SEC – The Promise of Structured Data: True Modernization of Disclosure Effectiveness

November 17, 2020 – SEC commissioner Allison Herren Lee gave remarks on applications of structured data. Speech delivered at XBRL investor forum 2020 on using data during perilous times. Addressed XBRL structured data tagging to improve the usability of regulatory information.

Broaden Tagging Applications

Originally, XBRL application and requirements concentrated on financial statements; however, it must be applied broadly, considering the ease of adoption, cost efficiency, and transparency benefits. Proposed application to SEC Form N-PX for funds proxy votes, procedural disclosures to streamline form data, and increasing investor usability through a simplified taxonomy. Apply to climate and ESG metrics, ex-post/ante, which SEC should consider requiring, and to MD&A disclosures and earnings releases to enhance comparability across firms.

Improve Accuracy and Quality

Evidence of large error rates in key filing metrics revenues, net income, and assets. Must continue to improve accuracy and reliability of structured data, make progress decreasing tagging error rates and limiting customized tags, and to enhance comparability. Potential to eliminate some disclosure requirements e.g. MD&A if quality improved.

Leverage Open Financial Identifiers

Potentially, use of free, non-licensed, and openly available financial identifiers in XBRL, in place of proprietary identifiers e.g. CUSIP, ISIN for regulatory reporting purposes. Such examples include the legal entity identifier (LEI) and the unique product identifier (UPI).

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