The SEC Needs a Coherent Data Strategy
The Data Transparency Coalition submitted a formal comment yesterday on the U.S. Securities and Exchange Commission’s (SEC) draft strategic plan, urging the agency to adopt a comprehensive data strategy that would complete its stalled transformation from disconnected documents to structured, open data in financial disclosures.
The SEC’s system of disclosure requirements under various securities laws are intended to provide a valuable public source of information for investors, analysts, the SEC’s own staff, and other regulators. However, with some exceptions, corporate and investment company disclosures are still expressed as unstructured documents. The result is that analysts both within and outside government are left with unreliable data that has often proven difficult to use.
The Draft Strategic Plan promises that “[e]ventually, new filings structured for automated data retrieval and analysis will replace all filings submitted through the EDGAR system.” Unfortunately, the plan currently lacks a coherent data strategy to accomplish this key commitment. Our comment outlines the most important aspects that we believe a data strategy must include to deliver useful structured data.
If the SEC adopts common data formats and identifiers for all the information it collects, it will deliver transparency to investors, facilitate new Big Data analytics tools for policing the capital markets, and allow filers to cut compliance costs through automation.