SECURITIES AND EXCHANGE COMMISSION

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17 CFR Parts 229, 230, 232, 239, 240 and 249

[Release Nos. 33-9002; 34-59324; 39-2461; IC-28609; File No. S7-11-08]

RIN 3235-AJ71

Interactive Data to Improve Financial Reporting

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

SUMMARY: We are adopting rules requiring companies to provide financial statement

information in a form that is intended to improve its usefulness to investors. In this format,

financial statement information could be downloaded directly into spreadsheets, analyzed in a

variety of ways using commercial off-the-shelf software, and used within investment models in

other software formats. The rules will apply to public companies and foreign private issuers that

prepare their financial statements in accordance with U.S. generally accepted accounting

principles (U.S. GAAP), and foreign private issuers that prepare their financial statements using

International Financial Reporting Standards (IFRS) as issued by the International Accounting

Standards Board (IASB). Companies will provide their financial statements to the Commission

and on their corporate Web sites in interactive data format using the eXtensible Business

Reporting Language (XBRL). The interactive data will be provided as an exhibit to periodic and

current reports and registration statements, as well as to transition reports for a change in fiscal

year. The new rules are intended not only to make financial information easier for investors to

analyze, but also to assist in automating regulatory filings and business information processing.

Interactive data has the potential to increase the speed, accuracy and usability of financial

disclosure, and eventually reduce costs.

EFFECTIVE DATE: April 13, 2009 except §232.406T is effective from April 13, 2009 until

October 31, 2014.

FOR FURTHER INFORMATION CONTACT: Mark W. Green, Senior Special Counsel

(Regulatory Policy), Division of Corporation Finance at (202) 551-3430; Craig E. Slivka,

Special Counsel, Division of Corporation Finance at (202) 551-3430; Jeffrey W. Naumann,

Assistant Director, Office of Interactive Disclosure at (202) 551-5352; or Jeffrey Ellis,

Professional Accounting Fellow, Office of the Chief Accountant at (202) 551-5300, U.S.

Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We are adding Rules 405 and 406T to Regulation

S-T, 1 and revising Item 601 2 of Regulation S-K, 3 Rules 11, 4 201, 5 202, 6 305, 7 401, 8 and 402 9 of

17 CFR 232.10 et seq.

17 CFR 229.601.

17 CFR 229.10 et seq.

17 CFR 232.11.

17 CFR 232.201.

17 CFR 232.202.

17 CFR 232.305.

17 CFR 232.401.

17 CFR 232.402.

Regulation S-T, Rule 144 10 under the Securities Act of 1933 (Securities Act), 11 and Rules

12b-25, 12 13a-14 13 and 15d-14 14 under the Securities Exchange Act of 1934 (Exchange Act). 15

We also are revising Forms S-3, 16 S-8, 17 F-3, 18 F-9 19 and F-10 20 under the Securities Act and

Forms 10-Q, 21 10-K, 22 12b-25, 23 20-F, 24 40-F 25 and 6-K 26 under the Exchange Act.

17 CFR 230.144.

15 U.S.C. 77a et seq.

17 CFR 240.12b-25.

17 CFR 240.13a-14.

17 CFR 240. 15d-14.

15 U.S.C. 78a et seq.

17 CFR 239.13.

17 CFR 239.16b.

17 CFR 239.33.

17 CFR 239.39.

17 CFR 239.40.

17 CFR 249.308a.

17 CFR 249.310.

17 CFR 249.322.

17 CFR 249.220f.

17 CFR 249.240f.

17 CFR 249.306.

TABLE OF CONTENTS

INTRODUCTION AND BACKGROUND

Introduction

Current Filing Technology and Interactive Data

The Commission’s Multiyear Evaluation of Interactive Data and Overview of

New Rules

Summary of Adopted Amendments

II.

DISCUSSION OF AMENDMENTS

Submission of Financial Information Using Interactive Data

Phase-in under the New Rules

Overview

Companies Covered by New Rules and Phase-in

Information and Documents Covered by the New Rules

Financial Statements, Footnotes, and Financial Statement

Schedules

Reports Covered by the New Rules

Registration Statements under the Securities Act Covered by

the Rules

Registration Statements under the Exchange Act Covered by

the Rules

Initial Filing Grace Period

Web Site Posting of Interactive Data

Accuracy and Reliability of Interactive Data

Voluntary Program

Use of Technology to Detect Errors

Application of Federal Securities Laws

Officer Certifications and Integration of Interactive Data and

Business Information Processing

Continued Traditional Format

Required Items

Data Tags

Regulation S-T and the EDGAR Filer Manual

Consequences of Non-Compliance and Hardship Exemption

III.

PAPERWORK REDUCTION ACT

IV.

COST-BENEFIT ANALYSIS

CONSIDERATION OF BURDEN ON COMPETITION AND PROMOTION OF

EFFICIENCY, COMPETITION AND CAPITAL FORMATION

VI.

FINAL REGULATORY FLEXIBILITY ACT ANALYSIS

VII.

STATUTORY AUTHORITY AND TEXT OF AMENDMENTS

INTRODUCTION AND BACKGROUND

Introduction

On May 30, 2008, we issued a release in which we proposed for public comment

amendments requiring companies to provide their financial statements to the Commission and on

their corporate Web sites in interactive data format using XBRL. 27 In this release, we are

adopting the amendments substantially as proposed, but with the modifications discussed below.

Over the last several decades, developments in technology and electronic data

communication have facilitated greater transparency in the form of easier access to, and analysis

of, financial reporting and disclosures. Technological developments also have significantly

decreased the time and cost of filing disclosure documents with us. Most notably, in 1993 we

began to require electronic filing on our Electronic Data Gathering, Analysis and Retrieval

We proposed the amendments in Release No. 33-8924 (May 30, 2008) [73 FR 32794]. The comment letters we

received in response to the proposing release were filed in File Number S7-11-08 and are available at

http://www.sec.gov/comments/s7-11-08/s71108.shtml or from our Public Reference Room at 100 F Street, NE,

Washington, DC 20549.

System (EDGAR). 28 Since then, widespread use of the Internet has vastly decreased the time

and expense of accessing disclosure filed with us.

We continue to update our filing standards and systems as technologies improve. These

developments assist us in our goal to promote efficient and transparent capital markets. For

example, since 2003 we have required electronic filing of certain ownership reports 29 filed on

Forms 3, 30 4, 31 and 5 32 in a format that provides interactive data, and recently we adopted similar

rules governing the filing of Form D. 33 In addition, recently we have encouraged, and in some

cases required, public reporting companies and mutual funds to provide disclosures and

communicate with investors using the Internet. 34 Now, as part of our continuing efforts to assist

investors who use Commission disclosures, as well as filers of that disclosure, we are adopting

In 1993, we began to require domestic issuers to file most documents electronically. Release No. 33-6977 (Feb.

23, 1993) [58 FR 14628]. Electronic filing began with a pilot program in 1984. Release No. 33-6539 (June 27,

1984) [49 FR 28044].

Release No. 33-8230 (May 7, 2003) [68 FR 25788 and 37044 (correction)] (required electronic filing of

ownership reports) and Release No. 33-8891 (Feb. 6, 2008) [73 FR 10592] (required electronic filing of Form D [17

CFR 239.500]).

17 CFR 249.103 and 274.202.

17 CFR 249.104 and 274.203.

17 CFR 249.105.

17 CFR 239.500.

See, e.g., Release No. 34-56135 (July 26, 2007) [72 FR 42222]; Release No. 34-55146 (Jan. 22, 2007) [72 FR

4148]; Release No. 34-52056 (July 19, 2005) [70 FR 44722]; Release No. 33-8861 (November 21, 2007) [72 FR

67790]; and Release No. 34-57172 (Jan. 18, 2008) [73 FR 4450].

rules to require that financial statements be provided in a format that makes the information they

contain interactive.

Our adoption of the new rules is consistent with the recently announced plan to replace

the EDGAR system with the Interactive Data Electronic Applications (IDEA) system. Based on

a completely new architecture being built from the ground up, it will at first supplement and then

eventually replace the EDGAR system. IDEA will facilitate the use and analysis of information

submitted to the Commission in interactive data format. 35

The new rules build on our voluntary filer program, started in 2005, 36 that allowed us to

evaluate certain uses of interactive data. The Commission has evaluated interactive data from an

investor's perspective in several ways, including holding a roundtable focused on

investor/analyst needs from interactive data, meeting with various investor focused data service

providers to understand the ways in which interactive data could improve their ability to serve

investors, and, at the staff level, experimenting with analysis capabilities using the Commission's

viewer and other existing XBRL software. The voluntary program allows companies to submit

financial statements on a supplemental basis in interactive format as exhibits to specified filings

under the Exchange Act and the Investment Company Act of 1940 (Investment Company Act). 37

Press Release No. 2008-179 (Aug. 19, 2008).

Release No. 33-8529 (Feb. 3, 2005) [70 FR 6556].

15 U.S.C. 80a-1 et seq.

Companies that participate in the program still are required to file their financial statements in

American Standard Code for Information Interchange (ASCII) or HyperText Markup Language

(HTML). 38 In 2007, we extended the program to enable mutual funds voluntarily to submit in

interactive data format supplemental information contained in the risk/return summary section of

their prospectuses. 39 Over 100 companies have participated in the voluntary program. These

companies span a wide range of industries and company characteristics, and have a total public

float of over $2 trillion.

Interactive data can create new ways for investors, analysts, and others to retrieve and use

financial information in documents filed with us. For example, users of financial information

will be able to download it directly into spreadsheets, analyze it using commercial off-the-shelf

software, or use it within investment models in other software formats. Through interactive data,

what is currently static, text-based information can be dynamically searched and analyzed,

facilitating the comparison of financial and business performance across companies, reporting

periods, and industries.

Interactive data also provide a significant opportunity to automate regulatory filings and

business information processing, with the potential to increase the speed, accuracy, and usability

of financial disclosure. Such automation could eventually reduce costs. A company that uses a

HTML is a standardized language commonly used to present text and other information on Web sites.

Release No. 33-8823 (July 11, 2007) [72 FR 39290].

standardized interactive data format at earlier stages of its reporting cycle could reduce the need

for repetitive data entry and, therefore, the likelihood of human error. In this way, interactive

data may improve the quality of information while reducing its cost.

Also, to the extent investors currently are required to pay for access to annual or quarterly

report disclosure that has been extracted and reformatted into an interactive data format by

third-party sources, the availability of interactive data in Commission filings will allow investors

to avoid additional costs associated with third party sources.

We believe that requiring issuers to file their financial statements using interactive data

format will enable investors, analysts, and the Commission staff to capture and analyze that

information more quickly and at less cost than is possible using the same financial information

provided in a static format. Any investor with a computer and an internet connection will have

the ability to acquire and download interactive financial data that have generally been available

only to large institutional users. The new interactive data requirements will not change

disclosure requirements under the federal securities laws and regulations, but will add a

requirement to include financial statements in a new interactive data format as an exhibit. Thus,

the requirement that filers provide financial statements using interactive data will not otherwise

alter at all the disclosure or formatting standards of periodic or other reports, 40 registration

These reports include reports on Forms 8-K and 6-K that either are required to be filed as a result of information

regarding specified events or are filed voluntarily to disclose other information.

statements, 41 or transition reports. 42 These filings will continue to be available as they are today

for those who prefer to view the traditional text-based document.

We received 79 comment letters relating to the proposing release from domestic and

foreign commenters including investor groups, pension funds, corporations, accounting and law

firms, vendors and service providers, individuals, and corporate, professional and trade

associations. Many commenters generally supported the proposed requirement to submit

financial information in interactive data format, but many also expressed concern about specific

aspects of the proposed rules including, in particular, the proposed phase-in requirement, detailed

tagging of footnotes and liability related to the interactive data file. The final amendments adopt

the rules substantially as proposed, with some changes to address issues expressed in the

comment letters. We discuss specific comments where applicable throughout this release.

Current Filing Technology and Interactive Data

Companies filing electronically are required to file their registration statements, quarterly,

annual and current reports, and transition reports in ASCII or HTML format. 43 Also, to a limited

Unless otherwise stated, when we refer to registration statements, we mean registration statements filed under the

Securities Act.

Transition reports generally must be filed when an issuer changes its fiscal closing date. The transition report

covers the resulting transition period between the closing date of its most recent fiscal year and the opening date of

its new fiscal year. See Rules 13a-10 [17 CFR 240.13a-10] and 15d-10 [17 CFR 240.15d-10]. Unless otherwise

stated, when we refer to Exchange Act reports, periodic reports, or “reports,” we mean quarterly and annual periodic

reports as well as transition reports.

Rule 301 under Regulation S-T [17 CFR 232.301] requires electronic filings to comply with the EDGAR Filer

Manual, and Section 5.1 of the Filer Manual requires that electronic filings be in ASCII or HTML format. Rule 104

degree, our electronic filing system uses other formats for internal processing and document-type

identification. For example, our system uses eXtensible Markup Language (XML) to process

reports of beneficial ownership of equity securities on Forms 3, 4, and 5 under Section 16(a) of

the Exchange Act. 44

Electronic formats such as HTML, XML, and XBRL are open standards 45 that define or

“tag” data using standard definitions. The tags establish a consistent structure of identity and

context. This consistent structure can be recognized and processed by a variety of different

software applications. In the case of HTML, the standardized tags enable Web browsers to

present Web sites’ embedded text and information in predictable format. In the case of XBRL,

software applications, such as databases, financial reporting systems, and spreadsheets, recognize

and process tagged financial information. XBRL was derived from the XML standard. It was

developed and continues to be supported by XBRL International, a consortium of approximately

550 organizations representing many elements of the financial reporting community worldwide.

XBRL U.S., the international organization’s U.S. jurisdiction representative, is a non-profit

under Regulation S-T [17 CFR 232.104] permits filers to submit voluntarily as an adjunct to their official filings in

ASCII or HTML unofficial PDF copies of filed documents. Unless otherwise stated, we refer to filings in ASCII or

HTML as traditional format filings.

15 U.S.C. 78p(a).

The term “open standard” is generally applied to technological specifications that are widely available to the

public, royalty-free, at minimal or no cost.

organization 46 that includes companies, public accounting firms, software developers, filing

agents, data aggregators, stock exchanges, regulators, financial services companies, and industry

associations. 47 In 2006, the Commission contracted with XBRL U.S. to develop the taxonomy

or standard list of tags necessary for financial reporting in interactive format consistent with U.S.

GAAP and Commission regulations. 48 In developing the taxonomy, XBRL US, which is

responsible for the content of the taxonomy, included items required by US GAAP and the

Commission's regulations, however they also included other items that are commonly used by

companies in their financial statements. In addition to undergoing a public review and comment

period, the taxonomy was reviewed by the staff of the Financial Accounting Standards Board

(FASB) and the Commission. The FASB staff is involved in the process for creating and

reviewing tags for new accounting pronouncements as they are published and in the future the

draft tags may even be published with the accounting standard. Currently, the Commission has a

contract with XBRL U.S. to develop the standard list of tags for the risk/return summary section

of mutual fund prospectuses and the schedule of investments for investment companies.

Financial reporting in interactive format requires a standard list of tags. These tags are

XBRL U.S. is a 501(c)(6) organization. Internal Revenue Code section 501(c)(6) applies to “Business leagues,

chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not

administering a pension fund for football players), not organized for profit and no part of the net earnings of which

inures to the benefit of any private shareholder or individual.” See 26 U.S.C 501(c)(6).

XBRL U.S. supports efforts to promote interactive financial and business data specific to the U.S., including U.S.

GAAP.

That contract has been completed.

similar to definitions in an ordinary dictionary, and they cover a variety of financial concepts

that can be read and understood by software applications. For financial statements prepared in

accordance with U.S. GAAP, a filer will use the list of tags for U.S. financial statement

reporting. 49 This list of tags contains descriptive labels, definitions, authoritative references to

U.S. GAAP and Commission regulations where applicable, and other elements, all of which

provide the contextual information necessary for interactive data 50 to be recognized and

processed by software. 51

Data tags are applied to financial statements by using commercially available software

that guides a preparer to tag information in the financial statements with the appropriate tags in

the standard list. Each element in the standard list of tags has a standard label. A company can

therefore match the standard labels to each caption in its financial statements. Occasionally,

because filers have considerable flexibility in how financial information is reported under U.S.

reporting standards, it is possible that a company may wish to use a non-standard financial

Unless stated otherwise, when we refer to the “list of tags for U.S. financial statement reporting” we mean the

interactive data taxonomy as approved by XBRL U.S. that is based on U.S. GAAP, Commission regulations, and

common financial reporting practices used in the preparation of financial statements in the U.S.

The new rules define the interactive data in machine-readable format required to be submitted as the “interactive

data file,” which will be required with every interactive data submission. See §232.11 of Regulation S-T.

For example, contextual information will identify the entity to which it relates, usually by using the filer’s CIK

number. A hypothetical filer converting its traditional electronic disclosure of $1,000,000 of net sales would have to

create interactive data that identify what the 1,000,000 represents, net sales, and the currency in which it is

disclosed, dollars. The contextual information will include other information as necessary; for example, whether it

statement line item that is not included in the standard list of tags. In this situation, a company

will create a company-specific element, called an extension. 52 For example, what a company

identifies in its traditional format financial statements as “operating revenues” may be associated

with an element that has “net revenues” as the standard label. In this situation, a company will

need to change, or extend, the standard label to become “operating revenues” when it tags that

disclosure with the element. 53 A company may choose to tag its own financial statements using

commercially available software, or it may choose instead to outsource the tagging process.

By the same process, a filer that prepares its financial statements in accordance with

IFRS as issued by the IASB 54 will use the IFRS list of tags to create its interactive

relates to an annual report or quarterly report, the financial reporting period, continuing or discontinued operations,

or actual, restated, forecast, pro forma or other type of disclosure.

In other cases, without a relevant and appropriate tag in the list of tags, a company will be required to create an

extension in order to provide interactive data that are equivalent to the corresponding portion of the traditional

format filing.

Unless otherwise stated, extensions, whether relating to an element or a label, are not part of the standard list of

tags.

As used in this release, the phrase “IFRS as issued by the IASB” refers to the authoritative text of IFRS, which,

according to the Constitution of the International Accounting Standards Committee Foundation (IASCF), is

published in English. See “International Financial Reporting Standards, including International Accounting

Standards and Interpretations as at 1 January 2007,” Preface to International Financial Reporting Standards, at

paragraph 23. See http://www.iasb.org/xbrl/index.html. The IASCF released the 2008 taxonomy (list of tags) on

March 31, 2008. See IASB Press Release, The IASC Foundation publishes IFRS Taxonomy 2008, (March 31,

2008). Following a 60-day public consultation period, the IASCF published the final list of tags in June 2008. See

IASB Press Release IASC Foundation publishes IFRS Taxonomy 2008 (June 24, 2008). Recently, the IASC

published the IFRS Taxonomy Guide. See IASB Press Release, The IASC Foundation publishes the IFRS

Taxonomy Guide (August 28, 2008).

data-formatted financial statements. 55 The IFRS list of tags contains descriptive labels,

authoritative references to IFRS where applicable, and other elements and concepts that provide

the contextual information necessary for interactive data to be recognized and processed by

software. The IASCF has developed the IFRS list of tags. To create interactive data using the

IFRS list of tags, an issuer generally will need to follow the same mapping, extension and

tagging process as will a company that uses the list of tags for U.S. financial statement

reporting. As further discussed below, the IASCF is collaborating with XBRL U.S. and other

parties to align the U.S. GAAP and IFRS lists of tags to make them more interoperable and

comparable. This collaboration involves the development of the appropriate scope for the IFRS

list of tags’ content and technology architecture and currently totals 2,700 IFRS tags.

Because financial statements in interactive data format are intended to be processed by

software applications, the unprocessed data are not readable by humans. Thus, viewers are

necessary to convert or “render” the interactive data file to human readable format. Some

viewers are similar to Web browsers used to read HTML files.

The Commission’s Web site currently provides links to viewers that allow the public to

easily read company disclosures submitted using interactive data. These viewers are intended to

demonstrate the capability of software to present interactive data in human-readable form and to

provide open source software to give developers a free resource they can use as is or build upon.

Unless stated otherwise, when we refer to the “IFRS list of tags” we mean the list of tags for financial statements

As noted above, software also is able to process interactive data so as to automate and, as a

result, facilitate access to and analysis of tagged data. In addition, we are aware of other

applications under development that may provide additional and advanced functionality.

The Commission’s Multiyear Evaluation of Interactive Data and Overview of

New Rules

In 2004, we began to assess the benefits of interactive data and its potential to improve

the timeliness and accuracy of financial disclosure and analysis of Commission filings. 56 As part

of this evaluation, we adopted rules in 2005 that permitted filers, on a voluntary basis, to provide

financial disclosure in interactive data format as an exhibit to certain filings on our electronic

filing system. The voluntary program has been based on an earlier version of the list of tags for

U.S. financial statement reporting, which does not include a full array of standard elements for

financial statement footnotes and schedules. After more than two years of increasing

participation, 100 companies have chosen to provide interactive data financial reporting. 57

During this time, we have kept informed of technology advances and other interactive

data developments. We note that several U.S. and foreign regulators have begun to incorporate

prepared in accordance with IFRS as issued by the IASB.

Press Release No. 2004-97 (July 22, 2004).

A viewer for the voluntary program is available at http://www.sec.gov/spotlight/xbrl/xbrlwebapp.shtml. This

viewer maintains a running total of companies and filers submitting data as part of the voluntary program. As of

January 2, 2009, 125 companies had submitted over 540 interactive data reports.

interactive data into their financial reporting systems. 58 In the U.S., the Federal Deposit

Insurance Corporation (FDIC), the Federal Reserve, and the Office of the Comptroller of the

Currency (OCC) require the use of XBRL. 59 Since 2006, approximately 8,200 U.S. financial

institutions have been using XBRL to submit quarterly reports to banking regulators. 60

Internationally, countries that require or have instituted voluntary or pilot programs for XBRL

financial reporting include Australia, Belgium, Canada, China, Denmark, France, Germany,

Ireland, Israel, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Singapore,

Spain, Sweden, Thailand and the United Kingdom. 61

We also have kept informed of relevant advances and developments by hosting

roundtables on the topic of interactive data financial reporting, 62 creating the Commission’s

However, well-developed and widespread application of XBRL to financial reports used by investors is not yet

the international norm. According to the commenter EuropeanIssuers, “XBRL is permitted or required by regulators

. . . only . . . for certain reports filed with banking regulators or unconsolidated financial statements filed with the

commercial registries [and] XBRL is not currently being used in Europe for financial reporting to investors.”

EuropeanIssuers is a non-profit pan-European organization formed when the European Association of Listed

Companies and the Union of Issuers Quoted in Europe combined their organizations in 2008. The organization

states that it represents the vast majority of publicly quoted companies in Europe.

Since 2005, the FDIC, Federal Reserve, and the OCC have required the insured institutions that they oversee to

file their quarterly Consolidated Reports of Condition and Income (called Call Reports) in interactive data format

using XBRL. Call Reports, which include data about an institution’s balance sheet and income statement, are used

by these federal agencies to assess the financial health and risk profile of the financial institution.

See Improved Business Process Through XBRL: A Use Case for Business Reporting, available at

http://www.xbrl.org/us/us/FFIEC%20White%20Paper%2002Feb2006.pdf.

See XBRL International Progress Report (November 2007), available at

http://www.xbrl.org/ProgressReports/2007_11_XBRL_Progress_Report.pdf.

See materials available at http://www.sec.gov/spotlight/xbrl/xbrl-meetings.shtml.

Office of Interactive Disclosure, 63 and meeting with international securities regulators to discuss,

among other items, timetables for implementation of interactive data initiatives for financial

reporting. 64 Also, staff of the Commission attended meetings of the Advisory Committee on

Improvements to Financial Reporting (CIFiR) in which the committee discussed proposals for

financial reporting using interactive data. 65 We also have reviewed written statements and

public comments received by CIFiR on its XBRL developed proposal 66 that preceded its XBRL

final recommendation.

Building on our experience from the voluntary program, and our participation in the other

initiatives described above, we proposed rules to require financial reporting using interactive

Press Release No. 2007-213 (October 9, 2007).

Press Release No. 2007-227 (November 9, 2007).

For example, CIFiR conducted an open meeting on March 14, 2008 in which it heard reactions from an invited

panel of participants to CIFiR’s developed proposal regarding required filing of financial information using

interactive data. An archived webcast of the meeting is available at http://sec.gov/about/offices/oca/cifir.shtml. The

March 14, 2008 panelists presented their views and engaged with CIFiR members regarding issues relating to

requiring interactive data tagged financial statements, including tag list and technological developments,

implications for large and small public companies, needs of investors, necessity of assurance and verification of

such tagged financial statements, and legal implications arising from such tagging. Also, CIFiR has provided to the

Commission a Final Report that recommends that the Commission, over the long term, require the filing of financial

information using interactive data once specified conditions are satisfied. See Final Report of the Advisory

Committee on Improvements to Financial Reporting to the United States Securities and Exchange Commission

(Aug. 1, 2008) (Final Report), available at http://www.sec.gov/about/offices/oca/acifr/acifr-finalreport.pdf. CIFiR’s

recommendation is discussed more fully in Part II.B.2 below.

See Progress Report of the Advisory Committee on Improvements to Financial Reporting to the United States

Securities and Exchange Commission (Feb. 14, 2008) (Progress Report), available at

http://www.sec.gov/rules/other/2008/33-8896.pdf. The XBRL developed proposal appears in chapter 4 of the

Progress Report. Written statements of panelists at the March 14, 2008 meeting and public comments received on

the Progress Report are available at http://sec.gov/comments/265-24/265-24.shtml.

data, and are now adopting those rules with the modifications discussed below. The rules will

apply to domestic and foreign public companies that prepare their financial statements in

accordance with U.S. GAAP, and foreign private issuers that prepare their financial statements in

accordance with IFRS as issued by the IASB. Filers will be required to include an exhibit

containing interactive data with their Securities Act registration statements, quarterly, if

applicable, and annual reports, and transition reports, as well as reports on Forms 8-K 67 or 6-K

that contain specified financial statements. 68 Filers also will be required to provide it on their

company Web sites. 69 We believe requiring the submission and posting of interactive data has

the potential to provide advantages for the investing public by making financial data more

accessible, timely, inexpensive and easier to analyze.

By enabling filers to further automate their financial processes, interactive data may

eventually help filers improve the timeliness of, and speed at which they generate, financial

information, while reducing the cost of filing and potentially increasing the accuracy of the

information. For example, with standardized interactive data tags, registration statements and

17 CFR 249.308.

The specified financial statements are discussed in detail in n. 74.

The new rules will not include any investment company that is registered under the Investment Company Act or

any “business development company,” as defined in Section 2(a)(48) of that Act [15 U.S.C. 80a-2(a)(48)]. Business

development companies are a category of closed-end investment companies that are not required to register under

that Act. The new rules also will not include any entity that reports under the Exchange Act and prepares its

financial statements in accordance with Article 6 of Regulation S-X [17 CFR 210.6-01 et seq.]. The new rules will

not apply to these entities because the standard list of tags for investment management is under development.

periodic and current reports may require less time for information gathering and review. Also,

standardized interactive data tagging may enhance the ability of an issuer’s in-house financial

professionals to identify and correct errors in the issuer’s registration statements and periodic and

current reports filed in traditional electronic format. Filers also may gain benefits not directly

related to public financial disclosures. For example, filers that use interactive data may be able

to consolidate enterprise financial information more quickly and potentially more reliably across

operating units with different accounting systems. However, we recognize that at the outset,

filers will most likely prepare their interactive data as an additional step after their financial

statements have been prepared.

Summary of Adopted Amendments

The principal elements of the new rules are as follows:

•

Domestic and foreign large accelerated filers 70 that use U.S. GAAP and have a

worldwide public common equity float above $5 billion 71 as of the end of the second

fiscal quarter of their most recently completed fiscal year 72 will provide to the

Exchange Act Rule 12b-2 [17 CFR 240.12b-2] generally defines “large accelerated filer” as an issuer that has

common equity held by unaffiliated persons with a value of at least $700 million, has been subject to the Exchange

Act’s periodic reporting requirements for at least 12 months, has filed at least one annual report, and is not eligible

to use the disclosure requirements available to smaller reporting companies for its periodic reports.

The $5 billion cutoff will establish a category of approximately 500 filers that will be subject to the interactive

data requirements in the first year.

The proposing release at n. 89 stated our intention that the float measurement date be consistent with the

measurement date for determining large accelerated filer status. Throughout the proposing release, however, we

inadvertently characterized the measurement date as the end of the most recently completed second fiscal quarter

Commission a new exhibit. 73 The exhibit will be required with such filers’ Securities

Act registration statements, quarterly, if applicable, and annual reports, and transition

reports, as well as reports on Form 8-K or Form 6-K that contain revised or updated

financial statements. 74 The exhibit will contain the financial statements 75 and any

applicable financial statement schedules in interactive data format. The requirement

rather than the end of the second fiscal quarter of the most recently completed fiscal year. We now characterize the

measurement date in the latter manner to conform it to our stated intention.

Interactive data will be required as an exhibit to a Securities Act registration statement that contains financial

statements, such as a Form S-1 [17 CFR 239.11], but not required in connection with an initial public offering.

Interactive data will not be required as an exhibit to a Securities Act registration statement that does not contain

financial statements, such as a Form S-3 or other form filed by an issuer that is eligible to and does incorporate by

reference all required financial statements from its periodic reports. Also, interactive data will not be required as an

exhibit to an Exchange Act registration statement.

In connection with registration statements where historical financial statements are incorporated by reference,

issuers often file under cover of Form 8-K or 6-K their revised audited annual financial statements when their

previously filed annual financial statements are required to be revised, pursuant to applicable accounting standards,

to reflect the effects of certain subsequent events, including a discontinued operation, a change in reportable

segments, or a change in accounting principle. Also, foreign private issuers occasionally may file current interim

financial statements pursuant to the nine-month updating requirement of Item 8.A.5 of Form 20-F under cover of

Form 6-K which are incorporated by reference into a registration statement. In these circumstances, the interactive

data exhibit will be required to be included in the Form 8-K or 6-K to accompany the traditional format financial

statements to which they relate. Interactive data exhibits related to financial statements that have been restated to

correct an accounting error will be required to be included in any amended registration statement or periodic report

or transition report that contains the restated traditional format financial statements. The requirement to submit

restated financial statements in interactive data format in such an instance would depend on whether the original

filing contained financial statements for fiscal periods regarding which the filer was subject to the interactive data

requirements. For instance, for those filers in the first phase-in period, the financial statements being restated would

only have to be submitted in interactive data format if they were originally for fiscal periods ending on or after June

15, 2009.

When we refer to financial statements, we mean the face of the financial statements and accompanying footnotes.

The face of the financial statements refers to the statement of financial position (balance sheet), income statement,

statement of comprehensive income, statement of cash flows, and statement of owners’ equity, as required by

Commission regulations. References to the financial statements as required for interactive data reporting include

any required schedules to the financial statements, unless we expressly state otherwise.

will apply beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F

containing financial statements for a fiscal period ending on or after June 15, 2009.

•

All other domestic and foreign large accelerated filers using U.S. GAAP will be

subject to the same interactive data reporting requirements the following year,

beginning with a periodic report on Form 10-Q, Form 20-F or Form 40-F containing

financial statements for a fiscal period ending on or after June 15, 2010.

•

All remaining filers using U.S. GAAP, including smaller reporting companies, 76 and

all foreign private issuers that prepare their financial statements in accordance with

IFRS as issued by the IASB, 77 will be subject to the same interactive data reporting

requirements beginning with a periodic report on Form 10-Q, Form 20-F or Form

40-F containing financial statements for a fiscal period ending on or after June 15,

2011.

•

Filers that first become subject to the requirement to submit interactive data after year

three (i.e., companies that become subject to our reporting requirements after the

phase-in is complete), will first be required to submit an interactive data file for their

Item 10(f)(1) of Regulation S-K [17 CFR 229.10(f)(1)], Rule 405 under the Securities Act [17 CFR 230.405] and

Rule 12b-2 under the Exchange Act [17 CFR 240.12b-2] define the term “smaller reporting company,” in general, as

a company that has common equity securities held by non-affiliates with a market value of less than $75 million or,

if that value cannot be calculated, had less than $50 million in revenue in the prior fiscal year.

The amendments will not require or permit foreign private issuers that prepare their financial statements in

accordance with a variation of IFRS as issued by the IASB to provide interactive data.

first periodic report on Form 10-Q or first annual report on Form 20-F or Form 40-F,

as applicable.

•

The amendments will not alter the requirements to provide financial statements and

any required financial statement schedules with the traditional format filings.

•

Financial statements in interactive data format will be provided as exhibits identified

in Item 601(b) of Regulation S-K and Forms F-9, F-10, 20-F, 6-K and 40-F. 78

•

Financial statement footnotes and financial statement schedules initially will be

tagged individually as a block of text. After a year of such tagging, a filer also will be

required to tag the detailed quantitative disclosures within the footnotes and schedules

and will be permitted, but not required, to the extent they choose, to tag each narrative

disclosure.

•

The amendments will require the financial information and document and entity

identifier elements, such as the form type, company name, and public float, to be

tagged according to Regulation S-T and the EDGAR Filer Manual.79

•

Interactive data exhibits will be required at the same time as the rest of the related

The adopted interactive data requirements would not apply to asset-backed filings because issuer financial

statements are generally not required or provided in filings made pursuant to Regulation AB (17 CFR 229.1100 et

seq.).

New Rule 405 of Regulation S-T will directly set forth the basic tagging requirements and indirectly set forth the

rest of the tagging requirements through the requirement to comply with the EDGAR Filer Manual. Consistent with

new Rule 405, the Filer Manual will contain the technical tagging requirements.

report or Securities Act registration statement, except for the following two

circumstances. The initial interactive data exhibit of a filer will be required within 30

days after the earlier of the due date or filing date of the related report or registration

statement, as applicable. In year two, a filer will have a similar 30 day grace period

for its first interactive data exhibit that includes detailed tagging of its footnotes and

schedules.

•

A filer required to provide financial statements in interactive data format to the

Commission also will be required to post those financial statements in interactive data

format on its corporate Web site not later than the end of the calendar day it filed or

was required to file the related registration statement or report with the Commission,

whichever is earlier. 80

•

Filers that do not provide or post required interactive data on the date required will be

deemed not current with their Exchange Act reports and, as a result, will not be

eligible to use the short Form S-3, F-3, or S-8, or elect under Form S-4 or F-4 to

provide information at a level prescribed by Form S-3 or F-3. Similarly, such filers

will not be deemed to have available adequate current public information for purposes

The day the registration statement or report is submitted electronically to the Commission may not be the business

day on which it was deemed officially filed. For example, a filing submitted after 5:30 p.m. generally is not deemed

officially filed until the following business day. Under the new rules, the Web posting will be required at any time

on the same calendar day that the related registration statement or report is deemed officially filed or required to be

filed, whichever is earlier.

of the resale exemption safe harbor provided by Rule 144. 81 A filer that is deemed

not current solely as a result of not providing or posting an interactive data exhibit

when required will be deemed current upon providing or posting the interactive data.

Therefore it will regain current status for purposes of short form registration

statement eligibility, and determining adequate current public information under Rule

144. As such, it will not lose its status as having “timely” filed its Exchange Act

reports solely as a result of the delay in providing interactive data. 82

•

Companies that are not required to provide interactive data until a later time will have

the option to do so earlier and may provide interactive data at their discretion until

required by the amendments. Such a company may also tag footnotes individually as

a block of text until required to tag the detailed quantitative disclosures within the

footnotes and schedules, but otherwise must follow the same requirements as those

mandated and can only use a grace period for its initial submission and the initial

detail-tagged-footnote submission, whether submitted voluntarily or as required by

the amendments.

•

Companies may cease voluntary submissions at any time and need not tag their

financial data at a pace other than at which the rules otherwise would require.

17 CFR 230.144.

Filers that do not provide or post required interactive data on the date required with respect to a Securities Act

filing will be deemed not current with their Exchange Act reports.

•

The voluntary program rules will be modified to permit investment companies to

participate, but to exclude non-investment company participation. As a result, the

voluntary program will continue for the financial statements of investment companies

that are registered under the Investment Company Act, and business development

companies and other entities that report under the Exchange Act and prepare their

financial statements in accordance with Article 6 of Regulation S-X. 83

•

An interactive data file generally will be subject to the federal securities laws in a

modified manner similar to that of the voluntary program if the filer submits the

interactive data file within 24 months of the time the filer first is required to submit

interactive data files but no later than October 31, 2014. During the time a filer’s

interactive data files are treated in this modified manner, they will be

o deemed not filed for purposes of specified liability provisions; and

o protected from liability for failure to comply with the tagging requirements if

the interactive data file failed to meet those requirements but the failure

On December 17, 2008, the Commission voted to adopt rules requiring interactive data for the risk/return

summary section of mutual fund prospectuses. See Press Release No. 2008-300 (December 18, 2008). See also

Release No. 33-8929 (June 10, 2008) [73 FR 35442] (mutual fund proposing release).

occurred despite the filer’s good faith effort and the filer corrected the failure

promptly after becoming aware of it. 84

•

Also similar to the voluntary program, interactive data files will be excluded from the

officer certification requirements under Rules 13a-14 and 15d-14 of the Exchange

Act.

The principal changes from the proposing release include:

•

Modified treatment of liability for the interactive data files under the federal securities

laws only will be available for interactive data files that a filer submits within 24

months of the time the filer first is required to submit interactive data files and no

later than October 31, 2014.

•

The phase-in schedule has been changed from the proposal. The filers that will be

phased in during year one will first be required to submit an interactive data file for a

periodic report on Form 10-Q, Form 20-F or Form 40-F containing financial

statements for a fiscal period ended on or after June 15, 2009. Filers that are phased

in during years two and three will be treated in a similar manner. Filers that first

become subject to the requirement to submit interactive data after year three will first

Although the interactive data formatted version of the financial statements will be provided in a separate exhibit

and subject to modified liability during the specified period, the financial statements themselves will, of course,

continue to be part of the registration statement or report and therefore subject to the full panoply of the federal

securities laws, including, without limitation, Sections 11, 12(a)(2) and 17 of the Securities Act and Sections 10(b),

13 and 18 of the Exchange Act.

be required to submit an interactive data file for a quarterly report on Form 10-Q or

annual report on Form 20-F or Form 40-F, as applicable.

•

The amendments will require that interactive data be submitted with a Securities Act

registration statement filing only after a price or price range has been determined and

any later time when the financial statements are changed, rather than requiring

interactive data submissions with each filing.

•

The amendments will require companies to submit interactive data for financial

statements contained in additional forms - Securities Act registration statements on

Forms F-9 and F-10 and periodic reports on Forms 40-F 85 as well as reports on Forms

8-K and Form 6-K that contain revised or updated financial statements. 86

•

The timing of the required Web site posting has been eased. A filer must post the

interactive data exhibit on its corporate Web site not later than the end of the calendar

day it submitted or was required to submit the interactive data exhibit, whichever is

earlier. As proposed, Web site posting would have been required by the end of the

business rather than calendar day.

•

Interactive data will be required to be posted for at least 12 months on an issuer’s

Similar to Form 20-F, Form 40-F may be used either as a periodic report or a registration statement under the

Exchange Act. As adopted, the amendments will require interactive data for Form 40-F only when used as a

periodic report.

See note 74 above.

Web site. The proposing release did not specify this, but commenters requested

clarification.

•

While the amendments will require filers to tag separately each amount within a

footnote or schedule (i.e., monetary value, percentage, and number), the rules will

permit, but not require, filers to tag, to the extent they choose, each narrative

disclosure.

We intend to monitor implementation and, if necessary, make appropriate adjustments to

the adopted amendments.

II.

DISCUSSION OF AMENDMENTS

Submission of Financial Information Using Interactive Data

For several years XBRL U.S. and its related entities, in consultation with the Commission

staff and FASB staff, have developed and refined the list of tags to classify and define financial

information in accordance with U.S. financial reporting practices and Commission regulations. 87

Many investors, accountants, and others, including companies that have been providing

interactive data disclosure in the voluntary program, have helped in this process.

Interactive data financial statements using the list of tags for U.S. financial statement

reporting have been submitted voluntarily to us by over 100 companies, some of which have

done so since the start of the voluntary program. The list of tags for U.S. financial statement

Press Release No. 2006-158 (Sept. 25, 2006).

reporting has expanded significantly since the original version available for the voluntary

program. 88 During this period, there has been a continuous increase in both the number and

capabilities of software products and applications for users of interactive data, as well as of the

services to assist companies to tag their financial statements using interactive data. 89 The

growing number of software applications available to preparers and consumers is helping make

interactive data increasingly useful to both institutional and retail investors, as well as to other

participants in the U.S. and global capital markets. On this basis, we believe interactive data,

and in particular the XBRL standard, is growing and that the updated list of tags for U.S.

financial statement reporting is now sufficiently comprehensive to require that U.S.

GAAP-reporting companies provide their financial statements in interactive data format using

XBRL. 90 We anticipate that there will be a further update of this list of tags in February 2009

but that the newer tags will not differ significantly from the old list and that any update would

not pose an additional burden to the tagging process.

When we adopted the voluntary program, the list of tags for U.S. GAAP financial statement reporting contained

approximately 4,000 data elements. The list of tags released on April 28, 2008 contains approximately 13,000 data

elements, with the most significant additions relating to the development of elements for standard U.S. GAAP

footnote disclosure.

Press Release No. 2007-253 (Dec. 5, 2007).

As previously noted, however, the new rules will not apply to investment companies registered under the

Investment Company Act and other entities.

With respect to the list of tags for IFRS financial reporting, the IASCF has, over several

years, developed a list of tags designed to classify and define financial information in accordance

with international accounting standards as issued by the IASB. Over the course of the past year,

the IASCF has worked to strengthen the development of its list of tags by forming an XBRL

Advisory Committee and an XBRL Quality Reporting Team, both consisting of international

representatives from investors, auditors, accountants, regulators and others. On March 31, 2008,

the IASCF published a near final version of the list of tags for IFRS financial reporting, 91 which

was subject to public comment through May 30, 2008. 92 On June 24, 2008, the IASCF

published the final version. 93 In addition, the IASCF is collaborating with XBRL U.S., other

foreign regulators, accounting industry members, analyst/investor groups, XBRL

technology/software service providers, and others to align practices designed to improve and

broaden the IFRS list of tags. This collaboration involves the development of the appropriate

scope for the IFRS list of tags’ content and technology architecture. On this basis, we believe

that the updated IFRS list of tags will be sufficiently advanced to require that foreign private

issuers that prepare their financial statements in accordance with IFRS as issued by the IASB

Unless stated otherwise, when we refer to the “list of tags for IFRS financial reporting” we mean the interactive

data taxonomy that is based on IFRS as issued by the IASB.

See Press Release, The IASC Foundation publishes IFRS Taxonomy 2008 (March 31, 2008), available at

http://www.iasb.org/News/Press+Releases/The+IASC+Foundation+publishes+IFRS+Taxonomy+2008.htm.

See Press Release, The IASC Foundation publishes IFRS Taxonomy 2008 (June 24, 2008), available at

http://www.iasb.org/News/Press+Releases/IASC+Foundation+publishes+IFRS+Taxonomy+2008.htm.

provide their financial statements in interactive data format under the phase-in schedule we are

adopting.

As discussed in more detail below, the new rules set forth a phase-in period that begins

with domestic and foreign large accelerated U.S. GAAP filers with a worldwide public common

equity float above $5 billion as of the end of the second fiscal quarter of their most recently

completed fiscal year. These large accelerated filers will be subject to the new rules beginning

with their first quarterly report on Form 10-Q, or annual report on Form 20-F or Form 40-F, that

contains financial statements for fiscal periods ending on or after June 15, 2009. Although it will

not be required, we encourage other U.S. GAAP filers to provide financial information in

interactive data format during the phase-in period. In such an instance, these filers’ voluntary

interactive data submissions will be under the rules as adopted instead of the existing rules of the

voluntary program. We also encourage foreign private issuers that prepare their financial

statements in accordance with IFRS as issued by the IASB to provide financial information in

interactive data format once EDGAR will accept such filings. 94 Prior to this time, such foreign

private issuers will be unable to submit financial information in interactive data format.

The new rules will require filers to provide the same type of information in interactive

data format that companies have been providing in the voluntary program, 95 together with the

Pursuant to the EDGAR Filer Manual, we will notify filers of the ability to file in IFRS on our Web site.

Unlike the voluntary program, unless otherwise stated, an interactive data file will be required to be provided

with the traditional format filing to which it relates. Companies will not be permitted to provide an interactive data

following items: the footnotes to the financial statements; any applicable schedules to the

financial statements; and document and entity identifier tags, such as company name and public

float. As is the case in the voluntary program, the new requirement for interactive data reporting

is intended to be disclosure neutral in that we do not intend the rules to result in companies

providing more, less, or different disclosure for a given disclosure item depending upon the

format whether ASCII, HTML, or XBRL.

Because we believe that the various electronic formats have uses for which each is best

suited, we will continue to require the existing ASCII and HTML electronic formats now used in

filings. 96 We also believe it is necessary to monitor the usefulness of interactive data reporting

to investors and the cost and ease of providing interactive data before we consider discontinuing

the use of ASCII and HTML formats and the integration of formats. However, the new rules

will treat interactive data as part of the official filing, instead of as only a supplement as is the

case in the voluntary program. 97 Further evaluation also will be useful with respect to the

availability of inexpensive and sophisticated interactive data viewers. In fact, there are many

software providers and financial printers that are developing interactive data viewers. We

file with a Form 8-K or 6-K unless it presents in interactive data format the revised or updated financial statements

included in that Form 8-K or 6-K as described in footnote 74. See Part II.B.4 for a further discussion.

For example, HTML currently is best suited for providing human-readable text.

As further discussed below in Part II.C.3, however, interactive data generally will be deemed not filed for

purposes of specified liability provisions.

anticipate that these will become widely available and increasingly useful to investors.

We expect that the open standard feature of the XBRL format will facilitate the

development of applications and software, and that some of these applications may be made

available to the public for free or at a relatively low cost. The expected continued improvement

in this software should give the public increasingly useful ways to view and analyze company

financial information. As we continue to evaluate the use of the new interactive data

technologies, software, and lists of tags, we may consider proposing rules to require a filing

format that integrates HTML with XBRL or eliminate financial statement reporting in ASCII or

HTML format.

We believe XBRL is the appropriate interactive data format with which to supplement

ASCII and HTML. Our experience with the voluntary program and feedback from company,

accounting, and software communities point to XBRL as the appropriate open standard for the

purposes of this rule. XBRL data will be compatible with a wide range of open source and

proprietary XBRL software applications. As discussed above, many XBRL-related products

exist for analysts, investors, public and private companies, and others to create and compare

financial data more easily; still others are in development, and that process will likely be

hastened by increased public company reporting using interactive data.

Most commenters generally supported the required submission of interactive data, 98 but a

significant number did not. 99 Some commenters that supported the required submission of

interactive data believed it would improve the usefulness of financial information to companies

and investors, and that mandated interactive data use would provide the incentives to drive

sufficient investment in software to enable widespread adoption of interactive data. 100

Commenters that provide interactive data services stated that issuers would need to expend only

modest cost and effort to comply with the proposed requirements. 101 One commenter stated that

it expected that costs would fall quickly, especially for small companies, as interactive data

became part of standard corporate accounting software packages. 102 Another commenter stated

that, based on its experience in the voluntary program, costs would fall significantly for

See, e.g., letters from American Bar Association (ABA), American Institute of Certified Public Accountants

(AICPA), Astoria Financial Corp. (Astoria), California Public Employees’ Retirement System (CalPERS), EDGAR

Online, Inc. (EDGAR Online), and Financial Executives International (FEI).

See, e.g., letters from Council of Institutional Investors (CII), Financial Services Information Division of the

Software and Information Industry Association (FISD), EuropeanIssuers, Committee of Annuity Insurers (COAI),

Valero Energy Corp. (VEC), and Wellpoint, Inc. (WellPoint).

100

See, e.g., letters from American Business Conference (ABC), AICPA, National City Corporation (National City),

New York State Society of Certified Public Accountants (NYSSCPA), and United Technologies Corporation

(UTC).

101

See, e.g., letters from Enterprise Compliance International (ECI), EdgarFilings, and UBMatrix, Inc..

102

See letter from James Angel, PhD (Angel).

subsequent submissions. 103 One commenter stated that it expected that preparing financial

information in interactive data format would result in less manual effort and provide the

foundation to improve business processes. 104 Similarly, comments on our 2004 concept release

and proposed rules in 2004 and 2007 generally supported interactive data and XBRL in

particular. 105

Many commenters objected to some or all of the requirements as proposed and suggested

alternatives. 106 For instance, one commenter argued that implementing interactive data would

add significant costs to purchase software, and pay for assistance and annual maintenance fees

for that software. 107 This commenter believed that the costs of using interactive data outweighed

the benefits. Several commenters also claimed that complying with the proposed requirements

103

See letter from PepsiCo., Inc..

104

See letter from UTC.

105

Release No. 33-8497 (Sept. 27, 2004) [69 FR 59111] (concept release); Release No. 33-8496 (Oct. 1, 2004) [69

FR 59098]; Release No. 33-8781 (Feb. 12, 2007) [72 FR 6676]. See, e.g., letter from Deloitte regarding the

voluntary program proposing release and letter from PR Newswire Association LLC regarding the concept release.

We also note that participants in the voluntary program provided positive feedback with respect to possible required

use of XBRL. For example, the vast majority of voluntary program participants that submitted responses and views

to a questionnaire answered in the affirmative to the question “Based on your experience to date, do you think it

would be advisable for the Commission to continue to explore the feasibility and desirability of the use of interactive

data on a more widespread and, possibly, mandated basis?” See question V.f in the Interactive Data Voluntary

Program Questionnaire available at http://www.sec.gov/cgi-bin/XBRL_Questionnaire.

106

See, e.g., letters from ABA, ACLI/AIA, AllState, Astoria, CSG, FEI, FirstEnergy, IBM, Intel, National City,

Pfizer and SCS.

107

See, e.g., letter from Florida Power and Light Company (FPL).

would not reduce the likelihood of human error or would not reduce costs for issuers.108 In this

regard, one commenter stated that the additional costs would make the U.S. market less attractive

to foreign issuers. 109

Some commenters that objected to the required submission of interactive data believed

that interactive data would not at this point improve the usefulness of financial information to

analysts or investors. 110 Some of these commenters suggested that there was not a widespread

demand for interactive data in the market, and that the Commission should allow market forces

to provide incentives for more widespread voluntary implementation of interactive data. 111

Other commenters believed that before adopting this requirement a way needs to be developed to

independently verify that financial data have been tagged accurately and ensure that information

that is consistent with that in the traditional format filing is provided to investors. 112

Although commenters generally favored XBRL as the most appropriate interactive data

format, some commenters expressed concerns about XBRL itself or the manner in which it is

proposed to be implemented in connection with the proposals. These concerns ranged from the

108

See, e.g., letters from CSG, EEC, National City, Southern and VEC.

109

See letter from EuropeanIssuers.

110

See, e.g., letters from BDO Seidman, LLP (BDO), CII, EuropeanIssuers, and VEC.

111

See, e.g., letters from EuropeanIssuers and Jay Starkman (Starkman).

112

See, e.g., CII and VEC.

availability of adequate software products 113 to the potential that customized taxonomy

extensions could grow so common that they would directly interfere with the comparability of

inter-company data. 114 A significant number of commenters suggested ways to facilitate

interactive data tagging, including exposing for comment the Commission’s maintenance and

support agreement for XBRL, 115 as well as monitoring, 116 cataloging, 117 providing guidance

on 118 and discouraging 119 extension use. We acknowledge these concerns and suggestions and

believe that the rules as adopted will address many of them. Widespread, mandatory adoption is

expected to foster a network effect and encourage development of cost reducing and improved

analytical products. Additionally, we believe that the taxonomy will become even more

comprehensive over time as common extensions are incorporated into the base in annual releases

thus minimizing any interference that common extensions might have with data comparability.

113

See, e.g., letter from Robert Gilmore (Gilmore).

114

See, e.g., letter from EuropeanIssuers.

115

See, e.g., letters from Center for Audit Quality (CAQ), Deloitte Touche LLP (Deloitte), E&Y, and

PricewaterhouseCoopers LLP (PWC).

116

See, e.g., letter from CFA.

117

See, e.g., letter from ABA.

118

See, e.g. letters from CFA Institute Centre for Financial Market Integrity (CFA), ConstellationEnergy

(Constellation), Deloitte, FEI, Grant Thornton, Morgan Stanley, and Rivet Software Inc (Rivet).

119

See, e.g., letters from Grant Thornton, CFA, Morgan Stanley, and Rivet.

Phase-in under the New Rules

Overview

The new rules initially will require interactive data reporting only by domestic and

foreign large accelerated filers that prepare their financial statements in accordance with U.S.

GAAP and have a worldwide public common equity float above $5 billion as of the end of the

second fiscal quarter of their most recently completed fiscal year. 120 The first required

submissions for issuers that file on domestic forms will be for quarterly reports containing

financial statements for a fiscal period ending on or after June 15, 2009. For calendar year

companies, this requirement will first apply to their June 30, 2009 quarterly reports filed on

Form 10-Q. 121

Filers under the new rules will be required to submit their financial statements in an

interactive data file using the list of tags for U.S. GAAP or IFRS as issued by the IASB, in either

case as approved for use by the Commission. The submission also will be required to include

any supporting files as prescribed by the EDGAR Filer Manual. Interactive data will be required

for the entirety of their financial statements, although tagging of the footnotes and schedules at a

120

Approximately 500 companies initially will be required to submit interactive data. Other companies, however,

initially will be permitted to submit interactive data if they use U.S. GAAP or IFRS as issued by the IASB.

121

For most U.S. companies and foreign private issuers filing on domestic forms, the periodic report to which this

will first apply will be the June 30, 2009 quarterly report. For a company that files on domestic forms with a June

30 fiscal year, the first report will be the September 30, 2009 quarterly report. Foreign private issuers not using

domestic forms that are in the first phase-in group will first provide interactive data in connection with their first

Form 20-F or Form 40-F annual reports for the year ended on or after June 15, 2009.

deeper level of detail will be phased in the following year.

We did not propose, and are not adopting, a requirement that filers provide interactive

data for their Management’s Discussion and Analysis (MD&A), executive compensation, or

other financial, statistical or narrative disclosure. 122 Many commenters supported this

position. 123 Some commenters supported the idea of eventually tagging non-financial statement

information because of its usefulness to investors, 124 while others expressed concern that

variations among companies in executive compensation practices may not lend themselves to the

development of standard tags 125 and should at the most be voluntary rather than required. 126

Another commenter supported the application of interactive data format to MD&A because of a

belief that interactive data format for MD&A disclosures would be more useful to investors than

detailed tagging of the footnotes to the financial statements. 127 This commenter recommended

block tagging each section of the MD&A, with some level of detailed tagging for the numbers

and tables. In deciding not to require the tagging of this information at this time, we agree with

122

Tagging this information is neither required nor permitted under the amendments.

123

See, e.g., letters from ABA, General Mills (Gen. Mills), KPMG, Pfizer, Inc. (Pfizer) and The Society of

Corporate Secretaries, and Governance Professionals (SCS).

124

See, e.g., letter from CalPERS.

125

See, e.g., letters from ABA, Johnson & Johnson (J&J), Pfizer, Gen. Mills, and SCS.

126

See, e.g., letter from UTC.

127

See, e.g., letter from National City.

the commenters who believed that more experience with interactive data and a greater

understanding of the costs and time associated with compliance with the requirements as

proposed is needed before expanding the requirement to other information. We will continue to

consider, however, the advisability of permissible optional or required interactive data for

disclosures made outside a set of financial statements prepared in accordance with U.S. GAAP or

IFRS as issued by the IASB or related financial statement schedules required under Commission

rules.

The following tables identify the reports for which a filer would first be required to

include interactive data for the company’s financial statements according to the company’s filing

status. 128

128

Transition reports that contain financial statements of the type and for the periods specified also will be required

to be submitted in interactive data format under the new rules. These dates apply to the initial required interactive

data disclosure; detailed tagging of the financial statement footnotes and schedules will not be required for an

additional year.

Domestic and Foreign Large Accelerated Filers Quarterly report on Form 10-Q or annual

Using U.S. GAAP with Worldwide Public

report on Form 20-F or Form 40-F containing

Common Equity Float above $5 Billion as of

financial statements for a fiscal period ending

the End of the Second Fiscal Quarter of Their

on or after June 15, 2009.

Most Recently Completed Fiscal Year

All Other Large Accelerated Filers Using U.S.

Quarterly report on Form 10-Q or annual

GAAP

report on Form 20-F or Form 40-F containing

financial statements for a fiscal period ending

on or after June 15, 2010.

All Remaining Filers Using U.S. GAAP

Quarterly report on Form 10-Q or annual

report on Form 20-F or Form 40-F containing

financial statements for a fiscal period ending

on or after June 15, 2011.

Foreign Private Issuers with Financial

Annual reports on Form 20-F or Form 40-F for

Statements Prepared in Accordance with IFRS

fiscal periods ending on or after June 15, 2011.

as Issued By the IASB

Companies Covered by New Rules and Phase-in

The new rules will cover all companies that report either in U.S. GAAP, including

smaller reporting companies and foreign private issuers that report in U.S. GAAP or, in the case

of foreign private issuers, in accordance with IFRS as issued by the IASB. 129 On November 14,

2008, we issued a release proposing to allow certain domestic issuers to prepare financial

statements in accordance with IFRS as issued by IASB. 130 The phase-in will require domestic

and foreign large accelerated filers that report in U.S. GAAP and meet the minimum worldwide

common equity float of greater than $5 billion to provide their initial interactive data

submissions in year one of the phase-in period discussed above. All other U.S. GAAP filers that

meet the definition of large accelerated filer will be required to provide their initial interactive

data submissions in year two of the phase-in period. All remaining U.S. GAAP filers, including

smaller reporting companies and companies not previously subject to periodic reporting

requirements, will be required to provide their initial interactive data submissions in year three of

the phase-in period.

Foreign private issuers that prepare their financial statements in accordance with IFRS as

issued by the IASB will be required to provide their initial interactive data submissions in year

129

As noted above, however, the new rules would not apply to investment companies registered under the

Investment Company Act, business development companies, or other entities that report under the Exchange Act

and prepare their financial statements in accordance Article 6 of Regulation S-X.

130

See Release No. 33-8982 (Nov.14, 2008) [73 FR 70816].

three of the phase-in period.

The additional phase-in time for all but the largest accelerated filers is intended to permit

companies to plan and implement their data tagging with the benefit of the experience of year

one filers. It also is intended to enable us to monitor implementation and, if necessary, make

appropriate adjustments during the phase-in period. With respect to foreign private issuers that

report using IFRS as issued by the IASB, the additional phase-in time for these issuers is to allow

greater development of the IFRS list of tags and our ability to accept filings using them.

Our multiyear experience with the voluntary program has helped us to better understand

the extent to which a filer will incur additional costs to create and submit its existing financial

disclosures in interactive data format. Based on that experience, we believe that the process of

preparing an interactive data file will not impose a significant burden or cost. The voluntary

program clearly demonstrated, although that program was limited to face financial statements

only and not footnotes, that companies can, if they choose, tag their financial statements using

currently available software without need of outside services or consultants; alternatively, they

can rely on financial printers, consultants, and software companies for assistance, although they

will retain ultimate responsibility for both their financial statements and their tagged data. As

discussed in more detail in the cost-benefit analysis below, 131 we believe that first-year costs for

a company will decrease in subsequent periods, particularly after detailed footnote tagging has

131

See Part V.

been implemented. We also believe that these costs will be justified by interactive data’s

benefits. As with domestic registrants, we believe foreign private issuers that report in U.S.

GAAP or prepare their financial statements in accordance with IFRS as issued by the IASB will

be able to comply with the rules without incurring significant costs.

We expect that smaller companies, which generally are disproportionately affected by

regulatory costs, also will be able to provide their reports in interactive data format without

undue effort or expense. While interactive data reporting involves changes in reporting

procedures, mostly in the initial reporting periods, we expect that these changes may provide

efficiencies in future periods. As a result, there may be potential net savings to the filer,

particularly if interactive data become integrated into the filer’s financial reporting process.

While we recognize that requiring interactive data financial reporting will likely result in start-up

expenses for smaller companies, these expenses may be lower than those of larger filers, given

that smaller filers tend to have simpler financial statements than larger companies, with fewer

elements and disclosures to tag. In addition, we expect that both software and third-party

services will be available to help meet the needs of smaller filers. We expect that the phase-in

will foster the improvement and availability of inexpensive software and that a firmly established

phase-in deadline could stimulate the development of such software. We also intend that the

third year phase-in for smaller reporting companies will permit them to learn from the experience

of the earlier filers. It will also give them a longer period of time over which to spread first-year

data tagging costs.

As noted above, 132 CIFiR issued its final report recommending that the Commission,

over the long term, phase in the requirement that companies file financial statements using

interactive data after the satisfaction of specified preconditions:

•

successful testing of the list of tags for U.S. financial statement reporting;

•

the ability of reporting companies to file interactive data on the Commission’s

electronic filing system using the new list of tags for U.S. financial statement

reporting; and

•

the ability of the Commission’s electronic filing system to provide an accurate

human-readable version of the interactive data.

CIFiR recommended that we phase in financial statements using interactive data by

requiring the largest 500 domestic registrants, 133 as determined by the value of shares held by

unaffiliated persons, to furnish (rather than file) interactive data for the face of their financial

132

See Part I.C above.

133

The recommendation does not address foreign companies. We do not believe that whether a U.S. GAAP

reporting company is domestic or foreign should determine the applicability of the rules, and therefore foreign

companies using U.S. GAAP will be included in the phase-in schedule along with their domestic counterparts. As

noted, foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB

also will be subject to the interactive data submission requirements, although they would not be phased in until year

three. We also note that the CIFiR Final Report does not expressly address filings other than Exchange Act periodic

reports.

statements and, in block-tagged form, 134 the footnotes to the financial statements. The Final

Report also recommends that, one year after we impose this requirement on the first group of

registrants, we impose the same requirement on the remaining domestic registrants that fall

within the definition of “large accelerated filer.” Finally, the Final Report recommends that,

once the specified conditions have been satisfied and the second phase-in period has been

implemented, we evaluate whether and when to require that the domestic large accelerated filers

file rather than furnish financial statements in interactive data format, as well as the inclusion of

all other reporting companies.

Several commenters suggested a later phase-in for all companies with start dates of the

second half of 2009 and when these pre-conditions are met. These commenters generally

reasoned that the additional time would help companies and service providers to prepare. 135

We believe that sufficient progress has been made regarding each of CIFiR’s

preconditions, particularly with respect to the list of tags for U.S. financial statement

reporting. 136 While admittedly there has been only limited experience with footnote tagging, the

current list of tags for U.S. financial statement reporting has been in wide use by participants in

134

“Block” text means that the entire footnote or other discrete item, such as a schedule or table, would be tagged as

an individual element.

135

See, e.g., letters from National City, Safeway, Inc. (Safeway), and Emerson Electric Company (EEC).

136

We are still working on the ability to use the IFRS list of tags with our system, but expect it to be operational by

the time filers that report in accordance with IFRS are required to submit interactive data files. As will be provided

in the EDGAR Filer Manual, we will publish on our Web site when EDGAR can support filings that use the IFRS

list of tags.

the voluntary program in submissions to us. 137 We understand that the list also is being used by

companies that are tagging their financial statements outside of the voluntary program, including

experimenting with footnote tagging. The tags also will be updated in an expected January 2009

version. The updated list is expected to contain improvements such as the reflection of new

accounting pronouncements. The Commission’s IDEA system into which companies actually

will submit interactive data has been effectively implemented and the ability of companies to do

so is now established. Finally, the Commission has developed a viewer to provide an accurate

human-readable version of interactive data. Both the filing and viewing capabilities are

fundamentally enhanced versions of applications and processes that were already in place for the

voluntary program.

We have also carefully considered the Committee’s thoughtful recommendation,

including the recommended phase-in of 500 initial companies and delayed consideration of

non-accelerated and other filers until after two years. We are adopting a phase-in schedule

similar to that suggested by the Committee. 138 However, instead of waiting until after the second

year to determine whether to propose extending the applicability of the rules to all filers, the new

rules will establish a phase-in for the remaining companies’ required interactive data submissions

137

Since June, when it became available on EDGAR, approximately 60 companies have completed approximately

100 submissions using the new taxonomy.

138

As previously noted, the worldwide public float cutoff of $5 billion will result in approximately 500 companies

subject to the new rules in year one.

that will begin in the third year. Based on comments received on the proposing release,

participants’ experience with the voluntary program and our consultations with filers, software

providers and filing intermediaries, we believe the new rules will accelerate the improvement

and availability of inexpensive software. This, in turn, should generate more options and

assistance for non-accelerated filers in general and, in particular, smaller reporting companies

and foreign private issuers that prepare their financial statements in accordance with IFRS as

issued by the IASB in particular so that they could become proficient in the use of interactive

data without undue burden.

One commenter expressed concern about whether the initial phase-in of 500 issuers

would involve enough companies to create a “network effect” so users of financial reporting

obtain the benefits of interactive data in peer comparisons that are most useful and likely to occur

if many or all filers provide financial reporting using interactive data.139 Although including a

larger number of filers in the initial phase-in might increase the overall commercial and

analytical value of the interactive data, which in turn would likely increase the supply of

software for analyzing and presenting interactive data to analysts and investors, we believe a

firm schedule for all U.S. GAAP and IFRS reporting companies to file their financial statements

using interactive data can provide an incentive to stimulate the further development of interactive

data-related software and services, while also affording most companies additional time to learn

from the experience of others.

We also believe that concurrently adopting a phase-in for non-accelerated filers in

general and, in particular, smaller reporting companies, and foreign private issuers using IFRS as

issued by the IASB will establish an appropriate and measured timeline, which we will be able to

monitor and, if necessary, reconsider during the first two years of the phase-in.

Commenters generally supported the proposed phase-in schedule. A substantial majority

of the commenters, however, suggested that the initial submission required be a Form 10-Q for

139

See letter from CalPERS.

domestic companies. 140 Other commenters recommended that the phase-in commence with

filings made for fiscal periods 141 or years 142 beginning on or after December 15, 2008 or fiscal

years beginning after December 31, 2008, 143 as opposed to fiscal periods ending on or after

December 15, 2008, as proposed. The reasons cited by commenters included assuring that

issuers would submit an interactive data file for three Forms 10-Q before submitting it for a

Form 10-K, 144 providing more time for issuers and service providers to prepare 145 and allowing

bugs to be detected in quarterly filings before the more widely distributed annual filings. 146

The commenters suggesting that the initial submission required be a Form 10-Q for

domestic issuers generally reasoned that it would be helpful to companies and service providers

alike if they could begin with a relatively simple form. Many of these commenters suggested

that the content requirements of quarterly reports would be less burdensome than those of annual

reports and allow companies to allocate more staff to initial tagging and provide a tagged

140

See, e.g., letters from ABA, American Council of Life Insurers/American Insurance Association (ACLI/AIA),

AICPA, AllState Corp. (AllState), Credit Suisse Group (CSG), and Comcast Corp. (Comcast).

141

See, e.g., letter from Constellation.

142

See, e.g., letters from Comcast, Grant Thornton, and Pfizer.

143

See, e.g., letter from Astoria.

144

See, e.g., letters from Astoria and Comcast.

145

See, e.g., letter from Constellation.

146

See, e.g., letter from Grant Thornton.

template on which to build for subsequent filings. 147 At least one commenter acknowledged,

however, that despite the greater initial effort posed by tagging an annual report, the

comprehensiveness of this report would cause companies to address most of the issues in

quarterly reports. 148 Some service providers commented that although a complete annual report

is more effort for preparers, creating a related XBRL document is about the same level of effort

for both a Form 10-K and Form 10-Q (assuming the footnotes are block tagged) and that the

biggest difference between the forms is the larger number of footnotes in a Form 10-K, resulting

in a nominal number of additional hours of effort. 149 These commenters further stated that

allowing the tagging of a Form 10-Q instead of a Form 10-K would delay the use and

development of XBRL by issuers while providing no significant savings of time or money.

Overall, the commenters that generally supported the proposed phase-in schedule took the view

that companies and service providers would be ready and the date certain together with the

significant number of issuers involved would encourage potential vendors of interactive data

products and services to invest in the development and marketing of new and improved products

and services. 150

147

See, e.g., letters from EEI, IBM, Pfizer, Southern Company (Southern), United States Steel Corporation (USS)

and UTC.

148

See letter from Association of the Bar of the City of New York (NYCBA).

149

See, e.g., letters from EDGAROnline and Rivet.

150

See, e.g., letters from PepsiCo., EDGAROnline and Rivet.

Many of the commenters that suggested that the phase-in be slower had concerns related

to the potential costs and burden of detailed footnote tagging. 151 Some commenters suggesting a

different initial phase-in period than what was proposed cited the ability to assess costs and

technology advancements. 152 Commenters also were concerned that such detailed tagging could

result in more company specific extensions than anticipated, which might not be comparable

between companies and present information out of context. 153

One commenter suggested that the phase-in should be faster for some filers, and

specifically recommended that all large accelerated filers reporting in accordance with U.S.

GAAP be made subject to the filing requirements in the first year, perhaps starting with a

quarterly report. 154 Other commenters stated that not only is tagging relatively simple and

inexpensive, but that we should endeavor to get more companies tagging sooner in order to

enhance the value of information available and to provide further impetus for software

development. 155

Some commenters also suggested that the rules should exclude or defer foreign private

151

See, e.g., letters from ABA, Constellation, SCS and Intel. See Part .II.B.3.a below for a more detailed discussion

of footnote tagging.

152

See, e.g., letters from EEI, Cisco Systems (Cisco), Comcast, and PPG Industries Inc. (PPG).

153

See, e.g., the letters from ABA, ACLI/AIA, CSG. FEI, IBM and Intel.

154

See letter from Grant Thornton.

155

See, e.g., letters from UBMatrix, EDGAROnline.

issuers because of the possibility that there might be a disproportionate burden on these

issuers. 156 As to foreign private issuers reporting in accordance with U.S. GAAP and who meet

the criteria for the first phase-in period in particular, several commenters stated that these issuers

could face extra burdens potentially due to less access to service provider help, language barriers,

a need to address both the U.S. GAAP list of tags and, possibly, relatively soon after, the IFRS

IASB list of tags (such as those issuers that have signaled an intention to report in accordance

with IFRS as issued by the IASB and discontinue reporting in U.S. GAAP), and have a potential

competitive disadvantage in comparison to foreign private issuers already reporting in

accordance with IFRS as issued by the IASB who would not have to tag until the third year. 157

One commenter suggested treating all foreign private issuers the same and placing them on the

later phase-in schedule (or at least the ones that have announced an intention to switch to IFRS

as their sole reporting standard). 158

One commenter expressed the desire that the phase-in not be delayed due to a possible

conversion away from U.S. GAAP to IFRS. The commenter noted in this regard that it believed

interactive data could facilitate such a conversion if similar items were to receive similar tags. 159

156

See, e.g., letters from CSG, Nippon Keidanren (NK), Philips International B.V. (Philips) and Sullivan &

Cromwell (S&C).

157

See, e.g., letters from Credit Suisse Group (CSG), NK, Philips, S&C, and J.P Morgan (JPM).

158

See letter from Philips.

159

See letter from CFA.

In light of the differing opinions among commenters, the experience of those in the voluntary

program, the size and resources of those issuers in the first group, and our ability to monitor the

experiences of those larger first phase companies, we believe that the phase-in period as

modified from the proposal generally addresses the burden and expense concerns expressed by

some commenters. In this regard, as noted above, a filer first will be required to submit an

interactive data file for a Form 10-Q, Form 20-F or Form 40-F, as applicable and the phase-in

period will begin later than proposed. We believe that this approach will provide issuers more

time to prepare their financial statements and service providers more time to deliver adequate

software to support them. The staff also will consider requests to defer the phase-in on a

case-by-case basis for issuers with special circumstances, particularly where the filer is

committed to switching its basis of reporting to IFRS as issued by the IASB. Issuers could make

such requests by applying for a continuing hardship exemption under amended Rule 202 of

Regulation S-T. 160

With respect to Canadian issuers, one commenter stated that such issuers filing forms

under the Multijurisdictional Disclosure System (MJDS)161 should be able to submit interactive

160

As further discussed in Part II.E, Rule 202 will permit an issuer to apply in writing for a continuing hardship

exemption from the requirement to provide interactive data if the issuer cannot do so without undue burden or

expense.

161

Certain Canadian foreign private issuers file registration statements and annual reports under the MJDS, which

permits eligible Canadian companies to use their disclosure documents prepared in accordance with Canadian

requirements in filings with the Commission.

data regardless of whether reporting in U.S. GAAP in order to avoid placing such issuers at a

competitive disadvantage to other issuers permitted or required to submit interactive data. 162

The commenter stated that if it would not be feasible to enable such issuers to submit interactive

data using a Canadian GAAP taxonomy, then the Commission should permit such issuers to tag

a U.S. GAAP reconciliation. Consistent with the commenter’s concern and our solicitation of

comment in the proposing release, we are adding MJDS Forms F-9, F-10 and 40-F to the forms

we expressly proposed to be subject to the interactive data requirements in adopting the

requirements. The rules will not, however, require or permit interactive data related to these

MJDS forms to be submitted when the financial statements they contain are prepared in

accordance with Canadian GAAP or as a U.S. GAAP reconciliation. There is no taxonomy for

Canadian GAAP or a U.S. GAAP reconciliation and, as a result, there is not sufficient tagging

guidance to produce tags that would be comparable across companies using Canadian GAAP.

As proposed and as adopted, investment companies registered under the Investment

Company Act, business development companies or other entities that report under the Exchange

Act and prepare their financial statements in accordance with Article 6 of Regulation S-X will

not be subject to the new rules. The one commenter to address the exclusion of these companies

agreed with this approach and stated that the investment management financial reporting

taxonomy is not sufficiently developed and that the degree of investor benefit from tagging that

162

See letter from Canadian Pacific Railway (CP).

occurs in the case of other types of issuers is not present for investment company and similar

issuers. 163

Information and Documents Covered by the New Rules

Financial Statements, Footnotes, and Financial Statement

Schedules

The rules will require interactive data tagging of a filer’s complete financial statements

and any required financial statement schedules.164 As with the voluntary program, the new rules

will require companies to provide the interactive data in an exhibit. Interactive data will be

required for all periods included in the filer’s financial statements. 165 As proposed and as

adopted, the new rules will not, however, require interactive data submissions for other financial

statements that may be required of filers, including those provided pursuant to Rules 3-05, 3-09,

3-14, and 3-16 of Regulation S-X. 166 This approach was generally supported by commenters. 167

As with the voluntary program, the new rules will require that the line item descriptions

163

See letter from the Investment Company Institute.

164

As previously noted, new Rule 405 of Regulation S-T will directly set forth the basic tagging requirements and

indirectly set forth the rest of the tagging requirements through the requirement to comply with the EDGAR Filer

Manual. Consistent with new Rule 405, the EDGAR Filer Manual will contain the detailed tagging requirements.

165

References in the rules to the financial statements of the filer or issuer also include financial statements of its

predecessor to the extent they are included in the related registration statement or report pursuant to Rule 3-02 of

Regulation S-X, Instruction 1 to Item 8 of Form 20-F or the requirements applicable to Forms F-9, F-10 or 40-F.

166

17 CFR 210.3-05, 17 CFR 210.3-09, 17 CFR 210.3-14, and 17 CFR 210.3-16. Additionally, pro forma financial

statements prepared under Article 11 of Regulation S-X are not subject to the interactive data requirements.

167

See, e.g., letter from Deloitte.

and amounts presented on the face of the financial statements in the traditional format filing be

the same as in the interactive data format. Also, the rules will prohibit partial presentation of

face financial statements in interactive data format. For example, filers will not be permitted to

exclude comparative financial information for prior periods.

Unlike the voluntary program, our new rules require companies using U.S. GAAP or

foreign private issuers using IFRS as issued by the IASB to provide tagged data for the footnotes

and schedules to the financial statements. The 2005 adopting release for the voluntary program

stated that we recognized that technical issues made it difficult to tag the notes to the financial

statements. We did, however, provide volunteers with the option of tagging the notes to the

financial statements. 168 Since the time of the adopting release, the necessary list of tags has been

completed and the available software has advanced sufficiently to require that the financial

statement footnotes and schedules be included in the new rules.

The voluntary program adopting release recommended that if participants voluntarily

provided footnotes in interactive data format, then they should provide enough detail so that the

tagging would be of practical value to users. The release stated that a single tag for the entire

group of footnotes in a filing would cover too much information to be useful to the user. We still

believe that one tag for the entire group of footnotes would be confusing and provide little

168

See Part II.E. of Release No. 33-8529 (Feb. 3, 2005) [70 FR 6556].

benefit. If filers tag each footnote separately, however, users will be able to compare footnote

disclosure between periods and across filers while minimizing the burden on preparers. We are

therefore adopting the requirement that footnotes be tagged using four different levels of detail:

(i) each complete footnote tagged as a single block of text;

(ii) each significant accounting policy within the significant accounting policies footnote

tagged as a single block of text;

(iii) each table within each footnote tagged as a separate block of text; and

(iv) within each footnote, each amount (i.e., monetary value, percentage, and number)

separately tagged.

To allow filers time to become familiar with tagging footnotes, in each filer’s first year of

interactive data reporting, only level (i) will be required. All four levels will be required starting

one year from the filer’s initial required submission in interactive data. In year two, for the first

filing required to have detailed tagging of footnotes and schedules, the filer will have an

additional 30 days to submit the interactive data exhibit. This is similar to the grace period

provided for a filer’s first required filing with interactive data. Subsequent interactive data

exhibits using all of the levels will be required at the same time as the rest of the related report or

registration statement. We believe the 30 day grace period will help a filer comply with the more

detailed tagging requirements.

The requirement that in the second year a filer tag separately each amount within a

footnote (i.e., monetary value, percentage, and number) should not affect a filer’s decisions

regarding what to disclose. We are aware of questions as to whether the contextual information

or data elements chosen from the standard list of tags could potentially reveal information that

the rest of the related registration statement or periodic report would not otherwise make known.

However, we do not believe that the contextual information or data elements chosen should

provide any additional substantive disclosure.

To clarify the intent of the interactive data requirements, new Rule 405 of Regulation

S-T, that sets forth tagging requirements, includes an instruction that states that the rule requires

a disclosure format, but does not change substantive disclosure requirements. As proposed and

as adopted, the rules also state clearly that the information in interactive data format should not

be more or less than the information in the ASCII or HTML part of the related registration

statement or report. 169

As briefly noted above, commenters provided a mix of views on the footnote tagging

requirements we proposed. Many commenters objected to some or all of the requirements as

proposed and suggested alternatives. 170 In terms of burden, a significant number of commenters

objected, in particular, to level (iv) tagging in whole or part. 171 Several of these commenters

argued that detailed footnote tagging would require significant effort from the issuer and could

be confusing because of the high number of company-specific extensions and the risk of

169

See Preliminary Note 2 of Rule 405 of Regulation S-T.

170

See, e.g., letters from ABA, ACLI/AIA, AllState, Astoria, FEI, FirstEnergy, IBM, Intel, National City, and SCS.

171

See, e.g., letters from ABA, ACLI/AIA, AllState, Astoria, CSG, FEI, FirstEnergy, IBM, Intel, National City,

Pfizer, and SCS.

inconsistency among filers due to varying footnote formats. 172 Other criticisms included

assertions that the effort required would be greater than the Commission estimated, 173 overly

burdensome 174 and duplicative, 175 would result in so many extensions that the information would

not be comparable among issuers, 176 and would produce information that users inappropriately

would take out of context. 177

Other commenters reacted more favorably, with some suggesting alternatives to the

proposed rules. For instance, a number of commenters recommended that the detailed tagging of

footnotes be gradually phased in to provide more time for issuers to get acclimated to the process

and for the development of standard taxonomies. 178 Other commenters suggested that the

required detail tagging of footnotes should focus on the most useful and used footnote data rather

on a broad array of data that would require issuers to apply thousands of additional tags for

detailed financial and narrative information. 179 Similarly, another commenter suggested that

172

See, e.g., the letters from ACLI/AIA, FEI, IBM, and Intel.

173

See, e.g., letter from SCS.

174

See, e.g., letter from Intel.

175

See, e.g., letter from FEI.

176

See, e.g., letter from ABA.

177

See, e.g., letter from CSG.

178

See, e.g., letters from Comcast, Constellation, EEI, Ernst & Young LLP (E&Y), Morgan Stanley, National

Association of Real Estate Investment Trusts (NAREIT), and Southern.

179

See, e.g., letters from Intel, Morgan Stanley, and SCS.

detail tagging only be required as to the more standardized types of footnotes. 180

180

See letter from USS.

While we are adopting the proposed requirement to tag separately each amount within a

footnote (i.e., monetary value, percentage, and number), we will permit, but not require, filers to

tag, to the extent they choose, each narrative disclosure. We believe that adopting the footnote

tagging requirements substantially as proposed strikes an appropriate balance between satisfying

investors’ needs and not imposing undue burden on issuers. We believe the block-text tagging

required under levels (i) through (iii) will satisfy the needs of those who desire information

within the context of an entire footnote or an entire table. We also believe that requiring the

detail tagging of individual amounts but permitting the detail tagging of narrative disclosures

within the footnotes as provided under level (iv) will satisfy the needs of those who desire to

analyze specific pieces of information or data. Further, we believe that by permitting filers to

choose whether and which elements to tag in the narrative disclosures of the footnotes and

schedules, they are granted a degree of flexibility and relieved of the uncertainty as to which

narrative elements to tag, some of which are placed into footnotes and schedules voluntarily. We

also believe that not requiring detailed tagging of narratives would not result in the loss of

information due to block text tagging. Finally, we believe that taxonomy and software advances,

combined with the rules’ grace period, will avoid placing an undue burden on issuers. We will,

however, monitor the implementation of these amendments and, if necessary, consider making

appropriate adjustments to the requirements.

Apart from footnote disclosures, filers may be required under existing financial reporting

requirements to include certain supplementary financial statement schedules with their financial

statements. The form and content of these schedules are governed by Article 12 of Regulation

S-X. 181 The list of tags for U.S. financial statement reporting enables companies to tag

individual facts in these financial statement schedules, or to block tag each entire schedule.

Filers also will be required to include with their interactive data any financial statement

schedules prescribed by Article 12 of Regulation S-X. These financial statement schedules will

be tagged using two different levels of detail; only the first level will be required in the first year.

Both levels will be required starting one year from the filer’s initial required submission in

interactive data format. Similar in concept to the tagging approach adopted for the financial

statement footnotes, the required levels of detail will be: (i) each complete financial statement

schedule tagged as a block of text; and (ii) each amount (i.e., monetary value, percentage, and

number) separately tagged. However, we will permit but not require each narrative disclosure in

such schedule to be separately tagged to the extent desired by the filer.

A filer may restate its previously filed financial statements for the correction of an error

and file an amendment to its registration statement, periodic report or transition report.

Alternatively, a filer may revise its previously filed financial statements to reflect the effects of

certain subsequent events, including a discontinued operation, a change in reportable segments,

or a change in accounting principle and file a Form 8-K or 6-K or an amendment to a

181

See Rules 5-04 and 7-05 of Regulation S-X and Items 17 and 18 of Form 20-F.

pre-effective registration statement. The new rules require a filer to provide revised interactive

data at the same time it files the restated or revised traditional format financial statements as an

exhibit to the registration statement or report containing those financial statements. 182 If a filer

decides to change a tag it used previously that was not inappropriate at the time used, it would

not be required to disclose the change.

Reports Covered by the New Rules

We are adopting the proposed requirement to submit interactive data for the filer’s

financial statements contained in periodic reports on Forms 10-Q, 10-K and 20-F and, in

addition, extending the requirement to the Form 40-F annual report and to Forms 8-K and 6-K

that contain revised or updated financial statements. 183 Under the new rules, filers also will be

required to provide interactive data for transition reports on Forms 10-Q, 10-K, or 20-F.

We are extending the interactive data requirements to Form 40-F when used as an annual

report because we believe that the effort required to satisfy the requirement and the benefits from

doing so would be comparable to the effort and benefits associated with the other periodic

reports to which the requirement will apply. In response to our solicitation of comment on

182

Revised interactive data will be required so that the financial information will be the same in both the traditional

format filing and the interactive data file. If the financial statements are not revised in connection with an amended

registration statement, periodic report, or transition report, the exhibit index will indicate that the interactive data file

was already provided.

183

Form 40-F may be filed by a Canadian company filing in accordance with the MJDS. Similar to Form 20-F, it

may be used as an annual report or an Exchange Act registration statement.

whether to require interactive data in connection with Forms 40-F, one commenter urged us to at

least permit filers to submit interactive data in order to avoid placing filers of that form at a

competitive disadvantage. 184

As discussed above, we are extending the interactive data requirements to Forms 8-K and

6-K that contain updated interim financial statements or financial statements that have been

revised to reflect the effects of certain subsequent events. These financial statements typically

are not filed as amendments to forms for which we proposed to require interactive data, but they

provide timely financial information comparable to that contained in such forms and may be

incorporated by reference into registration statements for which interactive data requirements

generally apply. 185 In this regard, several commenters noted that registrants use Form 8-K to file

financial statements that reflect changes for reasons other than to correct accounting errors. 186

Registration Statements under the Securities Act Covered by

the Rules

We are adopting substantially as proposed a requirement that, subject to the phase-in

period described above, registration statements filed under the Securities Act, 187 include

184

See letter from CP.

185

Issuers would not be required or permitted to submit an interactive data exhibit to a Form 8-K or 6-K under any

circumstances other than those specified. See note 74 above.

186

See, e.g., letters from Deloitte, E&Y, and KPMG LLP (KPMG).

187

The requirement will apply to registration statements under the Securities Act on Forms S-1, S-3, S-4, F-9, F-10,

S-11, F-1, F-3, and F-4. This includes registration statements for annuity contracts that are filed on Forms S-1 and

interactive data when financial statements are included directly in the registration statement,

rather than being incorporated by reference. This requirement will apply to the issuer’s financial

statements for all periods included in the registration statement as required by Regulation S-X

and our other rules. As proposed, the rules would apply from the first filing of a registration

statement. The rules as adopted, however, require that interactive data be submitted only after a

price or price range has been determined and any time thereafter when the financial statements

are changed. We believe analysts, investors, the public, and others will benefit from the

enhanced ability of interactive data to locate and compare financial data included in registration

statements. Further, under the new rules, interactive data will be required for the acquiring

company, the filer, but not for the company being acquired, in the context of a business

combination.

Some commenters opposed requiring the submission of interactive data with registration

statements for initial public offerings under the Securities Act. 188 Some of these objections

included the burdens for newly public companies. 189 However, a number of commenters favored

requiring interactive data for initial public offering registration statements, other Securities Act

S-3. As proposed, however, the requirement that we are adopting will not apply to registration statements on Form

N-3, N-4 or N-6, which are used to register variable annuity contracts and variable life insurance policies.

188

See, e.g., letters from ABC, National City, NYCBA, and Gary Purnhagen (Purnhagen).

189

See, e.g., letter from ABC.

registration statements or both. 190 Some commenters recommended that interactive data be

required to be submitted only after the registration statement becomes effective, given the effort

in preparing an initial public offering and the frequency with which initial public offering efforts

never come to fruition. 191

We believe that the interactive data requirements for Securities Act registration

statements in general and, in particular, as limited to filings only after a price or price range has

been determined and any time thereafter when the financial statements are changed, strike an

appropriate balance between the alternatives of requiring interactive data submissions with each

pre-effective amendment or waiting until a registration statement has been declared effective. In

our experience, most issues related to the staff’s review of offerings typically are resolved or

near resolution by the time a price range is determined, and, as a result, there typically would be

relatively few changes to the financial statements contained in additional amendments. As a

result, issuers would be required to tag information that likely is in substantially final form.

Consequently, the information would be useful to investors and issuers would be unlikely to

need to revise the information significantly in a way that would trigger multiple submissions of

interactive data. As each submission would be tagged to indicate that the information in the

submission has been revised, we believe investors should be able to monitor changes in the

190

See, e.g., letters from AICPA, Grant Thornton, PricewaterhouseCoopers LLP (PWC), CAQ, CalPERS, CFA,

UTC, Morgan Stanley, and E&Y.

191

See, e.g., letters from BDO, CAQ, and PWC.

interactive data efficiently. Further, the rules as adopted provide that a company’s first filing to

be subject to the interactive data requirement would be a quarterly report or, for a foreign private

issuer not required to file quarterly reports, an annual report. Accordingly, interactive data

exhibits will not be required for initial public offerings.

Registration Statements under the Exchange Act Covered by

the Rules

We are not adopting a requirement to submit interactive data for the financial statements

contained in registration statements under the Exchange Act on Forms 10, 20-F and 40-F.

Although we only expressly proposed to require interactive data in connection with Securities

Act registration statements, the proposing release solicited comment on whether to require

interactive data for the financial statements in Forms 40-F and in registration statements under

the Exchange Act on Forms 10 and 20-F.

One commenter suggested waiting in order to evaluate experience with interactive data

submission before requiring submission of Exchange Act registration statements. 192 Another

commenter stated that the interactive data requirements should apply to Canadian issuers that

report in accordance with U.S. GAAP and, ultimately, IFRS as issued by the IASB. 193

The rules as adopted will not require interactive data files to be submitted as an exhibit to Forms

192

See letter from UTC.

193

See letter from EDGAROnline.

10, 20-F or 40-F when used as Exchange Act registration statements. However, a filer is

permitted to voluntarily submit an interactive data exhibit with these registration statements.

Initial Filing Grace Period

As noted above, interactive data will be required at the same time as the rest of the filing

to which it relates. However, each company’s initial interactive data submission, regardless of

filing type, will have a 30 day grace period, and therefore will be permitted as an amendment to

•

periodic report on Form 10-K, 20-F, 40-F or 10-Q within 30 days after the earlier of

the due date or filing date of the related report;

•

Securities Act registration statement within 30 days after the filing date of the price or

price range as part of the related registration statement; 194 or

•

report on Form 8-K or 6-K that contains revised or updated financial statements that

have been revised to reflect a subsequent event rather than the correction of an error

within 30 days after the filing date of the related report.

In addition, as noted above, in year two for the first filing that is required to have footnotes and

schedules tagged using all levels of detail, the interactive data exhibit will be required within 30

days after the due date or filing date of the related registration statement or periodic, current or

194

The 30 day grace period would begin for a Securities Act registration statement once the price or price range is

filed as part of it because it is at that time the interactive data filing requirement becomes applicable.

transition report or Form 6-K, as applicable.

In the voluntary program, filers were permitted to provide the interactive data at the time

of filing or at any later time, without a deadline. 195 We believe that, consistent with our view

regarding the potential value of widespread market use of the interactive data, companies should

be required to provide the interactive data at the time the registration statement or report is filed

or required to be filed, whichever is earlier. We do not believe this timing requirement will place

undue pressure on filers as experience with tagging financial statements grows and software and

taxonomies develop. We believe, for example, based on our experience with the voluntary

program, that the time period for the quarterly or annual report is sufficient for filers to convert

their ASCII or HTML financial statements into interactive data format and that the initial grace

periods help to alleviate concerns over timing burdens.

Commenters overwhelmingly supported a 30 day grace period for the initial submission

and initial detail tagged footnote submission of interactive data and many supported a 30 day

grace period for additional submissions during the phase-in and, in some cases, beyond. 196

Some commenters suggested that the grace period apply either for all interactive data

195

The voluntary program permits filers to provide financial information in interactive data form as an exhibit to a

report on Form 8-K or Form 6-K when the related traditional format financial statements appear in a registration

statement or periodic report. The new rules, however, will require that interactive data be provided as an exhibit to

the registration statement or periodic report that contains the related traditional format financial statements.

196

See, e.g., letters from ACLI/AIA, AICPA, AllState, Astoria, CNW Group (CNW), Comcast, Constellation, and

EEI

submissions during the first two years of the phase-in period, 197 or for every submission made

during the entire phase-in period. 198 These commenters generally reasoned that during the time

specified, companies and service providers still would be familiarizing themselves and

developing expertise related to the tagging process and, as a result, would need time to complete

the tagging process. Some of those that supported additional grace periods noted that the tagging

process will be an additional step to financial statement preparation for years to come and that it

will take time to integrate the interactive data process with the financial statement preparation

process. 199 One commenter noted that the grace period following the filing of a Form 10-K

offers little relief for smaller companies due to the number of filings prepared shortly thereafter.

Specifically, this commenter noted that at many smaller companies, the staff responsible for the

preparation of a Form 10-K immediately turn their time and attention to the preparation of the

company’s proxy statement after filing the Form 10-K. The commenter stated that a Form

10-Q is not followed by a similar series of reporting obligations, so a grace period following this

report is consequently more helpful in assisting companies avoid excessive expense and

burden. 200

197

See, e.g., letters from Constellation, EEI, and IBM.

198

See, e.g., letters from AllState, Astoria, Comcast, Foley & Lardner (Foley), Pfizer, and UBmatrix.

199

See, e.g., letters from FEI and SCS.

200

See letter from ABA.

A few commenters suggested a grace period for submissions after the phase-in period.

Some stated that technical difficulties and the limited availability of support services would

necessitate the permanent or temporary extension of a grace period and proposed, on an on-going

basis after the initial phase-in period, that interactive data files be due within 4 or more days after

the related official filing is filed. Further, these commenters believed that this type of extension

would not ultimately impair the usefulness of interactive data while moving the tagging

procedures out of the financial reporting preparation timeframe but still providing it to investors

in a timely fashion. 201 However, other commenters were concerned that a grace period beyond

the periods proposed would diminish the usefulness of interactive data submitted beyond the due

date of the related official filing. 202

We acknowledge all of these concerns and suggestions, and while we are adopting the

grace periods substantially as proposed, we are deferring the start of the phase-in which we

believe may help to alleviate potential burdens by giving more time to prepare the initial

submission. We also believe that the eventual dropping of the grace period after the initial

submissions will help to make the interactive data files more useful and relevant to investors by

requiring the submissions at the same time as the related official filing.

Many commenters suggested that grace period submissions be filed as exhibits to Form

201

See, e.g., letters from AllState, EEI, SCS, and Southern.

202

See, e.g., letters from CFA and EDGAR Online.

8-K or 6-K rather than as exhibits to amendments to Exchange Act periodic reports, so as to

avoid negative connotations associated with the filing of an amendment. 203 One commenter

even suggested the creation of new forms for these amendments to distinguish them from

substantive amendments to periodic reports. 204 We acknowledge these concerns, but note that

grace period submissions filed with amended periodic reports need contain only the relevant

interactive data as an exhibit and therefore there should not be any confusion that the amended

report is being filed for any other reason. In this regard we note that Rule 12b-15 under the

Exchange Act 205 generally provides that any amendment to a filing that required a certification

must contain another certification; however, we clarify that, consistent with the exclusion of

interactive data from the disclosure certification requirements discussed in part II.C.4 below, an

amendment whose sole purposes is to submit interactive data as an exhibit is not subject to the

certification requirements of Rule 12b-15 under the Exchange Act. We therefore adopt the rules

as proposed as they relate to submitting interactive data as part of an amendment to the form

containing the related traditional format financial statements.

Web Site Posting of Interactive Data

We believe interactive data, consistent with our new rules, should be easily accessible for

203

See, e.g., letters from AICPA, Constellation, Institute of Management Accountants (IMA), NAREIT, Purnhagen,

and Teva Pharmaceutical Industries Limited (Teva).

204

See letter from IBM.

205

17 CFR 240.12b-15.

all investors and other market participants. As such disclosure becomes more widely available,

advances in interactive data software, online viewers, search engines and other Web tools may in

turn facilitate improved access to and usability of the data, promoting its awareness and use.

Encouraging widespread accessibility to filers’ financial information furthers our mission to

promote fair, orderly, and efficient markets, and facilitate capital formation. We believe Web

site availability of the interactive data will encourage its widespread dissemination, thereby

contributing to lower access costs for users. We therefore are requiring, generally as proposed,

that each filer covered by the new rules provide the same interactive data that it will be required

to provide to the Commission on its corporate Web site, if it has one, on the earlier of the

calendar day it filed or was required to file the related registration statement or report, as

applicable. 206 The interactive data should be accessible through the issuer’s Web site address the

issuer normally uses to disseminate information to investors. 207 Finally, the interactive data will

206

New Rule 405 of Regulation S-T contains the Web site posting requirement. We also are providing, however,

that Web site posting of the interactive data will not be required until the end of any applicable grace period that

applies to the submission of the interactive data to the Commission. Similarly, we are providing that Web site

posting of the interactive data will not be required before submission of the interactive data when submission of the

data is delayed in accordance with and during the term of any applicable hardship exemption provided under Rule

201 or 202 as proposed to be revised. Revisions to Rules 201 and 202 are more fully discussed below in Part II.E.

207

If the issuer has a corporate Web site but does not normally disseminate information to investors through its Web

site, it should provide access to the interactive data through a location on its Web site that it reasonably believes will

facilitate user access to the forms. We took a similar approach to Web site posting location and 12 month time

frame in connection with requiring that issuers with corporate Web sites post on their Web sites beneficial

ownership reports filed with respect to their securities on Forms 3, 4 and 5 under Section 16(a) of the Exchange Act.

See Section 16(a)(4)(C) [15 U.S.C. 78p(a)(4)(C)], Rule 16a-3(k) [17 CFR 240.16a-3(k)] and Release. No. 33-8230

(May 7, 2003) [68 FR 25788].

be required to be posted for at least 12 months, which is consistent with issuers’ full one year

reporting cycle.

We believe that access to the interactive data on corporate Web sites will enable search

engines and other data aggregators to more quickly and cheaply aggregate the data and make

them available to investors because the data will be available directly from the filer, instead of

through third-party sources that may charge a fee. It could also transfer reliability costs of data

availability to the public sector by reducing the likelihood that investors cannot access the data

through the Commission’s Web site due to down-time for maintenance or to increased network

traffic. We also believe that availability of interactive data on corporate Web sites will make it

easier and faster for investors to collect information on a particular filer if the interactive data is

on the filer’s Web site already, rather than if investors would be required to visit separately (for

example, by hyperlink) and search the Commission’s Web site for information, particularly if the

investor is already searching the issuer’s Web site. To help further our goals of decreasing user

cost and increasing availability, we will not allow companies to comply with the Web posting

requirement by including a hyperlink to the Commission’s Web site.

We believe this requirement will be consistent with the increasing role that corporate

Web sites perform in supplementing the information filed electronically with the Commission by

delivering financial and other disclosure directly to investors. We also believe that this

requirement can provide an incentive for corporations to add content to or otherwise enhance

their Web sites, thereby improving investor experience. For example, we note that since 2003

issuers with corporate Web sites have been required to post on their Web sites, directly or by

hyper linking to a third-party Web site such as the Commission’s Web site, beneficial ownership

reports filed with respect to their securities on Forms 3, 4, and 5. We also note that many

companies provide on their Web sites access to their periodic reports, proxy statements, and

other Commission filings. 208 The new rules will expand such Web site posting by requiring

companies with Web sites to post their interactive data as well. 209

Commenters had mixed views on the proposed Web site posting requirement. Some

commenters stated that it would be appropriate for a company to post interactive data on its Web

site because, for example, many users of financial statements access such types of information

through corporate Web sites. 210 Other commenters objected to the Web site posting requirement,

citing reasons including cost, 211 lack of investor benefit, 212 and facilitating use of information

out of context. 213 Finally, some commenters addressed posting details such as when the

interactive data must be posted and for how long it must remain accessible.

208

Companies filing registration statements and accelerated filers and large accelerated filers in their periodic

reports are required to disclose whether or not they make available free of charge on or through their Web site, if

they have one, their annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and

amendments to those reports. Companies that do not make their reports available in that manner also must disclose

the reasons they do not do so and whether they voluntarily provide electronic or paper copies of their filings free of

charge upon request. See Item 101(e) of Regulation S-K.

209

As further discussed in Part II.E, under the new rules a company that fails to post its interactive data as required

will be deemed ineligible to use short form registration Forms S-3, S-8, and F-3 and will be deemed not to have

adequate public information available for purposes of Rule 144(c)(1) unless and until it posted.

210

See, e.g., letters from FEI, CFA and UTC.

211

See, e.g., letters from IBM and Starkman.

212

See, e.g., letters from Starkman and VEC.

213

See, e.g., letters from ABA and SCS.

We believe that issuers that already have corporate Web sites can post interactive data at

a reasonable cost 214 and that such posting can benefit investors by facilitating their access to

interactive data 215 and, as a result, facilitating their automated parsing and analysis of financial

information. Investors and analysts routinely parse information out of filed financial statements,

whether in paper or electronic format. Interactive data merely facilitates the parsing. 216 In this

regard, an issuer that wishes to provide access to context beyond the posted interactive data

would be free to indicate on its Web site where a user could access the Commission filing to

which the interactive data is an exhibit. Similarly, an issuer could provide access to the

remainder of the filing directly on its Web site or by hyperlink to the Commission’s Web site.

Several commenters suggested that issuers not be required to post interactive data on

corporate Web sites on the same day they are submitted to the Commission because that would

be too burdensome. 217 Commenters suggested grace periods to post such data such as 24

214

See Part IV.

215

One commenter stated that an issuer should be able to satisfy its posting requirement through a hyperlink. See

letter from IBM. Similarly, another commenter suggested dropping the posting requirement because the information

would be available on the Commission’s Web site and the requirement would be difficult to monitor. See letter

from E&Y. We believe, however, that search engines and other data aggregators might be better able to access the

posted information directly from issuers’ Web sites.

216

We believe that parsing information in a filing is useful but we continue to emphasize the need to evaluate the

entirety of a filing.

217

See, e.g., letters from Foley, Liberty Global, Inc. (LGI), NYCBA, Southern, and Teva.

hours 218 or, in the case of foreign private issuers, two business days 219 after the related form has

been filed with the Commission. As proposed, issuers would have been required to post the

interactive data by the end of the business day on the earlier of the date the interactive data is

submitted or is required to be submitted to the Commission. In order to make it easier for issuers

to satisfy the posting requirement by providing several more hours in which to comply but still

have the posted information available in a timely manner, the new rules, as adopted, will require

posting by the end of the calendar rather than business day specified.

One commenter recommended that the Commission clarify the length of time that issuers

would be required to keep interactive data posted. 220 As result, we are revising the proposed

rules to require that an issuer keep the information posted for at least 12 months. As we stated in

connection with adopting a 12-month posting period for Forms 3, 4 and 5, 221 we believe that

such a period strikes an appropriate balance between the issuer effort needed to post and the

investor benefit from having access to the posted material through the additional source of the

issuer’s Web site. In this regard, we note that the interactive data would be available indefinitely

on the Commission’s Web site. 222

218

See, e.g., letter from LGI.

219

See, e.g., letter from Teva.

220

See letter from ABA.

221

Rule 16a-3(k) [17 CFR 240.16a-3(k)].

222

See Release No. 33-8230 (May 7, 2003) [68 FR 25788].

Accuracy and Reliability of Interactive Data

Voluntary Program

Data must be accurate to be useful to investors. To help assure the accuracy of

interactive data in the voluntary program, the data, upon receipt by our electronic filing system,

undergoes a validation separate from the normal validation of the traditional format filing. 223

Potential liability also helps ensure the accuracy and reliability of the data. Although the

voluntary program has provided limited protections from liability under the federal securities

laws 224 and excluded interactive data from being subject to officer certification requirements

under Exchange Act Rules 13a-14 and 15d-14, 225 interactive data in the voluntary program are

subject to the anti-fraud provisions of the federal securities laws. The voluntary program also

encourages participants’ efforts to create accurate and reliable interactive data that is the same as

the corresponding disclosure in the traditional electronic format filing by providing that a

participant is not liable for information in its interactive data that reflects the same information

that appears in the corresponding portion of the traditional format filing, to the extent that the

information in the corresponding portion of the traditional format filing was not materially false

223

If the traditional format filing meets its validation criteria, but any interactive data fail their own validation

criteria, all interactive data are removed and the traditional format filing is accepted and disseminated without the

interactive data file.

224

Rule 402 under Regulation S-T provides these liability protections.

225

See Rules 13a-14(f) [17 CFR 240.13a-14(f)] and 15d-14(f) [17 CFR 240.15d-14(f)].

or misleading. To further encourage reasonable efforts to provide accurate interactive data, the

voluntary program treats interactive data that do not reflect the same information as the official

version as reflecting the official version if the volunteer meets several conditions. The volunteer

must have made a good faith and reasonable attempt to reflect the same information as appears in

the traditional format filing and, as soon as reasonably practicable after becoming aware of any

difference, the volunteer must amend the interactive data to cause them to reflect the same

information. 226

Use of Technology to Detect Errors

Complete, accurate, and reliable financial statements and other disclosures are essential

to investors and the proper functioning of the securities markets. Our new requirement to submit

interactive data with registration statements and reports is designed to provide investors with

new tools to obtain, review, and analyze information from public filers more efficiently and

effectively. To satisfy these goals, interactive data must meet investor expectations of reliability

and accuracy. Many factors, including companies’ policies and procedures as buttressed by

incentives provided by the application of technology by the Commission, market forces and the

liability provisions of the federal securities laws, help further those goals.

Building on the validation criteria referenced above for interactive data in the voluntary

program, we plan to use validation software to check interactive data for compliance with many

226

17 CFR 232.402(b).

of the applicable technical requirements and to help the Commission identify data that may be

problematic. For example, we expect the Commission’s technology to:

•

check if required conventions (such as the use of angle brackets to separate data) are

applied properly for standard and, in particular, non-standard special labels and tags;

•

identify, count, and provide the staff with easy access to non-standard special labels

and tags; 227

•

identify the use of practices, including some the XBRL U.S. Preparers Guide

contains, that enhance usability; 228

•

facilitate comparison of interactive data with disclosure in the corresponding

traditional format filing;

•

check for mathematical errors; and

•

analyze the way that companies explain how particular financial facts relate to one

another. 229

227

For example, if a company uses the word “liabilities” as the caption for a value data tagged as “assets,” the

software would flag the filing and bring it to the staff’s attention. In contrast, if the company used “Total Assets” or

“Assets, Total,” the software would identify the use of these terms as a low risk discrepancy.

228

The XBRL U.S. Preparers Guide, available from the XBRL U.S. Web site, provides guidance to facilitate

preparing information in the interactive data format.

229

The technology used to show these relationships is known as a “linkbase.” Linkbases are part of an XBRL

taxonomy and serve one of two primary purposes: (1) to define additional information about a particular concept

(for example to express the definition for Inventory or to express the authoritative references for Inventory); and (2)

to express relationships between different concepts (for example Inventory adds up to Current Assets or Inventory

appears after Accounts Receivable on the balance sheet, but before Prepaid Expenses). The Commission will seek

The availability of interactive data to the staff may also enhance its review of company

filings. After the FDIC required submission of interactive data, it reported that its analysts were

able to increase the number of banks they reviewed by 10% to 33%, and that the number of bank

reports that failed to fully meet filing requirements fell from 30% to 0%. 230

We believe analysts, individual investors and others outside the Commission that use the

interactive data submitted to us also will make use of software and other tools to evaluate the

interactive data and, as a result, market forces will encourage companies to provide interactive

data that accurately reflects the corresponding traditional format data in the traditional format

filing. For example, the use of non-standard special labels or tags (extensions) could introduce

errors, but we expect the open source and public nature of interactive data and the list of tags for

U.S. financial statement reporting would enable software easily to detect and identify any

modifications or additions to the approved list of tags. Based on our knowledge of the existing

software market, we believe such software and other technology will be widely available for free

or at reasonable cost. Investors, analysts, and other users therefore would be able to identify the

existence and evaluate the validity of any such modifications or additions. We also anticipate

that companies preparing their interactive data and investors, analysts, and other users will use

to ensure that linkbases not only comply with technical requirements but also are not used to evade accounting

standards.

230

These bank reports require information that is more structured and less varied than the information we will

require. As a result, the FDIC’s efficiency gains from the use of interactive data likely would be greater than ours.

such devices to search for and detect any changes made to the standard list of tags. The ability of

analysts and other users to discover mistakes or alterations not consistent with the desired use of

interactive data may give filers an additional incentive to prepare such data with care and

promptly to correct any errors.

Application of Federal Securities Laws

An interactive data file generally will be subject to the federal securities laws in a

modified manner similar to that of the voluntary program under new Rule 406T if the filer

submits the interactive data file within 24 months of the time the filer first is required to submit

interactive data files 231 but no later than October 31, 2014. 232 Rule 406T provides that during

the time a filer’s interactive data files are treated in this modified manner, they will be

•

subject to specified anti-fraud provisions 233 except in connection with a failure to

comply with the tagging requirements that occurs despite a good faith attempt to

comply and is corrected promptly after the filer becomes aware of the failure;

231

The 24-month period would be exclusive of a grace period. For example, a large accelerated filer first required

to submit interactive data for financial statements in a Form 10-Q for the fiscal period ended June 30, 2009, would

be required to submit the interactive data by 30 days after the Form 10-Q’s August 10, 2009 due date but its

24-month period would end August 10, 2011.

232

In regard to liability and also similar to the voluntary program, we are adopting as proposed an exclusion for

interactive data files from the officer certification requirements of Rules 13a-14 and 15d-14 of the Exchange Act.

That exclusion is discussed further below in Part II.C.4.

233

The specified anti-fraud provisions are Section 17(a)(1) of the Securities Act [15 U.S.C. 77q(a)(1)], Section

10(b) [15 U.S.C. 78j(b)] of and Rule 10b-5 [17 CFR 240.10 b-5] under the Exchange Act and Section 206(1) [15

U.S.C. 80b-6(1)] of the Investment Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.].

•

deemed not filed or part of a registration statement or prospectus for purposes of

Sections 11 or 12 of the Securities Act and not otherwise subject to liability under

these sections;

•

deemed not filed for purposes of Section 18 of the Exchange Act or Section 34(b) of

the Investment Company Act and not otherwise subject to liability under these

sections; and

•

deemed filed for purposes of (and, as a result, benefit from) Rule 103 under

Regulation S-T. 234

In regard to correcting an interactive data file, we are adding the term “promptly” to the list of

defined terms in Rule 11 under Regulation S-T. Rule 11 defines “promptly” as “as soon as

reasonably practicable under the facts and circumstances at the time.” The definition is followed

by a non-exclusive safe harbor. The safe harbor generally provides that a correction made by the

later of 24 hours or 9:30 a.m. on the next business day after the filer becomes aware of the need

for the correction is deemed promptly made. If a filer fails to correct within the safe harbor

234

Interactive data files will be deemed filed for purposes of Rule 103 under Regulation S-T [17 CFR 232.103] and,

as a result, the issuer will not be subject to liability for electronic transmission errors beyond its control if the issuer

corrects the problem through an amendment as soon as reasonably practicable after the issuer becomes aware of the

problem. Interactive data files will be deemed filed for purposes of Rule 103 regardless whether they are eligible for

the modified treatment provided by Rule 406T at the time submitted. Rule 406T expressly provides that interactive

data files are deemed filed for purposes of Rule 103 to remove any negative inference that otherwise might be drawn

due to the fact that Rule 406T deems interactive data files to be not filed for other specified purposes.

timeframe, the filer still may have corrected promptly depending on the applicable facts and

circumstances.

Despite the modified treatment of interactive data files under the federal securities laws, a

filer would be subject to actions under circumstances where the protections of new Rule 406T do

not apply. For example, the Commission could bring an action against a filer under Section

13(a) of the Exchange Act if the filer submits an interactive data file with a periodic report and

the interactive data file fails to comply with the tagging requirements despite a good faith

attempt, where the filer fails to correct the interactive data file promptly after it discovers the

failure. On the other hand, the Commission would not be able to bring an action against a filer

under Sections 17(a)(2) and (3) under the Securities Act if the filer submits an interactive data

file with a Securities Act registration statement if the interactive data file fails to comply despite

a good faith effort but the filer acted negligently.

New Rule 406T differs from proposed Rule 406 primarily by omitting reference to

interactive data in viewable form and applying only for a specified time.

We believe that interactive data in viewable form are best addressed in relation to

interactive data files and traditional concepts of liability. Interactive data in viewable form that

are displayed on the Commission’s Web site will reflect the related interactive data file and, as a

result, such interactive data in viewable form should be treated in the same manner as the related

interactive data file in regard to a filer’s failure to correctly tag an interactive data file that results

in a failure of the interactive data in viewable form to reflect the related official filing.

Interactive data in viewable form that are displayed on other Web sites would be subject to

general anti-fraud principles applicable to republication of another person’s statements. 235

Consistent with traditional concepts of liability, a filer would incur no additional liability for a

failure that occurs in both an interactive data file and the related interactive data in viewable

form.

We believe that limiting the modified application of the federal securities laws to a

specified period improves the balance between avoiding unnecessary cost and expense and

encouraging accuracy in regard to interactive data because it recognizes that issuers and service

providers likely will grow increasingly skilled at and comfortable with the tagging requirements.

In the proposing release, the Commission sought comment on modified treatment of

interactive data under the federal securities laws. Commenters overwhelmingly supported

limiting liability, 236 with a fair number of commenters supporting the proposed approach, and a

fair number suggesting that the proposed approach be made less stringent. One expressed the

concern that the proposed approach should be made more stringent. 237 A significant number

235

These general anti-fraud principles include the concepts of aiding and abetting and control person liability. In

addition, liability for interactive data in viewable form displayed by third parties would depend in part on whether

that information is attributable to the filer. See, e.g., Release No. 34-58288 (Aug. 7, 2008) at Section II.B.2.

236

See, e.g., letters from ABA and IBM.

237

See letter from CII.

stated that the regulatory text was confusing or unclear, especially as to viewable interactive

data. Finally, a few commenters made other liability-related suggestions, sought clarification of

the liability applicable to situations not intended to be addressed expressly by the proposed rules

or expressed other concerns.

Commenters supporting the proposed approach generally supported having interactive

data files be deemed furnished rather than filed. 238 New Rule 406T is consistent with the

proposals and these comments because it deems interactive data files not filed for purposes of

various provisions under the federal securities laws.

Commenters suggesting that the proposed approach be made less stringent did so

explicitly and implicitly. For example, while the proposals generally provided that an interactive

data file would be protected from federal securities law liability if the issuer made a good faith

attempt to prepare it correctly, one commenter criticized the good faith requirement explicitly239

and others did so implicitly by stating there should be no liability where there is no affirmative

intent to mislead. 240 The commenter that criticized the good faith requirement explicitly stated

that it would be problematic because there would be litigation over its fulfillment. Upon further

reflection and in light of these comments, new Rule 406T requires a “good faith attempt” to

238

See, e.g., letters from AICPA, Deloitte, NYCBA, SavaNet LLC (SavaNet), and UTC.

239

See letter from S&C.

240

See, e.g., letters from Angel, Intel, LG, SCS, Southern, and USS.

comply with the tagging requirements rather than the proposed “good faith and reasonable

attempt.” We believe that omission of the reference to “reasonable” should not result in a lesser

degree of effort by issuers but should help to avoid litigation over fulfillment of the requirement.

As discussed in detail above, under new Rule 406T additional liability protection occurs when a

filer makes a good faith attempt and corrects any failure to comply with the tagging requirements

promptly after the filer becomes aware of the failure. In this context, we interpret “good faith”

as not having the scienter required for purposes of the anti-fraud provisions. 241 In a further effort

to help clarify what constitutes adequate effort for purposes of receiving additional liability

protection and as also discussed in detail above, we have adopted a definition for the term

“promptly” that includes a non-exclusive safe harbor.

Three commenters suggested that, at least at the outset of the interactive data submission

requirement, there should be essentially no liability based on interactive data files or viewable

interactive data. 242 Two of these commenters stated that there should be no liability because

tagging would be a “new” process. 243 The third commenter stated that interactive data are merely

a repetition, in another format, of information already required and there would be little risk that

issuers would affirmatively try to introduce differences between the formats because any such

241

See Ernst & Ernst v. Hochfelder, 425 US 185, 206 (1976).

242

See letters from NYCBA, Safeway, and S&C.

243

See letters from NYCBA and Safeway.

differences would be transparent. Similarly, one commenter stated there should be no liability

attributable to the posting of an interactive data file because the information would be out of

context. 244 We acknowledge these comments but, in general, believe the measured level of

liability that would apply at the outset of the mandated program is appropriate in light of the

current level of development in tagging processes and the effect this level of liability should have

on helping to assure that interactive data are reliable. 245

Some commenters that supported limited liability at least at the outset of the interactive

data submission requirement suggested that liability be revisited 246 or increased 247 later.

Similarly, one commenter suggested that the imposition of liability on viewable interactive data

be conditioned on the maturity of the tagging and rendering technology. 248 In that regard, three

commenters suggested that the good faith exception proposed for the interactive data file in part

could form the basis for an exemption for viewable interactive data.249 As discussed above, we

have decided to limit liability at the outset of the mandated program but phase out the limitation

of liability over time. We believe that treatment of interactive data in viewable form that appears

244

See letter from SCS.

245

See Part II.B.5 for a discussion of commenter concerns regarding interactive data’s being out of context.

246

See, e.g., letters from AICPA, E&Y, and Grant Thornton.

247

See, e.g., letters from SavaNet and UTC.

248

See letter from ABA.

249

See, e.g., letters from ABA, E&Y, and IBM.

on our Web site in a manner analogous to the treatment of the related interactive data file for

liability purposes is appropriate in light of the maturity of tagging and rendering technology.

Similarly, we believe that treatment of interactive data in viewable form that appears on other

Web sites under general anti-fraud principles applicable to republication of another person’s

statements also is appropriate in light of the maturity of such technology.

Commenters stated that the regulatory text was confusing or unclear in various ways,

with a focus on viewable interactive data. In terms of specific items, commenters singled out,

for example, the proposed Rule 406(c)(3)(C) provision attempting to draw a distinction between

substantive content and compliance with the tagging provisions of proposed Rule 405. 250 In

terms of general items and viewable interactive data, commenter concerns often related to the

fact that the proposed rules expressly addressed viewable interactive data only to the extent, as

converted by the Commission’s viewer, it appeared identical in all material respects to the

related official filing. As a result, commenters indicated that it was unclear what liability applied

to viewable interactive data as rendered by the Commission’s viewer, not identical in all material

respects to the related official filing; and as rendered by a non-Commission viewer. 251 We

believe that new Rule 406T clarifies or omits the provisions of proposed Rule 406 that

commenters found confusing. As to viewable interactive data in particular, we now omit

250

See letters from ABA, Intel, and SCS.

251

See, e.g., letters from ABA and S&C.

reference in the rule to one particular situation in favor of addressing viewable interactive data in

general under traditional legal and liability concepts as discussed in detail above.

We did not propose to permit or require legends for interactive data files. One

commenter expressly approved the absence of a legend requirement, 252 but four commenters

suggested variously that the Commission require a legend that states people should not rely on

the interactive data,253 that they should not rely on it because of limited liability, 254 or that

people should not use the interactive data in isolation. 255 We believe that attempting to place in

interactive data legends of the type suggested would be impracticable because interactive data

will often be accessed in their machine-readable form and, even if they were accessed in

viewable form, might not be accessed in a place where the legend would appear. As to a legend

that states people should not rely on the interactive data in particular, such a legend would be

unnecessary because there is no reason the data should not be reliable and, were they not reliable,

they would have little value.

252

See letter from CFA. Under the current voluntary program, the filing with which interactive data are submitted

must disclose that the purpose of the interactive data is to test the related format and technology and, as a result,

investors should not rely on the interactive data in making investment decisions.

253

See, e.g., letters from AICPA, CAQ and PWC.

254

See letters from CAQ and PWC.

255

See letter from ABA.

To assist filers in ensuring the accuracy of their interactive data submissions, we plan to

make available to filers the opportunity to make a test submission with the Commission. The

test submission will enable the filer to learn how the validation system would respond if the test

submission were a live submission and then, if the filer wishes, use the Commission’s pre-viewer

to see the viewable interactive data that would be displayed on the Commission Web site if the

interactive data were accepted and disseminated. 256 If the validation system finds an error, it will

advise the filer of the nature of the error and as to whether the error was major or minor. As

occurs in the voluntary program, a major error in an interactive data exhibit that was part of a

live filing will cause the exhibit to be held in suspense in the electronic filing system. The rest of

the filing will be accepted and disseminated if there are no major errors outside of the interactive

data exhibit. If that were to happen, the filer will need to revise the interactive data exhibit to

eliminate the major error and submit the exhibit as an amendment to the filing to which it is

intended to appear as an exhibit. A minor error in an interactive data exhibit that is part of a live

filing will not prevent the interactive data exhibit from being accepte

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