SEC's open data rule could come before end of Obama administration

Open data advocates have long sought a rule change to require the use of machine-readable data in filings with the Securities and Exchange Commission. In a new letter to senators on the banking committee, SEC Chairwoman Mary Jo White announced the possibility of doing just that.

White's Dec. 12 letter to Sens. Richard Shelby (R-Ala.) and Mike Crapo (R-Idaho), respectively the chairs of the Senate Banking Committee and the Banking Subcommittee on Securities, Insurance and Investment, came in response to a call for the SEC to cease promulgating new regulations in the wake of the election of Republican Donald Trump.

The SEC chairwoman said the commission "remains focused on advancing a number of important rules and initiatives to fulfill its mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation."

One of those rules that could make it through before the end of White's tenure at SEC is a proposal to require the use of inline XBRL in the submission of financial data in certain filings. Inline XBRL is embedded directly into web documents. It lends itself to the automated analysis of financial information. And, as a technical matter, inline XBRL filings are less likely to contain errors than XBRL filings that are created and tagged from documents, something the SEC documented in the June 2016 order permitting companies to file annual and quarterly financial statements as inline XBRL on a voluntary basis.

The move to machine-readable data is not universally supported. The House of Representatives passed a bill last February that includes removing any XBRL filing requirements for companies with annual revenues of under $250 million.

Backers of open financial data hailed the possibility of a new rule.

"The proposal of a mandatory inline XBRL rule would be a huge step forward for open, structured data at the SEC," said Christian Hoehner, policy director at the Data Coalition, a group that advocates for open data standards in government, in a note to members. "Universal inline filing will allow the agency to easily add more tags and structure to the filings -- rather than having to create separate exhibits to the document-based forms each time a new structured data requirement begins."