have to be filed in
paper first, as this would be meaningless in the case
of interactive data.
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format documents but fails to provide
interactive data?
• Do commenters believe that the
proposed revisions to the hardship
exemptions would be sufficient to cover
unanticipated technical difficulties
associated with interactive data? If
insufficient, why would they be
insufficient and how should the
hardship exemptions be tailored to
address technical difficulties associated
with interactive data? For example,
would six business days be an
appropriate period for the temporary
hardship exemption to apply? If not,
would a shorter or longer period be
appropriate, and why?
in interactive data form. The specified
financial information already is and
would continue to be required to be
submitted to the Commission in
traditional format under existing
registration statement and periodic
report requirements. Compliance with
the proposed amendments would be
mandatory according to the phase-in
schedule previously described.158
Issuers not yet phased-in, however,
could comply voluntarily with the
proposed amendments. The information
required to be submitted would not be
kept confidential by the Commission.
III. General Request for Comments
We request comment on the specific
issues we discuss in this release, and on
any other approaches or issues that we
should consider in connection with the
proposed amendments. We seek
comment from any interested persons,
including those required to file
information with us on the EDGAR
system, as well as investors,
disseminators of EDGAR data, industry
analysts, EDGAR filing agents, and any
other members of the public.
1. Registration Statement and Periodic
Reporting
Form S–1 (OMB Control No. 3235–
0065), Form S–3 (OMB Control No.
3235–0073), Form S–4 (OMB Control
No. 3235–0324), and Form S–11 (OMB
Control No. 3235–0067) prescribe
information that a filer must disclose to
register certain offers and sales of
securities under the Securities Act.
Form F–1 (OMB Control No. 3235–
0258), Form F–3 (OMB Control No.
3235–0256) and Form F–4 (OMB
Control No. 3235–0325) prescribe
information that a foreign private issuer
must disclose to register certain offers
and sales of securities under the
Securities Act. Form 10–K (OMB
Control No. 3235–0063) prescribes
information that a filer must disclose
annually to the market about its
business. Form 10–Q (OMB Control No.
3235–0070) prescribes information that
a filer must disclose quarterly to the
market about its business. Form 20–F
(OMB Control No. 3235–0288) is used
by a foreign private issuer both to
register a class of securities under the
Exchange Act as well as to provide its
annual report required under the
Exchange Act.
The information required by the new
collection information we propose,
would correspond to specified financial
information now required by these
forms and would be required to appear
in exhibits to these forms and on filers’
corporate Web sites. The compliance
burden estimates for the proposed
collection of information are based on
the proposed phase-in, beginning with
approximately 500 large accelerated
filers subject to the rules in the first
year, followed by approximately 1,300
more filers in year two and
approximately 10,200 more filers in year
three.
Based on estimates from the voluntary
filer participant questionnaire results,
IV. Paperwork Reduction Act
A. Background
The proposed amendments contain
‘‘collection of information’’
requirements within the meaning of the
Paperwork Reduction Act of 1995, or
PRA.156 The purpose of the proposed
amendments is to make financial
information easier for investors to
analyze and to assist issuers in
automating regulatory filings and
business information processing. We are
submitting the proposed amendments to
the Office of Management and Budget
(OMB), for review in accordance with
the PRA.157 An agency may not conduct
or sponsor, and a person is not required
to respond to, an information collection
unless it displays a currently valid OMB
control number.
The title for the new collection of
information the proposed amendments
would establish is ‘‘Interactive Data’’
(OMB Control No. 3235–XXXX). This
collection of information relates to
already existing regulations and forms
adopted under the Securities Act and
the Exchange Act that set forth financial
disclosure requirements for registration
statements and periodic reports. The
proposed amendments would require
issuers to submit specified financial
information to the Commission and post
it on their corporate Web sites, if any,
156 44
157 44
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B. Reporting and Cost Burden Estimates
158 See
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we estimate that interactive data filers
would incur the following average:
• Internal burden hours to tag the face
financials:
• 125 hours for the first filing under
the proposed requirements; and
• 17 hours for each subsequent filing.
• Out-of-pocket cost for software and
filing agent services: $6,140 for each
filing.
Based on qualitative assessments of
time, we estimate that interactive data
filers would incur the following average
internal burden hours:
• Footnotes
• 7 hours to block tag for each filing
made during the first year under the
proposed requirements;
• 100 hours to detail tag for the first
filing made in the second year under the
proposed requirements; and
• 50 hours to detail tag for each
subsequent filing.
• Schedules
• 1 hour to block tag for each filing
made during the first year under the
proposed requirements;
• 10 hours to detail tag for the first
filing made in the second year under the
proposed requirements; and
• 5 hours to detail tag for each
subsequent filing.
• Web site Posting: 4 hours to post all
interactive data submissions made
during each year.
Based on the number of filers we
expect to be phased in each of the first
three years under the proposed
requirements, the number of filings that
we expect those filers to make that
would require interactive data 159 and
the internal burden hour and out-ofpocket cost estimates described, we
estimate that the average yearly burden
of the proposed requirements over the
first three years would be 1,164,690
internal hours per year and $129 million
in out-of-pocket expenses per year and
would be incurred by an average of 4708
filers for an average yearly burden per
filer of 247.4 internal hours and $27,400
in out-of-pocket expenses.
By the fifth year under the proposed
requirements, filers to be phased in
generally will have been subject to the
proposed requirements for at least two
years. As a result, filers generally would
incur burdens applicable to interactive
data filings made after the first filing in
which the filer detail tagged footnotes
and schedules. Consequently, we
estimate that in the fifth year under the
proposed requirements, the burden on
159 We include in the number of filings that
would require interactive data both initial filings
and amended filings but we estimate that the
burden incurred in connection with an amended
filing would be one half the burden that would be
incurred if the amended filing were an initial filing.
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filers would be 3,743,683 internal hours
and $330.9 million in out-of-pocket
expenses and would be incurred by
11,893 filers for an average burden per
filer of 314.8 internal hours and $27,800
in out-of-pocket expenses.160
2. Regulation S–K and Regulation S–T
Regulation S–K (OMB Control No.
3235–0071) specifies information that a
registrant must provide in filings under
both the Securities Act and the
Exchange Act. Regulation S–T (OMB
Control No. 3235–0424) specifies the
requirements that govern the electronic
submission of documents. The proposed
changes to these items would add and
revise rules under Regulations S–K and
S–T. The filing requirements
themselves, however, are included in
the forms and we have reflected the
burden for these new requirements in
the burden estimate for the forms. These
rules in Regulations S–K and S–T do not
impose any separate burden. We assign
one burden hour each to Regulations
S–K and S–T for administrative
convenience to reflect the fact that these
regulations do not impose any direct
burden on companies.
C. Request for Comments
We solicit comment on the expected
Paperwork Reduction Act effects of the
proposed amendments, including the
following:
• The accuracy of our estimates of the
additional burden hours that would
result from adoption of the proposed
amendments;
• Whether the proposed new
collection of information is necessary
for the proper performance of the
functions of the Commission, including
whether the information will have
practical utility;
• Ways to enhance the quality, utility
and clarity of the information to be
collected;
• Ways to minimize the burden of the
collection of information on those who
respond, including through the use of
automated collection techniques or
other forms of information technology;
and
• Any effects of the proposed
amendments on any other collections of
information not previously identified.
Any member of the public may direct
to us any comments concerning these
burden estimates and suggestions for
reducing the burdens. Persons
submitting comments on the collection
of information requirements should
160 We provide an estimate of the burden in the
fifth year under the proposed requirements because
we believe the burden in the fifth year may help
indicate what the burden would be under the
proposed requirements on an ongoing basis.
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direct their comments to the OMB,
Attention: Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Washington, DC 20503, and
send a copy of the comments to
Secretary, Securities and Exchange
Commission, 100 F Street, NE.,
Washington, DC 20549–9303, with
reference to File No. S7–11–08.
Requests for materials submitted to
OMB by the Commission with regard to
these collections of information should
be in writing, refer to File No. S7–11–
08, and be submitted to the Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549.
OMB is required to make a decision
concerning the collection of information
between 30 and 60 days after
publication of this release.
Consequently, a comment to OMB is
best assured of having its full effect if
OMB receives it within 30 days of
publication.
V. Cost-Benefit Analysis
The proposed rules would require
submission of interactive data-formatted
financial statements and other financial
information and the posting of such
information on an issuer’s corporate
Web site, if any, according to a phasein schedule. The proposed rules likely
would result in the benefits and costs
described below. We base our belief on
an economic analysis of data obtained
from several sources, including
voluntary program participant responses
to a staff-prepared questionnaire,
information on the experience of issuers
that participated in an interactive data
pilot program in Japan (covering a larger
sample of issuers), and interviews
conducted with parties knowledgeable
about interactive data technology in
order to learn their views on issues
including those that might affect the
interpretation of the questionnaire
responses.161
Interactive data are intended to
remove a barrier in the flow of
information between issuers and users
of information that is conveyed through
corporate financial reports. This should
enable less costly dissemination of
information and thereby improve the
allocation of capital. The cost of
implementation will depend primarily
on the costs of transition by issuers to
the new mode of reporting. The
magnitudes of these benefits and costs
from any individual issuer’s adoption of
interactive data reporting will depend
161 The proposed required program, similar to the
voluntary program and the pilot program in Japan,
would require use of interactive data in XBRL
format.
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on the number of other issuers who also
adopt and on the availability of
supporting software and other
infrastructures that enable analysis of
the information. To the extent that
submitted information allows investors
to make investment decisions based on
market-wide comparison and analysis,
the value to the investors of the reported
information tends to increase with the
total number of issuers adopting the
regime. Likewise, issuers’ incentives to
report their information using
interactive data depends on the interest
level of the investors in this mode of
reporting. By mandating
implementation, the rule will expand
the network of adopters and thereby
create positive network externalities of
reported information for the investors.
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A. Benefits of Interactive Data
Submission and Web Site Posting
The proposed rules have the potential
to benefit investors both directly and by
facilitating the exchange of information
between issuers and the analysts and
other intermediaries who receive and
process the financial reports of public
companies.
1. Information Access
Benefits of the proposed rulemaking
accrue from the acceleration of marketwide adoption of interactive data format
reporting. The magnitudes of the
benefits thus depend on the value to
investors of the new reporting regime
relative to the old reporting regime and
on the extent to which the mandated
adoption speeds up the market-wide
implementation.
Requiring issuers to file their financial
statements using the interactive data
format would enable investors, analysts,
and the Commission staff to capture and
analyze that information more quickly
and at a lower cost than is possible
using the same financial information
provided in a static format.162 Even
though the new regime does not require
any new information to be disclosed or
reported, certain benefits accrue when
issuers use an interactive data format to
report their financial reports. These
include the following. Through
interactive data, what is currently static,
text-based information can be
dynamically searched and analyzed,
facilitating the comparison of financial
and business performance across
companies, reporting periods, and
industries. Any investor with a
computer would have the ability to
acquire and download interactive
financial data that have generally been
available only to large institutional
162 See
Part I.
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users. For example, users of financial
information could download it directly
into spreadsheets, analyze it using
commercial off-the-shelf software, or
use it within investment models in
other software formats. Also, to the
extent investors currently are required
to pay for access to annual or quarterly
report disclosure that has been extracted
and reformatted into an interactive data
format by third-party sources, the
availability of interactive data in
Commission filings could allow
investors to avoid additional costs
associated with third-party sources.
The magnitude of this informational
benefit varies, however, with the
availability of sophisticated tools that
will allow investors to analyze the
information. The growing development
of software products for users of
interactive data is helping to make it
increasingly useful to both institutional
and retail investors.163 For example,
currently there are many software
providers and financial printers that are
developing interactive data viewers. We
anticipate that these will become widely
available and increasingly accessible to
investors. We expect that the open
standard feature of the interactive data
format will facilitate the development of
applications, software, and that some of
these applications may be made
available to the public for free or at a
relatively low cost. The continued
improvement in this software would
allow increasingly useful ways to view
and analyze company financial
information.
Interactive data also could provide a
significant opportunity for issuers to
automate their regulatory filings and
business information processing, with
the potential to increase the speed,
accuracy, and usability of financial
disclosure. This reporting regime may in
turn reduce filing and processing costs.
By enabling filers to further automate
their financial processes, interactive
data may eventually help filers improve
the speed at which they generate
financial information. For example,
with standardized interactive data tags,
registration statements and periodic
reports may require less time for
information gathering and review.
Because a substantial portion of each
financial report makes use of the same
information, a filer that uses a
standardized interactive data format at
earlier stages of its reporting cycle may
also increase the accuracy of its
financial disclosure by reducing the
need for repetitive data entry that could
contribute human error and enhancing
the ability of a filer’s in-house financial
163 Press
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32815
professionals to identify and correct
errors in the issuer’s registration
statements and periodic reports filed in
traditional electronic format.
A filer that uses a standardized
interactive data format at earlier stages
of its reporting cycle also may increase
the usability of its internal financial
information. Through interactive data, a
filer can dynamically search and
analyze what is currently static, textbased internal financial information,
facilitating the comparison of financial
and business performance across
business units and reporting periods.
For example, filers that use interactive
data may be able to consolidate
enterprise financial information more
quickly and potentially more reliably
across operating units with different
accounting systems.164 There has been a
growing development of software
products to assist filers to tag their
financial statements using interactive
data helping make interactive data
increasingly useful.165
Filers that automate their regulatory
filings and business information
processing in a manner that facilitates
their generation and analysis of internal
financial information could, as a result,
realize a reduction in costs.
2. Market Efficiency
The proposed requirements could
benefit investors by making financial
markets more efficient in regard to the
following: 166
• Capital formation as a result of
public companies being in a better
position to attract investor capital
because of greater (less costly)
awareness on the part of the investors of
issuer financial information; and
• Capital allocation as a result of
investors being better able to allocate
capital among those issuers seeking it
because of interactive data reporting
facilitating innovations in efficient
communication of issuer financial
information.
164 However, we recognize that at the outset, filers
would most likely prepare their interactive data as
an additional step after their financial statements
have been prepared.
165 Press Release No. 2007–253 (Dec. 5, 2007).
166 We believe the benefits would stem primarily
from the requirement to submit interactive data to
the Commission and the Commission’s
disseminating that data. We also believe, however,
that the requirement that issuers with corporate
Web sites post the interactive data required to be
submitted would encourage its widespread
dissemination thereby contributing to lower access
costs for users and the related benefits described.
We solicit comment in Part II.B.5 regarding what
advantages, if any, dual Commission and corporate
Web site availability would have.
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a. More Efficient Capital Formation
An increase in the efficiency of
capital formation is a benefit that may
accrue to the extent that interactive data
reduces some of the information barriers
that make it costly for companies to find
appropriate sources of external finance.
In particular, smaller public companies
are expected to benefit from enhanced
exposure to investors. If interactive data
financial reporting increases the
availability, or reduces the cost of
collecting and analyzing corporate
financial data, then there could be
improved coverage of small companies
by analysts and commercial data
vendors.
At present, many small companies are
not included in commercially available
products that provide corporate
financial data, possibly due to high data
collection costs relative to the value of
providing coverage. Their absence may
reduce the likelihood that they receive
coverage by financial analysts who use
commercially available products to
assess issuer performance. Hence, if
interactive data reporting increases
coverage of smaller companies by
commercially available financial
information products, and this increases
their exposure to analysts and investors,
then lower search costs for capital could
result. In other words, smaller
companies could realize a lower cost of
capital, or less costly financing.
While an increase in coverage should
occur for some issuers, it is possible that
less than full coverage will remain in
more sophisticated products that
provide analysis or reporting items
beyond basic financial information. This
conclusion is based on an assumption
that many commercially available
product offerings provide valuable
information beyond what is reported in
basic financial information, and the
costs of providing this additional
information for every company may
make 100% coverage prohibitive. In
particular, the smallest issuers may not
offer sufficient market capitalization to
make investment worthwhile to larger
investors, for whom these commercial
products are primarily designed.
So while lower data collection costs
are likely to increase the level of
coverage that smaller issuers receive
from investors and market analysts,
there is no certainty that this will
extend down to the very smallest set of
issuers. As a result, it is possible that
the capital-raising benefits of interactive
data reporting for some issuers will not
be as great as for others. Regardless, we
are not aware of any data to suggest that
any issuer would be made worse off
with respect to analyst and investor
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coverage as it pertains to capital
formation.
b. More Efficient Capital Allocation
An increase in the efficiency of
capital allocation may accrue to the
extent that interactive data increase the
quality of information in financial
markets by reducing the cost to access,
collect and analyze corporate financial
data or improves the content of issuerreported information.167 An increase in
quality and improvement in content
could enable investors to better allocate
their capital among issuers.168
Information quality in financial
markets would likely be higher if
interactive data reporting were required
than if not, leading to more efficient
capital allocation. As a result of the
improved utility of information,
investors may be able to better
distinguish the merits of various
investment choices, thereby facilitating
capital flow into the favored investment
prospects. This outcome is the main
tenet of improved market efficiency,
whereby providing more widespread
access to information concerning the
value of a financial asset such as a
company’s shares results in better
market pricing. Consequently, reducing
the costs of accessing, collecting and
analyzing information about the value of
a financial asset facilitates this end.
Requiring companies to provide
interactive data would improve the
quality of financial information
available to end users, and help spur
interactive data-related innovation in
the supply of financial services
products, resulting from a potential
increased competition among suppliers
of such products due to lower entry
barriers as a result of lower data
collection costs.
However, we have considered
competing views of the informational
consequences of interactive data. For
example, a requirement to submit
interactive data information could
decrease the marginal benefit of
collecting information and thus reduce
the information quality to the extent it
reduces third-party incentives to
facilitate access to, collect or analyze
167 In the context of the discussion below, quality
refers to the ease with which end-users of financial
data can access, collect and analyze the financial
data. This issue is separate from the content of
issuer-reported information. The higher the quality
and the better the content, the more accurately
investors can price the underlying securities.
168 Among the benefits to investors are some that
are specific or most valuable to smaller money
managers and retail investors, including the ability
to acquire and download interactive financial
reporting data that have generally been available
only to large institutional users, and at substantial
expense.
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information. Assuming that markets
efficiently price the value of
information, the amount of information
accessed, collected (or enhanced) and
analyzed will be determined by the
marginal benefit of doing so.169
Lowering information collection costs
(through a requirement to submit
interactive data information) should
increase this benefit. If this is so, then
there should be no degradation in the
level of information quality as a result
of changes in third-party provider
behavior under an interactive data
reporting regime. However, if one
competitor in the industry can subsidize
its operations through an alternative
revenue stream, both quality and
competition may suffer.170
Another potential information
consequence of the proposed
requirements may be changes to the
precision and comparability of the
information disseminated by data
service providers since the interactive
data requirements would shift the
source of data formatting that allows
aggregation and facilitates comparison
and analysis from end-users to issuers
submitting interactive data. At present,
data service providers manually key
financial information into a format that
allows aggregation. As a result, the data
service provider makes interpretive
decisions on how to aggregate reported
financial items so that they can be
compared across all companies.
Consequently, when a subscriber of the
commercial product offered by a data
service provider uses this aggregated
data, it can expect consistent
interpretation of the reported financial
items. In contrast, a requirement for
issuers to submit interactive data
information would require the issuers to
independently decide within the
confines of applicable requirements
which financial ‘‘tag’’ best describes
169 Also, we expect that because the proposed
rules would require the use of the XBRL interactive
data standard, XBRL’s being an open standard
would facilitate the development of related
software, some of which may, as a result, be made
available to the public for free or at a relatively low
cost and provide the public alternative ways to
view and analyze interactive data information
provided under our proposed rules.
170 For illustration purposes only, assume that an
Internet service company develops an interactive
data-based tool that easily provides company
financial data for free to all subscribers, and it uses
this product as a loss leader to increase viewership
and advertising revenue. If the data provided is of
the same quality as data provided through
subscription to other available commercial
products, then there should be no informational
efficiency loss. However, if a data aggregator’s
providing information that improves investor
interpretation and goes beyond base financials is
possible, but no longer profitable to produce for
competitors without the subsidy, then valuable
information production may be lost.
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each financial item—perhaps with the
help from a filing agent or consultant—
lessening the amount of interpretation
required by data aggregators or endusers of the data. Once a tag is chosen,
comparison to other companies is
straightforward. However, since
companies have some discretion in how
to select tags, and can choose extensions
(new tags) when they can not find an
appropriate existing tag, unique
interpretations by each company could
result in reporting differences from what
current data service providers and other
end-users would have chosen. This
view suggests that the information
disseminated by data aggregators may
be, on the one hand, less comparable
because they have not normalized it
across issuers but, on the other hand,
more accurate because the risk of
human error in the manual keying and
interpretation of filed information
would be eliminated and more precise
because it will reflect decisions by the
issuers themselves. Replication of prior
methods of interpretation still would be
possible, however, because issuers
would continue to be required to file
financial information in traditional
format. As a result, nothing would
prohibit data aggregators from
continuing to provide normalized data.
Nonetheless, interactive data benefits
could diminish if other reporting
formats are required for clarification in
data aggregation.
The content of issuer-reported
information may improve because, as
previously discussed, an issuer that uses
a standardized interactive data format at
earlier stages of its reporting cycle may
increase the accuracy of its financial
disclosure.171 In contrast, the content of
issuer-reported information may
improve or decline to the extent that the
interactive data process influences what
issuers report. While the proposed
requirements to submit and post
interactive data information are
intended to be disclosure neutral, it is
possible they would affect what is
reported.172
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B. Costs of Requiring Submission and
Posting of Interactive Data
The primary cost of the rulemaking is
the cost of filers’ implementation of the
rule, which includes the costs of
submitting and posting interactive data.
We discuss this cost element
extensively below. In addition, because
the rule allows an increase in the flow
of financial information being reported
directly to analysts and investors, there
will be a cost of learning on the part of
the investors in using and analyzing
financial information at the interactive
data level.
As for the cost of implementation of
the rule, based on currently available
data, we estimate the average direct
costs of submitting and posting
interactive data-formatted financial
statements and other information for all
issuers under the proposed rules would,
based on certain assumptions, be as
follows:
TABLE 1.—ESTIMATED DIRECT COSTS OF SUBMITTING INTERACTIVE DATA-FORMATTED FINANCIAL STATEMENTS AND
OTHER INFORMATION
First submission
with block-text
footnotes &
schedules
Subsequent
submission with
block-text
footnotes &
schedules
First submission
with detailed
footnotes &
schedules
Subsequent
submission with
detailed footnotes
& schedules
Preparation face financials 173 .................................................
Preparation footnotes 174 .........................................................
Preparation schedules .............................................................
Software and filing agent services 175 .....................................
Web site posting 176 .................................................................
$31,369
1,750
250
6,140
1,000
$4,312
1,750
250
6,140
1,000
$4,312
25,000
2,500
6,140
1,000
$4,312
12,500
1,250
6,140
1,000
Total cost ..........................................................................
40,509
13,452
38,952
25,202
The above estimates are generated in
part from a limited number of voluntary
program participant questionnaire
responses. In particular, these responses
provided detail on the projected costs of
preparing the face financials and for
purchasing software or related filing
agent services. A more detailed analysis
of just the costs associated with
voluntary program participation
171 See
Part V.A.1.
solicit comment on whether the proposed
requirements would affect issuer disclosure in Part
II.B.3.a.
173 Estimates based on voluntary filer program
questionnaire responses, excluding participants
with an interactive data-related business interest.
These data suggest that the time required for tagging
the face financials decreases by approximately 85%
between the first and second submissions. A $250
wage rate is assumed for all preparation cost
estimates.
174 The costs associated with block-tagging of
footnotes and schedules are assumed to remain
constant in subsequent filings. In contrast,
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172 We
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suggests that the estimated direct cost of
submitting face financial statements in
interactive data format falls within the
range of $17,980 to $71,125 per issuer
for the first submission.177 This cost
reflects expenditures on interactive
data-related software, consulting or
filing agent services used, and the
market rate for all internal labor hours
spent (including training) to prepare,
review and submit the first interactive
data format information face financial
statements. Although the estimate
accounts for estimation error resulting
from the small sample statistics on
which it is based, the future experiences
of individual issuers regarding face
financial statements still may vary due
to differences between the voluntary
program and the proposed required
anticipated learning benefits from more
complicated detailed tagging of footnotes and
schedules are assumed to result in a 50% reduction
in cost for subsequent filings.
175 Software licensing and the use of a print agent
can be substitutionary—companies can choose to
do one or the other, or do both—and are thus
aggregated.
176 This is an annual cost, and as such, will not
be incurred for subsequent filings within the same
year.
177 Voluntary program participants were not
required to tag financial statement footnotes or
schedules related to the financial statements except
that registered management investment company
participants were required to tag one specified
schedule. Similarly, voluntary program participants
were not required to post on their corporate Web
sites, if any, the interactive data information they
submitted. Consequently, the costs of requirements
to tag financial statement footnotes and schedules
related to financial statements and post interactive
data information are not derived from the voluntary
program participant questionnaire responses or
discussed in our analysis of those responses. Those
costs are, instead, derived from informal
discussions with a limited number of persons
believed to be generally knowledgeable about
preparing, submitting and posting interactive data.
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program 178 and may vary according to
the issuers’ size, complexity, prior
experience with interactive data, and
other factors not apparent from the
voluntary program participant
responses.179 The discussion below
summarizes the direct cost estimates of
compliance regarding face financial
statements based on voluntary program
participant questionnaire responses and
the specified assumptions.180
• Average cost of first submission
from voluntary program questionnaire
data is $30,933.
• Average cost of second submission
is $9,060 (69% average reduction).
• These average cost estimates
increase by 20% after removing
voluntary program participants in an
interactive data-related business (these
participants may have skills and
incentives specific to interactive data,
unrepresentative of other issuers).
• Due to sampling error,181 there is a
1% chance that the true costs are
underestimated by up to 80%.
Assuming this 1% likelihood and after
removing participants in an interactive
data-related business, estimated cost of
first submission is $71,125.
• Smaller financial issuers appear to
have less complex financials and labor
At present, there are 76 issuers that
have participated in the voluntary
program. Of these, 35 were provided
questionnaires on the details of their
cost experience, and 22 responses were
collected by the time of this analysis.
Table 2 summarizes the average
aggregate costs, including software and
filing agent service costs and an
estimated cost for the internal labor
hours required to prepare and submit
the interactive data format information.
The low and high estimates of the cost
for internal labor hours represent billing
rates of $130 (internal junior
accountant) and $250 (external
accountant) per hour, respectively.183
The reported costs are calculated using
responses from all voluntary program
participants that provided complete
responses (20), and are also calculated
using only those voluntary program
complete responses (15) from
participants without an interactive datarelated business activity. We also report
the estimated bias in the reported cost
when interactive data-related businesses
are included, calculated as the percent
difference between all participants and
only those participants with no
interactive data-related business
activity.
costs that tend to be 20–30% lower than
for other issuers to submit interactive
data information.
• There also is some evidence to
suggest that the smallest (nonaccelerated) issuers might have
submission costs or compliance
difficulties in excess of other issuers.
This analysis attempts to quantify
some of the direct costs that issuers will
incur if we require submission and
posting of interactive data.182 Whether
issuers choose to purchase and learn
how to use software packages designed
for interactive data submissions or
outsource this task to a third party,
internal (labor) resources would be
required to complete the task. The cost
estimates provided here using voluntary
program participant questionnaire
responses shed light on the potential
dollar magnitude of the costs of
requiring interactive data submission
other than with regard to tagging
schedules and footnotes to financials
statements. However, the small size of
the participant response and the
voluntary nature of participation suggest
that the numbers may not reflect the
costs that all issuers would incur in a
required participation regime.
TABLE 2.—SUMMARY OF ILLUSTRATIVE SURVEY DATA ON THE DIRECT COST ESTIMATES FOR VOLUNTARY PROGRAM AND
CONFIDENCE INTERVALS (CIS) FOR VOLUNTARY PROGRAM PARTICIPANTS
All voluntary program
participants (N=20)
No interactive data-related
business (N=15)
Estimated bias
(percent)
Low
First submission:
Estimated costs ........................................................
Upper bound using 5% CI ........................................
Upper bound using 1% CI ........................................
Subsequent submissions:
Estimated costs ........................................................
Upper bound using 5% CI ........................................
Upper bound using 1% CI ........................................
Average reduction in cost:
From 1st to 2nd submission .....................................
High
Low
High
Low
High
$17,980
29,682
34,065
$30,933
49,749
56,635
$21,424
36,550
42,555
$37,509
61,771
71,125
19.2
23.1
37.7
21.3
23.1
25.6
7,408
12,691
14,687
9,060
15,357
17,753
8,382
15,209
17,938
10,452
18,494
21,737
13.1
19.8
22.1
15.4
20.4
22.4
69%
....................
71%
....................
....................
....................
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Although there is a great deal of
consistency across the voluntary
program questionnaire responses, three
considerations become important when
extending these questionnaire-based
cost estimates from the voluntary
program sample to the population of all
issuers that would be required to submit
interactive data. First, the sample size is
small. There are only 22 voluntary
program respondents to the
questionnaire, representing
approximately 0.21% of all issuers that
ultimately would be required to submit
interactive data.184 The small sample
178 For example, the related list of tags would
differ between the voluntary and proposed required
program. When we adopted the voluntary program,
the list of tags for U.S. GAAP financial statement
reporting contained approximately 4,000 data
elements. The list of tags released on April 28, 2008
contains approximately 13,000 data elements, with
the most significant additions relating to the
development of elements for standard U.S. GAAP
footnote disclosure.
179 As such, caution should be used when
referring to a particular estimate without also
acknowledging the potential effect of these factors
on future compliance costs.
180 The details of this analysis regarding face
financial statements, including the underlying
assumptions, concerns on extrapolating these
results to a broader set of issuers, and other
considerations related to both the costs and benefits
of requiring submission of interactive data, are
provided following the summary.
181 In general, sampling error is the error that
arises as a function of sampling in general and the
sample chosen in particular.
182 Because we are not proposing to require any
kind of attestation or audit of interactive data in the
rulemaking, the costs from attestation or auditing
are not discussed in this analysis.
183 These estimates are from the Securities
Industry and Financial Markets Association’s
Management & Professional Earnings in the
Securities Industry 2007, modified to account for an
1,800-hour work-year and multiplied by 5.35 to
account for bonuses, firm size, employee benefits
and overhead.
184 This is based on 10,692 domestic and foreign
issuers that filed an annual report in 2006. Under
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32819
lower for issuers that have an interactive
data-related business relative to other
issuers.
The other effect of sample selection
relates to the size of the respondent
companies. The voluntary program
questionnaire evidence is based on
responses of predominantly large
issuers, and their cost experience may
not be representative of the smaller
issuers. As is evident from Figure 1,
voluntary program participants are
found among the largest of all issuers,
with more than 64% in the largest
market size decile, and more than 88%
considered to be large accelerated filers
(measured as greater than $750 million
in market capitalization).186 In contrast,
only 1,846 of 10,692 filers (17.4% of all
filers) were considered large accelerated
filers in 2006.
A size bias is plausible, since there
are reasons to believe that the reported
submission costs vary with the size of
the issuer. For instance, larger issuers
might have lower interactive data
submission costs than smaller issuers,
since they have a larger pool of internal
resources to draw from, allowing them
to more efficiently allocate available
skill sets from their labor pools to
implement interactive data reporting
technology. Moreover, larger
organizations might have greater excess
capacity in their internal labor pool
such that they are better able to absorb
the short-term labor needs of ‘‘learning’’
interactive data. If so, the effect of
sample selection in this instance may be
to underreport the interactive data
submission costs for smaller issuers.
Alternatively, smaller issuers could
have lower submission costs than larger
issuers if their operations are less
complex. This reasoning suggests that
simpler business operations lead to
simpler financial statements, requiring
less effort to tag and submit using
interactive data. Hence, any reduction
in available resources to allocate to
interactive data submission may be
offset by lesser demand for resources.
This view suggests a trade-off in
submission costs as issuers become
smaller, and as a typical result, less
complex.
our proposed rules, not all foreign private issuers
would be required to submit interactive data; only
those foreign private issuers that prepare their
financial statements in accordance with U.S. GAAP
or IFRS as issued by the IASB would be required
to submit interactive data. Foreign private issuers
that report in accordance with other structures and
reconcile to U.S. GAAP would not be required to
submit interactive data.
185 For example, a 1% confidence interval
(reported above) measures 80% of the reported
mean, such that if a different set of randomly drawn
respondents were surveyed about their interactive
data cost experience, there is a 1% chance that this
new group would have more than an 80% increase
in costs from what is estimated in this analysis. As
a result, for example, if a different group of
randomly drawn voluntary program participants
had responded to the questionnaire with their cost
experience, there is a 1% chance that the new group
would have more than an 80% increase in the
lowest cost for the first submission above $34,065.
186 ‘‘Large accelerated filers,’’ among other things,
have shares held by unaffiliated persons with a
value of at least $700 million. Our analysis instead
uses as a threshold $750 million in the value of
shares held by all persons (market capitalization) as
an approximation of the value of shares held by
non-affiliates. The use of market capitalization may
overestimate the number of large accelerated filers.
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size reduces the reliability of the cost
estimates as a predictor of future costs,
a result of sampling error.185
The second and third factors to
consider arise from the fact that the
survey respondents may not be
representative of the general population
of issuers that would comply with a
proposed rule. This is known as
‘‘sample selection bias.’’ The first of
these factors arises from evidence that
many voluntary program survey
participants have a business interest in
interactive data, such as filing agents,
other filing service providers, financial
services providers, and other consulting
agents. Five of the 22 survey
respondents had such an affiliation.
These issuers may have incentives and
skill sets unrepresentative of the average
issuer, and as such, may cause their
costs to depart from the likely
submission cost of the average issuer if
interactive data become required.
Indeed, after removing the five
respondents with an obvious interactive
data related business interest, the
average cost estimate increased by 20%.
Thus, submission costs appear to be
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required for a Japanese filer to
successfully prepare and submit its first
interactive data filing, disaggregated by
approximate filer size measured by the
book value of their capital.188 The
number of labor hours required is
approximately 30% higher for the
largest filers relative to the smaller, but
not smallest, filers. However, the sizelabor hour relation is not perfectly
linear. The smallest size group deviates
from the trend, with the average number
of labor hours required being similar to
that of larger filers.
While the number of labor hours
required for the smallest filers is not
greater than that of the largest filers, the
smaller filers were far more likely to file
late, or ‘‘fail’’ (Figure 3). The JFSA
classified firms as ‘‘failures’’ for having
not completed their first filing in the
time required (i.e., before the filing
deadline). This smallest filer size group
has a failure rate of nearly 25%
compared to less than 5% for the largest
filer size group.
of 108 Yen to the dollar. Although the Commission
generally measures issuer size based on the market
value of outstanding securities, market value is
highly correlated to book value of equity. As a
result, the use of book value of equity in Figures
2 and 3 should not impact the relevance of
inferences drawn from those Figures.
rwilkins on PROD1PC63 with PROPOSALS2
187 Japanese
filers did not tag financial footnotes.
provided by the JFSA reported firm sizes
according to their book value of equity, in Yen.
These values were converted into dollars at a rate
188 Data
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We have also reviewed evidence from
the Japanese interactive data pilot
program. Starting in April 2008,
Japanese filers are required to report
financial statements with their Financial
Services Agency (JFSA) using
interactive data technology. Before this
requirement, 1,233 Japanese companies
participated in a pilot program; 768
participants described their interactive
data submission experience through a
JFSA survey. Unlike the U.S. voluntary
program participants, Japanese pilot
program participants span a larger
issuer size range, including a
considerable number of the smallest
issuers in the market (see Figure 3).
The survey evidence suggests that
smaller Japanese filers required less
time to prepare and submit their first
interactive data filing than larger
Japanese filers, but even so, some of the
smallest filers exhibited the greatest
compliance difficulty.187 Figure 2 plots
the average number of labor hours
1. Survey Results From the Japanese
Interactive Data Pilot Program
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189 The technical differences between the two
systems are beyond the scope of this analysis.
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difficulty in complying with a timespecific requirement if implemented too
quickly. These findings add to the
evidence from the U.S. voluntary
program questionnaire results given that
they span a greater issuer size range.
2. U.S. Issuer Document Complexity
Also Suggests Lower Costs for Smaller
Issuers
Although the Japanese pilot program
findings document an important sizerelated cost consideration, extrapolating
these results to what might be expected
in a U.S. interactive data required
program poses some risk given the
potential differences between Japanese
and U.S. regulatory regimes and filing
requirements. For instance,
implementing required interactive data
reporting in the United States may be
more complex, as a greater number of
accounting concepts can be tagged.189
Indeed, voluntary program results
demonstrate an average of 101 hours to
complete the first filing, more than three
190 Edgar Online provided the number of reported
items in each of the three main financial tables
(balance sheet, income statement, and statement of
cash flow) for all U.S. filers from 2001 and 2007,
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times the time required for the Japanese
pilot program participants.
To assess the likelihood that the
Japanese survey results can be applied
to the proposed program under which
interactive data would be required,
Form 10–K complexity is examined
across issuer size. If reduced complexity
in financial reporting is responsible for
the lower labor costs among smaller
Japanese issuers, then evidence of
reduced complexity among Commission
issuers as their size decreases would
suggest that lower labor costs among
small U.S. issuers as well. This analysis
uses the number of items reported in a
filer’s financial document as the
measure of document complexity. The
evidence in Figure 4 reveals that there
is roughly a 15% difference in the
number of elements reported by the
smallest and largest filers.190 In other
words, U.S. filer document complexity
results are consistent with lower
compliance costs for smaller firms
(leaving aside the very smallest filers).
and this was matched to market data from CRSP
(Center for Research in Security Prices) to be
included in the analysis.
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The JFSA indicated that most of the
‘‘failures’’ occurred among filers who
underestimated the resources required
for their first filing, with many of the
failing firms (44%) electing to prepare
and submit their documents on their
own. In contrast, it is estimated that
87% of pilot program firms used a
printing company to prepare and submit
their documents. Of the Japanese pilot
program participants that were
classified as having failed to submit,
69% indicated that they would not have
a problem for their next submission.
The results of the JFSA survey yield
two relevant conclusions. First, smaller,
but not the smallest, issuers are likely to
have lower submission costs as a result
of fewer labor hours required to submit
information using interactive data.
Second, these submission cost savings
may not accrue to the smallest issuers
(i.e., those with total equity held by nonaffiliates with a market value below $75
million). Moreover, there is a risk that
the smallest issuers might have
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3. Scalability of Interactive Data-Related
Support Services and Technology
The final cost consideration in this
section is the scalability of interactive
data-related support services and
technology. In particular, it is unclear
how the market for interactive data
support services and technology may
change if the Commission required over
10,000 issuers to submit and post
interactive data.
The roles of each potential kind of
service provider within the interactive
data market are likely to develop further
and are not yet clear, and there are
many potential participants to consider,
including the software vendors,
financial reporting system providers
(i.e., providers of widely used financial
products), print/filing agents, auditors
and other consultants, as well as the
Commission. Until the market of issuers
that submit interactive data information
grows substantially larger (either by
requirement or by expansion of the
number of volunteers), it is difficult to
predict how standard solutions will
evolve. For example, we do not know
whether issuers will adopt solutions
that create interactive data submissions
using third party software, a so-called
‘‘bolt-on’’ approach, or will seek
integrated solutions that enable issuers
to prepare interactive data submissions
from their existing financial services
software. Moreover, filing agents may
maintain their role as an intermediary
by offering interactive data technology
or other service providers may cause
that role to change. Others with
financial and technical expertise may
participate in the technology with
unpredictable results.
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Combining the uncertainty over the
source of future interactive data services
with increased demand for these
services could result in a new
equilibrium market price that is
different from what is currently reported
by voluntary program participants. This
price could be higher if the demand for
interactive data services increases (from
76 voluntary program participants to
more than 10,000 total participants) at a
faster rate than the supply for these
same services. For example, we are
aware that one interactive data service
provider offers a basic package to
issuers that costs $15,000, and includes
all software resources and training
required (it suggests 40 hours is needed)
for the issuer to submit its first quarterly
interactive data information. This price
schedule was based on an expectation of
servicing as many as 100 voluntary
participants in the first year of the
program. However, the main pricing
concern for the future is whether this or
similar products could be scaled
upwards to service a much larger market
without material (adverse) impact to the
stated price. More broadly, if an
interactive data requirement resulted in
clients subscribing for interactive data
services faster than the rate at which
these services can be supplied, then a
price increase is the natural
discriminator in how to allocate limited
resources.
The submission costs discussed in
this section suggest that a phase-in
program that is implemented too
quickly could result in higher than
necessary submission costs if the supply
of interactive data-related resources is
constrained, but the effect would likely
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diminish as a market place for
interactive data services develops.
Hence, this concern is mitigated to the
extent that issuers are phased in at a rate
that allows interactive data service
suppliers to keep pace with demand.
D. Comment Solicited
We solicit comment on all aspects of
this cost-benefit analysis, including the
identification of any additional costs or
benefits or, suggested alternatives to, the
proposed rules. Commenters are
requested to provide empirical data and
other factual support for their views to
the extent possible.
We request comment regarding the
costs and benefits to investors,
companies, analysts, third-party
information providers, software
providers, filing agents, and others who
may be affected by the proposed rules.
We are particularly interested in
information on the costs and benefits to
smaller reporting companies.
In particular, we request comment
regarding:
• The differences between start-up
costs and the costs of providing
interactive data on a continuing basis
after the initial preparation;
• The cost to prepare interactive data
in block-text and detail for footnotes
and schedules to financial statements;
• Differences in interactive data
preparation costs due to differences
between U.S. GAAP and IFRS as issued
by the IASB and the list of tags related
to each; and the cost of Web site
posting.
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Federal Register / Vol. 73, No. 112 / Tuesday, June 10, 2008 / Proposed Rules
VI. Consideration of Burden on
Competition and Promotion of
Efficiency, Competition and Capital
Formation
Section 23(a)(2) of the Exchange
Act 191 requires us, when adopting rules
under the Exchange Act, to consider the
impact that any new rule would have on
competition. In addition, section
23(a)(2) prohibits us from adopting any
rule that would impose a burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Exchange Act.
Furthermore, section 2(b) 192 of the
Securities Act, section 3(f) 193 of the
Exchange Act, and section 2(c) 194 of the
Investment Company Act require us,
when engaging in rulemaking where we
are required to consider or determine
whether an action is necessary or
appropriate in the public interest, to
consider, in addition to the protection of
investors, whether the action will
promote efficiency, competition, and
capital formation.
The proposals to require issuers to
submit interactive data to the
Commission and post it on their
corporate Web sites are intended to
make financial information easier for
investors to analyze while assisting in
automating regulatory filings and
business information processing. In
particular, we believe that the proposed
rules would enable investors and others
to search and analyze the financial
information dynamically; facilitate
comparison of financial and business
performance across issuers, reporting
periods and industries; and, possibly,
provide a significant opportunity to
automate regulatory filings and business
information processing with the
potential to increase the speed,
accuracy, and usability of financial
disclosure. Further, as discussed in
detail above, we believe that the
proposals may lead to more efficient
capital formation and allocation.195
We understand that private sector
businesses such as those that access
financial information and aggregate,
analyze, compare or convert it into
interactive format have business models
and, as a result, competitive strategies
that the proposed interactive data
requirements might affect. Since
interactive data technology is designed
to remove an informational barrier,
business models within the financial
services industry that are currently
adapted to traditional format document
191 15
U.S.C. 78w(a)(2).
U.S.C. 77b(b).
193 15 U.S.C. 78c(f).
194 15 U.S.C. 80a–2(c).
195 See Part V.A.2.
192 15
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reporting may change, with possible
consequences for the revenue stream of
current product offerings due to the
competitive effects of such a change.
The competitive effects may relate to
changes in the accessibility of financial
information to investors, the nature of
the information that investors receive,
and the potential from new entry or
innovation in the markets through
which financial reports are transmitted
from filers to investors. For example,
lower entry barriers that result from
lower data collection costs may increase
competition among suppliers of
financial services products and help
spur interactive data-related innovation.
It is also possible, however, that a
requirement to submit interactive data
information could decrease the marginal
benefit of collecting information and
thus cause suppliers of financial
services products to produce
information that is less robust to the
extent the decreased marginal benefit
reduces third-party incentives to
facilitate access to, collect or analyze
information. If markets efficiently price
the value of information, the amount of
information accessed, collected (or
enhanced) and analyzed will be
determined by the marginal benefit of
doing so.196 Lowering information
collection costs (through a requirement
to submit interactive data information)
should increase this benefit. If this is so,
then there should be no degradation in
the level of information quality as a
result of changes in third-party provider
behavior under an interactive data
reporting regime. However, if one
competitor in the industry can subsidize
its operations through an alternative
revenue stream, both quality and
competition may suffer.
For the reasons described more fully
above, we believe the liability
protections for interactive data would be
necessary or appropriate in the public
interest and consistent with the
protection of investors. Moreover, the
protections would also be consistent
with the purposes fairly intended by the
policy and provisions of the Investment
Company Act.
We request comment on whether the
proposals, if adopted, would promote
efficiency, competition, and capital
formation or have an impact or burden
on competition. Commenters are
196 Also, we expect that because the proposed
rules would require the use of the XBRL interactive
data standard, XBRL’s being an open standard
would facilitate the development of related
software, some of which may, as a result, be made
available to the public for free or at a relatively low
cost and provide the public alternative ways to
view and analyze interactive data information
provided under our proposed rules.
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32823
requested to provide empirical data and
other factual support for their views, if
possible.
VII. Initial Regulatory Flexibility Act
Analysis
This Initial Regulatory Flexibility
Analysis has been prepared in
accordance with 5 U.S.C. 603. It relates
to proposed amendments that would
require issuers to provide their financial
statements to the Commission and on
their corporate Web sites in interactive
data format.
A. Reasons for, and Objectives of, the
Proposed Action
The main purpose of the proposed
amendments is to make financial
information easier for investors to
analyze while assisting in automating
regulatory filings and business
information processing. Currently,
issuers are required to file their
registration statements, quarterly and
annual reports, and transitional reports
in a traditional format that provides
static text-based information. We
believe that providing the financial
statements these filings contain in
interactive data format would
• Enable investors and others to
search and analyze the information
dynamically;
• Facilitate comparison of financial
and business performance across
issuers, reporting periods and
industries; and
• Possibly provide a significant
opportunity to automate regulatory
filings and business information
processing with the potential to increase
the speed, accuracy, and usability of
financial disclosure.
B. Legal Basis
We are proposing the amendments
under sections 7, 10, 19(a) and 28 of the
Securities Act,197 sections 3, 12, 13, 14,
15(d), 23(a), 35A and 36 of the Exchange
Act,198 sections 314 and 319 of the Trust
Indenture Act 199 and sections 6(c), 8,
24, 30 and 38 of the Investment
Company Act 200 and section 3(a) of the
Sarbanes-Oxley Act.201
C. Small Entities Subject to the
Proposed Rules
The proposed amendments would
affect issuers that are small entities.
Exchange Act Rule 0–10(a) 202 defines
197 15
U.S.C. 77g, 77j, 77s(a) and 77z–3.
U.S.C. 78c, 78l, 78m, 78n, 78o(d), 78w(a),
78ll and 78mm.
199 15 U.S.C. 77nnn and 77sss.
200 15 U.S.C. 80a–6(c), 80a–8, 80a–24, 80a–29 and
80a–37.
201 [Pub. L. No. 107–204, 116 Stat. 745.]
202 17 CFR 240.0–10(a).
198 15
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an issuer, other than an investment
company, to be a ‘‘small business’’ or
‘‘small organization’’ for purposes of the
Regulatory Flexibility Act if it had total
assets of $5 million or less on the last
day of its most recent fiscal year.203 We
estimate that there are approximately
1,100 issuers that file reports under the
Exchange Act and may be considered
small entities.204 All of these issuers
would become subject to the proposed
rules in year three of the phase-in.
rwilkins on PROD1PC63 with PROPOSALS2
D. Reporting, Recordkeeping and Other
Compliance Requirements
All issuers subject to the proposed
rules would be required to submit
financial information to the Commission
in interactive data format and, if they
have a corporate Web site, post the
interactive data on their Web site. We
believe that, in order to submit financial
information in interactive data format,
issuers in general and small entities in
particular likely would need to prepare
and then submit the interactive data by
expending internal labor hours in
connection with either or both of
• Purchasing, learning and using
software packages designed to prepare
financial information in interactive
format; and
• Hiring and working with a
consultant or filing agent.205
We believe that issuers would incur
relatively little cost in connection with
the requirement to post the interactive
data on the issuer’s corporate Web site
because the requirement applies only to
issuers that already have a corporate
Web site.206
203 Securities Act Rule 157(a) [17 CFR 230.157(a)]
generally defines an issuer, other than an
investment company, to be a ‘‘small business’’ or
‘‘small entity’’ for purposes of the Regulatory
Flexibility Act if it had total assets of $5 million or
less on the last day of its most recent fiscal year and
it is conducting or proposing to conduct a securities
offering of $5 million or less. For purposes of our
analysis of issuers other than investment companies
in this Part VII of the release, however, we use the
Exchange Act definition of ‘‘small business’’ or
‘‘small entity’’ because that definition includes
more issuers than does the Securities Act definition
and, as a result, assures that the definition we use
would not itself lead to an understatement of the
impact of the amendments on small entities.
204 The estimated number of small entities that
report under the Exchange Act is based on 2007
data including the Commission’s internal
computerized filing system and Thompson
Financial’s Worldscope database.
205 Some issuers such as those that have
participated in the voluntary program may already
prepare financial information in interactive data
format or already have the expertise and software
to prepare financial information in interactive data
format. Those issuers would incur fewer costs as a
result of the proposed requirements. Based on our
experience with the voluntary program, however,
we believe that it would be unlikely that those
issuers would include many small entities.
206 The internal labor and external costs required
to comply with the proposed rules are discussed
more fully in Parts IV and V above.
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E. Duplicative, Overlapping, or
Conflicting Federal Rules
We believe that the proposed
amendments would not duplicate, or
overlap or conflict with, other federal
rules.
F. Agency Action To Minimize the Effect
on Small Entities
The Regulatory Flexibility Act directs
us to consider significant alternatives
that would accomplish the stated
objective, while minimizing any
significant adverse impact on small
entities. In connection with the
proposed amendments, we considered
several alternatives, including the
following:
• Establishing different compliance or
reporting requirements or timetables
that take into account the resources
available to small entities;
• Further clarifying, consolidating or
simplifying the proposed requirements;
• Using performance rather than
design standards; and
• Providing an exemption from the
proposed requirements, or any part of
them, for small entities.
We believe that, as to small entities,
differing compliance, reporting or nonphase-in timetable requirements, a
partial or complete exemption from the
proposed requirements or the use of
performance rather than design
standards would be inappropriate
because these approaches would detract
from the long-term completeness and
uniformity of the interactive data format
financial information database. Less
long-term completeness and uniformity
would reduce the extent to which the
proposed requirements would enable
investors and others to search and
analyze the information dynamically;
facilitate comparison of financial and
business performance across issuers,
reporting periods and industries; and,
possibly, provide a significant
opportunity to automate regulatory
filings and business information
processing with the potential to increase
the speed, accuracy, and usability of
financial disclosure. We note, however,
that small entities would not be subject
to the proposed requirements until year
three of the phase-in and, as all other
issuers, would not be required to tag in
detail the footnotes and schedules to
their financial statements until their
second year subject to the
requirements.207 We solicit comment,
207 In this regard, in Part II.B.2 of this release we
note that the additional time phase-in time for
companies not required to submit interactive data
in year one of the phase-in period is intended to
permit them to plan for and implement the
interactive data reporting process after having the
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however, on whether differing
compliance, reporting or timetable
requirements, a partial or complete
exemption, or the use of performance
rather than design standards would be
consistent with our described main goal
of making financial information easier
for investors to analyze while assisting
in automating regulatory filings and
business information processing.
We are considering whether further
clarifying, consolidating or simplifying
the proposed interactive data
submission and posting requirements
would be appropriate. Based in part on
our experience with the voluntary
program, we believe that the proposed
requirements are sufficiently clear and
straightforward (although, we seek
comment on this).
G. Solicitation of Comment
We encourage comments with respect
to any aspect of this Initial Regulatory
Flexibility Analysis. In particular, we
request comments regarding:
• The number of small entities that
may be affected by the proposed
amendments;
• The existence or nature of the
potential impact of the proposed
amendments on small entities as
discussed in this analysis; and
• How to quantify the impact of the
proposed amendments.
We ask those submitting comments to
describe the nature of any impact and
provide empirical data supporting the
extent of the impact. These comments
will be considered in the preparation of
the Final Regulatory Flexibility
Analysis, if the proposed amendments
are adopted, and will be placed in the
same public file as comments on the
proposed amendments themselves.
VIII. Small Business Regulatory
Enforcement Fairness Act
For purposes of the Small Business
Regulatory Enforcement Fairness Act of
1996, a rule is ‘‘major’’ if it has resulted,
or is likely to result in:
• An annual effect on the economy of
$100 million or more;
• A major increase in costs or prices
for consumers or individual industries;
or
• Significant adverse effects on
competition, investment or innovation.
We request comment on whether our
proposals would be a ‘‘major rule’’ for
opportunity to learn from the experience of year
one filers. We also there solicit comment on the
appropriate phase-in schedule for smaller reporting
companies (which would include small entities)
and note that the additional phase-in time also is
intended to enable us to monitor implementation
and, if necessary, make appropriate adjustments to
the phase-in period.
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purposes of SBREFA. We solicit
comment and empirical data on:
• The potential effect on the U.S.
economy on an annual basis;
• Any potential increase in costs or
prices for consumers or individual
industries; and
• Any potential effect on competition,
investment or innovation.
IX. Statutory Authority and Text of
Proposed Amendments
and section 3(a) of the Sarbanes-Oxley
Act.212
List of Subjects in 17 CFR Parts 229,
230, 232, 239, 240 and 249
Reporting and recordkeeping
requirements, Securities.
For the reasons set out in the
preamble, we propose to amend Title
17, Chapter II of the Code of Federal
Regulations as follows:
PART 229—STANDARD
INSTRUCTIONS FOR FILING FORMS
UNDER SECURITIES ACT OF 1933,
SECURITIES EXCHANGE ACT OF 1934
AND ENERGY POLICY AND
CONSERVATION ACT OF 1975—
REGULATION S–K
We are proposing the amendments
outlined above under sections 7, 10,
19(a) and 28 of the Securities Act, 208
sections 3, 12, 13, 14, 15(d), 23(a), 35A,
and 36 of the Exchange Act, 209 sections
314 and 319 of the Trust Indenture
Act 210 and sections 6(c), 8, 24, 30, and
38 of the Investment Company Act 211
1. The authority citation for part 229
continues to read in part as follows:
Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j,
77k, 77s, 77z–2, 77z–3, 77aa(25), 77aa(26),
77ddd, 77eee, 77ggg, 77hhh, 777iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n,
78o, 78u–5, 78w, 78ll, 78mm, 80a–8, 80a–9,
80a–20, 80a–29, 80a–30, 80a–31(c), 80a–37,
80a–38(a), 80a–39, 80b–11, and 7201 et seq.;
and 18 U.S.C. 1350, unless otherwise noted.
*
*
*
*
*
2. Amend § 229.601 by revising the
exhibit table in paragraph (a) and by
revising paragraph (b)(100) and adding
paragraph (b)(101) to read as follows:
§ 229.601 (Item 601)
Exhibits.
(a) * * *
Exhibit Table
*
*
*
*
*
EXHIBIT TABLE
Securities Act Forms
Exchange Act Forms
rwilkins on PROD1PC63 with PROPOSALS2
S–1
(1) Underwriting agreement .......
(2) Plan of acquisition, reorganization, arrangement, liquidation or succession ...................
(3) (i) Articles of incorporation ...
(ii) Bylaws ...................................
(4) Instruments defining the
rights of security holders, including indentures ..................
(5) Opinion re legality .................
(6) [Reserved] ............................
(7) Correspondence from an
independent accountant regarding non-reliance on a previously issued audit report or
completed interim review ........
(8) Opinion re tax matters ..........
(9) Voting trust agreement .........
(10) Material contracts ...............
(11) Statement re computation
of per share earnings .............
(12) Statements re computation
of ratios ...................................
(13) Annual report to security
holders, Form 10–Q or quarterly report to security holders 3 .........................................
(14) Code of Ethics ....................
(15) Letter re unaudited interim
financial information ................
(16) Letter re change in certifying accountant 4 ...................
(17) Correspondence on departure of director ........................
(18) Letter re change in accounting principles ..................
(19) Report furnished to security
holders ....................................
(20) Other documents or statements to security holders .......
(21) Subsidiaries of the registrant ......................................
S–3
S–4 1
X
X
X
..........
X
X
X
X
..........
X
..........
..........
..........
X
X
X
X
..........
..........
X
X
X
..........
..........
..........
X
X
X
X
X
X
X
..........
..........
X
X
X
X
X
X
X
X
X
..........
X
X
X
X
X
X
X
X
X
X
N/A
X
X
N/A
X
X
N/A
X
X
N/A
X
X
N/A
X
X
N/A
X
X
N/A
X
X
N/A
X
..........
N/A
X
..........
N/A
X
..........
N/A
X
..........
N/A
X
..........
N/A
..........
X
X
X
..........
X
..........
..........
..........
X
X
X
..........
..........
..........
..........
..........
X
X
X
..........
X
X
X
..........
X
..........
..........
..........
X
X
X
..........
..........
X
X
X
..........
..........
..........
..........
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..........
X
..........
..........
..........
X
..........
..........
X
X
X
..........
X
..........
X
X
..........
X
X
..........
..........
X
X
X
X
X
..........
X
X
..........
X
X
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..........
..........
X
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..........
..........
X
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..........
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..........
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..........
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..........
..........
..........
..........
X
..........
..........
..........
..........
X
X
X
X
X
X
X
X
X
X
..........
..........
..........
X
..........
X
..........
X
..........
X
..........
..........
..........
X
X
..........
..........
X
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..........
..........
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X
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X
X
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X
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X
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X
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X
X
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X
X
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..........
X
208 15
U.S.C. 77g, 77j, 77s(a), and 77z–3.
U.S.C. 78c, 78l, 78m, 78n, 78o(d), 78w(a),
78ll, and 78mm.
209 15
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S–8
S–11
F–3
F–1
210 15
F–4 1
10
8–K 2
10–D
10–Q
10–K
U.S.C. 77nnn and 77sss.
U.S.C. 80a–6(c), 80a–8, 80a–24, 80a–29,
and 80a–37.
212 [Pub.
L. No. 107–204, 116 Stat. 745.]
211 15
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EXHIBIT TABLE—Continued
Securities Act Forms
Exchange Act Forms
S–1
(22) Published report regarding
matters submitted to vote of
security holders ......................
(23) Consents of experts and
counsel ...................................
(24) Power of attorney ...............
(25) Statement of eligibility of
trustee .....................................
(26) Invitation for competitive
bids .........................................
(27) through (30) [Reserved] .....
(31) (i) Rule 13a–14(a)/15d–
14(a) Certifications .................
(ii) Rule 13a–14/15d–14
Certifications ....................
(32) Section 1350 Certifications 6
(33) Report on assessment of
compliance with servicing criteria for asset-backed issuers
(34) Attestation report on assessment of compliance with
servicing criteria for assetbacked securities ....................
(35) Servicer compliance statement ........................................
(36) through (98) [Reserved] .....
(99) Additional exhibits ...............
(100) XBRL-Related Documents
(101) Interactive Data File .........
S–3
S–4 1
S–8
S–11
F–1
F–3
F–4 1
10
8–K 2
10–D
10–Q
10–K
..........
..........
..........
..........
..........
..........
..........
..........
..........
..........
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
..........
X
X5
X
X5
..........
X5
X
X5
X
X
X
X
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X
X
X
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N/A
X
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X
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X
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N/A
X
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X
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N/A
X
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N/A
X
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X
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N/A
X
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X
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N/A
X
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X
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N/A
X
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X
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N/A
X
X
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N/A
X
X
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N/A
X
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..........
..........
N/A
X
X
X
X
N/A
X
X
X
rwilkins on PROD1PC63 with PROPOSALS2
1 An exhibit need not be provided about a company if: (1) With respect to such company an election has been made under Form S–4 or F–4
to provide information about such company at a level prescribed by Form S–3 or F–3; and (2) the form, the level of which has been elected
under Form S–4 or F–4, would not require such company to provide such exhibit if it were registering a primary offering.
2 A Form 8–K exhibit is required only if relevant to the subject matter reported on the Form 8–K report. For example, if the Form 8–K pertains
to the departure of a director, only the exhibit described in paragraph (b)(17) of this section need be filed. A required exhibit may be incorporated
by reference from a previous filing.
3 Where incorporated by reference into the text of the prospectus and delivered to security holders along with the prospectus as permitted by
the registration statement; or, in the case of the Form 10–K, where the annual report to security holders is incorporated by reference into the text
of the Form 10–K.
4 If required pursuant to Item 304 of Regulation S–K.
5 Where the opinion of the expert or counsel has been incorporated by reference into a previously filed Securities Act registration statement.
6 Pursuant to §§ 240.13a–13(b)(3) and 240.15d–13(b)(3) of this chapter, asset-backed issuers are not required to file reports on Form 10–Q.
(b) * * *
(100) XBRL-Related Documents. Only
an electronic filer that prepares its
financial statements in accordance with
Article 6 of Regulation S–X (17 CFR
210.6–01 et seq.) is permitted to
participate in the voluntary XBRL
(eXtensible Business Reporting
Language) program and, as a result, may
submit XBRL-Related Documents
(§ 232.11 of this chapter) in electronic
format as an exhibit to: The filing to
which they relate; an amendment to
such filing; or a Form 8–K (§ 249.308 of
this chapter) that references such filing,
if the Form 8–K is submitted no earlier
than the date of filing. Rule 401 of
Regulation S–T (§ 232.401 of this
chapter) sets forth further details
regarding eligibility to participate in the
voluntary XBRL program.
(101) Interactive Data File. An
Interactive Data File (§ 232.11 of this
chapter) is:
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(i) Required to be Submitted and
Posted. Required to be submitted to the
Commission and posted on the
registrant’s corporate Web site, if any, in
the manner provided by Rule 405 of
Regulation S–T (§ 232.405 of this
chapter) if the registrant does not
prepare its financial statements in
accordance with Article 6 of Regulation
S–X (17 CFR 210.6–01 et seq.) and is:
(A) A large accelerated filer
(§ 240.12b–2 of this chapter) that had an
aggregate worldwide market value of the
voting and non-voting common equity
held by non-affiliates of more than $5
billion as of the last business day of its
most recently completed second fiscal
quarter that prepares its financial
statements in accordance with generally
accepted accounting principles as used
in the United States and the filing
contains financial statements of the
registrant for a period that ends on or
after December 15, 2008;
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(B) A large accelerated filer not
specified in paragraph (b)(101)(i)(A) of
this Item that prepares its financial
statements in accordance with generally
accepted accounting principles as used
in the United States and the filing
contains financial statements of the
registrant for a period that ends on or
after December 15, 2009;
(C) A filer not specified in paragraph
(b)(101)(i)(A) or (B) of this Item that
prepares its financial statements in
accordance with generally accepted
accounting principles as used in the
United States and the filing contains
financial statements of the registrant for
a period that ends on or after December
15, 2010; or
(D) A foreign private issuer (§ 240.3b–
4(c) of this chapter) that prepares its
financial statements in accordance with
International Financial Reporting
Standards as issued by the International
Accounting Standards Board, and the
filing contains financial statements of
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the registrant for a period that ends on
or after December 15, 2010.
(ii) Permitted to be Submitted.
Permitted to be submitted to the
Commission in the manner provided by
Rule 405 of Regulation S–T (§ 232.405 of
this chapter) if the registrant:
(A) Prepares its financial statements
(1) In accordance with either
(a) Generally accepted accounting
principles as used in the United States;
or
(b) International Financial Reporting
Standards as issued by the International
Accounting Standards Board; and
(2) Not in accordance with Article 6
of Regulation S–X (17 CFR 210.6–01 et
seq.) and
(B) Is not required to be submitted to
the Commission under paragraph
(b)(101)(i) of this Item.
(iii) Not Permitted to be Submitted.
Not permitted to be submitted to the
Commission if the registrant prepares its
financial statements in accordance with
Article 6 of Regulation S–X (17 CFR
210.6–01 et seq.).
PART 230—GENERAL RULES AND
REGULATIONS, SECURITIES ACT OF
1933
3. The authority citation for part 230
continues to read in part as follows:
Authority: 15 U.S.C. 77b, 77c, 77d, 77f,
77g, 77h, 77j, 77r, 77s, 77z–3, 77sss, 78c, 78d,
78j, 78l, 78m, 78n, 78o, 78t, 78w, 78ll(d),
78mm, 80a–8, 80a–24, 80a–28, 80a–29, 80a–
30, and 80a–37, unless otherwise noted.
*
*
*
*
*
4. Amend § 230.144 by revising
paragraph (c)(1) to read as follows:
§ 230.144 Persons deemed not to be
engaged in a distribution and therefore not
underwriters.
rwilkins on PROD1PC63 with PROPOSALS2
*
*
*
*
*
(c) * * *
(1) Reporting issuers. The issuer is,
and has been for a period of at least 90
days immediately before the sale,
subject to the reporting requirements of
section 13 or 15(d) of the Exchange Act,
has filed all required reports under
section 13 or 15(d) of the Exchange Act,
as applicable, and has submitted
electronically and posted on its
corporate Web site, if any, every
Interactive Data File (§ 232.11 of this
chapter) required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form
20–F (§ 249.220f of this chapter), during
the 12 months preceding such sale (or
for such shorter period that the issuer
was required to file such reports), other
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than form 8-K reports (§ 249.308 of this
chapter); or
*
*
*
*
*
PART 232—REGULATION S–T—
GENERAL RULES AND REGULATIONS
FOR ELECTRONIC FILINGS
5. The authority citation for part 232
continues to read in part as follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a), 77z–3, 77sss(a), 78c(b), 78l, 78m, 78n,
78o(d), 78w(a), 78ll, 80a–6(c), 80a–8, 80a–29,
80a–30, 80a–37, and 7201 et seq.; and 18
U.S.C. 1350.
*
*
*
*
*
6. Amend § 232.11 by adding
definitions for ‘‘Interactive Data File’’,
‘‘Interactive Data in Viewable Form’’,
and ‘‘Related Official Filing’’ in
alphabetical order to read as follows:
§ 232.11
232.
Definition of terms used in part
*
*
*
*
*
Interactive Data File. The term
Interactive Data File means the
machine-readable computer code that
presents information in eXtensible
Business Reporting Language in
electronic format in accordance with
§ 232.405.
Interactive Data in Viewable Form.
The term Interactive Data in Viewable
Form means the financial statements,
financial statement schedules and
financial statement footnotes that
(1) Are displayed when an Interactive
Data File is converted from machinereadable computer code into humanreadable text through software the
Commission provides; and
(2) Are displayed through such
conversion identically in all material
respects to the corresponding financial
statements, financial statement
schedules and financial statement
footnotes in the Related Official Filing.
*
*
*
*
*
Related Official Filing. The term
Related Official Filing means the ASCII
or HTML format part of the official
filing with which an Interactive Data
File appears as an exhibit.
*
*
*
*
*
7. Amend § 232.201 by:
a. Revising paragraph (a) introductory
text;
b. Amending paragraph (b) by revising
the headings to Notes 1 and 2;
c. Adding paragraph (c).
The revisions and additions read as
follows:
§ 232.201
Temporary hardship exemption.
(a) If an electronic filer experiences
unanticipated technical difficulties
preventing the timely preparation and
submission of an electronic filing, other
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than a Form 3 (§ 249.103 of this
chapter), a Form 4 (§ 249.104 of this
chapter), a Form 5 (§ 249.105 of this
chapter), a Form ID (§§ 239.63, 249.446,
269.7 and 274.402 of this chapter), a
Form TA–1 (§ 249.100 of this chapter),
a Form TA–2 (§ 249.102 of this chapter),
a Form TA–W (§ 249.101 of this
chapter), a Form D (§ 239.500 of this
chapter) or an Interactive Data File
(§ 232.11 of this chapter), the electronic
filer may file the subject filing, under
cover of Form TH (§§ 239.65, 249.447,
269.10 and 274.404 of this chapter), in
paper format no later than one business
day after the date on which the filing
was to be made.
*
*
*
*
*
(b) * * *
Note 1 to paragraph (b): * * *
Note 2 to paragraph (b): * * *
(c) If an electronic filer experiences
unanticipated technical difficulties
preventing the timely preparation and
(1) Submission of an Interactive Data
File (§ 232.11) as an exhibit as required
by either Item 601(b)(101) of Regulation
S–K (§ 229.601(b)(101) of this chapter)
or Item 101 of the Instructions as to
Exhibits of Form 20–F (§ 249.220f of this
chapter), the electronic filer still can
timely satisfy the requirement to submit
the Interactive Data File in the following
manner:
(i) Substitute for the Interactive Data
File in the required exhibit a document
that sets forth the following legend:
IN ACCORDANCE WITH THE
TEMPORARY HARDSHIP EXEMPTION
PROVIDED BY RULE 201 OF
REGULATION S–T, THE DATE BY
WHICH THE INTERACTIVE DATA FILE
IS REQUIRED TO BE SUBMITTED HAS
BEEN EXTENDED BY SIX BUSINESS
DAYS; and
(ii) Submit the required Interactive
Data File no later than six business days
after the Interactive Data File originally
was required to be submitted.
(2) Posting on its corporate Web site
of an Interactive Data File as required by
either Item 601(b)(101) of Regulation S–
K or Item 101 of the Instructions as to
Exhibits of Form 20–F, the electronic
filer still can timely satisfy the
requirement to post the Interactive Data
File by so posting the Interactive Data
File within six business days after the
Interactive Data File was required to be
submitted to the Commission.
Note to paragraph (c): Electronic filers
unable to submit or post, as applicable, the
Interactive Data File under the circumstances
specified by paragraph (c), must comply with
the provisions of this section and cannot use
Form 12b–25 (§ 249.322 of this chapter) as a
notification of late filing. Failure to submit or
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post, as applicable, the Interactive Data File
as required by the end of the six-business-day
period specified by paragraph (c) of this
section will result in ineligibility to use
Forms S–3, S–8 and F–3 (§§ 239.13, 239.16b
and 239.33 of this chapter) and constitute a
failure to have filed all required reports for
purposes of the current public information
requirements of Rule 144(c)(1)
(§ 230.144(c)(1) of this chapter).
8. Amend § 232.202 by:
a. Revising paragraphs (a)
introductory text, (a)(2), (b)(2), and
(b)(3);
b. Revising paragraph (c);
c. Revising paragraph (d) and;
d. Revising the headings to Notes 1,
2, and 3 to the section; and
e. Adding Note 4 to the section.
The revisions and additions read as
follows:
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§ 232.202
Continuing hardship exemption.
(a) An electronic filer may apply in
writing for a continuing hardship
exemption if all or part of a filing, group
of filings or submission, other than a
Form ID (§§ 239.63, 249.446, 269.7, and
274.402 of this chapter) or a Form D
(§ 239.500 of this chapter), otherwise to
be filed or submitted in electronic
format or, in the case of an Interactive
Data File (§ 232.11), to be posted on the
electronic filer’s corporate Web site,
cannot be so filed, submitted or posted,
as applicable, without undue burden or
expense. Such written application shall
be made at least ten business days
before the required due date of the
filing(s), submission(s) or posting of the
proposed filing, submission or posting
date, as appropriate, or within such
shorter period as may be permitted. The
written application shall contain the
information set forth in paragraph (b) of
this section.
(1) * * *
(2) If the Commission, or the staff
acting pursuant to delegated authority,
denies the application for a continuing
hardship exemption, the electronic filer
shall file or submit the required
document or Interactive Data File in
electronic format or post the Interactive
Data File on its corporate Web site, as
applicable, on the required due date or
the proposed filing or submission date,
or such other date as may be permitted.
*
*
*
*
*
(b) * * *
(1) * * *
(2) The burden and expense to
employ alternative means to make the
electronic submission or posting, as
applicable;
(3) The reasons for not submitting
electronically the document, group of
documents or Interactive Data File or
not posting the Interactive Data File, as
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well as the justification for the
requested time period.
(c) If the request is granted with
respect to:
(1) Electronic filing of a document or
group of documents, not electronic
submission or posting of an Interactive
Data File, then the electronic filer shall
submit the document or group of
documents for which the continuing
hardship exemption is granted in paper
format on the required due date
specified in the applicable form, rule or
regulation, or the proposed filing date,
as appropriate and the following legend
shall be placed in capital letters at the
top of the cover page of the paper format
document(s):
IN ACCORDANCE WITH RULE 202
OF REGULATION S–T, THIS (specify
document) IS BEING FILED IN PAPER
PURSUANT TO A CONTINUING
HARDSHIP EXEMPTION.
(2) Electronic submission of an
Interactive Data File, then the electronic
filer shall substitute for the Interactive
Data File in the exhibit in which it was
required a document that sets forth one
of the following legends, as appropriate:
IN ACCORDANCE WITH A
CONTINUING HARDSHIP EXEMPTION
OBTAINED UNDER RULE 202 OF
REGULATION S–T, THE DATE BY
WHICH THE INTERACTIVE DATA FILE
IS REQUIRED TO BE SUBMITTED HAS
BEEN EXTENDED TO (specify date); or
IN ACCORDANCE WITH A
CONTINUING HARDSHIP EXEMPTION
OBTAINED UNDER RULE 202 OF
REGULATION S–T, THE INTERACTIVE
DATA FILE IS NOT REQUIRED TO BE
SUBMITTED.
(3) Web site posting by an electronic
filer of its Interactive Data File, the
electronic filer need not post on its Web
site any statement with regard to the
grant of the request.
(d) If a continuing hardship
exemption is granted for a limited
period of time for:
(1) Electronic filing of a document or
group of documents, not electronic
submission or posting of an Interactive
Data File, then the grant may be
conditioned upon the filing of the
document or group of documents that is
the subject of the exemption in
electronic format upon the expiration of
the period for which the exemption is
granted. The electronic format version
shall contain the following statement in
capital letters at the top of the first page
of the document: THIS DOCUMENT IS
A COPY OF THE (specify document)
FILED ON (DATE) PURSUANT TO A
RULE 202(d) CONTINUING HARDSHIP
EXEMPTION.
(2) Electronic submission or posting
of an Interactive Data File, then the
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grant may be conditioned upon the
electronic submission and posting, as
applicable, of the Interactive Data File
that is the subject of the exemption
upon the expiration of the period for
which the exemption is granted.
Note 1 to § 232.202: * * *
Note 2 to § 232.202: * * *
Note 3 to § 232.202: * * *
Note 4 to § 232.202: Failure to submit or
post, as applicable, the Interactive Data File
as required by Rule 405 by the end of the
continuing hardship exemption if granted for
a limited period of time, will result in
ineligibility to use Forms S–3, S–8, and F–
3 (§§ 239.13, 239.16b and 239.33 of this
chapter) and constitute a failure to have filed
all required reports for purposes of the
current public information requirements of
Rule 144(c)(1) (§ 230.144(c)(1) of this
chapter).
9. Amend § 232.305 by revising
paragraph (b) to read as follows:
§ 232.305 Number of characters per line;
tabular and columnar information.
*
*
*
*
*
(b) Paragraph (a) of this section does
not apply to HTML documents,
Interactive Data Files (§ 232.11) or
XBRL-Related Documents (§ 232.11).
10. Amend § 232.401(a) by adding a
new first sentence to read as follows:
§ 232.401 XBRL-Related Document
submissions.
(a) Only an electronic filer that is an
investment company registered under
the Investment Company Act of 1940
(15 U.S.C. 80a–1 et seq.), a ‘‘business
development company’’ as defined in
section 2(a)(48) of that Act, or an entity
that reports under the Exchange Act and
prepares its financial statements in
accordance with Article 6 of Regulation
S–X (17 CFR 210.6–01 et seq.) is
permitted to participate in the voluntary
XBRL (eXtensible Business Reporting
Language) program. * * *
*
*
*
*
*
11. Amend § 232.402 by removing the
phrase ‘‘Public Utility Act,’’ from the
first sentence of paragraph (b).
§§ 232.403 and 232.404
[Reserved]
12. Reserve § 232.403 and § 232.404.
13. Add § 232.405 to read as follows:
§ 232.405 Interactive Data File
submissions and postings.
Preliminary Notes
1. Sections 405 and 406 of Regulation
S–T (§§ 232.405 and 232.406) apply to
electronic filers that submit or post
Interactive Data Files. Item 601(b)(101)
of Regulation S–K (§ 229.601(b)(101) of
this chapter) and Item 101 of the
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Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) specify
when electronic filers are required or
permitted to submit or post an
Interactive Data File (§ 232.11), as
further described below in the Note to
Section 405.
2. Section 405 imposes content,
format, submission and Web site posting
requirements for an Interactive Data
File, but does not change the
substantive content requirements for the
financial and other disclosures in the
Related Official Filing (§ 232.11).
3. Section 406 addresses liability
related to Interactive Data Files.
(a) Content, Format, Submission and
Posting Requirements—General. An
Interactive Data File must:
(1) Comply with the content, format,
submission and Web site posting
requirements of this section;
(2) Be submitted only by an electronic
filer either required or permitted to
submit an Interactive Data File as
specified by Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter), as
applicable, as an exhibit to a form that
contains the disclosure required by this
section;
(3) Be submitted in accordance with
the EDGAR Filer Manual and, as
applicable, either Item 601(b)(101) of
Regulation S–K or Item 101 of the
Instructions as to Exhibits of Form 20–
F; and
(4) Be posted on the electronic filer’s
corporate Web site, if any, in accordance
with, as applicable, either Item
601(b)(101) of Regulation S–K or Item
101 of the Instructions as to Exhibits of
Form 20–F.
(b) Content—Categories of
Information Presented. An Interactive
Data File must consist of only a
complete set of information for all
periods required to be presented in the
corresponding data in the Related
Official Filing, no more and no less,
from all of the following categories:
(1) The complete set of the electronic
filer’s financial statements (which
includes the face of the financial
statements and all footnotes); and
(2) All schedules set forth in Article
12 of Regulation S–X (§§ 210.12–01–
210.12–29) related to the electronic
filer’s financial statements.
Note to paragraph (b): It is not permissible
for the Interactive Data File to present only
partial face financial statements, such as by
excluding comparative financial information
for prior periods.
(c) Format—Generally. An Interactive
Data File must comply with the
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following requirements, except as
modified by paragraph (d) or (e) of this
section, as applicable, with respect to
the corresponding data in the Related
Official Filing consisting of footnotes to
financial statements or financial
statement schedules as set forth in
Article 12 of Regulation S–X:
(1) Data Elements and Labels.
(i) Element Accuracy. Each data
element (i.e., all text, line item names,
monetary values, percentages, numbers,
dates and other labels) contained in the
Interactive Data File reflect the same
information in the corresponding data
in the Related Official Filing;
(ii) Element Specificity. No data
element contained in the corresponding
data in the Related Official Filing is
changed, deleted or summarized in the
Interactive Data File;
(iii) Standard and Special Labels and
Elements. Each data element contained
in the Interactive Data File is matched
with an appropriate tag from the most
recent version of the standard list of tags
specified by the EDGAR Filer Manual. A
tag is appropriate only when its
standard definition, standard label and
other attributes as and to the extent
identified in the list of tags match the
information to be tagged, except that:
(A) Labels. An electronic filer must
create and use a new special label to
modify a tag’s existing standard label
when that tag is an appropriate tag in all
other respects (i.e., in order to use a tag
from the standard list of tags only its
label needs to be changed); and
(B) Elements. An electronic filer must
create and use a new special element if
and only if an appropriate tag does not
exist in the standard list of tags for
reasons other than or in addition to an
inappropriate standard label; and
(2) Additional Mark-Up Related
Content. The Interactive Data File
contains any additional mark-up related
content (e.g., the eXtensible Business
Reporting Language tags themselves,
identification of the core XML
documents used and other technology
related content) not found in the
corresponding data in the Related
Official Filing that is necessary to
comply with the EDGAR Filer Manual
requirements.
(d) Format—Footnotes—Generally.
The part of the Interactive Data File for
which the corresponding data in the
Related Official Filing consists of
footnotes to financial statements must
comply with the requirements of
paragraphs (c)(1) and (c)(2) of this
section, as modified by this paragraph
(d), unless the electronic filer is within
one of the categories specified in
paragraph (f) of this section. Footnotes
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to financial statements must be tagged
as follows:
(1) Each complete footnote must be
block-text tagged;
(2) Each significant accounting policy
within the significant accounting
policies footnote must be block-text
tagged;
(3) Each table within each footnote
must be block-text tagged; and
(4) Within each footnote, each amount
(i.e., monetary value, percentage, and
number) must be tagged separately and
each narrative disclosure required to be
disclosed by generally accepted
accounting principles as used in the
United States, (or International
Financial Reporting Standards as issued
by the International Accounting
Standards Board, if applicable) and
Commission regulations must be tagged
separately.
(e) Format—Schedules—Generally.
The part of the Interactive Data File for
which the corresponding data in the
Related Official Filing consists of
financial statement schedules as set
forth in Article 12 of Regulation S–X
must comply with the requirements of
paragraphs (c)(1) and (c)(2) of this
section, as modified by this paragraph
(e), unless the electronic filer is within
one of the categories specified in
paragraph (f) of this section. Financial
statement schedules as set forth in
Article 12 of Regulation S–X must be
tagged as follows:
(1) Each complete financial statement
schedule must be block-text tagged; and
(2) Within each financial statement
schedule, each amount (i.e., monetary
value, percentage and number) must be
tagged separately and each narrative
disclosure required by Commission
regulations must be tagged separately.
(f) Format—Footnotes and Schedules
Eligible for Phased-In Detail. The
following electronic filers must comply
with paragraphs (c)(1) and (c)(2) of this
section as modified by paragraphs (d)
and (e) of this section, except that they
may choose to comply with paragraph
(d)(1) rather than paragraphs (d)(1)
through (d)(4) and may choose to
comply with paragraph (e)(1) rather
than paragraphs (e)(1) and (e)(2):
(1) Any large accelerated filer
(§ 240.12b–2 of this chapter) that had an
aggregate worldwide market value of the
voting and non-voting common equity
held by non-affiliates of more than $5
billion as of the last business day of its
most recently completed second fiscal
quarter that prepares its financial
statements in accordance with generally
accepted accounting principles as used
in the United States, if none of the
financial statements for which an
Interactive Data File is required is for a
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period that ends on or after December
15, 2009;
(2) Any large accelerated filer not
specified in paragraph (f)(1) that
prepares its financial statements in
accordance with generally accepted
accounting principles as used in the
United States, if none of the financial
statements for which an Interactive Data
File is required is for a period that ends
on or after December 15, 2010;
(3) Any filer not specified in
paragraph (f)(1) or (2) that prepares its
financial statements in accordance with
generally accepted accounting
principles as used in the United States,
if none of the financial statements for
which an Interactive Data File is
required is for a period that ends on or
after December 15, 2011; and
(4) Any foreign private issuer
(§ 240.3b–4(c) of this chapter) that
prepares its financial statements in
accordance with International Financial
Reporting Standards as issued by the
International Accounting Standards
Board, if none of the financial
statements for which an Interactive Data
File is required is for a period that ends
on or after December 15, 2011.
(g) Posting. Any electronic filer that
maintains a corporate Web site and is
required to submit an Interactive Data
File must post that Interactive Data File
on that Web site by the end of the
business day on the earlier of the date
the Interactive Data File is submitted or
is required to be submitted.
Note to § 232.405: Item 601(b)(101) of
Regulation S–K specifies the circumstances
under which an Interactive Data File must be
submitted as an exhibit and be posted to the
issuer’s corporate Web site, if any, and the
circumstances under which it is permitted to
be submitted as an exhibit, with respect to
Forms S–1 (§ 239.11 of this chapter), S–3
(§ 239.13 of this chapter), S–4 (§ 239.25 of
this chapter), S–11 (§ 239.18 of this chapter),
F–1 (§ 239.31 of this chapter), F–3 (§ 239.33
of this chapter), F–4 (§ 239.34 of this
chapter), 10–K (§ 249.310 of this chapter) and
10–Q (§ 249.308a of this chapter). Similarly,
Item 101 of the Instructions as to Exhibits of
Form 20–F specifies the circumstances under
which an Interactive Data File must be
submitted as an exhibit and be posted to the
issuer’s corporate Web site, if any, and the
circumstances under which it is permitted to
be submitted as an exhibit, with respect to
Form 20–F. Item 601(b)(101) of Regulation S–
K and Item 101 of the Instructions as to
Exhibits of Form 20–F both prohibit
submission of an Interactive Data File by an
issuer that prepares its financial statements
in accordance with Article 6 of Regulation S–
X (17 CFR 210.6–01 et seq.).
14. Add § 232.406 to read as follows:
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§ 232.406 Liability for Related Official
Filing, Interactive Data in Viewable Form
and Interactive Data File.
(a) Liability for Related Official Filing
Unaffected. The disclosures in the
Related Official Filing are subject to the
liability provisions of the Securities Act,
Exchange Act, Trust Indenture Act, and
Investment Company Act and the rules
and regulations under those Acts.
Nothing in Rule 405 of Regulation S–T
(§ 232.405) or this Rule 406 changes the
liability otherwise applicable to an
electronic filer’s Related Official Filing.
(b) Liability for Interactive Data in
Viewable Form. Interactive Data in
Viewable Form are subject to liability
under the Securities Act, Exchange Act,
Trust Indenture Act, and Investment
Company Act and the rules and
regulations under those Acts in the
same way and to the same extent as the
Related Official Filing.
(c) Liability for Interactive Data File.
An Interactive Data File submitted to
the Commission:
(1) Will be deemed to comply with
Rule 405 if:
(A) The electronic filer makes a good
faith and reasonable attempt to comply
with Rule 405; and
(B) As soon as reasonably practicable
after the electronic filer becomes aware
that the Interactive Data File does not
comply with Rule 405, the electronic
filer amends the Interactive Data File to
comply with Rule 405.
(2) That complies or is deemed to
comply with Rule 405 is not subject to
liability under any provision of the
Securities Act, Exchange Act, Trust
Indenture Act and Investment Company
Act or the rules and regulations under
those Acts for failure to comply with
Rule 405.
(3) In addition to paragraphs (c)(1)
and (c)(2),
(A) Is deemed not filed or part of a
registration statement or prospectus for
purposes of sections 11 and 12 of the
Securities Act (15 U.S.C. 77k and 77l),
is deemed not filed for purposes of
section 18 of the Exchange Act (15
U.S.C. 78r) and section 34(b) of the
Investment Company Act (15 U.S.C.
80a–33(b)), and otherwise is not subject
to the liabilities of these sections;
(B) Is deemed filed for purposes of
(and thereby benefits from the liability
protection provided by) Item 103 of
Regulation S–T (§ 232.103); and
(C) Other than as stated in
subparagraph (c)(3)(A), is subject to
liability for the substantive content of
the financial and other disclosures, as
distinct from its compliance with Rule
405, under the Securities Act, Exchange
Act, Trust Indenture Act, and
Investment Company Act and the rules
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and regulations under those Acts in the
same way and to the same extent as the
Related Official Filing.
PART 239—FORMS PRESCRIBED
UNDER THE SECURITIES ACT OF 1933
15. The authority citation for part 239
continues to read in part as follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s,
77z–2, 77z–3, 77sss, 78c, 78l, 78m, 78n,
78o(d), 78u–5, 78w(a), 78ll, 78mm, 80a–2(a),
80a–3, 80a–8, 80a–9, 80a–10, 80a–13, 80a–
24, 80a–26, 80a–29, 80a–30, and 80a–37,
unless otherwise noted.
*
*
*
*
*
16. Amend § 239.13 by revising
paragraph (a)(8) to read as follows:
§ 239.13 Form S–3, for registration under
the Securities Act of 1933 of securities of
certain issuers offered pursuant to certain
types of transactions.
*
*
*
*
*
(a) * * *
(8) Electronic filings. In addition to
satisfying the foregoing conditions, a
registrant subject to the electronic filing
requirements of Rule 101 of Regulation
S–T (§ 232.101 of this chapter) shall
have:
(i) Filed with the Commission all
required electronic filings, including
electronic copies of documents
submitted in paper pursuant to a
hardship exemption as provided by
Rule 201 or Rule 202(d) of Regulation
S–T (§ 232.201 or § 232.202(d) of this
chapter); and
(ii) Submitted electronically to the
Commission and posted on its corporate
Web site, if any, all Interactive Data
Files required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) during the
twelve calendar months and any portion
of a month immediately preceding the
filing of the registration statement on
this Form.
17. Amend Form S–3 (referenced in
§ 239.13) by revising paragraph I.A.8
and adding paragraphs I.A.8(a) and
I.A.8(b) of the General Instructions to
read as follows:
Note: The text of Form S–3 does not and
this amendment will not appear in the Code
of Federal Regulations.
Form S–3
*
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*
*
*
General Instructions
I. * * *
A. * * *
8. Electronic filings. In addition to
satisfying the foregoing conditions, a
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registrant subject to the electronic filing
requirements of Rule 101 of Regulation
S–T (§ 232.101 of this chapter) shall
have:
(a) Filed with the Commission all
required electronic filings, including
electronic copies of documents
submitted in paper pursuant to a
hardship exemption as provided by
Rule 201 or Rule 202(d) of Regulation
S–T (§ 232.201 or § 232.202(d) of this
chapter); and
(b) Submitted electronically to the
Commission and posted on its corporate
Web site, if any, all Interactive Data
Files required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) during the
twelve calendar months and any portion
of a month immediately preceding the
filing of the registration statement on
this Form.
*
*
*
*
*
18. Amend § 239.16b by revising
paragraph (b) to read as follows:
rwilkins on PROD1PC63 with PROPOSALS2
§ 239.16b Form S–8, for registration under
the Securities Act of 1933 of securities to
be offered to employees pursuant to
employee benefit plans.
(a) * * *
(b) Electronic filings. In addition to
satisfying the foregoing conditions, a
registrant subject to the electronic filing
requirements of Rule 101 of Regulation
S–T (§ 232.101 of this chapter) shall
have:
(1) Filed with the Commission all
required electronic filings, including
electronic copies of documents
submitted in paper pursuant to a
hardship exemption as provided by
Rule 201 or Rule 202(d) of Regulation
S–T (§ 232.201 or § 232.202(d) of this
chapter); and
(2) Submitted electronically to the
Commission and posted on its corporate
Web site, if any, all Interactive Data
Files required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) during the
twelve calendar months and any portion
of a month immediately preceding the
filing of the registration statement on
this Form.
19. Amend Form S–8 (referenced in
§ 239.16b) by revising paragraph A.3
and adding paragraphs A.3(a) and A.3(b)
of the General Instructions to read as
follows:
Note: The text of Form S–8 does not and
this amendment will not appear in the Code
of Federal Regulations.
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17:28 Jun 09, 2008
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Form S–8
*
*
*
*
*
General Instructions
A. * * *
1. * * *
2. * * *
3. Electronic filings. In addition to
satisfying the foregoing conditions, a
registrant subject to the electronic filing
requirements of Rule 101 of Regulation
S–T (§ 232.101 of this chapter) shall
have:
(a) Filed with the Commission all
required electronic filings, including
electronic copies of documents
submitted in paper pursuant to a
hardship exemption as provided by
Rule 201 or Rule 202(d) of Regulation
S–T (§ 232.201 or § 232.202(d) of this
chapter); and
(b) Submitted electronically to the
Commission and posted on its corporate
Web site, if any, all Interactive Data
Files required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) during the
twelve calendar months and any portion
of a month immediately preceding the
filing of the registration statement on
this Form.
*
*
*
*
*
20. Amend § 239.33 by revising
paragraph (a)(6) to read as follows:
§ 239.33 Form F–3, for registration under
the Securities Act of 1933 of securities of
certain foreign private issuers offered
pursuant to certain types of transactions.
*
*
*
*
*
(a) * * *
(6) Electronic filings. In addition to
satisfying the foregoing conditions, a
registrant subject to the electronic filing
requirements of Rule 101 of Regulation
S–T (§ 232.101 of this chapter) shall
have:
(i) Filed with the Commission all
required electronic filings, including
electronic copies of documents
submitted in paper pursuant to a
hardship exemption as provided by
Rule 201 or Rule 202(d) of Regulation
S–T (§ 232.201 or § 232.202(d) of this
chapter); and
(ii) Submitted electronically to the
Commission and posted on its corporate
Web site, if any, all Interactive Data
Files required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) during the
twelve calendar months and any portion
of a month immediately preceding the
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Frm 00039
Fmt 4701
Sfmt 4702
filing of the registration statement on
this Form.
*
*
*
*
*
21. Amend Form F–3 (referenced in
§ 239.33) by revising paragraph I.A.6
and adding paragraphs I.A.6(i) and
I.A.6(ii) of the General Instructions to
read as follows:
Note: The text of Form F–3 does not and
this amendment will not appear in the Code
of Federal Regulations.
Form F–3
*
*
*
*
*
General Instructions
I. * * *
A. * * *
6. Electronic filings. In addition to
satisfying the foregoing conditions, a
registrant subject to the electronic filing
requirements of Rule 101 of Regulation
S–T (§ 232.101 of this chapter) shall
have:
(i) Filed with the Commission all
required electronic filings, including
electronic copies of documents
submitted in paper pursuant to a
hardship exemption as provided by
Rule 201 or Rule 202(d) of Regulation
S–T (§ 232.201 or § 2.202(d) of this
chapter); and
(ii) Submitted electronically to the
Commission and posted on its corporate
Web site, if any, all Interactive Data
Files required to be submitted and
posted under either Item 601(b)(101) of
Regulation S–K (§ 229.601(b)(101) of
this chapter) or Item 101 of the
Instructions as to Exhibits of Form 20–
F (§ 249.220f of this chapter) during the
twelve calendar months and any portion
of a month immediately preceding the
filing of the registration statement on
this Form.
*
*
*
*
*
PART 240—GENERAL RULES AND
REGULATIONS, SECURITIES
EXCHANGE ACT OF 1934
22. The authority citation for part 240
continues to read in part as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j,
77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn,
77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 78j,
78j–1, 78k, 78k–1, 78l, 78m, 78n, 78o, 78p,
78q, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 80a–
20, 80a–23, 80a–29, 80a–37, 80b–3, 80b–4,
80b–11, and 7201 et seq.; and 18 U.S.C. 1350,
unless otherwise noted.
*
*
*
*
*
23. Amend § 240.13a–14 by revising
paragraph (f) to read as follows:
§ 240.13a–14 Certification of disclosure in
annual and quarterly reports.
*
*
*
*
*
(f) The certification requirements of
this section do not apply to
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(a) Required to be submitted to the
Commission and posted on the
registrant’s corporate Web site, if any, in
the manner provided by Rule 405 of
Regulation S–T (§ 232.405 of this
chapter) if the Form 20–F is an annual
report and the registrant is not specified
by paragraph (c) of this Instruction 101
§ 240.15d–14 Certification of disclosure in
and is:
annual and quarterly reports.
(i) A large accelerated filer (§ 240.12b–
*
*
*
*
*
2 of this chapter) that had an aggregate
(f) The certification requirements of
worldwide market value of the voting
this section do not apply to:
and non-voting common equity held by
(1) An Interactive Data File, as
non-affiliates of more than $5 billion as
defined in Rule 11 of Regulation S–T
of the last business day of its most
(§ 232.11 of this chapter); or
recently completed second fiscal quarter
(2) XBRL-Related Documents, as
that is a foreign private issuer (§ 240.3b–
defined in Rule 11 of Regulation S–T.
4(c) of this chapter) that prepares its
financial statements in accordance with
PART 249—FORMS, SECURITIES
generally accepted accounting
EXCHANGE ACT OF 1934
principles as used in the United States
25. The authority citation for part 249 and the filing contains financial
continues to read in part as follows:
statements of the registrant for a period
Authority: 15 U.S.C. 78a et seq., 7202,
that ends on or after December 15, 2008;
7233, 7241, 7262, 7264, and 7265; and 18
(ii) A large accelerated filer not
U.S.C. 1350, unless otherwise noted.
specified in paragraph (a)(i) of this
*
*
*
*
*
instruction but is a foreign private issuer
26. Amend Form 20–F (referenced in
that prepares its financial statements in
§ 249.220f) by revising paragraph 100
accordance with generally accepted
and adding paragraph 101 at the end of
accounting principles as used in the
‘‘Instructions as to Exhibits’’ to read as
United States and the filing contains
follows:
financial statements of the registrant for
a period that ends on or after December
Note: The text of Form 20–F does not and
15, 2009;
this amendment will not appear in the Code
of Federal Regulations.
(iii) A filer not specified in paragraph
(a)(i) or (ii) of this instruction that is a
Form 20–F
foreign private issuer that prepares its
financial statements in accordance with
*
*
*
*
*
generally accepted accounting
Instructions as to Exhibits
principles as used in the United States
and the filing contains financial
*
*
*
*
*
100. XBRL-Related Documents. Only a statements of the registrant for a period
that ends on or after December 15, 2010;
registrant that prepares its financial
statements in accordance with Article 6 and
(iv) A foreign private issuer that
of Regulation S–X (17 CFR 210.6–01 et
prepares its financial statements in
seq.) is permitted to participate in the
accordance with International Financial
voluntary XBRL (eXtensible Business
Reporting Standards as issued by the
Reporting Language) program and, as a
International Accounting Standards
result, may submit XBRL-Related
Board, and the filing contains financial
Documents (§ 232.11 of this chapter).
Rule 401 of Regulation S–T (§ 232.401 of statements of the registrant for a period
that ends on or after December 15, 2010.
this chapter) sets forth further details
(b) Permitted to be submitted to the
regarding eligibility to participate in the
Commission in the manner provided by
voluntary XBRL program.
101. Interactive Data File. An
Rule 405 of Regulation S–T (§ 232.405 of
Interactive Data File (§ 232.11 of this
this chapter) if the registrant:
(i) Prepares its financial statements
chapter) is:
rwilkins on PROD1PC63 with PROPOSALS2
(1) An Interactive Data File, as
defined in Rule 11 of Regulation S–T
(§ 232.11 of this chapter); or
(2) XBRL-Related Documents, as
defined in Rule 11 of Regulation S–T.
24. Amend § 240.15d–14 by revising
paragraph (f) to read as follows:
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17:28 Jun 09, 2008
Jkt 214001
PO 00000
Frm 00040
Fmt 4701
Sfmt 4702
(A) In accordance with either
(1) Generally accepted accounting
principles as used in the United States;
or
(2) International Financial Reporting
Standards as issued by the International
Accounting Standards Board; and
(B) Not in accordance with Article 6
of Regulation S–X (17 CFR 210.6–01 et
seq.); and
(ii) Is not required to be submitted to
the Commission under paragraph (a) of
this Instruction 101.
(c) Not permitted to be submitted to
the Commission if the registrant
prepares its financial statements in
accordance with Article 6 of Regulation
S–X (17 CFR 210.6–01 et seq.).
*
*
*
*
*
27. Amend Form 6–K (referenced in
§ 249.306) by revising paragraph (5) to
General Instruction C to read as follows:
Note: The text of Form 6–K does not and
this amendment will not appear in the Code
of Federal Regulations.
Form 6–K
*
*
*
*
*
General Instructions
*
*
*
*
*
C. * * *
(5) XBRL-Related Documents. Only a
registrant that prepares its financial
statements in accordance with Article 6
of Regulation S–X (17 CFR 210.6–01 et
seq.) is permitted to participate in the
voluntary XBRL (eXtensible Business
Reporting Language) program and, as a
result, may submit XBRL-Related
Documents (§ 232.11 of this chapter).
XBRL-Related Documents submitted as
an exhibit to a Form 6–K must be listed
as exhibit 100. Rule 401 of Regulation
S –T (§ 232.401 of this chapter) sets
forth further details regarding eligibility
to participate in the voluntary XBRL
program.
*
*
*
*
*
By the Commission.
Dated: May 30, 2008.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–12596 Filed 6–9–08; 8:45 am]
BILLING CODE 8010–01–P
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]]>Agencies
[Federal Register Volume 73, Number 112 (Tuesday, June 10, 2008)]
[Proposed Rules]
[Pages 32794-32832]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-12596]
[[Page 32793]]
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Part II
Securities and Exchange Commission
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17 CFR Parts 229, 230, 232, 239, 240, and 249
Interactive Data To Improve Financial Reporting; Proposed Rule
Federal Register / Vol. 73 , No. 112 / Tuesday, June 10, 2008 /
Proposed Rules
[[Page 32794]]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 229, 230, 232, 239, 240 and 249
[Release Nos. 33-8924; 34-57896; 39-2455; IC-28293; File No. S7-11-08]
RIN 3235-AJ71
Interactive Data To Improve Financial Reporting
AGENCY: Securities and Exchange Commission.
ACTION: Proposed rule.
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SUMMARY: We are proposing rules requiring companies to provide
financial statement information in a form that would improve its
usefulness to investors. Under the proposed rules, financial statement
information could be downloaded directly into spreadsheets, analyzed in
a variety of ways using commercial off-the-shelf software, and used
within investment models in other software formats. The rules would
apply to domestic and foreign public companies that prepare their
financial statements in accordance with generally accepted accounting
principles as used in the United States (U.S. GAAP), and foreign
private issuers that prepare their financial statements using
International Financial Reporting Standards (IFRS) as promulgated by
the International Accounting Standards Board (IASB). Companies would
provide their financial statements to the Commission and on their
corporate Web sites in interactive data format using the eXtensible
Business Reporting Language (XBRL). The interactive data would be
provided as an exhibit to periodic reports and registration statements,
as well as to transition reports for a change in fiscal year. The
proposed rules are intended not only to make financial information
easier for investors to analyze, but also to assist in automating
regulatory filings and business information processing. Interactive
data has the potential to increase the speed, accuracy, and usability
of financial disclosure, and eventually reduce costs.
DATES: Comments should be received on or before August 1, 2008.
ADDRESSES: Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/proposed.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number S7-11-08 on the subject line; or
Use the Federal eRulemaking Portal (https://
www.regulations.gov). Follow the instructions for submitting comments.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number S7-11-08. This file number
should be included on the subject line if e-mail is used. To help us
process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
Internet Web site (https://www.sec.gov/rules/proposed.shtml). Comments
are also available for public inspection and copying in the
Commission's Public Reference Room, 100 F Street, NE., Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. All comments received will be posted without change; we do not
edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT: James C. Lopez, Legal Branch Chief,
Division of Corporation Finance at (202) 551-3790; Mark W. Green,
Senior Special Counsel (Regulatory Policy), Division of Corporation
Finance at (202) 551-3430; Jeffrey W. Naumann, Assistant Director,
Office of Interactive Disclosure at (202) 551-5352; or Melanie
Jacobsen, Office of the Chief Accountant at (202) 551-5300, U.S.
Securities and Exchange Commission, 100 F Street, NE., Washington, DC
20549-3628.
SUPPLEMENTARY INFORMATION: We propose to add Rules 405 and 406 to
Regulation S-T,\1\ and revise Item 601 \2\ of Regulation S-K,\3\ Rules
11,\4\ 201,\5\ 202,\6\ 305,\7\ 401,\8\ and 402 \9\ of Regulation S-T,
Rule 144 \10\ under the Securities Act of 1933 (Securities Act),\11\
and Rules 13a-14 \12\ and 15d-14 \13\ under the Securities Exchange Act
of 1934 (Exchange Act).\14\ We also propose to revise Forms S-3,\15\ S-
8,\16\ and F-3 \17\ under the Securities Act and Forms 20-F \18\ and 6-
K \19\ under the Exchange Act.
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\1\ 17 CFR 232.10 et seq.
\2\ 17 CFR 229.601.
\3\ 17 CFR 229.10. et seq.
\4\ 17 CFR 232.11.
\5\ 17 CFR 232.201.
\6\ 17 CFR 232.202.
\7\ 17 CFR 232.305.
\8\ 17 CFR 232.401.
\9\ 17 CFR 232.402.
\10\ 17 CFR 230.144.
\11\ 15 U.S.C. 77a et seq.
\12\ 17 CFR 240.13a-14.
\13\ 17 CFR 240.15d-14.
\14\ 15 U.S.C. 78a et seq.
\15\ 17 CFR 239.13.
\16\ 17 CFR 239.16b.
\17\ 17 CFR 239.33.
\18\ 17 CFR 249.220f.
\19\ 17 CFR 249.306.
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Table of Contents
I. Introduction and Background
A. Introduction
B. Current Filing Technology and Interactive Data
C. The Commission's Multiyear Evaluation of Interactive Data and
Overview of Proposed Rules
II. Discussion of the Proposed Amendments
A. Submission of Financial Information Using Interactive Data
B. Phase-In Under the Proposed Rules
1. Overview
2. Companies and Filings Covered by the Proposed Rules and
Phase-In
3. Documents and Information Covered by the Proposed Rules
a. Financial Statements and Financial Statement Schedules
b. Registration Statements Covered by the Proposed Rules
4. Initial Filing Grace Period
5. Web Site Posting of Interactive Data
C. Accuracy and Reliability of Interactive Data
1. Voluntary Program
2. Use of Technology To Detect Errors
3. Integration of Interactive Data and Business Information
Processing
4. Continued Traditional Format and Interactive Data Cautionary
Disclosure
D. Required Items
1. Data Tags
2. Regulation S-T and the EDGAR Filer Manual
E. Consequences of Non-Compliance and Hardship Exemption
III. General Request for Comments
IV. Paperwork Reduction Act
V. Cost-Benefit Analysis
VI. Consideration of Burden on Competition and Promotion of
Efficiency, Competition and Capital Formation
VII. Initial Regulatory Flexibility Act Analysis
VIII. Small Business Regulatory Enforcement Fairness Act
IX. Statutory Authority and Text of Proposed Amendments
I. Introduction and Background
A. Introduction
Over the last several decades, developments in technology and
electronic data communication have significantly decreased the time and
cost of filing disclosure documents with us. Technological developments
also have facilitated greater transparency in the form of easier access
to, and analysis of, financial reporting and disclosures. Most notably,
in 1993 we began to require electronic filing on our Electronic Data
Gathering, Analysis and
[[Page 32795]]
Retrieval System (EDGAR).\20\ Since then, widespread use of the
Internet has vastly decreased the time and expense of accessing
disclosure filed with us.
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\20\ In 1993, we began to require domestic issuers to file most
documents electronically. Release No. 33-6977 (Feb. 23, 1993) [58 FR
14628]. Electronic filing began with a pilot program in 1984.
Release No. 33-6539 (June 27, 1984) [49 FR 28044].
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We continue to update our filing standards and systems as
technologies improve. These developments assist us in our goal to
promote efficient and transparent capital markets. For example, since
2003 we have required electronic filing of certain ownership reports
\21\ filed on Forms 3,\22\ 4,\23\ and 5 \24\ in a format that provides
interactive data, and recently we adopted similar rules governing the
filing of Form D.\25\ In addition, recently we have encouraged, and in
some cases required, public reporting companies and mutual funds to
provide disclosures and communicate with investors using the
Internet.\26\ Now, as part of our continuing efforts to assist filers
as well as investors who use Commission disclosures, we propose to
require that financial statements be provided in a format that makes
the information they contain interactive.
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\21\ Release No. 33-8230 (May 7, 2003) [68 FR 25788 and 37044
(correction)] (required electronic filing of ownership reports) and
Release No. 33-8891 (Feb. 6, 2008) [73 FR 10592] (required
electronic filing of Form D [17 CFR 239.500]).
\22\ 17 CFR 249.103 and 274.202.
\23\ 17 CFR 249.104 and 274.203.
\24\ 17 CFR 249.105.
\25\ 17 CFR 239.500.
\26\ See, e.g., Release No. 34-56135 (July 26, 2007) [72 FR
42222]; Release No. 34-55146 (Jan. 22, 2007) [72 FR 4148]; Release
No. 34-52056 (July 19, 2005) [70 FR 44722]; Release No. 33-8861
(November 21, 2007) [72 FR 67790]; and Release No. 34-57172 (Jan.
18, 2008) [73 FR 4450].
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Our proposal builds on our voluntary filer program, started in
2005,\27\ that allowed us to evaluate the merits of interactive data.
The voluntary program allows companies to submit financial statements
on a supplemental basis in interactive format as exhibits to specified
filings under the Exchange Act and the Investment Company Act of 1940
(Investment Company Act).\28\ Companies that participate in the program
still are required to file their financial statements in American
Standard Code for Information Interchange (ASCII) or HyperText Markup
Language (HTML).\29\
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\27\ Release No. 33-8529 (Feb. 3, 2005) [70 FR 6556].
\28\ 15 U.S.C. 80a-1 et seq.
\29\ HTML is a standardized language commonly used to present
text and other information on Web sites.
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In 2007, we extended the program to enable mutual funds voluntarily
to submit in interactive data format supplemental information contained
in the risk/return summary section of their prospectuses.\30\ Over 75
companies have participated in the voluntary program. These companies
span a wide range of industries and company characteristics, and have a
total public float of over $2 trillion.
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\30\ Release No. 33-8823 (July 11, 2007) [72 FR 39290].
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Financial reporting based on interactive data would create new ways
for investors, analysts, and others to retrieve and use financial
information in documents filed with us. For example, users of financial
information could download it directly into spreadsheets, analyze it
using commercial off-the-shelf software, or use it within investment
models in other software formats. Through interactive data, what is
currently static, text-based information can be dynamically searched
and analyzed, facilitating the comparison of financial and business
performance across companies, reporting periods, and industries.
Interactive data also could provide a significant opportunity to
automate regulatory filings and business information processing, with
the potential to increase the speed, accuracy, and usability of
financial disclosure. Such automation could eventually reduce costs. A
company that uses a standardized interactive data format at earlier
stages of its reporting cycle could reduce the need for repetitive data
entry and, therefore, the likelihood of human error. In this way,
interactive data may improve the quality of information while reducing
its cost.
Also, to the extent investors currently are required to pay for
access to annual or quarterly report disclosure that has been extracted
and reformatted into an interactive data format by third-party sources,
the availability of interactive data in Commission filings could allow
investors to avoid additional costs associated with third party
sources.
We believe that requiring issuers to file their financial
statements using interactive data format would enable investors,
analysts, and the Commission staff to capture and analyze that
information more quickly and at less cost than is possible using the
same financial information provided in a static format. Any investor
with a computer would have the ability to acquire and download
interactive financial data that have generally been available only to
large institutional users. The proposed interactive data requirements
would not change what is currently reported, but would add a
requirement to include financial statements in a new format as an
exhibit. Thus, the proposal to require that filers provide financial
statements using interactive data will not alter the disclosure or
formatting standards of periodic reports, registration statements,\31\
or transition reports,\32\ which would continue to be available as they
are today for those who prefer to view the traditional text-based
document.
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\31\ Although registration statements can be filed under federal
securities laws other than the Securities Act, we use the term
``registration statement'' in this release only to refer to those
filed under the Securities Act unless we expressly state otherwise.
\32\ Transition reports generally must be filed when an issuer
changes its fiscal closing date. The transition report covers the
resulting transition period between the closing date of its most
recent fiscal year and the opening date of its new fiscal year. Rule
13a-10 [17 CFR 240.13a-10]; Rule 15d-10 [17 CFR 240.15d-10]. Unless
otherwise stated, when we refer to Exchange Act reports, periodic
reports, or ``reports,'' we mean quarterly and annual periodic
reports as well as transition reports.
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Throughout this release, we solicit comment on many issues
concerning the use of interactive data, including specifically whether
financial information in interactive data format should be required as
exhibits to Securities Act registration statements and Exchange Act
periodic and transition reports filed with us. We are seeking comment
from investors, registrants, accountants, analysts and any other
parties or individuals who may be affected by the use of interactive
disclosure in Commission filings, and any other members of the public.
B. Current Filing Technology and Interactive Data
Companies filing electronically are required to file their
registration statements, quarterly and annual reports, and transition
reports in ASCII or HTML format.\33\ Also, to a limited degree, our
electronic filing system uses other formats for internal processing and
document-type identification. For example, our system uses eXtensible
Markup Language (XML) to process reports of beneficial ownership of
equity securities on Forms 3, 4, and 5 under section 16(a) of the
Exchange Act.\34\
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\33\ Rule 301 under Regulation S-T [17 CFR 232.301] requires
electronic filings to comply with the EDGAR Filer Manual, and
Section 5.1 of the Filer Manual requires that electronic filings be
in ASCII or HTML format. Rule 104 under Regulation S-T [17 CFR
232.104] permits filers to submit voluntarily as an adjunct to their
official filings in ASCII or HTML unofficial PDF copies of filed
documents. Unless otherwise stated, we refer to filings in ASCII or
HTML as traditional format filings.
\34\ 15 U.S.C. 78p(a).
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[[Page 32796]]
Electronic formats such as HTML, XML, and XBRL are open standards
\35\ that define or ``tag'' data using standard definitions. The tags
establish a consistent structure of identity and context. This
consistent structure can be recognized and processed by a variety of
different software applications. In the case of HTML, the standardized
tags enable Web browsers to present Web sites' embedded text and
information in predictable format. In the case of XBRL, software
applications, such as databases, financial reporting systems, and
spreadsheets, recognize and process tagged financial information.
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\35\ The term ``open standard'' is generally applied to
technological specifications that are widely available to the
public, royalty-free, at minimal or no cost.
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XBRL was derived from the XML standard. It was developed and
continues to be supported by XBRL International, a collaborative
consortium of approximately 550 organizations representing many
elements of the financial reporting community worldwide in more than 20
jurisdictions, national and regional. XBRL U.S., the international
organization's U.S. jurisdiction representative, is a non-profit
organization that includes companies, public accounting firms, software
developers, filing agents, data aggregators, stock exchanges,
regulators, financial services companies, and industry
associations.\36\ In 2006, the Commission contracted with XBRL U.S. to
develop the standard list of tags necessary for financial reporting in
interactive format consistent with U.S. GAAP and Commission
regulations.
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\36\ XBRL U.S. supports efforts to promote interactive financial
and business data specific to the U.S., including U.S. GAAP.
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Financial reporting in interactive format requires a standard list
of tags. These tags are similar to definitions in an ordinary financial
dictionary, and they cover a variety of financial concepts that can be
read and understood by software applications. For financial statements
prepared in accordance with U.S. GAAP, a filer would use the list of
tags for U.S. financial statement reporting.\37\ This list of tags
contains descriptive labels, definitions, authoritative references to
U.S. GAAP and Commission regulations where applicable, and other
elements, all of which provide the contextual information necessary for
interactive data \38\ to be recognized and processed by software.\39\
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\37\ Unless stated otherwise, when we refer to the ``list of
tags for U.S. financial statement reporting'' we mean the
interactive data taxonomy as approved by XBRL U.S. that is based on
U.S. GAAP, Commission regulations, and common financial reporting
practices used in the preparation of financial statements in the
U.S.
\38\ The proposed rules would define the interactive data
necessary to create human-readable disclosure as the ``interactive
data file,'' which would be required with every interactive data
submission. The EDGAR Filer Manual would identify any necessary
supporting files.
\39\ For example, contextual information would identify the
entity to which it relates, usually by using the filer's CIK number.
A hypothetical filer converting its traditional electronic
disclosure of $1,000,000 of net sales would have to create
interactive data that identify what the 1,000,000 represents, net
sales, and the currency in which it is disclosed, dollars. The
contextual information would include other information as necessary;
for example, whether it relates to an annual report or quarterly
report, the financial reporting period, continuing or discontinued
operations, or actual, restated, forecast, pro forma or other type
of disclosure.
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Applying data tags to financial statements is accomplished using
commercially available software that guides a preparer in mapping
information in the financial statements to the appropriate tags in the
standard list. Each element in the standard list of tags has a standard
label. A company can therefore match the standard labels to each
caption in its financial statements. Occasionally, because filers have
considerable flexibility in how financial information is reported under
U.S. reporting standards, it is possible that a company may wish to use
a non-standard financial statement line item that is not included in
the standard list of tags.\40\ In this situation, a company would
create a company-specific element, called an extension.
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\40\ In other cases, without a relevant and appropriate tag in
the list of tags, a company would be required to create an extension
in order to provide interactive data that appears the same as the
corresponding portion of traditional format filing.
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For example, what a company identifies in its traditional format
financial statements as ``operating revenues'' may be associated with
an element that has ``net revenues'' as the standard label. In this
situation, a company would need to change, or extend, the standard
label to become ``operating revenues'' when tagging that disclosure
with the element.\41\
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\41\ Unless otherwise stated, extensions, whether relating to an
element or a label, are not part of the standard list of tags.
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A company may choose to tag its own financial statements using
commercially available software, or it may choose instead to outsource
the tagging process. In the event a company relies upon a service
provider to tag the company's financial statements, the company would
want to carefully review the tagging done by the service provider in
order to make sure that the tagged financial statements are accurate
and consistent with the information the company presents in its
traditional format filing.
Similarly, to create interactive data-formatted financial
statements prepared in accordance with IFRS as issued by the IASB, a
filer would use the IFRS list of tags.\42\ The IFRS list of tags
contains descriptive labels, authoritative references to IFRS where
applicable, and other elements and concepts that provide the contextual
information necessary for interactive data to be recognized and
processed by software. The International Accounting Standards Committee
Foundation (IASCF) has developed the IFRS list of tags.\43\ To create
interactive data using the IFRS list of tags, an issuer generally would
need to follow the same mapping, extension and tagging process as would
a company that uses the list of tags for U.S. financial statement
reporting. As further discussed below, the IASCF is collaborating with
XBRL U.S. and other parties to align practices designed to develop the
IFRS list of tags. This collaboration involves the development of the
appropriate scope for the IFRS list of tags' content and technology
architecture.\44\
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\42\ Unless stated otherwise, when we refer to the ``IFRS list
of tags'' we mean the list of tags for financial statements prepared
in accordance with IFRS as issued by the IASB.
\43\ See https://www.iasb.org/xbrl/. The IASCF released
the 2008 taxonomy (list of tags) on March 31, 2008. See IASB Press
Release, The IASC Foundation publishes IFRS Taxonomy 2008, (March
31, 2008).
\44\ As previously noted, in 2006 we contracted with XBRL U.S.
to develop the standard tags necessary for financial reporting in
interactive format consistent with U.S. GAAP and Commission
regulations. That contract has been completed.
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Because financial statements in interactive data format, referred
to as the interactive data file,\45\ are intended to be processed by
software applications, the unprocessed data is not readable. Thus,
viewers are necessary to convert the interactive data file to human
readable format. Some viewers are similar to Web browsers used to read
HTML files.
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\45\ See note 40 above.
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The Commission's Web site currently provides links to four viewers
that allow the public to easily read company disclosures filed using
interactive data.\46\ These viewers demonstrate the capability of
downloading interactive data into software such as Microsoft Excel as
well as into other applications that are widely available on the
Internet. In addition, we are aware of other applications under
development that may provide additional and advanced functionality.
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\46\ See viewers available at https://www.sec.gov/xbrl.
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[[Page 32797]]
C. The Commission's Multiyear Evaluation of Interactive Data and
Overview of Proposed Rules
In 2004, we began assessing the benefits of interactive data and
its potential for improving the timeliness and accuracy of financial
disclosure and analysis of Commission filings.\47\ As part of this
evaluation, we adopted rules in 2005 permitting filers, on a voluntary
basis, to provide financial disclosure in interactive data format as an
exhibit to certain filings on our electronic filing system. The
voluntary program has been based on an earlier version of the list of
tags for U.S. financial statement reporting, which does not include a
full array of standard elements for financial statement footnotes and
schedules. After more than two years of increasing participation, over
75 companies have chosen to provide interactive data financial
reporting.\48\
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\47\ See Press Release No. 2004-97 (July 22, 2004).
\48\ A viewer for the voluntary program is available at https://
www.sec.gov/spotlight/xbrl/xbrlwebapp.shtml. This viewer, one of
several funded by the Commission to demonstrate interactive data,
maintains a running total of companies and filers submitting data as
part of the voluntary program. As of April 17, 2008, 78 companies
had submitted 350 interactive data reports.
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During this time, we have kept informed of technology advances and
other interactive data developments. We note that several U.S. and
foreign regulators have begun to incorporate interactive data into
their financial reporting systems. The Federal Deposit Insurance
Corporation (FDIC), the Federal Reserve, and the Office of the
Comptroller of the Currency (OCC) require the use of XBRL.\49\ As of
2006, approximately 8,200 U.S. financial institutions were using XBRL
to submit quarterly reports to banking regulators.\50\ Countries that
have required or instituted voluntary or pilot programs for XBRL
financial reporting include Australia, Belgium, Canada, China, Denmark,
France, Germany, Ireland, Israel, Japan, Korea, Luxembourg, the
Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Thailand
and the United Kingdom.\51\
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\49\ Since 2005, the FDIC, Federal Reserve, and the OCC have
required the insured institutions that they oversee to file their
quarterly Consolidated Reports of Condition and Income (called Call
Reports) in interactive data format using XBRL. Call Reports, which
include data about an institution's balance sheet and income
statement, are used by these federal agencies to assess the
financial health and risk profile of the financial institution.
\50\ See Improved Business Process Through XBRL: A Use Case for
Business Reporting, available at https://www.xbrl.org/us/us/
FFIEC%20White%20Paper%2002Feb2006.pdf.
\51\ See XBRL International Progress Report (November 2007),
available at https://www.xbrl.org/ProgressReports/2007_11_XBRL_
Progress_Report.pdf.
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We also have kept informed of relevant advances and developments by
hosting roundtables on the topic of interactive data financial
reporting,\52\ creating the Commission's Office of Interactive
Disclosure,\53\ and meeting with international securities regulators to
discuss, among other items, timetables for implementation of
interactive data initiatives for financial reporting.\54\ Also, staff
of the Commission have attended meetings of the Advisory Committee on
Improvements to Financial Reporting (CIFiR) in which the committee
discussed proposals for financial reporting using interactive data.\55\
We also have reviewed written statements and public comments received
by CIFiR on its XBRL developed proposal.\56\
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\52\ See materials available at https://www.sec.gov/spotlight/
xbrl/xbrl-meetings.shtml.
\53\ See Press Release No. 2007-213 (October 9, 2007).
\54\ See Press Release No. 2007-227 (November 9, 2007).
\55\ For example, CIFiR conducted an open meeting on March 14,
2008 in which it heard reactions from an invited panel of
participants to CIFiR's developed proposal regarding required filing
of financial information using interactive data. An archived webcast
of the meeting is available at https://sec.gov/about/offices/oca/
cifir.shtml. The March 14, 2008 panelists presented their views and
engaged with CIFiR members regarding issues relating to requiring
interactive data tagged financial statements, including tag list and
technological developments, implications for large and small public
companies, needs of investors, necessity of assurance and
verification of such tagged financial statements, and legal
implications arising from such tagging. Also, CIFiR has provided to
the Commission an interim progress report that contains a developed
proposal that the Commission, over the long term, require the filing
of financial information using interactive data once specified
conditions are satisfied. See Progress Report of the Advisory
Committee on Improvements to the Financial Reporting to the United
States Securities and Exchange Commission (Feb. 14, 2008) (Progress
Report), available at https://www.sec.gov/about/offices/oca/acifr/
acifr-pr-021408-final.pdf. CIFiR's developed proposal is discussed
more fully in Part II.C.2 below.
\56\ The XBRL developed proposal appears in chapter 4 of the
Progress Report. Written statements of panelists at the March 14,
2008 meeting and public comments received on the Progress Report are
available at https://sec.gov/comments/265-24/265-24.shtml.
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Building on our experience monitoring the voluntary program, and
our participation in the other initiatives described above, we are now
proposing rules to require financial reporting using interactive data.
The proposed rules would apply to domestic and foreign public companies
that prepare their financial statements in accordance with U.S. GAAP,
and foreign private issuers \57\ that prepare their financial
statements in accordance with IFRS as issued by the IASB. Interactive
data would be required to be provided on a company's Web site \58\ and
with the filer's Securities Act registration statements,\59\ annual
reports, quarterly reports if applicable,\60\ and transition
reports.\61\ We believe this has the potential to provide advantages
for the investing public by making financial data more accessible,
timely, inexpensive and easier to analyze.
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\57\ Exchange Act Rule 3b-4(c) [17 CFR 240.3b-4(c)] defines
``foreign private issuer'' as a foreign issuer other than a foreign
government that either has 50 percent or less of its outstanding
voting securities held of record by U.S. residents or, if more than
50 percent of its outstanding voting securities are held by U.S.
residents, about which none of the following is true: (1) A majority
of its executive officers or directors are U.S. citizens or
residents; (2) more than 50 percent of its assets are located in the
U.S.; or (3) the issuer's business is administered principally in
the U.S.
\58\ The proposed Web site posting requirement would apply only
to the extent a filer already maintains a corporate Web site.
\59\ Interactive data would be required as an exhibit to a
Securities Act registration statement that contains financial
statements, such as a Form S-1 [17 CFR 239.11] used in connection
with an initial public offering. Interactive data would not be
required as an exhibit to a Securities Act registration statement
that does not contain financial statements, such as a Form S-3 filed
by an issuer that is eligible to and does incorporate by reference
all required financial statements from its periodic reports.
\60\ Foreign private issuers filing on Form 10-Q would be
required to provide financial statements in quarterly reports using
interactive data.
\61\ The proposed rules would not include any investment company
that is registered under the Investment Company Act or any
``business development company,'' as defined in Section 2(a)(48) of
that Act [15 U.S.C. 80a-2(a)(48)]. Business development companies
are a category of closed-end investment companies that are not
required to register under that Act. The proposed rules also would
not include any entity that reports under the Exchange Act and
prepares its financial statements in accordance with Article 6 of
Regulation S-X [17 CFR 210.6-01 et seq.]. The proposed rules would
not apply to these entities because the standard list of tags for
investment management is not yet fully developed.
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By enabling filers to further automate their financial processes,
interactive data may eventually help filers improve the speed at which
they generate financial information, while reducing the cost of filing
and potentially increasing the accuracy of the data. For example, with
standardized interactive data tags, registration statements and
periodic reports may require less time for information gathering and
review. Also, standardized interactive data tagging may enhance the
ability of an issuer's in-house financial professionals to identify and
correct errors in the issuer's registration statements and periodic
reports filed in traditional electronic format. Filers also may gain
benefits not directly related to public financial disclosures. For
example, filers that use interactive data may be able to consolidate
enterprise financial
[[Page 32798]]
information more quickly and potentially more reliably across operating
units with different accounting systems. However, we recognize that at
the outset, filers would most likely prepare their interactive data as
an additional step after their financial statements have been prepared.
The principal elements of the proposal are as follows:
Domestic and foreign large accelerated filers \62\ that
use U.S. GAAP and have a worldwide public common equity float above $5
billion \63\ as of the end of their most recently completed second
fiscal quarter would provide to the Commission a new exhibit.\64\ The
exhibit would contain their financial statements,\65\ and any
applicable financial statement schedules in interactive data format.
The requirement would apply beginning with fiscal periods ending on or
after December 15, 2008.\66\
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\62\ Exchange Act Rule 12b-2 [17 CFR 240.12b-2] generally
defines ``large accelerated filer'' as an issuer that has common
equity held by unaffiliated persons with a value of at least $700
million, has been subject to the Exchange Act's periodic reporting
requirements for at least 12 months, has filed at least one annual
report, and is not eligible to use the disclosure requirements
available to smaller reporting companies for its periodic reports.
\63\ As of the end of 2006, the $5 billion cutoff would
establish a category of approximately 500 filers.
\64\ The exhibit would be required with such filers'
registration statements, quarterly, if applicable, and annual
reports, and transition reports.
\65\ When we refer to financial statements, we mean the face of
the financial statements and accompanying footnotes. The face of the
financial statements refers to the statement of financial position
(balance sheet), income statement, statement of comprehensive
income, statement of cash flows, and statement of owners' equity, as
required by Commission regulations. References to the financial
statements as required for interactive data reporting include any
required schedules to the financial statements, unless we expressly
state otherwise.
\66\ The proposed schedule is premised on the rules being
adopted this fall in time for affected filers to implement this
schedule, and could be adjusted depending on when the Commission
adopts any final rules.
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All other domestic and foreign large accelerated filers
using U.S. GAAP would be subject to the same interactive data reporting
requirements the following year, beginning with fiscal periods ending
on or after December 15, 2009.
All remaining filers using U.S. GAAP, including smaller
reporting companies,\67\ and all foreign private issuers that prepare
their financial statements in accordance with IFRS as issued by the
IASB,\68\ would be subject to the same interactive data reporting
requirements beginning with fiscal periods ending on or after December
15, 2010.\69\
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\67\ Item 10(f)(1) of Regulation S-K [17 CFR 229.10(f)(1)], Rule
405 under the Securities Act [17 CFR 230.405] and Rule 12b-2 under
the Exchange Act [17 CFR 240.12b-2] define the term ``smaller
reporting company,'' in general, as a company that has common equity
securities held by non-affiliates with a market value of less than
$75 million or, if that value cannot be calculated, had less than
$50 million in revenue in the prior fiscal year.
\68\ The proposed rules would not require foreign private
issuers that prepare their financial statements in accordance with a
variation of IFRS as issued by the IASB to provide interactive data.
\69\ We do not propose to require foreign private issuers to
provide in interactive data format interim financial information
contained in Form 6-K or any financial information prepared in
accordance with non-U.S.GAAP that must be reconciled to U.S. GAAP in
the foreign private issuer's Exchange Act reports.
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Filers providing financial statements in interactive data
format would be required to use the most recent and appropriate list of
tags released by XBRL U.S. or the IASCF as required by the EDGAR Filer
Manual. Filers also would be required to tag a limited number of
document and entity identifier elements, such as the form type, company
name, and public float. As with interactive data for the financial
statements, these document and entity identifier elements would be
formatted using the appropriate list of tags as required by the EDGAR
Filer Manual.\70\
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\70\ The appropriate list of tags for document and entity
identifier elements would be a list released by XBRL U.S., but would
not be specific to U.S. GAAP or IFRS as issued by the IASB and would
be required to be used by all issuers required to submit interactive
data regardless of whether reporting in U.S. GAAP or IFRS as issued
by the IASB.
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A filer required to provide financial statements in
interactive data format to the Commission also would be required to
post those financial statements in interactive data format on its
corporate Web site on the same day it filed or was required to file the
related registration statement or report with the Commission, whichever
is earlier.\71\
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\71\ The day the registration statement or report is submitted
electronically to the Commission may not be the business day on
which it was deemed officially filed. For example, a filing
submitted after 5:30 p.m. generally is not deemed officially filed
until the following business day. Under the proposed rules, the Web
posting would be required to be posted at any time on the same day
that the related registration statement or report is deemed
officially filed or required to be filed, whichever is earlier.
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The proposed rules would not alter the requirements to
provide financial statements and any required financial statement
schedules with the traditional format filings.\72\
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\72\ When we established the voluntary program, we stated in the
adopting release that the interactive data submission would be
supplemental to filings and not replace the required traditional
electronic format of the financial information it contains. We also
said that volunteers would be required to continue to file their
traditional electronic filings. See Part II.D of Release No. 33-8529
(Feb. 3, 2005) [70 FR 6556, 6559].
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Financial statements in interactive data format would be
provided as exhibits identified in Item 601(b) of Regulation S-K and
Form 20-F.
Financial statement footnotes and financial statement
schedules initially would be tagged individually as a block of text.
After a year of such tagging, a filer also would be required to tag the
detailed disclosures within the footnotes and schedules.
Viewable interactive data as displayed through software
available on the Commission's Web site, and to the extent identical in
all material respects to the corresponding portion of the traditional
format filing, would be subject to all the same liability provisions of
the federal securities laws as the corresponding data in the
traditional format part of the official filing.
Data in the interactive data file submitted to us
generally would be subject to the federal securities laws in a manner
similar to that of the voluntary program and, as a result, would be
[cir] Excluded from the officer certification requirements under
Rules 13a-14 and 15d-14 of the Exchange Act; \73\
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\73\ 17 CFR 240.13a-14 and 17 CFR 240.15d-14.
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[cir] Deemed not filed for purposes of specified liability
provisions; and
[cir] Protected from liability for failure to comply with the
proposed tagging and related requirements if the interactive data file
either
[ballot] Met the requirements; or
[ballot] Failed to meet those requirements, but the failure
occurred despite the issuer's good faith and reasonable effort, and the
issuer corrected the failure as soon as reasonably practicable after
becoming aware of it.
The proposed rules would require the financial information
and document and entity identifier elements to be tagged according to
Regulation S-T and the EDGAR Filer Manual.\74\
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\74\ Proposed Rule 405 of Regulation S-T would directly set
forth the basic tagging requirements and indirectly set forth the
rest of the tagging requirements through the requirement to comply
with the EDGAR Filer Manual. Consistent with proposed Rule 405, the
Filer Manual would contain the technical tagging requirements.
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The initial interactive data exhibit of a filer would be
required within 30 days of the earlier of the due date or filing date
of the related report or registration statement, as applicable. In year
two, a filer would have a similar 30 day grace period for its first
interactive data exhibit that includes detailed tagging of its
footnotes and schedules. All other interactive data exhibits would be
required at the same time as the rest of the related report or
registration statement.
[[Page 32799]]
Filers that do not provide or post required interactive
data on the date required would be deemed not current with their
Exchange Act reports and, as a result, would not be eligible to use the
short forms S-3, F-3, or S-8, or elect under Form S-4 or F-4 to provide
information at a level prescribed by Form S-3 or F-3. Similarly, such
filers would not be deemed to have available adequate current public
information for purposes of the resale exemption safe harbor provided
by Rule 144.\75\ A filer that was deemed not current solely as a result
of not providing an interactive data exhibit when required would be
deemed current and timely upon providing the interactive data.
Therefore it would regain the ability to incorporate by reference,
short form registration statement eligibility, and current status for
purposes of determining adequate current public information under Rule
144. As such, it would not lose its status as having ``timely'' filed
its Exchange Act reports solely as a result of the delay in providing
interactive data.
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\75\ 17 CFR 230.144.
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Although we have not proposed at this time to require
interactive data for executive compensation disclosure because a
definitive list of tags for this purpose is not yet completed, we are
soliciting comment on the usefulness to investors and others of such
interactive data, as well as the extent of the related costs and
associated questions.
We anticipate that if the proposed rules become effective,
companies that are not required to provide interactive data until a
later time would have the option to do so earlier.
We also anticipate that the voluntary program would be
modified, if the proposed rules are adopted, to permit investment
companies to participate, but to exclude non-investment company
participation. As a result, the voluntary program would continue for
the financial statements of investment companies that are registered
under the Investment Company Act, and business development companies
and other entities that report under the Exchange Act and prepare their
financial statements in accordance with Article 6 of Regulation S-X.
The voluntary program also would continue for the risk/return summary
section of mutual fund prospectuses.\76\
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\76\ See Release No. 33-8823 (July 11, 2007) [72 FR 39290]. On
May 21, 2008, the Commission voted to propose rules that would
require interactive data for the risk/return summary section of
mutual fund prospectuses. See Press Release No. 2008-94 (May 21,
2008).
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II. Discussion of the Proposed Amendments
A. Submission of Financial Information Using Interactive Data
For several years XBRL U.S. and its related entities have developed
and refined the list of tags to classify and define financial
information in accordance with U.S. financial reporting practices and
Commission regulations.\77\ Many investors, auditors, accountants, and
others, including companies that have been providing interactive data
disclosure in the voluntary program, have helped in this process.
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\77\ See Press Release No. 2006-158 (Sept. 25, 2006).
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Interactive data financial statements using the list of tags for
U.S. financial statement reporting have been submitted voluntarily to
us by over 75 companies, some of which have done so since the start of
the voluntary program approximately three years ago. The list of tags
for U.S. financial statement reporting has improved significantly since
the original version available for the voluntary program.\78\ During
this period, there has been a growing development of software products
for users of interactive data, as well as of applications to assist
companies to tag their financial statements using interactive data.\79\
The growing number of software applications available to preparers and
consumers is helping make interactive data increasingly useful to both
institutional and retail investors, as well as to other participants in
the U.S. and global capital markets. On this basis, we believe
interactive data, and in particular the XBRL standard, have become
widespread and that the updated list of tags for U.S. financial
statement reporting is now sufficiently advanced to require that U.S.
GAAP-reporting companies provide their interactive financial statements
in interactive data format.\80\
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\78\ When we adopted the voluntary program, the list of tags for
U.S. GAAP financial statement reporting contained approximately
4,000 data elements. The list of tags released on April 28, 2008
contains approximately 13,000 data elements, with the most
significant additions relating to the development of elements for
standard U.S. GAAP footnote disclosure.
\79\ See Press Release No. 2007-253 (Dec. 5, 2007).
\80\ As previously noted in Part I.C, however, the proposed
rules would not apply to investment companies registered under the
Investment Company Act and other entities. See footnote 61 above.
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With respect to the list of tags for IFRS financial reporting, the
IASCF has, over several years, developed a list of tags designed to
classify and define financial information in accordance with
international accounting standards as promulgated by the IASB. Over the
course of the past year, the IASCF has worked to strengthen the
development of its list of tags by forming an XBRL Advisory Committee
and an XBRL Quality Reporting Team, both consisting of international
representatives from investors, auditors, accountants, regulators and
others. On March 31, 2008, the IASCF published a near final version of
the list of tags for IFRS financial reporting,\81\ which is subject to
public comment through May 30, 2008.\82\ In addition, the IASCF is
collaborating with XBRL U.S. and other parties to align practices
designed to develop the IFRS list of tags. This collaboration involves
the development of the appropriate scope for the IFRS list of tags'
content and technology architecture. On this basis, we believe that the
updated IFRS list of tags will be sufficiently advanced to require that
foreign private issuers that prepare their financial statements in
accordance with IFRS as issued by the IASB provide their financial
statements in interactive data format under the phase-in schedule we
are proposing.
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\81\ Unless stated otherwise, when we refer to the ``list of
tags for IFRS financial reporting'' we mean the interactive data
taxonomy that is based on IFRS as issued by the IASB.
\82\ See Press Release, The IASC Foundation publishes IFRS
Taxonomy 2008 (March 31, 2008), available at https://www.iasb.org/
News/Press+Releases/
The+IASC+Foundation+publishes+IFRS+Taxonomy+2008.htm.
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As discussed in more detail below, our proposed rules would set
forth a phase-in period beginning with domestic and foreign large
accelerated U.S. GAAP filers with a worldwide public common equity
float above $5 billion as of the end of their most recently completed
second fiscal quarter. These large accelerated filers would be subject
to the proposed rules beginning with their Securities Act registration
statements, periodic reports, and transition reports that contain
financial statements for fiscal periods ending on or after December 15,
2008. Although it would not be required, we encourage other U.S. GAAP
filers to provide financial information in interactive data format
during the phase-in period. We also encourage foreign private issuers
that prepare their financial statements in accordance with IFRS as
issued by the IASB to provide financial information in interactive data
format during the phase-in period. In each instance, these filers'
voluntary interactive data submissions would be under the proposed
rules instead of the existing rules of the voluntary program.
[[Page 32800]]
We are proposing that filers be required to provide the same
information in interactive data format that companies have been
providing in the voluntary program,\83\ together with the following
items: The footnotes to the financial statements; any applicable
schedules to the financial statements; financial statements for
Securities Act registration statements; and document and entity
identifier tags, such as company name and public float. As was the case
in the voluntary program, the proposed requirement for interactive data
reporting is intended to be disclosure neutral. We do not intend the
rules to result in companies providing more, less, or different
disclosure for a given disclosure item depending upon the format
whether ASCII, HTML, or XBRL.
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\83\ Unlike the voluntary program, unless otherwise stated, an
interactive data file would be required to be provided with the
traditional format filing to which it relates. Companies would not
be permitted to provide the interactive data file with a Form 8-K or
6-K.
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We propose to continue requiring the existing electronic formats
now used in filings because we believe it is necessary to monitor the
usefulness of interactive data reporting to investors and the cost and
ease of providing interactive data before attempting further
integration of the interactive data format. However, the proposed rules
would treat viewable interactive data as displayed through software
available on the Commission's Web site, and interactive data
generally,\84\ as part of the official filing, instead of a supplement
as is the case in the voluntary program. Further evaluation will be
useful with respect to the availability of inexpensive, sophisticated
interactive data viewers. Currently there are many software providers
and financial printers that are developing interactive data viewers. We
anticipate that these will become widely available and increasingly
useful to investors.
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\84\ As further discussed below in Part II.C, interactive data
generally would be deemed not filed for purposes of specified
liability provisions.
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We expect that the open standard feature of XBRL format will
facilitate the development of applications and software, and that some
of these applications may be made available to the public for free or
at a relatively low cost. The expected continued improvement in this
software would give the public increasingly useful ways to view and
analyze company financial information. After evaluating the use of the
new interactive data technologies, software, and lists of tags, we may
consider proposing rules to eliminate financial statement reporting in
ASCII or HTML format. Or we may consider proposing rules to require a
filing format that integrates ASCII or HTML with XBRL.
We believe XBRL is the appropriate interactive data format with
which to supplement ASCII and HTML. Our experience with the voluntary
program and feedback from company, audit, and software communities
point to XBRL as the appropriate open standard for the purposes of this
rule. As a derivative of the XML standard, XBRL data would be
compatible with a wide range of open source and proprietary XBRL
software applications. As discussed above, many XBRL-related products
exist for analysts, investors, public and private companies, and others
to more easily create and compare financial data; still others are in
development, and that process would likely be hastened by public
company reporting using interactive data. Comments on our 2004 concept
release and proposed rules in 2004 and 2007 generally supported
interactive data and XBRL in particular.\85\ Several other factors
support our views regarding XBRL's broad and growing acceptance,
internationally as well as in the U.S. For example, as noted above, in
addition to the use of XBRL by other U.S. agencies,\86\ several foreign
securities regulators have adopted voluntary or required XBRL financial
reporting.\87\ We understand that several U.S. public and private
companies use XBRL in connection with financial reporting or
analysis.\88\
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\85\ Release No. 33-8497 (Sept. 27, 2004) [69 FR 59111] (Concept
Release); Release No. 33-8496 (Oct. 1, 2004) [69 FR 59098]; Release
No. 33-8781 (Feb. 12, 2007) [72 FR 6676]. See, e.g., letter from
Deloitte & Touche LLP regarding the Adopting Release and letter from
PR Newswire Association LLC regarding the Concept Release. We also
note that participants in the voluntary program provided positive
feedback with respect to possible required use of XBRL. For example,
the vast majority of voluntary program participants that submitted
responses and views to a questionnaire answered in the affirmative
to the question ``Based on your experience to date, do you think it
would be advisable for the Commission to continue to explore the
feasibility and desirability of the use of interactive data on a
more widespread and, possibly, mandated basis?'' See question V.f in
the Interactive Data Voluntary Program Questionnaire available at
https://www.sec.gov/cgi-bin/XBRL_Questionnaire.
\86\ See note 49 above. Also we note CIFiR's support of XBRL as
referenced above in Part B.2
\87\ For example, such countries include Canada, China, Israel,
Japan, Korea and Thailand.
\88\ Whenever we seek comment in this release, we request that
commenters distinguish in their responses, as appropriate, between
the proposed requirements applicable to U.S. GAAP filers and those
applicable to foreign private issuers that prepare their financial
statements in accordance with IFRS as issued by the IASB, regardless
of whether our question distinguishes between or references one or
both of these types of issuers.
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Request for Comment:
Should we adopt rules that require each filer's financial
statements to be provided in interactive data format? If we do so,
should we include a phase-in period or temporary exception for detailed
tagging of the financial statement footnotes? Should schedules to the
financial statements be tagged? What are the principal factors that
should be considered in making these decisions? Is it useful to users
of financial information to continue to have, in addition to
interactive data, duplicate, human-readable financial statements in
ASCII or HTML format?
What opportunities exist to improve the display of
financial statements prepared using interactive data? For example, if
the technology is sufficiently developed, should we propose rules to
encourage or require a format that embeds interactive data tags in HTML
so that the entire set of financial statements can be viewed in a
browser? How should these affect any continued requirement to file
ASCII- or HTML-formatted financial statements? What obstacles exist to
making such improvements in the display of XBRL information?
Is it appropriate to require public companies to provide
interactive data using XBRL? Alternatively, in place of such a
requirement, should the Commission instead wait to see whether
interactive data reporting by public companies is voluntarily adopted?
Without a requirement, would the development of products for producing
and using interactive data from private and public companies meet the
needs of investors, analysts, and others who seek interactive data?
Would a large percentage of public companies provide interactive data
voluntarily, and following the same standard, if not required to do so?
If we do not adopt the proposed rules and instead wait to
see whether companies on their own expand their use of interactive
data, would such data be less comparable among companies? Is there a
``network effect,'' such that interactive data would not be useful
unless many or all filers provide their financial statements using
interactive data? Would the development of software for retail
investors to obtain and make use of such data be slowed without a
requirement that companies provide interactive data?
What advantages are there to investors having the company
responsible for preparing financial information in interactive data
format, as opposed to a model in which third parties independently
prepare the
[[Page 32801]]
information in interactive format and charge a fee for it?
Do commenters agree that compared to reports using ASCII
and HTML, interactive data would require less manually-transferred
data? If so, do commenters believe that the proposed rules would result
in less human error and therefore contribute to reduced costs?
If w
