On January 16, the Securities and Exchange Commission released its 21st Century Disclosure Initiative Staff Report. In June 2008, the Chairman of the SEC established this Initiative, with a mandate to examine the current state of operating and investment company disclosure and to present a high-level outline of a plan to modernize the present disclosure system by improving transparency and making disclosure information more accessible and easier to use.  

The staff focused on four guiding principles in proposing an interactive data-based approach to disclosure:  

  • Disclosure information and other data should be submitted and stored in an interactive format.
    • Financial and non-financial information should be electronically tagged (using eXtensible Business Reporting Language and/or another mark-up language). The tagged disclosure information would be stored electronically in a centrally organized interactive company file that would satisfy compliance requirements and would avoid repeated filing of the same redundant information year after year. The Initiative recommends that disclosure rules be rewritten to require that disclosure information be submitted in standardized or structured components that facilitate interactive data tagging and piecemeal updating or deletion of information in the company file.
  • The Commission should consider establishing a data warehouse.
    • This would provide a single, consistent and integrated source of all data needed by Commission staff. The SEC’s offices and divisions could then use separate compilations of this data to serve their individual purposes, while a master version is maintained in the data warehouse.  
  • The Commission should consider providing multiple submission methods for disclosures.
    • These would include filing disclosure information directly into a Commission-maintained portal as is currently the case for Section 16 filings; uploading disclosure information as is the case with most EDGAR filings; or taking advantage of technology that would allow the submitter’s internal software to interface with the Commission’s software.
  • The Commission should consider providing multiple dissemination methods for disclosures.

Disclosures could be accessed directly from the Commission’s website for investors seeking filings or it could be disseminated through other channels that could allow it to ultimately feed directly into third-party models or other applications; different users could have different levels of access to information.  

The staff recommends that the SEC establish an advisory committee comprised of investors, filers, information intermediaries, and other primary users to give the Commission insight on the specifics of how to develop a modernized interactive data-based disclosure system, as outlined in the Initiative.