SEC to Congress: Don’t force us to stop collecting open data
In response to questions from a member of the House Financial Services Committee, Securities and Exchange Commission Chair Mary Jo White has voiced her agency’s desire to keep collecting structured financial data from public companies–contrary to a proposal that would force the SEC to collect this information from most companies as less-useful documents.
Rep. Keith Ellison (D-MN) submitted written follow-up questions after Chair White’s testimony before the committee in April 2014. The Chair’s answers to Rep. Ellison’s questions show that the SEC wants to improve the quality and usefulness of the structured data it collects–and hopes Congress will keep allowing it to collect such data from all public companies, rather than a subset of them.
The Chair’s statements are the clearest picture we’ve got of her view of the need for the SEC to transform its disclosure system from documents into standardized data. In a nutshell, the SEC wants to improve the quality and usefulness of the structured data it collects–and hopes Congress will keep allowing it to collect such data from all public companies, rather than a subset of them.
Here’s what Chair White’s statements tell us:
1. The SEC’s Position on XBRL Exemption Legislation. Asked to comment on Rep. Robert Hurt’s proposal to require the SEC to stop collecting structured-data financial statements from all public companies below $250 million in revenue, Chair White responds that the exemption would harm investors’ interests because it would restrict investors’ and the SEC’s ability to “search and analyze the financial information dynamically and … [compare] financial and business performance across companies, reporting periods, and agencies” (page 3). 2. Adopting the iXBRL Format for Corporate Financial Statements. Chair White confirms (page 1) that her agency is considering adopting the inline XBRL format for corporate financial statements. The inline XBRL format would allow public companies to submit a single version of each financial statement that is both human-readable and machine-readable, replacing the current duplicative system that requires companies to submit two versions of every financial statement (a document version and an XBRL version).
3. Replacing Document-Based Reporting with Data. In July 2013, the SEC’s Investor Advisory Committee recommended that the SEC adopt structured data formats for all information it collects under the securities laws. (Currently, a few of the more than 600 forms and submissions are expressed as structured data; the rest are documents.) The SEC has not yet formally responded to the Advisory Committee’s recommendation, though it’s obligated to do so under the Dodd-Frank Act. Chair White doesn’t answer Rep. Ellison’s request that she state when the SEC will finally respond–but she does say (page 2) that the SEC now considers the need for data structure with each new disclosure requirement.