SEC report sheds more light on benefits of machine-readable disclosures

Posted on December 24, 2023 by Editor

In compliance with 2022’s Financial Data Transparency Act (FDTA), the US Securities and Exchange Commission (SEC) has released its second semi-annual report providing insights into the use and value of machine-readable data. The report covers a spectrum of benefits, including an updated list of which corporate disclosures are machine-readable. It outlines the latest data on associated costs and benefits, summarises enforcement actions, and provides an analysis of the SEC’s own use of this data.

Since its last report, the SEC has introduced structured data tagging requirements for various forms, expanding the scope of machine-readable data to a total of 54 forms, schedules and statements.

In one area of particular interest, the report delves into the latest costs and benefits associated with machine-readable disclosures. Studies indicate that investors, markets and issuers reap significant benefits from reduced information-processing costs, increased liquidity, lower capital costs, and improved benchmarking. The report highlights the importance of validation rules for streamlining the process, reducing staff time spent checking technical errors. While issuers incur compliance costs associated with tagging requirements, the SEC emphasises the overall positive impact on investor protection, reduced information asymmetry, and streamlined supervision.

Exploring the SEC’s own application of machine-readable data, the report highlights an increase in the efficiency of enforcement actions. The SEC uses several internal applications to analyse Inline XBRL data, allowing for easy access and comparison.

This semi-annual report provides an excellent, in-depth regular insight into everything XBRL happening at the SEC – we encourage our readers to explore it in full.

Interested? Dive straight into the full document.

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