# Inline XBRL Filing of Tagged Data > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2017-04366 ## Record - **Collection:** Federal Register - **Document type:** Proposed Rule - **Published:** March 17, 2017 - **Citation:** 82 FR 14282 ## Text SECURITIES AND EXCHANGE COMMISSION 17 CFR Parts 229, 230, 232, 239, 249 and 274 [Release Nos. 33-10323; 34-80133; IC-32518; File No. S7-03-17] RIN 3235-AL59 Inline XBRL Filing of Tagged Data AGENCY: Securities and Exchange Commission. ACTION: Proposed rule. SUMMARY: We are proposing to require the use of the Inline XBRL format for the submission of operating company financial statement information and mutual fund risk/return summaries. The proposed amendments are intended to improve the data's quality, benefiting investors, other market participants, and other data users, and to decrease, over time, the cost of preparing the data for submission to the Commission. The proposed amendments would also eliminate the requirement for filers to post Interactive Data Files on their Web sites and terminate the Commission's voluntary program for the submission of financial statement information interactive data that is currently available only to investment companies and certain other entities. DATES: Comments should be received by May 16, 2017. ADDRESSES: Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( http://www.sec.gov/rules/proposed.shtml ); • Send an email to rule-comments@sec.gov. Please include File Number S7-03-17 on the subject line; or • Use the Federal eRulemaking Portal ( http://www.regulations.gov ). Follow the instructions for submitting comments. Paper Comments • Send paper comments to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number S7-03-17. This file number should be included on the subject line if email is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( http://www.sec.gov/rules/proposed.shtml ). Comments are also available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Room 1580, Washington, DC 20549 on all official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the Commission's Web site. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at www.sec.gov to receive notifications by email. FOR FURTHER INFORMATION CONTACT: Mark W. Green, Senior Special Counsel (Regulatory Policy), Division of Corporation Finance, at (202) 551-3430; John Foley, Senior Counsel, or Michael C. Pawluk, Senior Special Counsel, Division of Investment Management, at (202) 551-6792; R. Michael Willis, Assistant Director, Office of Structured Disclosure, Anzhela Knyazeva, Senior Financial Economist, or Hermine Wong, Special Counsel, Division of Economic and Risk Analysis, at (202) 551-6600. SUPPLEMENTARY INFORMATION: We are proposing amendments to Item 601 1 of Regulation S-K, 2 Rules 11, 3 201, 4 202, 5 401 6 and 405 7 of Regulation S-T, 8 Rules 144, 9 485 10 and 497 11 and Form F-10 12 under the Securities Act of 1933 (Securities Act), 13 Forms 10-Q, 14 10-K, 15 20-F, 16 40-F 17 and 6-K 18 under the Securities Exchange Act of 1934 (Exchange Act), 19 and Form N-1A 20 under the Securities Act and Investment Company Act of 1940 (Investment Company Act). 21 1 17 CFR 229.601. 2 17 CFR 229.10 et seq. 3 17 CFR 232.11. 4 17 CFR 232.201. 5 17 CFR 232.202. 6 17 CFR 232.401. 7 17 CFR 232.405. 8 17 CFR 232.10 et seq. 9 17 CFR 230.144. 10 17 CFR 230.485. 11 17 CFR 230.497. 12 17 CFR 239.40. 13 15 U.S.C. 77a et seq. 14 17 CFR 249.308a. 15 17 CFR 249.310. 16 17 CFR 249.220f. 17 17 CFR 249.240f. 18 17 CFR 249.306. 19 15 U.S.C. 78a et seq. 20 17 CFR 239.15A and 274.11A. 21 15 U.S.C. 80a. I. Introduction II. Background and Economic Baseline A. Overview of Existing XBRL Requirements for Operating Companies and Mutual Funds B. Current XBRL Practices 1. XBRL Preparation 2. XBRL Data Use III. Proposed Amendments and Anticipated Economic Effects A. Overview of Inline XBRL B. Proposed Amendments 1. Inline XBRL Requirements 2. Elimination of Web Site Posting Requirement 3. Termination of the 2005 XBRL Voluntary Program 4. Proposed Technical Amendments 5. Request for Comment C. Potential Economic Effects of the Proposed Amendments 1. Benefits 2. Costs 3. Compliance Dates 4. Alternatives 5. Request for Comment IV. Paperwork Reduction Act A. Background B. Reporting and Cost Burden Estimates 1. Registration Statement and Periodic Reporting 2. Regulation S-K and Regulation S-T C. Request for Comment V. Initial Regulatory Flexibility Act Analysis A. Reasons for, and Objectives of, the Action B. Legal Basis C. Small Entities Subject to the Proposed Amendments D. Projected Reporting, Recordkeeping and Other Compliance Requirements E. Duplicative, Overlapping or Conflicting Federal Rules F. Significant Alternatives G. General Request for Comment VI. Small Business Regulatory Enforcement Fairness Act VII. Statutory Basis and Text of Proposed Rule and Form Amendments I. Introduction In 2009 the Commission adopted rules requiring operating companies to provide the information from the financial statements accompanying their registration statements and periodic and current reports in machine-readable format using eXtensible Business Reporting Language (XBRL) by submitting it to the Commission in exhibits to such reports and posting it on their Web sites, if any. 22 That same year, the Commission similarly required open-end management investment companies (“mutual funds”) to provide risk/return summary information from their prospectuses in XBRL format by submitting it to the Commission in exhibits and posting it on their Web sites, if any. 23 22 17 CFR 232.405. See also Release No. 33-9002 (Jan. 30, 2009) [74 FR 6776] (“2009 Financial Statement Information Adopting Release”) as corrected by Release No. 33-9002A (Apr. 1, 2009) [74 FR 15666]. 23 See Release No. 33-9006 (Feb. 11, 2009) [74 FR 7747] (“2009 Risk/Return Summary Adopting Release”) as corrected by Release No. 33-9006A (May 1, 2009) [74 FR 21255]. The risk/return summary is set forth in Items 2, 3, and 4 of Form N-1A. XBRL requirements currently apply to operating companies that prepare their financial statements in accordance with U.S. generally accepted accounting principles (U.S. GAAP) or in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). 24 XBRL requirements also apply to mutual funds pursuant to Form N-1A and related rules under Regulation S-T. 25 Filers subject to these XBRL requirements must submit an Interactive Data File, 26 including information tagged in XBRL, as an exhibit to the Related Official Filing, which is filed in the traditional HyperText Markup Language (HTML) or, less commonly, American Standard Code for Information Interchange (ASCII) format. 27 The 2009 requirements were intended to make financial information and mutual fund risk/return summaries easier for investors to analyze and to assist in automating regulatory filings and business information processing. 28 Since that time, some commenters have expressed concerns regarding the quality of, extent of use of, and cost to create XBRL data, 29 while other commenters have recognized the benefits of XBRL data. 30 In addition, the Commission staff has identified a number of data quality issues associated with financial statement information XBRL data filed by operating companies. 31 The amendments we are proposing today are intended to address some of these issues and concerns by facilitating improvements in the quality and usefulness of XBRL data and, over time, decreasing filing costs by decreasing XBRL preparation costs. 24 As used in this release, the phrase “IFRS as issued by the IASB” refers to the authoritative text of IFRS. 25 See General Instruction C.3(g) to Form N-1A; Rule 405 of Regulation S-T. 26 17 CFR 232.11; 17 CFR 232.405. The term Interactive Data File means the machine-readable computer code that presents information in XBRL electronic format pursuant to Rule 405 of Regulation S-T. The Interactive Data File currently consists of an “instance document” and other documents as described in the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) Filer Manual. The instance document contains the XBRL tags for the information contained in the corresponding data in the Related Official Filing to satisfy the content and format requirements in Rule 405. The other documents in the Interactive Data File contain contextual information about the XBRL tags. 27 17 CFR 232.11. The term Related Official Filing means the ASCII or HTML format part of the official filing with which an Interactive Data File appears as an exhibit or, in the case of Form N-1A, the ASCII or HTML format part of the official filing that contains the information to which an Interactive Data File corresponds. 28 See 2009 Financial Statement Information Adopting Release, at 6776; 2009 Risk/Return Summary Adopting Release, at 7748. 29 See notes 70 and 78 below. 30 See note 169 below. 31 See, e.g., Staff Observations of Custom Axis Tags (Mar. 29, 2016), available at http://www.sec.gov/structureddata/reportspubs/osd_assessment_custom-axis-tags.html; Staff Observations of Custom Tag Rates (Jul. 7, 2014), available at http://www.sec.gov/dera/reportspubs/assessment-custom-tag-rates-xbrl.html (“Staff XBRL Observations 2014”); Staff Observations from the Review of Interactive Data Financial Statements (Dec. 13, 2011), available at http://www.sec.gov/spotlight/xbrl/staff-review-observations-121311.shtml (“Staff XBRL Observations 2011”). The proposed amendments would require financial statement information and mutual fund risk/return summary information to be provided in the Inline XBRL format. 32 Inline XBRL allows filers to embed XBRL data directly into an HTML document, eliminating the need to tag a copy of the information in a separate XBRL exhibit. Inline XBRL would be both human-readable and machine-readable for purposes of validation, aggregation and analysis. The proposed amendments also would eliminate the requirement for filers to post Interactive Data Files on their Web sites. 32 Inline XBRL TM and iXBRL TM are trademarks of XBRL International. XBRL® is a registered trademark of XBRL International. II. Background and Economic Baseline The XBRL requirements were adopted in 2009 to provide financial statement and risk/return summary data in a form that was intended to improve its usefulness to investors. 33 Since the XBRL requirements were adopted, the XBRL technology has continued to evolve. 34 In particular, the Inline XBRL format has seen increased use for various regulatory purposes in several foreign jurisdictions. 35 33 The Commission has recently implemented requirements for the structuring of other types of information using the XBRL format, including swap-based security data repository financial statements and credit rating history information maintained by nationally recognized statistical rating organizations, and proposed requirements for the structuring of certain compensation disclosures, including the disclosure of the relationship between executive compensation and the financial performance of the registrant and the compensation recovery policies of listed registrants. See, e. g., Release No. 34-74244 (Feb. 11, 2015) [80 FR 14563]; Release No. 34-72936 (Aug. 27, 2014) [79 FR 55077]; Release No. 34-74835 (Apr. 29, 2015) [80 FR 26329]; Release No. 33-9861 (Jul. 1, 2015) [80 FR 41143]. The Commission also has implemented requirements for the structuring of information in certain forms using XML, including Form N-CEN (annual report for registered investment companies), Form N-PORT (monthly schedule of portfolio investments), Form N-MFP (monthly schedule of portfolio holdings of money market funds), Form PF (investment advisers to private funds), Form D (Regulation D offerings), Form 1-A (Regulation A offering statement), and Form C (securities-based crowdfunding offerings). See Release No. 33-10231 (Oct. 13, 2016) [81 FR 81870], Release No. IC-29132 (Feb. 23, 2010) [75 FR 10059]; Release No. IA-3308 (Oct. 31, 2011) [76 FR 71127]; Release No. 33-8891 (Feb. 6, 2008) [73 FR 10591]; Release No. 33-9974 (Oct. 30, 2015) [80 FR 71387]; Release No. 33-9741 (Mar. 25, 2015) [80 FR 21805]. 34 The XBRL preparation industry has gained significant technological expertise and efficiency. See, e.g., William Sinnett, SEC reporting and the impact of XBRL: 2013 survey, Financial Executives Research Foundation (Nov. 15, 2013) (“FERF Study”); Research shows XBRL filing costs lower than expected, American Institute of CPAs, available at http://www.aicpa.org/InterestAreas/FRC/AccountingFinancialReporting/XBRL/DownloadableDocuments/XBRL%20Costs%20for%20Small%20Companies.pdf (retrieved Aug. 30, 2016) (“AICPA Study”). See also Section II.B.1 below. 35 Inline XBRL has been adopted in several foreign jurisdictions and proposed for required use in another. It has also gained support among several XBRL preparation software vendors in the U.S. See notes 94 and 95 below. Separately, the EDGAR system has been modified to accept voluntary Inline XBRL submissions. See note 58 below and accompanying text. In assessing the potential impact of the proposed amendments, we consider as a point of reference the interactive data requirements and XBRL practices as they exist today. This economic baseline includes the current XBRL requirements, information about filers subject to these requirements and current practices related to XBRL filing and use. A. Overview of Existing XBRL Requirements for Operating Companies and Mutual Funds Structured information is currently required to be submitted in an Interactive Data File exhibit to certain forms. These forms are prepared in either HTML or ASCII 36 electronic formats. 37 The XBRL requirements for the required information are located in the Interactive Data File provisions of Regulation S-K, 38 Forms F-10, 39 20-F, 40 40-F, 41 6-K 42 and N-1A, 43 Rule 405 of Regulation S-T, and the EDGAR 44 Filer Manual. 36 Based on staff review of Form 10-K filings filed during calendar year 2015, fewer than 1% were filed in the ASCII format. The majority of those were filed by smaller reporting companies and non-accelerated filers. Based on staff review of data on Rule 485(b) and Rule 497 filings filed during calendar year 2015, approximately 15% were filed in the ASCII format. 37 In a companion release we are issuing today, the Commission is adopting amendments to eliminate the ASCII format for registration statements and periodic and current reports that are subject to the exhibit requirements under Item 601 of Regulation S-K and for Forms F-10 and 20-F. See Release No. 33-10322 (Mar. 1, 2017) (“Hyperlinks Adopting Release”). The amendments were proposed in 2016. See Release No. 33-10201 (Aug. 31, 2016) [81 FR 62689] (“Hyperlinks Proposing Release”). 38 See Item 601(b)(101) of Regulation S-K [17 CFR 229.601(b)(101)]. 39 See Paragraph (101) of Part II—Information Not Required to be Delivered to Offerees or Purchasers of Form F-10. 40 See Paragraph 101 of the Instructions as to Exhibits of Form 20-F. 41 See Paragraph B.(15) of the General Instructions to Form 40-F. 42 See Paragraph C.(6) of the General Instructions to Form 6-K. 43 See General Instruction C.3(g) to Form N-1A. 44 EDGAR performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required to file forms with the Commission. See http://www.sec.gov/edgar/aboutedgar.htm. Operating companies are required to submit financial statements and any applicable financial statement schedules in XBRL as exhibits to certain Exchange Act reports and Securities Act registration statements. 45 In general, operating companies that prepare their financial statements in accordance with U.S. GAAP or in accordance with IFRS as issued by the IASB must submit their financial statements to the Commission in XBRL. Filers that are required to provide information in XBRL must use the taxonomies specified on the Commission's Web site. 46 45 Financial statements in XBRL are required as exhibits to Exchange Act reports on Forms 10-Q, 10-K, 20-F, 40-F and, in some cases, 8-K and 6-K. Item 601(b)(101) of Regulation S-K requires an Interactive Data File to be submitted with a Form 8-K only when the Form 8-K contains audited annual financial statements that previously were filed with the Commission but have been 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. Item 601(b)(101) further specifies that, in such case, the Interactive Data File is required only as to such revised financial statements regardless of whether the Form 8-K contains other financial statements. Paragraph C.(6) of the General Instructions to Form 6-K requires an Interactive Data File to be submitted with a Form 6-K only when the Form 6-K contains either of the following: audited annual financial statements that are a revised version of financial statements that previously were filed with the Commission that have been 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; or current interim financial statements included pursuant to the nine-month updating requirement of Item 8.A.5 of Form 20-F. Paragraph C.(6) further specifies that, in either such case, the Interactive Data File would be required only as to such revised financial statements or current interim financial statements regardless of whether the Form 6-K contains other financial statements. Financial statements in XBRL also are required as exhibits to Securities Act registration statements that contain financial statements, such as Form S-1 (except registration statements filed in connection with an initial public offering). Securities Act registration statements that do not contain financial statements, such as a Form S-3 or other form filed by an issuer that incorporates by reference all required financial statement information from its periodic reports, and Exchange Act registration statements are not required to include Interactive Data Files. See 2009 Financial Statement Information Adopting Release. 46 See Rule 405(c)(1) of Regulation S-T. On March 1, 2017, in a companion release, the Commission issued a notice that, for the first time, an IFRS taxonomy had been specified on its Web site for use by foreign private issuers (FPIs) to submit their financial statement information to the Commission in XBRL. See Release No. 33-10320 (Mar. 1, 2017). Mutual funds are required to submit risk/return summary information in XBRL as exhibits to registration statements and to prospectuses with risk/return summary information that varies from the registration statement. 47 In addition, mutual funds, as well as other investment companies registered under the Investment Company Act, business development companies (“BDCs”), 48 and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X 49 are currently allowed to participate in the Commission's Interactive Data Voluntary Program (the “2005 XBRL Voluntary Program”) with respect to financial statement information. 50 47 See General Instruction C.3(g) to Form N-1A. 48 Business development companies are a category of closed-end investment companies that are not required to register under the Investment Company Act. See Section 2(a)(48) of the Investment Company Act [15 U.S.C. 80a-2(a)(48)]. 49 17 CFR 210.6-01 et seq. 50 See Rule 401 of Regulation S-T. In 2005, the Commission began to allow public companies, and later mutual funds, to voluntarily submit XBRL-formatted files as exhibits to periodic reports and Investment Company Act filings. See Release No. 33-8529 (Feb. 3, 2005) [70 FR 6556]; Release No. 33-8823 (Jul. 11, 2007) [72 FR 39289]. As a result of rule amendments adopted by the Commission in 2009, the 2005 XBRL Voluntary Program is now only open for participation by investment companies and entities that prepare their financial statements in accordance with Article 6 of Regulation S-X. See 2009 Financial Statement Information Adopting Release and 2009 Risk/Return Summary Adopting Release. An operating company generally must submit the Interactive Data File as an exhibit to the Related Official Filing to which it relates. 51 Mutual funds are required to submit the Interactive Data File within 15 business days after (1) the effective date of the registration statement or post-effective amendment that contains the related information, 52 or (2) the filing of a form of prospectus made pursuant to paragraph (c) or (e) of Rule 497. 53 Operating companies and mutual funds may delay submission and posting to the extent provided under a hardship exemption. 54 51 See Rule 405(a) of Regulation S-T. 52 See General Instruction C.3g(i), (iv) to Form N-1A. 53 See General Instruction C.3g(ii), (iv) to Form N-1A. 54 An operating company may delay the submission and posting of the Interactive Data File to the extent provided under a temporary or a continuing hardship exemption. See Rules 201 and 202 of Regulation S-T. A mutual fund filer may delay the submission and posting of the Interactive Data File to the extent provided under a continuing hardship exemption. See Rule 202 of Regulation S-T. For both operating companies and mutual funds, the Interactive Data File submitted to the Commission also must be posted on the filer's Web site, if any, on the earlier of the calendar day that the filer submitted or was required to submit it. 55 Operating companies must keep the Interactive Data File posted for at least 12 months. 56 For mutual funds, the Interactive Data File is required to be posted on the fund's Web site for as long as the registration statement or post-effective amendment to which the Interactive Data File relates remains current. 57 55 See Rule 405(g). 56 Id. 57 See Rule 405(g) and General Instruction C.3(g)(iii) to Form N-1A. If a mutual fund does not submit or post interactive data as required, its ability to file post-effective amendments to its registration statement under Rule 485(b) under the Securities Act is automatically suspended until it submits and posts the interactive data as required. See Rule 485(c) under the Securities Act. The Interactive Data File also must be submitted in such a manner that will permit the information for each series and, for any information that does not relate to all of the classes in a filing, each class of the mutual fund to be separately identified. See General Instruction C.3(g)(iv) to Form N-1A. On June 13, 2016, the Commission issued an exemptive order under the Exchange Act to permit operating companies that comply with certain conditions listed in the order to file structured financial statement data required in their periodic and current reports using Inline XBRL through March 2020. 58 When it issued the order, the Commission stated that permitting companies to use Inline XBRL on a voluntary, time-limited basis could facilitate the development of Inline XBRL preparation and analysis tools, provide investors and companies with the opportunity to evaluate its usefulness and help inform any future Commission rulemaking in this area. As of February 27, 2017, the Commission has received 55 Inline XBRL filings by 35 filers. 58 See Order Granting Limited and Conditional Exemption under Section 36(a) of the Securities Exchange Act of 1934 from Compliance with Interactive Data File Exhibit Requirement in Forms 6-K, 8-K, 10-Q, 10-K, 20-F and 40-F to Facilitate Inline Filing of Tagged Financial Data, Release No. 34-78041 (Jun. 13, 2016) [81 FR 39741] (“Exemptive Order”). The Exemptive Order does not exempt voluntary filers from the Web site posting requirement. B. Current XBRL Practices 1. XBRL Preparation XBRL preparation to comply with financial statement information and risk/return summary XBRL requirements affects operating company and mutual fund filers. There were approximately 9,200 filers of annual and quarterly reports (Forms 10-K, 10-Q, 20-F and 40-F), including amendments, during calendar year 2015. 59 As of December 2015, there were approximately 11,106 mutual funds that are registered on Form N-1A. 60 59 Based on staff analysis of EDGAR filings. Some filers, including investment companies, asset-backed issuers, and filers who have received a hardship exemption, are not subject to financial statement information interactive data requirements. Interactive data requirements for operating companies also pertain to certain registration statements, as well as certain filings on Forms 8-K and 6-K containing specified financial statements. See note 45 above. 60 Based on data obtained from the Investment Company Institute (“ICI”) and reports filed by registrants on Form N-SAR. See ICI, 2016 Investment Company Fact Book (56th ed., 2016), at 22, available at http://www.ici.org/pdf/2016_factbook.pdf (retrieved Aug. 30, 2016). This count of 11,106 “mutual funds” includes 9,520 traditional open-end mutual funds (including funds of funds and money market funds) and 1,586 exchange-traded funds (“ETFs”) registered as open-end investment companies. Unit investment trusts (“UITs”) (including ETFs registered as UITs) and closed-end funds are not subject to the proposed amendments and are therefore excluded from this count. Structured disclosure facilitates the analysis of information by investors, their financial advisors, professional analysts and the Commission and its staff. Structured disclosures include both numeric and narrative-based disclosures that are made machine-readable by having reported disclosure items labeled (tagged) using a markup language, such as XBRL, that can be processed by software for analysis. Structured information can be stored, shared and presented in different systems or platforms. Standardized markup languages, such as XBRL, use sets of data element tags for each required reporting element, referred to as taxonomies. Taxonomies provide common definitions that represent agreed-upon information or reporting standards, such as U.S. GAAP for accounting-based disclosures and, in the case of mutual funds, the risk/return summary information. The resulting standardization allows for aggregation, comparison and large-scale statistical analysis of reported information through significantly more automated means than is possible with HTML. All filers must assign appropriate tags to their reported disclosures based on the taxonomy of the required disclosures as part of the process to create their Interactive Data File. Currently, filers can prepare their Interactive Data Files to comply with the existing XBRL requirements in several ways. Filers may either tag required disclosures in-house or use an outside service provider. Based on data in a 2013 study, the staff estimates that approximately 63% of operating company filers outsourced at least some part of XBRL preparation for their most recent annual filing, with the remainder preparing XBRL in-house. 61 From the process standpoint, the tagging of required disclosures may involve either standalone or integrated XBRL preparation software. With the standalone approach, 62 filers or filing agents use information initially prepared in word processing software to create a filing document in the traditional HTML or ASCII format. Filers or filing agents then create an XBRL exhibit by copying the information from the filing document and tagging it in XBRL, which requires them to expend incremental resources to create and tag a copy of the data and verify the consistency of tagged data across documents. 63 With the integrated approach, XBRL tagging of required disclosures is a part of the disclosure management process, and integrated disclosure management software 64 is used to generate both the HTML filing and the XBRL exhibit. According to the same study, 71% of operating company filers relied on integrated disclosure management software, as opposed to a standalone XBRL preparation solution. 65 The integrated approach also is prevalent among mutual fund filers. During 2015 and the first half of 2016, at least 80% of mutual fund risk/return summary XBRL submissions were created using integrated solutions. 66 61 See FERF Study, at 15. 62 See FERF Study, at 6. Standalone XBRL software typically creates XBRL filings using financial statements and footnotes which have been prepared using other software. 63 As noted by some industry observers, the creation of two documents that contain the same financial statement information may be unnecessarily costly and/or inefficient. See note 155 below. 64 Disclosure management software typically integrates document drafting and XBRL tagging. It may also integrate conversion into the HTML format compatible with EDGAR and direct filing of both traditional and XBRL reports with the Commission. See FERF Study, at 6. 65 See FERF Study, at 6. 66 Based on indications of the vendor software used to produce the EDGAR filing attachments, when available. When filers submit XBRL exhibits during EDGAR filing, the XBRL exhibits are validated and rendered before the attachments are accepted. During EDGAR filing, EDGAR validates XBRL documents that make up an Interactive Data File, producing error and warning messages when issues with the XBRL data are identified, and “renders” or creates a human-readable version of XBRL data that can be viewed on the EDGAR Web site. 67 Thus, EDGAR Web site users can view the information in HTML format or they can view a rendered version of the tagged information submitted in the XBRL exhibit by clicking on the “Interactive Data” button next to the relevant filing on EDGAR. 67 See also http://www.sec.gov/structureddata/edgarvalandrender. In 2009 the Commission estimated the expected direct cost of compliance with XBRL requirements by operating companies. 68 After the adoption of the XBRL rules, several studies and commenters have also provided estimates of the cost of compliance with XBRL requirements. 69 While some observers have expressed concern about the costs associated with XBRL requirements generally, particularly for smaller filers, 70 other observers have disagreed with the claim that the XBRL requirements impose high costs and emphasized the decrease in costs over time as filers and filing agents have gained experience and widely adopted the XBRL technology, the variety of filing agents that assist with XBRL preparation, and the potential benefits associated with better availability of information about smaller companies from the standpoint of access to capital. 71 According to a 2013 survey, the median filer required 25 hours for the preparation and 15 hours for the review of XBRL and between $8,000 and $10,000 for the services of outside professionals for its most recent annual filing. 72 According to another survey, the median small filer paid $10,000 or less on an annual basis for fully outsourced creation and filing of its XBRL exhibits. 73 68 See 2009 Financial Statement Information Adopting Release, at 6804 (estimating direct costs of preparing and submitting interactive data-formatted financial statements, excluding the cost of Web site posting, at $39,510-$81,220 ($12,450-$20,340) for the first submission (each subsequent submission) with block-text footnotes and schedules and $29,700-$59,150 ($20,075-$36,940) for the first submission (each subsequent submission) with detailed tagging of footnotes and schedules, and the cost of Web site posting at $1,000 per year). 69 See FERF Study, at 17 and 19 (estimating the cost of outside services to prepare and review the most recent annual XBRL filing as approximately $21,000 ($10,000) for the average (median) large accelerated filer, $15,000 ($10,000) for the average (median) accelerated filer, $19,000 ($10,000) for the average (median) non-accelerated filer, and $10,000 ($2,000) for the average (median) smaller reporting company and estimating the number of hours to prepare and review XBRL reports as 49 (32) preparation hours and 16 (28) review hours for the average (median) large accelerated filer, 42 (20) preparation hours and 10 (23) review hours for the average (median) accelerated filer, 44 (24) preparation hours and 16 (22) review hours for the average (median) non-accelerated filer, and 23 (24) preparation hours and 8 (11) review hours for the average (median) smaller reporting company filer). See also AICPA Study. XBRL US and the AICPA surveyed 14 XBRL filing agents providing XBRL tagging and filing services to 1,299 small public companies (32% of small publicly listed companies). According to this survey, 69% of small public companies, defined for purposes of the survey as having up to $75 million in market capitalization, paid $10,000 or less on an annual basis for fully outsourced creation and filing of their XBRL exhibits; 18% had annual costs of between $10,000 and $20,000 for full-service outsourced solutions; and 8% paid more than $25,000 per year. Higher fees tended to be associated with complexities in financial statements and with rush charges imposed in the event of last-minute changes to the filings. The exact time frame of the survey is not specified. See also Letter from Data Transparency Coalition (Oct. 29, 2015), available at http://www.sec.gov/comments/disclosure-effectiveness/disclosure effectiveness-55.pdf (“Data Coalition Letter 1”) (estimating a median small filer's costs of XBRL compliance to be $8,000 based on the AICPA Study); Letter from Committee on Securities Law of the Business Law Section of the Maryland State Bar Association (Jul. 21, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-257.pdf (“Maryland State Bar Letter”) (citing one registrant's cost of XBRL exhibits for fiscal year 2014 as $27,000). 70 See FERF Study, at 1 (finding, in a 2013 survey of executives and SEC reporting professionals from 442 unique companies, including members of FEI and other reporting companies, that “the cost/benefit proposition of the XBRL mandate” was among companies' top concerns about XBRL compliance). See also Letter from the ABA Business Law Section (Feb. 15, 2016), available at http://www.sec.gov/comments/disclosure-effectiveness/disclosureeffectiveness-69.pdf (“ABA Letter”); Advisory Committee on Small and Emerging Companies (ACSEC) Recommendations Regarding Disclosure and Other Requirements for Smaller Public Companies (Mar. 21, 2013), available at http://www.sec.gov/info/smallbus/acsec/acsec-recommendation-032113-smaller-public-co-ltr.pdf (“ACSEC Recommendations 2013”) (recommending that “the Commission revise its rules to provide an exemption for smaller reporting companies from the requirement to submit financial information in XBRL format for periodic reports and other public filings” in light of the disproportionate cost and time burden that compliance with financial statement information XBRL requirements imposes on smaller filers); ACSEC Recommendations about Expanding Simplified Disclosure for Smaller Issuers (Sep. 23, 2015), available at http://www.sec.gov/info/smallbus/acsec/acsec-recommendations-expanding-simplified-disclosure-for-smaller-issuers.pdf (“ACSEC Recommendations 2015”) (recommending that “the Commission exempt smaller reporting companies from XBRL tagging”); Recommendations of the Investor Advisory Committee Regarding the SEC and the Need for the Cost Effective Retrieval of Information by Investors (Jul. 25, 2013), available at http://www.sec.gov/spotlight/investor-advisory-committee-2012/data-tagging-resolution-72513.pdf (“IAC Recommendations”) (recommending that “the SEC take steps designed to reduce the costs of providing tagged data, particularly for smaller issuers and investors”); Letter from Center for Capital Markets Competitiveness (Jul. 20, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-173.pdf (recommending that smaller reporting companies be exempted from XBRL tagging); Maryland State Bar Letter (stating that XBRL imposes a burden on small registrants); Letter from Prologis (Jul. 21,2016), available at http://www.sec.gov/comments/s7-06-16/s70616-303.pdf (stating that XBRL preparation imposes an internal time burden of approximately one week per quarter in addition to the cost of services of an outside firm). 71 See AICPA Study; Data Coalition Letter 1. See also Trevor S. Harris and Suzanne Morsfield, “An Evaluation of the Current State and Future of XBRL and Interactive Data for Investors and Analysts”—“White Paper Number Three,” Columbia Business School Center for Excellence in Accounting and Security Analysis (December 2012), available at http://www4.gsb.columbia.edu/filemgr?&file_id=7313146 (“Columbia White Paper”), footnote 34 (finding that, based on FEI's FERF survey data for 2011 and 2012, XBRL implementation was either not as costly as anticipated, or had become significantly less costly over time for most filers). See also Mohini Singh and Sandra Peters (2016) Data and Technology: Transforming the Financial Information Landscape, CFA Institute, Codes, Standards and Position Papers, Vol. 2016, Issue 7 (June 2016), available at http://www.cfainstitute.org/learning/products/publications/ccb/Pages/ccb.v2016.n7.1.aspx (“Singh”) (retrieved Sep. 20, 2016), at 48 (stating that “SMEs [small and medium-sized enterprises] should balance the cost of tagging against the cost of capital” and that “XBRL filings make the financial information of SMEs more accessible to investors and lead to a reduction in the cost of capital”). 72 See FERF Study, at 18-19. 73 See AICPA Study. The 2009 Risk/Return Summary Adopting Release estimated the expected direct cost of compliance with the mutual fund risk/return summary XBRL requirements. 74 We have not received comments or further data that would lead us to update cost estimates for XBRL requirements pertaining to risk/return summary information. 74 See 2009 Risk/Return Summary Adopting Release, at 7769 (estimating direct costs of preparing and submitting interactive data-formatted risk/return summary information, excluding the cost of Web site posting, at $23,200 ($3,100) for the first submission (each subsequent submission) and the cost of Web site posting at $250). To facilitate compliance with XBRL requirements, the staff has taken steps to provide guidance and tools to assist with XBRL filing. 75 75 See, e.g., Office of Structured Disclosure Staff Interpretations and FAQs Related to Interactive Data Disclosure, available at http://www.sec.gov/structureddata/FAQs (“OSD FAQs”). The Commission also makes available to the public certain tools to assist with filing. For example, the Previewer can be used by a filer to see how XBRL submissions would appear on the SEC's Web site before submission via EDGAR and rendering by the EDGAR Renderer. The Previewer displays any error and warning messages that EDGAR would display. See http://www.sec.gov/structureddata/edgarvalandrender. See also http://www.sec.gov/structureddata/interactive-data-test-suite. 2. XBRL Data Use There is a wide range of users of XBRL data, including investors, financial analysts, economic research firms, data aggregators, academic researchers, and Commission staff. Investors, other market participants, and other data users access XBRL data in various ways. XBRL data for individual filings is available on EDGAR and on each filer's respective Web site. Downloads of XBRL data also are available from the Commission through Really Simple Syndication (RSS) feeds. The Commission combines, organizes and posts for bulk download XBRL data extracted from operating company submissions to facilitate investor analysis and comparisons of public company information. 76 A number of businesses have created open-source software products, which freely provide XBRL data to investors. Other businesses offer investors additional analytical software and data feeds for a small license fee. Data aggregators ( i.e., entities that, in general, collect, package and resell data) have incorporated XBRL data into their products to varying degrees. Various third-party data providers extract or preview information contained in XBRL exhibits, offering XBRL analytics tools or using XBRL data to supplement other reported data based on filer disclosures. 77 76 See http://www.sec.gov/dera/data/financial-statement-data-sets.html. 77 See, e.g., a discussion of XBRL analytics tools, available at http://xbrl.us/use/howto/, http://xbrl.us/home/category/productsservices/service/data-aggregation/. See also Mitchell R. Wenger, Rick Elam, and Kelly L. Williams (2013) A tour of five XBRL tools, Journal of Accountancy (Apr. 1, 2013), available at http://www.journalofaccountancy.com/issues/2013/apr/20126677.html; Letter from XBRL US (Nov. 30, 2015), available at http://www.sec.gov/comments/s7-20-15/s72015-29.pdf (“XBRL US Letter 1”) (suggesting that investment firms often obtain their data through third-party providers, many of which use the XBRL version of public company data); Letter from XBRL US (Oct. 6, 2016), available at http://www.sec.gov/comments/s7-15-16/s71516-16.pdf (stating that XBRL improves productivity by allowing analysts to spend less time on data collection and enabling deeper analysis); Letter from Data Coalition (Jul. 21, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-299.pdf (“Data Coalition Letter 2”) (discussing the availability of tools for XBRL data users). See also note 33. The Commission staff uses XBRL data to support risk assessment, rulemaking and enforcement activities. Machine-readable financial market data, including XBRL-formatted data, enhances the Commission's rulemaking and market monitoring activities by allowing staff to efficiently analyze large quantities of information. For example, the Commission staff uses financial statement information XBRL data in the Corporate Issuer Risk Assessment (CIRA) program, which provides a comprehensive overview of the financial reporting environment of filers and assists the staff in detecting anomalous patterns in financial statements that may warrant additional inquiry. However, some commenters have indicated that XBRL data use has been limited, in part due to concerns regarding data quality for operating companies. 78 Errors may appear in information submitted in XBRL that affect the quality of the data and its potential use by the public and the Commission staff. For example, Commission staff has identified several recurring issues with financial statement information XBRL data, including errors related to the characterization of a number as negative when it is positive, incorrect scaling of a number ( e.g., in billions rather than in millions), unnecessary taxonomy extensions (“custom tags”), incomplete tagging ( e.g., a failure to tag numbers in parentheses) and missing calculations that show relationships between data ( e.g., how subtracting cost of revenue from revenue equals gross profit). 79 Staff has provided guidance 80 to improve the quality of XBRL data. Some of these data quality issues seem to have been mitigated over time 81 while others are recurring. 78 See, e.g., Data Coalition Letter 1; Letter from Center for Capital Markets Competitiveness (Nov. 30, 2015), available at http://www.sec.gov/comments/s7-20-15/s72015-14.pdf; CFA Institute Member Survey: XBRL (December 2011), available at http://www.cfainstitute.org/ethics/Documents/Research%20Topics%20and%20Positions%20Documents/xbrl_member_survey_report_2011.pdf (retrieved Aug. 30, 2016) (“CFA Survey”) (finding that, among respondents aware of XBRL, fewer than 20% used information through an XBRL instance document reader/viewer and fewer than 10% extracted or imported XBRL data directly into financial analysis models); Columbia White Paper; ACSEC Recommendations 2013; Final Report of the 2012 SEC Government-Business Forum on Small Business Capital Formation, available at http://www.sec.gov/info/smallbus/gbfor31.pdf; Letter from Corporate Governance Coalition for Investor Value (Jul. 20, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-188.pdf; Letter from Lark Research, Inc. (Jul. 24, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-317.pdf ; Letter from Investor Advisory Committee (Jun. 15, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-22.pdf (“IAC Letter”) (stating that, as part of the staff's Disclosure Effectiveness Initiative, the Commission should take steps to increase the quality of the data that is filed with the Commission). 79 See note 31 above. 80 See Sample Letter Sent to Public Companies Regarding XBRL Requirement to Include Calculation Relationships (July 2014), available at http://www.sec.gov/divisions/corpfin/guidance/xbrl-calculation-0714.htm (“CFO Letter”). See also OSD FAQs. 81 See, e.g., Staff XBRL Observations 2014 (observing a steady decline in custom tag use by large accelerated filers during the phase-in period and thereafter, based on an assessment of XBRL exhibits submitted from 2009 through October 2013). See also Hui Du, Miklos A. Vasarhelyi, and Xiaochuan Zheng (2013) XBRL mandate: thousands of filing errors and so what? Journal of Information Systems, Volume 27, Issue 1, pp. 61-78 (suggesting that filers and software vendors have learned over time, which resulted in a reduced rate of XBRL errors); Ariel J. Markelevich, 2016, The quality and usability of XBRL filings in the US, working paper (Jun. 21, 2016), available at http://ssrn.com/abstract_id=2798732 (retrieved Aug. 30, 2016) (“Markelevich”) (finding declines in several types of XBRL errors other than incorrect signs and declines in custom tag rates during 2012-2015 and also finding a higher incidence of errors among smaller filers); SEC Filers Decreased Errors by 64 Percent by Using Data Quality Committee Validation Rules (May 31, 2016), available at http://xbrl.us/news/dqc-20160531/ (retrieved Aug. 30, 2016) (analyzing the effects on XBRL data quality of guidance and validation rules of XBRL US Data Quality Committee that took effect took effect January 1, 2016 and finding that several types of errors, including incorrect signs, improper value relationships between elements, and incorrect dates, declined during the first quarter of 2016). Compared to financial statements of operating companies, mutual fund risk/return summaries have fewer instances in which numeric data is embedded into text, and data is generally more standardized. As discussed above, 82 risk/return summary filers also rely to a considerable degree on the integrated approach to XBRL preparation. These factors may suggest that there are fewer data quality issues with risk/return summary XBRL data. However, we presently lack sufficient data or other information to assess the quality of risk/return summary XBRL data. 82 See Section II.B.1 above. While these data quality issues may have multiple potential causes, we believe that some of these errors may result from the submission of XBRL tagged information as an exhibit separate from the Related Official Filing. This requirement creates an additional opportunity for reporting errors for those companies that first prepare their required disclosures in the HTML or ASCII format before creating a separate XBRL exhibit, often via an incremental set of reporting processes and controls. In particular, tagging information from the Related Official Filing in a separate XBRL exhibit increases the likelihood of inconsistently entering the information. 83 Furthermore, since the separate XBRL exhibit is subsequently rendered for viewing by readers, although filers are not required to make the rendered version of XBRL data look exactly the same as the Related Official Filing, 84 filers commonly add unnecessary tags aimed at managing the appearance of the rendered XBRL data that may contribute to data quality issues. 85 83 See, e.g., XBRL US Letter 1; Letter from XBRL US (Apr. 14, 2016), available at http://www.sec.gov/comments/s7-27-15/s72715-34.pdf (“XBRL US Letter 2”); Letter from XBRL US (Jul. 21, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-278.pdf (“XBRL US Letter 3”) (referencing the translation risk associated with the preparation of two documents); Data Coalition Letter 2 (stating that Inline XBRL “reduces the danger that the registrant will file a correct number in a document but misplace a decimal point or flip a negative sign in the corresponding structured data”). See also note 155 below. 84 See Regulation S-T Compliance and Disclosure Interpretations, Question 130.08 (May 29, 2009), available at http://www.sec.gov/divisions/corpfin/guidance/regs-tinterp.htm (indicating that an Interactive Data File need not appear identical to the traditional format financial statements when displayed by a viewer on the Commission's Web site). 85 See Staff XBRL Observations 2014; Staff XBRL Observations 2011. See also Inline XBRL—saving cost and effort for company reporting, XBRL UK White Paper, available at http://www.xbrl.org.uk/resources/whitepapers/inlineXBRL-benefits-v1.pdf (retrieved Aug. 30, 2016) (“XBRL White Paper”), at 5; Company reporting in the UK—an XBRL success story, XBRL UK White Paper, available at http://www.xbrl.org.uk/resources/whitepapers/UKcompanyReporting-XBRL-v1.pdf (retrieved Aug. 30, 2016) (“XBRL UK Success Story White Paper”), at 2 and 7. The 2005 XBRL Voluntary Program for financial statement information interactive data is currently only available to investment companies and entities that prepare their financial statements in accordance with Article 6 of Regulation S-X. Based on an analysis of EDGAR filings, we estimate that six mutual funds and other permitted participants made such submissions during calendar years 2008-2010, with no submissions in 2011-2015. 86 86 Two filers submitted Voluntary Program XBRL exhibits (EX100) in 2015, but those filings seem to have been made in error. III. Proposed Amendments and Anticipated Economic Effects A. Overview of Inline XBRL In the 2009 Financial Statement Information Adopting Release, the Commission stated that it “may consider proposing rules to require a filing format that integrates HTML with XBRL or eliminate financial statement reporting in ASCII or HTML format.” 87 The 2009 Risk/Return Summary Adopting Release stated, in the context of the possibility of embedding interactive data in HTML filings, that it was necessary to monitor interactive data reporting before attempting further integration of the interactive data format. 88 We believe that current XBRL embedding technology now is sufficiently developed to propose requiring its use in Commission filings. In particular, the Inline XBRL technology 89 contains a standardized set of requirements for embedding XBRL data into an HTML version of a filing, which eliminates the need to copy and tag the required information with XBRL in a separate exhibit. 90 The Inline XBRL technology is freely licensed and made available by XBRL International, a consortium of over 600 organizations representing many aspects of the financial reporting supply chain community worldwide. 91 87 See 2009 Financial Statement Information Adopting Release, at 6783. When the Commission proposed the XBRL requirements for financial statement information, it similarly stated that “we may consider proposing rules to require a filing format that integrates ASCII or HTML with XBRL.” See Release No. 33-8924 (May 30, 2008) [73 FR 32793], at 32800. 88 See 2009 Risk/Return Summary Adopting Release, at 7755. When the Commission proposed the XBRL requirements for risk/return summary information, it similarly stated that “we may consider proposing rules to require a filing format that integrates ASCII or HTML with XBRL.” See Release No. 33-8929 (Jun. 10, 2008) [73 FR 35441], at 35447. 89 See http://specifications.xbrl.org/spec-group-index-inline-xbrl.html (retrieved Aug. 30, 2016). 90 See http://specifications.xbrl.org/presentation.html (retrieved Aug. 30, 2016). 91 See http://www.xbrl.org/the-consortium/about/ (retrieved Aug. 30, 2016). With Inline XBRL, similar to existing practices, filers or filing agents would need to tag the required disclosures using the applicable taxonomy. However, the tagging of information would be performed within the HTML document instead of a separate XBRL exhibit. 92 Inline XBRL also would give the preparer full control over the presentation of filer disclosures because the XBRL data would be displayed within the HTML filing in a browser. 93 Inline XBRL thus yields a single document that is both human-readable and enables the automated extraction and analysis of embedded XBRL data by the user's XBRL extraction software. 92 See note 159 below. 93 In an Inline XBRL document, data values are nested within Inline XBRL elements which are themselves nested within HTML or XHTML elements (“Markup Elements”). The browser ignores the Inline XBRL elements and displays the data values as though they were textual content of the Markup Elements, enabling presentation in a human-readable format. See Inline XBRL Part 0: Primer 1.1, available at http://www.xbrl.org/WGN/inlineXBRL-part0/WGN-2015-12-09/inlineXBRL-part0-WGN-2015-12-09.html (retrieved Aug. 30, 2016). The Inline XBRL technology is currently used in several other jurisdictions for a variety of regulatory purposes and has been proposed for required use in another. 94 As a result, some filers that are subject to Inline XBRL reporting requirements in other countries, as well as vendors with customers in these same countries, may already have Inline XBRL capabilities, 95 although their experience with Inline XBRL may be based on information unrelated to financial statements or mutual fund risk/return summaries. We request comment and input from filing agents, software vendors, investors, other market participants, and other data users about their current ability to accommodate Inline XBRL. 96 94 For example, in the United Kingdom, the “accounts and computations” part of a “Company Tax Return” must be submitted to HM Revenue and Customs using Inline XBRL ( http://www.gov.uk/government/publications/xbrl-tagging-when-what-and-how-to-tag, retrieved Aug. 30, 2016). See also XBRL UK Success Story White Paper. Other examples can be found in regulations permitting or requiring the use of Inline XBRL in Australia ( http://asic.gov.au/about-asic/media-centre/find-a-media-release/2015-releases/15-104mr-asic-introduces-format-for-improved-communication-of-financial-information/, retrieved Aug. 30, 2016); Ireland ( http://www.revenue.ie/en/online/ros/ixbrl/index.html, retrieved Aug. 30, 2016); Denmark and Japan ( http://www.xbrl.org/the-standard/why/who-else-uses-xbrl/, retrieved Aug. 30, 2016). We note that the specific disclosure regimes in these countries may differ from that in the United States. According to one commenter, Inline XBRL is used in the UK by approximately 2 million companies for reporting tax information to HMRC Tax Service Online. The commenter notes that “[a]ccording to the HMRC's former Strategy Architect for the Company Tax online service, an estimated 90% of filings are at zero cost to the issuer because most companies (continue to) use packaged tax and accounting software to which the vendors added inline XBRL production capability as an alternative to printed output” while “[t]he remaining 10% of companies outsource their inline XBRL conversion to accounting firms with estimated annual costs ranging from as low as $135 to as high as $4200.” See XBRL US Letter 2. The European Securities and Markets Authority recently proposed to require issuers in the European Union to prepare their annual financial reports containing IFRS financial statements in the Inline XBRL format using the IFRS taxonomy from January 1, 2020. See ESMA proposes new digital format for issuers' financial reporting, available at http://www.esma.europa.eu/press-news/esma-news/esma-proposes-new-digital-format-issuers%E2%80%99-financial-reporting (retrieved Jan. 31, 2017); ESMA Feedback Statement on the Consultation Paper on the Regulatory Technical Standard on the European Single Electronic Format (ESEF), Dec. 21, 2016, available at http://www.esma.europa.eu/sites/default/files/library/2016-1668_esma_feedback_statement_on_the_rts_on_esef_0.pdf (retrieved Jan. 31, 2017). 95 In the United States, some XBRL filing agents and software vendors have stated on their Web sites, in press releases or in user documentation that they have or will have in the future the capability to generate Inline XBRL filings. 96 See Section III.B.5 below. B. Proposed Amendments 1. Inline XBRL Requirements a. Use of Inline XBRL Format We propose to require the use of Inline XBRL for operating company financial information and mutual fund risk/return summaries by amending the rules that specify certain content and format requirements for the Interactive Data File. Currently, the requirement to submit and post information in XBRL applies through the exhibit requirements of Item 601(b)(101) of Regulation S-K 97 and Forms F-10, 98 20-F, 99 40-F 100 and 6-K 101 with regard to financial statement information. Similar requirements for mutual funds to submit and post risk/return summary information in XBRL apply through the exhibit requirements of Form N-1A 102 and Rule 497. 103 These exhibit requirements specify when information in the Related Official Filing triggers the requirement to submit and post an Interactive Data File in the manner provided by Rule 405 of Regulation S-T. 104 Rule 405 sets forth the basic content, format, submission and posting requirements for the Interactive Data File, such as the requirement to submit the Interactive Data File as an exhibit to the Related Official Filing. 105 Rule 405 also requires that an Interactive Data File be submitted in accordance with the EDGAR Filer Manual. 106 The EDGAR Filer Manual contains additional formatting and submission requirements for the Interactive Data File. 97 The exhibit requirements of Item 601(b)(101) relate to Forms S-1, S-3, S-4, S-11, F-1, F-3, F-4, 8-K, 10-Q and 10-K. 98 Paragraph (101) of Part II—Information Not Required to be Delivered to Offerees or Purchasers of Form F-10. 99 Paragraph 101 of the Instructions as to Exhibits of Form 20-F. 100 Paragraph B.(15) of the General Instructions to Form 40-F. 101 Paragraph C.(6) of the General Instructions to Form 6-K. 102 See General Instruction C.3(g) to Form N-1A. 103 See Rule 497(c) and (e). 104 The exhibit provisions that specify when an Interactive Data File is required for financial information also specify when it is optional and when it is prohibited. 105 See Rule 405(a)(2) for the exhibit requirement. 106 See Rule 405(a)(3). The amendments we are proposing today would revise Rule 405 to require filers to submit the Interactive Data File using Inline XBRL. The proposed amendments would require filers, on a phased in basis, to embed a part of the Interactive Data File within an HTML document using Inline XBRL and to include the rest in an exhibit to that document. The portion filed as an exhibit to the form would contain contextual information about the XBRL tags embedded in the filing. The information as tagged would continue to be required to satisfy all other requirements of Rule 405, including the technical requirements in the EDGAR Filer Manual. 107 107 Information presented in multiple locations within the financial statements must be tagged in all those locations. We note that Inline XBRL is not compatible with the ASCII format. Thus, filers that currently prepare the Related Official Filing in the ASCII format would need to switch to HTML unless they already have done so to comply with the amendments adopted in the Hyperlinks Adopting Release. We do not expect this to affect many filers, as the vast majority currently file in HTML. 108 While the filers that use ASCII that would be affected by the proposal to require HTML are primarily small entities and may incur a disproportionately greater burden, 109 we expect the impact on smaller filers to be partly mitigated by the proposed phase-in. We further expect that the average costs of switching to HTML would not be large because the cost of software with built-in HTML features is minimal. Overall, given the modest costs involved, we do not expect that the proposed amendments would have significant competitive effects for filers. We also note the advantages of HTML for the presentation of information from the standpoint of filers and users. Unlike ASCII documents, HTML documents can include graphics, varied fonts and other visual displays that filers use when they create Internet presentations or material for distribution to shareholders and other investors. 110 In prior rulemakings, the Commission has noted the possibility of HTML eventually replacing ASCII. 111 Furthermore, as discussed above, the Commission has adopted amendments to eliminate the ASCII format for registration statements and periodic and current reports that are subject to the exhibit requirements under Item 601 of Regulation S-K and for Forms F-10 and 20-F. 112 These amendments should further reduce the portion of the cost of operating company ASCII filers switching to HTML that is incremental to the proposed rule. 108 See note 36 above. 109 Some commenters on the Hyperlinks Proposing Release expressed concern about the cost of switching from ASCII to HTML but have not provided specific estimates. See, e.g., Letter from Corporate Governance Coalition for Investor Value (Oct. 27, 2016), available at http://www.sec.gov/comments/s7-15-16/s71516-34.pdf; Letter from Center for Capital Markets Competitiveness (Oct. 27, 2016), available at http://www.sec.gov/comments/s7-15-16/s71516-33.pdf. 110 Plain text submissions may not include certain characters that are not in the standard ASCII character set, such as certain foreign characters and special characters for currencies, as well as characters associated with document style and format that may be introduced by standard word processing software. Submissions must not exceed 80 characters per line. Additionally, the conversion of tabular, columnar or footnote material created in standard word processing software into ASCII may pose formatting challenges and require some information to be formatted manually. See EDGAR Filer Manual, Volume II, Section 5.2.1.2, available at http://www.sec.gov/info/edgar/edmanuals.htm. See also http://www.sec.gov/info/edgar/quick-reference/create-ascii-files.pdf. 111 See Release No. 33-7855 (Apr. 24, 2000) [65 FR 24787], at 24789 and Release No. 33-7684 (May 17, 1999) [64 FR 27888], at 27889 (stating that “we expect that HTML will eventually replace ASCII for most filings”). 112 See Hyperlinks Adopting Release. b. Timing of Submission of Interactive Data File We are not proposing changes to the timing of the submission of the Interactive Data File for operating company financial statement information. Operating company filers would continue to be generally required to submit the Interactive Data File with the filing. 113 113 An operating company may submit its first Interactive Data File as an amendment to the filing. See Rule 405(a) of Regulation S-T. In contrast, for mutual funds, we are proposing changes to the General Instructions to Form N-1A that would change the timing requirements for the submission of the Interactive Data File. First, we are proposing to permit mutual funds to submit Interactive Data Files concurrently with certain post-effective amendments filed pursuant to paragraph (b) of Rule 485 under the Securities Act. 114 Second, we are proposing to eliminate the current 15 business day filing period accorded to all mutual fund filings containing risk/return summaries, including initial registration statements, post-effective amendments, and forms of prospectuses filed pursuant to paragraphs (c) and (e) of Rule 497. In the case of initial registration statements and post-effective amendments, the Interactive Data File would be required to be submitted no later than the effective date of those filings. In the case of forms of prospectuses filed pursuant to Rule 497, the Interactive Data File would be required to be submitted concurrently with the filing. 114 A post-effective amendment filed under Rule 485(b) may become effective immediately upon filing, or at a later date designated on the facing sheet of the amendment of generally up to 30 days after the date on which the amendment is filed. A post-effective amendment may only be filed under Rule 485(b) if it is filed for one or more specified purposes, including to make non-material changes to the registration statement. Currently, an Interactive Data File for a Form N-1A filing, whether the filing is an initial registration statement or a post-effective amendment thereto, must be submitted as an amendment to the registration statement to which the Interactive Data File relates. 115 That amendment with the Interactive Data File also must be submitted after the registration statement or post-effective amendment that contains the related information becomes effective but not later than 15 business days after the effective date of that registration statement or post-effective amendment. 116 As we noted in the 2009 Risk/Return Summary Adopting Release, the period of 15 business days was intended both to provide funds with adequate time to prepare the exhibit and to make the interactive data available promptly. 117 We understand that questions have been raised as to whether this 15 business day filing period remains necessary in light of the development of, and resulting efficiencies from, integrated solutions in the XBRL preparation process in use today and the proposed implementation of Inline XBRL. 115 General Instruction C.3(g)(i) to Form N-1A. 116 Id. Filings on Form N-1A, which contain mutual fund registration statements (or amendments thereto), are often subject to revision prior to effectiveness. For example, initial registration statements and post-effective amendments filed under Rule 485(a) are subject to Commission staff review, and revisions to the registration statement may be made in connection with the staff review process. 117 See 2009 Risk/Return Summary Adopting Release, footnote 97 and accompanying and following text. For example, mutual funds may require additional time after making the related filing to prepare and file in a subsequent amendment the Interactive Data File due to the staff comment process or otherwise. Mutual funds also are required to submit an Interactive Data File for any form of prospectus filed pursuant to Rule 497(c) or (e) under the Securities Act that includes information provided in response to Items 2, 3, or 4 of Form N-1A that varies from the registration statement. 118 In the case of those filings, however, mutual funds are permitted to file the Interactive Data File concurrently with the filing or up to 15 business days subsequent to the filing. 119 118 See General Instruction C.3(g)(ii) to Form N-1A. 119 Id. To help facilitate efficiencies in the mutual fund post-effective amendment filing process, we are proposing to amend the General Instructions to Form N-1A to permit mutual funds to submit Interactive Data Files concurrently with post-effective amendments filed pursuant to paragraphs (b)(1)(i), 120 (ii), 121 (v), 122 or (vii) 123 of Rule 485 under the Securities Act. 124 We are proposing this change in recognition of the fact that, in our experience, post-effective amendments filed pursuant to these paragraphs of Rule 485 generally are not subject to further revision. 125 120 Subparagraph (i) of Rule 485(b)(1) permits a post-effective amendment filing for the purpose of bringing the financial statements up to date under Section 10(a)(3) of the Securities Act or Rules 3-12 or 3-18 of Regulation S-X. 17 CFR 210.3-12 and 210.3-18. 121 Subparagraph (ii) of Rule 485(b)(1) permits a post-effective amendment filing for the purpose of complying with an undertaking to file an amendment containing financial statements, which may be unaudited, within four to six months after the effective date of the registrant's registration statement under the Securities Act. 122 Subparagraph (v) of Rule 485(b)(1) permits a post-effective amendment filing for the purpose of making any non-material changes which the registrant deems appropriate. 123 Subparagraph (vii) of Rule 485(b)(1) permits a post-effective amendment filing for any other purpose which the Commission shall approve. 124 See proposed General Instruction C.3(g)(i)(B) to Form N-1A. 125 With the exception of post-effective amendments filed pursuant to Rule 485(b)(1)(iii), a post-effective amendment filed under Rule 485(b)(1) may become effective immediately upon filing. With respect to all filings by mutual funds containing risk/return summaries (initial registration statements, post-effective amendments, and forms of prospectuses pursuant to Rule 497), we are proposing to eliminate the current 15 business day period during which mutual funds must submit Interactive Data Files. Inline XBRL involves embedding XBRL data directly into the filing. We believe that most mutual fund risk/return summary XBRL submissions today are created using integrated solutions. 126 Therefore, in order to improve the timeliness of the availability of risk/return summary XBRL information, we are proposing that Interactive Date Files be submitted to the Commission as follows: 126 See note 66 above and accompanying text (noting that during 2015 and the first half of 2016, at least 80% of mutual fund risk/return summary XBRL submissions were created using integrated solutions). • For post-effective amendments filed pursuant to paragraphs (b)(1)(i), (ii), (v), or (vii) of Rule 485, Interactive Data Files must be filed either concurrently with the filing or in a subsequent amendment that is filed on or before the date that the post-effective amendment that contains the related information becomes effective; 127 127 See proposed General Instruction C.3(g)(i)(B) to Form N-1A. • For initial registration statements and post-effective amendments filed other than pursuant to paragraphs (b)(1)(i), (ii), (v), or (vii) of Rule 485, Interactive Data Files must be filed in a subsequent amendment filed on or before the date the registration statement or post-effective amendment that contains the related information becomes effective; 128 and 128 See proposed General Instruction C.3(g)(i)(A) to Form N-1A. • For any form of prospectus filed pursuant to Rule 497(c) or (e), mutual funds would be required to submit the Interactive Data File concurrently with the filing. 129 129 See proposed General Instruction C.3(g)(ii) to Form N-1A. c. Phase-in of Inline XBRL Requirements We propose to phase in the Inline XBRL requirements for operating companies in annual increments based on the category of filer status. Large accelerated filers that prepare their financial statements in accordance with U.S. GAAP would be required to comply with Inline XBRL requirements for financial statement information in the second year after the rule is effective, followed by accelerated filers that prepare their financial statements in accordance with U.S. GAAP in the third year and all other operating company filers that are required to submit Interactive Data Files in the fourth year. 130 This phase-in approach is broadly consistent with the approach in the 2009 Financial Statement Information Adopting Release and is intended to ease the cost of transition for smaller filers and those filers that use IFRS as issued by the IASB. Given that any fixed cost of initial transition would disproportionately burden smaller filers, this approach would give such filers time to develop related expertise, as well as the opportunity to benefit from the experience of larger filers with Inline XBRL. The proposed phase-in might also provide filing agents and software vendors whose main customers are smaller filers with additional time to adopt the Inline XBRL technology and develop related expertise. Filers would be permitted to file using Inline XBRL prior to the compliance date for each category of filers; otherwise, prior to the applicable compliance date, filers that do not file using Inline XBRL would continue to be required to submit the entire Interactive Data File as an exhibit, as they do currently. 131 130 See proposed Rule 405(f)(1)(i). 131 See proposed Rule 405(f)(2). Similarly, we propose a phase-in for mutual funds based on net asset size. Specifically, for larger entities ( i.e., mutual funds that together with other investment companies in the same “group of related investment companies” 132 have net assets of $1 billion or more as of the end of the most recent fiscal year) we are proposing a compliance date of one year after the effective date to comply with the new reporting requirements. For smaller entities ( i.e., mutual funds that together with other investment companies in the same “group of related investment companies” have net assets of less than $1 billion as of the end of the most recent fiscal year), we are proposing to provide for an additional year to comply with the new reporting requirements. 133 Mutual funds would be permitted to file using Inline XBRL prior to the compliance date for each category of filers; otherwise, prior to their applicable compliance date, filers that do not file using Inline XBRL would continue to be required to submit their Interactive Data File as an exhibit to their filing, as they do currently and under the current timing requirements. 132 For these purposes, we expect that the threshold would be based on the definition of a “group of related investment companies,” as such term is defined in Rule 0-10 under the Investment Company Act. Rule 0-10 defines the term as applied to management investment companies as two or more management companies (including series thereof) that: (i) Hold themselves out to investors as related companies for purposes of investment and investor services; and (ii) either: (A) Have a common investment adviser or have investment advisers that are affiliated persons of each other; or (B) have a common administrator. 17 CFR 270.0-10(a)(1). We believe that this broad definition would encompass most types of fund complexes and therefore is an appropriate definition for compliance date purposes. 133 When the risk/return summary information XBRL requirements were adopted on February 11, 2009, all filers had approximately two years to comply (until January 1, 2011). We do not believe that a similarly extended period would be necessary for larger filers to comply with the proposed Inline XBRL requirements due to the incremental nature of the changes required for the transition to Inline XBRL compared to the initial introduction of XBRL. However, we believe that smaller mutual fund filers may on the margin benefit from the additional time to comply with the Inline XBRL requirements. d. Categories of Filers Subject to Inline XBRL Requirements The proposed Inline XBRL requirements for financial statement information would apply to all operating company filers, including smaller reporting companies (SRCs), 134 emerging growth companies (EGCs) 135 and FPIs, 136 that currently are required to submit financial statement information in XBRL. Similarly, the proposed Inline XBRL requirements for risk/return summary information would apply to all mutual fund filers that currently are required to submit risk/ return summary information in XBRL. At this time, we are not proposing changes to the categories of filers subject to XBRL requirements or the scope of information that is subject to XBRL requirements. 137 134 Rule 405 under the Securities Act [17 CFR 230.405], Rule 12b-2 of the Exchange Act [17 CFR 240.12b-2] and Item 10(f) of the Regulation S-K [17 CFR 229.10(f)]. 135 Section 2(a)(19) of the Securities Act [15 U.S.C. 77b(a)(19)] and Section 3(a)(80) of the Exchange Act [15 U.S.C. 78c(a)(80)]. 136 Rule 3b-4(c) [17 CFR 240.3b-4(c)]. 137 When the Commission adopted the financial statement information XBRL requirements in 2009, after considering public comments, the Commission stated that a partial or complete exemption would detract from the long-term completeness and uniformity of XBRL financial information and would be inconsistent with the Commission's goal of making financial information easier for investors to analyze while assisting in automating regulatory filings and business information processing. We continue to believe that to be the case. See note 169 below. We recognize, however, that some commenters have expressed concerns about the cost of XBRL for smaller filers. See note 70 above. As part of our recent concept release on modernizing certain business and financial disclosure requirements in Regulation S-K, we solicited comment about whether we should eliminate or reduce any of the XBRL tagging requirements for SRCs. See Release No. 33-10064 (Apr. 13, 2016) [81 FR 23915] (“Regulation S-K Concept Release”). In formulating the current proposals, we considered exempting SRCs from the Inline XBRL requirements. 138 As discussed below, 139 we do not expect Inline XBRL to significantly affect the overall costs of compliance with XBRL requirements. We expect that while filers may incur a small initial transition cost, filers also may realize reductions in ongoing costs of compliance with XBRL requirements due to the elimination of the effort associated with the creation of a separate exhibit. In addition, exempting smaller filers could result in a reduction of the aggregate data quality benefits, which would affect the usefulness of the information for investors, analysts, other users and the Commission. 140 138 The Commission has recently proposed to amend the SRC definition. Under the proposed amendments, registrants with a public float of less than $250 million and registrants with a public float of zero and annual revenues of less than $100 million would qualify as SRCs. See Release No. 33-10107 (Jun. 27, 2016) [81 FR 43130], at 43134 and 43139. 139 See Section III.C.2 below. 140 See Section III.C.1 below. Inline XBRL may offer greater benefits to smaller filers since they tend to have more XBRL data errors. See Markelevich. 2. Elimination of Web Site Posting Requirement The amendments we are proposing also would eliminate the existing requirement to post the Interactive Data File on the filer's Web site for both operating companies and mutual funds. 141 In the 2009 Financial Statement Information Adopting Release, the Commission stated that it thought that the Web site availability of the interactive data would encourage its widespread dissemination, make it easier and faster for investors to collect information on a particular filer, enable search engines and other data aggregators to more quickly and cheaply aggregate the data and make them available to investors and potentially increase the reliability of data availability to the public. 142 However, the Commission also noted that this benefit could be limited since investors seeking to aggregate machine-readable XBRL data across companies, manually or through an automated process, may find XBRL exhibits posted on filers' Web sites less useful. 143 141 See Rule 405(g) and General Instruction C.3(g) to Form N-1A. 142 See 2009 Financial Statement Information Adopting Release, at 6791-6792. Similarly, in adopting the Web site posting requirement for risk/return summary information, the Commission stated that Web site availability of the interactive data would encourage its widespread dissemination, contributing to lower access costs for users. See 2009 Risk/Return Summary Adopting Release, footnote 263. 143 See 2009 Financial Statement Information Adopting Release, at 6807. See also 2009 Risk/Return Summary Adopting Release, footnote 263 (“We believe the benefits will stem primarily from the requirement to submit interactive data to the Commission and the Commission's disseminating that data.”). Since the adoption of the Web site posting requirement, industry commenters have observed very limited use of XBRL data from corporate Web sites. 144 Based on our experience, we do not believe that users of XBRL data generally seek the information directly from filers' Web sites; rather, they obtain the data from the Commission's EDGAR system or third-party aggregators. We believe that access to XBRL data for purposes of aggregation and processing, whether by data aggregators or individual users, is most efficiently achieved when such machine-readable data is consistently organized ( e.g., with respect to directory structure) and made available at a single source. We further believe that, based on our experience since we adopted the Web site posting requirement in 2009, potential data users can obtain sufficiently reliable access to XBRL data through EDGAR and do not need the backup of a Web site posting on a filer's Web site to access the XBRL data. Thus, we do not expect data users to incur significant costs from the elimination of the requirement to post the XBRL data on filers' Web sites. We expect filers to recognize a modest benefit from the elimination of this requirement, as discussed in greater detail below. 145 144 See, e.g., Columbia White Paper, at 21 (suggesting that none of the data users the authors surveyed reported accessing XBRL files from filers' Web sites). We have not received comments or information about the extent of use by investors of XBRL risk/return summary information on mutual fund Web sites after the adoption of the risk/return summary information XBRL requirements. Some of the commenters on the 2008 proposal stated that the Web site posting requirement for risk/return summary XBRL data was unnecessary. See, e.g., Letter from T. Rowe Price Associates, Inc. (Aug. 1, 2008), available at http://www.sec.gov/comments/s7-12-08/s71208-15.pdf ; Letter from Investment Company Institute (Aug. 1, 2008), available at http://www.sec.gov/comments/s7-12-08/s71208-13.pdf ; Letter from L. A. Schnase (Jul. 25, 2008), available at http://www.sec.gov/comments/s7-12-08/s71208-7.pdf (Schnase Letter). See also 2009 Risk/Return Summary Adopting Release, at 7755. 145 See Section III.C.1 below. 3. Termination of the 2005 XBRL Voluntary Program Finally, we propose to terminate the 2005 XBRL Voluntary Program for financial statement information interactive data. 146 Subsequent to the adoption of the interactive data requirements for financial statement information for operating companies in 2009, the only filers that remain eligible for the program are registered investment companies, business development companies, and entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X. The 2005 XBRL Voluntary Program is used very infrequently and thus, we do not believe that its continued existence would provide significant benefits. 146 See Rule 401 of Regulation S-T. 4. Proposed Technical Amendments We are proposing to make certain technical, conforming changes to the rules for hardship exemptions, current public information under Rule 144(c)(1) of the Securities Act and form eligibility, consistent with the proposed changes in format to the Interactive Data File and elimination of the Web site posting requirement. We propose to delete the definition of “promptly” from Rule 11 because it was only used in Rule 406T, which has expired, and references to Forms S-2 and F-2 because the forms have been eliminated. 5. Request for Comment We request and encourage any interested person to submit comments regarding the proposed amendments, specific issues discussed in this release and other matters that may have an effect on the proposed amendments. We request comment from the point of view of filers, filing agents, and software vendors as well as investors, other market participants, data aggregators, and other data users. With regard to any comments, we note that such comments are of particular assistance to us if accompanied by supporting data and analysis of the issues addressed in those comments. Commenters are urged to be as specific as possible. 1. Should operating companies be required to submit financial statement information using Inline XBRL, as proposed? Why or why not? 2. Should mutual funds be required to submit risk/return summary information using Inline XBRL, as proposed? Why or why not? In this regard, do mutual funds present different issues and considerations from operating companies? If so, how? 3. The Inline XBRL Viewer is now freely available as an open source application. 147 What future enhancements to the Inline Viewer would help to improve data quality or facilitate the implementation of Inline XBRL? 147 See http://arelle.org/2016/03/08/edgar-update/ (retrieved Sep. 20, 2016). 4. Would requiring the submission of information in Inline XBRL affect the quality and use of XBRL interactive data? If so, in what way? 5. Is the Inline XBRL technology sufficiently developed to require its use in Commission filings? 6. To what extent can filing agents and software vendors currently provide filers with the Inline XBRL functionality? For those filing agents and vendors that cannot currently provide this functionality, can it be readily developed in the future? 7. Are vendors likely to develop and make commercially available software applications or Internet products that would extract and/or analyze XBRL data from submissions in Inline XBRL? 8. Should any category of filers that is presently subject to financial statement information XBRL requirements, such as SRCs or EGCs, be exempt from the Inline XBRL requirements? Why or why not? If we were to exempt any such filers from the Inline XBRL requirements, should they be permitted to voluntarily submit their interactive data in the Inline XBRL format? What are the costs to investors, other market participants, and other data users, for instance, due to lower data quality, associated with exempting such filers from the Inline XBRL requirements? 9. Should we adopt a phase-in schedule for the implementation of Inline XBRL for operating company financial statement information, as proposed? Why or why not? Would the proposed phase-in schedule for the submission of financial statement information in Inline XBRL allow sufficient time for vendors and filers to develop and efficiently apply the Inline XBRL technology? If not, what schedule would better provide for this? Are there other factors, besides filer size and accounting principles used, that we should consider for purposes of a phase-in schedule for operating companies? 10. Would the proposed Inline XBRL requirements impose significant costs on ASCII filers? Why or why not? 11. In the case of post-effective amendment filings made pursuant to paragraphs (b)(1)(i), (ii),(v), or (vii) of Rule 485 under the Securities Act, should we, as proposed, permit mutual funds to submit interactive data information concurrently with the related filing? Why or why not? For example, is there a risk that investors may be confused by interactive data information that is filed before effectiveness of the related filing? Should we permit concurrent submission with filings made pursuant to other paragraphs of Rule 485? Conversely, should we not permit concurrent submission with filings made pursuant to one or more of paragraphs (b)(1)(i), (ii), (v), or (vii)? Should we also permit mutual funds to submit interactive data information concurrently with the related filing in the case of initial registration statements and post-effective amendments made pursuant to other paragraphs of Rule 485? Why or why not? Should we instead maintain the current requirement that Interactive Data Files be submitted in a subsequent amendment to the initial registration statement or any post-effective amendment? Why or why not? 12. We are proposing to eliminate the 15 business day filing period currently accorded to all mutual fund filings containing risk/return summaries, including initial registration statements, post-effective amendments, and forms of prospectuses filed pursuant to paragraphs (c) and (e) of Rule 497. Should we instead maintain some filing period after the related filing is made? Why or why not? If we maintain a filing period after the related filing is made, is the current period of 15 business days an appropriate time period for mutual funds to submit the interactive data, or should the time period be shorter or longer ( e.g., 1 day, 5 days, 10 days, 20 days, 30 days)? Are there costs or other burdens that may be incurred by filers if the current 15 business day filing period is eliminated? 13. We are proposing that for post-effective amendments filed pursuant to paragraphs (b)(1)(i), (ii), (v), or (vii) of Rule 485, Interactive Data Files must be submitted either concurrently with the filing or in a subsequent amendment that is filed on or before the date that the post-effective amendment that contains the related information becomes effective. Should we instead require that the Interactive Data Files be filed concurrently with the filing? Why or why not? Are there instances in which mutual fund filers would prefer to submit the Interactive Data File in a subsequent amendment? For example, in post-effective amendment filings designating a future effective date, would filers be more likely to submit the Interactive Data File concurrently with the filing or in a subsequent amendment? Should we extend the proposed filing requirements described above to filings made pursuant to other paragraphs of Rule 485? Instead, should different filing requirements extend to filings made pursuant to one or more of paragraphs (b)(1)(i), (ii), (v), or (vii)? 14. Would the proposed phase-in schedule for the submission of risk/return summary information in Inline XBRL allow sufficient time for vendors and filers to develop and efficiently apply the Inline XBRL technology? Is a threshold of $1 billion based on the net assets of mutual funds together with other investment companies in the same “group of related investment companies” as of the end of the most recent fiscal year appropriate? Should the threshold include aggregation of net assets with other investment companies in the same “group of related investment companies”? Why or why not? In lieu of “group of related investment companies,” should aggregation be based on a different set of related companies? For example, should aggregate assets be based on “family of investment companies,” as such term defined in instruction 1(a) to Item 17 of Form N-1A or “fund complex” as defined in instruction 1(b) to Item 17 of Form N-1A? Should we require administrator-sponsored funds to aggregate assets for purposes of this threshold regardless of whether the individual funds (or series thereof) do not hold themselves out to investors as related companies for purposes of investment and investor services? Why or why not? 15. Does the proposed phase-in schedule provide sufficient time for compliance for larger mutual fund filers? If not, what length of time would be appropriate for compliance? Is our 12-month extension of the compliance period for smaller entities appropriate? If not, what length of time would be appropriate for the extension of the compliance period for smaller entities? 16. To what extent do investors and other users of risk/return summary information find tagged risk/return summary information useful for analytical purposes? Is tagged risk/return summary information that is narrative, rather than numerical, useful as an analytical tool? 17. Are any other amendments necessary or appropriate to require the submission of financial statement and risk/return summary information in Inline XBRL? If so, what are they? 18. Should we eliminate the requirement to post financial statement information in XBRL on corporate filer Web sites, as proposed? Would operating company filers benefit from the elimination of the XBRL Web site posting requirement? To what extent do operating company investors access financial statement information XBRL data on filer Web sites? Would eliminating the requirement impede their efforts to access the information? Why or why not? 19. Should we eliminate the XBRL Web site posting requirement for risk/return summary information, as proposed? Would mutual fund filers benefit from the elimination of the XBRL Web site posting requirement? To what extent do mutual fund investors access risk/return summary XBRL data on mutual fund Web sites? Please provide any related data. Would eliminating the Web site posting requirement impede mutual fund investor efforts to access the information? Why or why not? 20. In what ways might the Commission enhance the access to Inline XBRL data submitted by filers? 21. Should the Commission terminate the 2005 XBRL Voluntary Program, as proposed? Why or why not? 22. Should the Commission consider rulemaking to require other types of information to be submitted in the Inline XBRL format? If so, what other types of information would be suitable for the Inline XBRL format and why? Are there other means of embedding structured data into the human-readable format of filings that we should consider? C. Potential Economic Effects of the Proposed Amendments We are mindful of the costs imposed by and the benefits obtained from our rules. Securities Act Section 2(b), 148 Exchange Act Section 3(f) 149 and Investment Company Act Section 2(c) 150 require us, when engaging in rulemaking that requires us to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition and capital formation. Additionally, Exchange Act Section 23(a)(2) requires us, when adopting rules under the Exchange Act, to consider the impact that any new rule would have on competition and not to adopt any rule that would impose a burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. 151 148 15 U.S.C. 77b(b). 149 15 U.S.C. 78c(f). 150 15 U.S.C. 80a-2(c). 151 15 U.S.C. 78w(a)(2). The proposed amendments aim to increase the efficiency and lower the cost of compliance with the existing XBRL requirements applicable to operating companies and mutual funds through process improvements associated with Inline XBRL, thereby potentially improving the quality of XBRL data available to users. The discussion below addresses the potential economic effects of the proposed amendments, including their likely costs and benefits as well as the likely effects of the proposed amendments on efficiency, competition and capital formation, relative to the economic baseline, which is comprised of XBRL practices in existence today. 152 152 See Section II.B above. At the outset, we note that, where possible, we have attempted to quantify the costs and benefits expected to result from the proposed amendments to the XBRL requirements. However, in some cases we have been unable to quantify the economic effects because we lack the information necessary to provide a reasonable estimate. For example, it is difficult to assess the extent to which the transition to Inline XBRL would result in an initial cost of switching, future savings of XBRL preparation cost and time or potential decreases in the incidence of XBRL data errors. Similarly, it is difficult to quantify the extent to which Inline XBRL would enhance the quality of XBRL data and, if so, whether it would increase XBRL data use. We encourage commenters to provide data that may be relevant for quantifying these impacts. As operating company filers begin to use Inline XBRL on a voluntary basis pursuant to our recently issued Exemptive Order, 153 we expect to be able to obtain additional information about the effects of Inline XBRL on the quality of XBRL data submitted by filers as well as any reduction in preparation time or costs. We encourage such voluntary filers to provide us information and data from their experiences. 153 See note 58 above. Voluntary transition to Inline XBRL could accelerate the economic effects of Inline XBRL and allow filers that are able to file in Inline XBRL or that rely on service providers that already have or are close to developing Inline XBRL capability to realize the benefits of Inline XBRL sooner. The expertise gained by software vendors and filing agents from a voluntary transition to Inline XBRL may facilitate the transition to Inline XBRL by subsequent adopters. Filer demand for Inline XBRL filing under the voluntary program pursuant to the Exemptive Order may also lead filing agents and software vendors to accelerate the development of Inline XBRL filing solutions and accumulate associated expertise, which could potentially lower initial costs per filer should the proposal for mandatory Inline XBRL filing be adopted. 1. Benefits We believe that filing information with Inline XBRL has the potential to provide a number of benefits to both filers and users of this information. In particular, we believe that the use of Inline XBRL may reduce the time and effort associated with preparing XBRL filings, simplify the review process for filers, and improve the quality of structured data and, by improving data quality, increase the use of XBRL data by investors, other market participants, and other data users. 154 154 See Letter from CFA Institute (Oct. 6, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-375.pdf ; IAC Recommendations (recommending consideration of the use of Inline XBRL to promote standardization and facilitate recovery of data filed with the Commission); IAC Letter (recommending accelerated development and implementation of Inline XBRL); Letter from California State Teachers' Retirement System (Jul. 21, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-226.pdf (stating that the development and implementation of technology such as Inline XBRL should be accelerated “to provide needed information in a format where investors can drill-down and contrast peer information through robust technology”). See also notes 155 and 162 below. Embedding XBRL data in an HTML document rather than tagging a copy of the data to create a separate XBRL exhibit should increase the efficiency and effectiveness of the filing preparation process and, by saving time and effort spent on the filing process, may, over time, reduce the cost of compliance with existing XBRL requirements. Commenters and other sources have noted these potential benefits of Inline XBRL both in the operating company context 155 and in the mutual fund context. 156 Inline XBRL eliminates the need to create a separate XBRL instance document, which can reduce the incidence of those re-keying errors that are associated with the presence of separate documents. 157 Inline XBRL also makes it possible for filers or filing agents to view XBRL meta data 158 within the HTML document, which can facilitate the review of XBRL data and better equip filers to detect XBRL errors. Further, filers or filing agents can use tools like the open source Inline XBRL Viewer to review the Interactive Data File and more efficiently filter and identify errors. Thus, by facilitating the preparation and review of XBRL data, Inline XBRL can decrease the overall time and cost required by filers to comply with the existing XBRL requirements. 155 See XBRL US Letter 1 (stating that “In-line XBRL would reduce filing costs for US companies because they would be required to file only one document—not two . . . [and] would also eliminate the translation risk companies bear preparing two documents reporting the same information”); XBRL US Letter 2 (stating that the current process of submitting both an HTML and XBRL version of financial statement information results in companies filing duplicated data and that the burden on reporting entities can be further reduced by leveraging Inline XBRL technology, which combines an HTML and an XBRL file into a single document); XBRL US Letter 3 (stating that “the disclosure process overall will be further streamlined now that the SEC allows the use of inline XBRL, which eliminates the need to create duplicate versions of the filing”); Letter from XBRL US to Members of the U.S. House of Representatives (Feb. 3, 2016), available at http://xbrl.us/wp-content/uploads/2016/02/XBRL-US-Letter-to-U-S-House-of-Representatives-2-3-16.pdf (stating that “[I]nline XBRL will enable companies to streamline their current process significantly, further reducing the cost of disclosure . . . and would also improve the efficiency and effectiveness of the current SEC reporting program”); Data Coalition Letter 2 (stating that Inline XBRL “reduces the danger that the registrant will file a correct number in a document but misplace a decimal point or flip a negative sign in the corresponding structured data” and that Inline XBRL is a “significant step toward better quality and predictability”); Letter from Pfizer (Dec. 7, 2015), available at http://www.sec.gov/comments/s7-20-15/s72015-44.pdf (observing that duplication due to the current requirement that both the HTML and XBRL document be filed is not beneficial to investors or registrants and recommending that the Commission avoid imposing certain of the existing machine-readable filing requirements that result in unnecessary duplication); ABA Letter (referencing “unnecessary duplication” in the current data tagging framework). See also XBRL White Paper, at 4 (discussing the ease of assessing XBRL tags in an Inline XBRL document); Kamile Asli Basoglu, Clinton E. (Skip) White, Jr. (2015) Inline XBRL versus XBRL for SEC Reporting, Journal of Emerging Technologies in Accounting, Volume 12, Issue 1, pp. 189-199 (discussing the technical advantages of Inline XBRL). 156 While we are not aware of comment letters or data from other sources specifically addressing Inline XBRL in the context of mutual fund risk/return summary information after the adoption of the risk/return summary information XBRL requirements in 2009, we note that, in the context of the 2008 risk/return summary information proposal, one commenter stated that “XBRL tags can be embedded seamlessly in the body of the official traditional filing—or the entire filing can be formatted in XBRL—so that funds will not have to create and bear potential liability for stand-alone submissions containing only XBRL data taken out of context, or have to grapple with portions of their information being required in 2 or 3 different formats” and that many of the added costs of the XBRL requirement for risk/return summary information “stem from the fact that the tagged data will appear in a separately created document, rather than embedded seamlessly into the traditional Related Official Filing.” The commenter also acknowledged that, at the time, “there may be technological obstacles to embedded tagging.” See Schnase Letter. Another commenter stated that “[w]ith respect to the integration of XBRL tagging with HTML, this technology has not yet been fully developed and it would be premature to propose such.” See Letter from Data Communiqué (Jul. 31, 2008), available at http://www.sec.gov/comments/s7-12-08/s71208-11.pdf . As discussed above, we believe that current XBRL embedding technology now is sufficiently developed to propose requiring its use in submitting information to the Commission. 157 See Section III.A above. 158 Such meta data include, for example, definitions, reporting period information, data type and related references. We expect the benefit of savings in ongoing XBRL preparation and filing costs due to Inline XBRL to be smaller for filers that presently rely on the integrated XBRL preparation approach, which generally involves fewer re-keying issues. To the extent that the integrated XBRL preparation approach is more prevalent among mutual fund filers than operating companies, such filers may realize smaller benefits. However, filers that use the integrated XBRL preparation approach may nonetheless realize incremental time savings and/or efficiencies in the filing process from Inline XBRL. 159 Additionally, those filers that currently choose XBRL tags so that the data looks similar to the HTML document when rendered by software into a human-readable presentation would have less of an incentive to do so because Inline XBRL would embed XBRL tags into the HTML document. This may result in higher-quality tagged data at a lower cost. 159 Software vendors and filing agents that currently use the integrated XBRL preparation approach, combining the processes of creating interactive data tags and an HTML document, cannot presently take full advantage of the resulting efficiency because of current requirements. At present, filing agents and/or filers that use integrated XBRL solutions must expend the effort, albeit minimal, to split out the interactive data and save it to a separate instance document for filing. While we are currently unable to quantify these potential gains in the effectiveness and efficiency of the filing preparation process and the resulting reductions in the ongoing cost of compliance with the XBRL requirements, we believe that the experience of operating company filers using Inline XBRL under the voluntary program pursuant to the Exemptive Order may help provide useful information and data that will help inform any final decision on the proposed rules. 160 We are also requesting comment on the anticipated effects of adopting Inline XBRL on the efficiency of the XBRL filing process. 161 160 We recognize that the experience of operating companies that elect to file in Inline XBRL pursuant to the Exemptive Order may not be fully representative of all operating company filers or of mutual fund filers. 161 See Section III.C.5 below. The use of Inline XBRL may also improve XBRL data quality. 162 When XBRL is embedded directly into the HTML document, the filer prepares and reviews a single document, rather than separate documents—as is the case with the current reporting requirement—which should enable a reduction in data errors, particularly for those filers that currently use the standalone XBRL preparation approach. 163 Further, filers or filing agents can use review tools like the open source Inline XBRL Viewer to more readily filter and identify errors. To the extent that Inline XBRL technology can reduce the rate of XBRL errors that are not detected by filers with the current XBRL filing practices and technology, Inline XBRL could incrementally improve XBRL data quality and thus potentially benefit data users. 164 Additionally, since Inline XBRL filers would have less of an incentive to create custom XBRL tags solely to mimic the appearance of an HTML filing, Inline XBRL could increase the ability of investors, other market participants, and other data users to compare information across filers for those filers that currently engage in such tagging practices. 165 Due to greater standardization of presentation of mutual fund risk/return summary XBRL information, we do not expect the latter benefit of Inline XBRL to extend to mutual fund risk/return summaries. 162 See Columbia White Paper, at 42 and footnote 48 (arguing that one way to help improve the quality of XBRL data, as well as to make the data more useful and accessible to users, is “for issuers to move to `Inline XBRL' which ensures that XBRL and HTML data are the same, and which can ease the preparation burden for filers”). See also IAC Recommendations (suggesting that the use of Inline XBRL be considered as one of the means to promote standardization and facilitate recovery of data by investors). 163 See note 83 above. 164 Existing format requirements for Interactive Data Files include the element accuracy requirement, which provides that each data element ( i.e., all text, line item names, monetary values, percentages, numbers, dates and other labels) contained in the Interactive Data File must reflect the same information in the corresponding data in the Related Official Filing. See Rule 405(c)(1)(i) of Regulation S-T. We also note that the incremental effects of Inline XBRL on the reduction in XBRL errors would be smaller if other initiatives result in a reduction in XBRL data errors. For example, the XBRL US Data Quality Committee has published validation rules to help public companies detect inconsistencies or errors in their XBRL-formatted financial data, such as incorrect negative values, improper relationships between elements and incorrect dates associated with certain data. See http://xbrl.us/data-quality/rules-guidance/ . See also XBRL US Letter 3 (stating that the “XBRL US Data Quality Committee is developing a Framework for Element Selection and Extension Use to help issuers make decisions that will improve the consistency of reported data”). See also note 80 above. 165 See notes 84, 85 and 93 and accompanying text above. Inline XBRL filers may still use custom tags to represent certain company-specific data. To the extent that Inline XBRL might improve data quality, it may contribute to wider use of XBRL data by investors, other market participants, and other data users and may enhance the benefits that are associated with XBRL more generally for filers that presently submit interactive data using the XBRL format. In the 2009 Financial Statement Information Adopting Release, the Commission stated that requiring filers to submit their financial statement information in XBRL would enable investors, analysts and the Commission staff to capture and analyze that information more quickly and at a lower cost; enable investors and others to search and analyze the financial information dynamically; and facilitate comparison of financial and business performance across filers, reporting periods and industries. 166 The 2009 Financial Statement Information Adopting Release also referenced potential gains in the efficiency of capital formation and allocation, suggesting that, if interactive data, through increased availability or reduced cost of collecting and analyzing corporate financial data, were to reduce the information barriers faced by investors, which make it costly for companies to find appropriate sources of finance, it would lower the cost of capital and increase the efficiency of capital formation, particularly for smaller public companies. 167 Similarly, in the 2009 Risk/Return Summary Adopting Release, we noted that requiring mutual funds to file their risk/return summary information using the interactive data format would enable investors, third-party information providers and the Commission staff to capture and analyze that information more quickly and at a lower cost than is possible using the same information provided in a static format, facilitate comparisons of mutual fund costs, performance and other information across classes of securities and across funds and help investors make more well-informed investment decisions. 168 Thus, to the extent that Inline XBRL contributes to an increase in XBRL data quality and XBRL data use by investors, other market participants, and other data users, it could potentially increase the informational efficiency of prices and the efficiency of capital formation and allocation and potentially decrease the cost of capital. 166 See 2009 Financial Statement Information Adopting Release, at 6777. 167 See 2009 Financial Statement Information Adopting Release, at 6807-6808. 168 See 2009 Risk/Return Summary Adopting Release, at 7766-7768. Based on our experience with XBRL so far, we believe that the XBRL requirements are providing these benefits, 169 including to smaller filers. The realization of these benefits of XBRL is conditional on the quality and use of interactive data. Thus, to the extent that Inline XBRL results in an improvement in XBRL data quality and in increased use of XBRL data, we expect that these benefits would be enhanced. We note, however, that because the proposed Inline XBRL requirements would not modify the scope and substance of existing XBRL requirements or the categories of filers subject to the requirements, both the improvement in data quality due to Inline XBRL and the associated economic benefits that are incremental to Inline XBRL likely would be smaller than the benefits of the XBRL requirements more generally. To the extent that risk/return summary XBRL data might be associated with fewer data quality issues, the data quality benefits incremental to Inline XBRL might be smaller for risk/return summary information than for financial statement information. 169 For academic research on the benefits of XBRL, see, e.g., Yi Dong, Oliver Zhen Li, Yupeng Lin, and Chenkai Ni (2016) Does information processing cost affect firm-specific information acquisition? Evidence from XBRL adoption, Journal of Financial and Quantitative Analysis, Volume 51, Issue 2, pp. 435-462; Chunhui Liu, Tawei Wang, and Lee J. Yao (2014) XBRL's impact on analyst forecast behavior: An empirical study, Journal of Accounting and Public Policy, Volume 33, Issue 1, pp. 69-82; Kosal Ly (2012) Extensible Business Reporting Language for Financial Reporting (XBRL-FR) and financial analysts' activity: early evidence, Academy of Accounting and Financial Studies Journal, Volume 16, Issue 2, pp. 25-44; Yu Cong, Jia Hao, and Lin Zou (2014) The impact of XBRL reporting on market efficiency, Journal of Information Systems, Volume 28, Issue 2, pp. 181-207; Lizhong Hao and Mark J. Kohlbeck (2013) The market impact of mandatory interactive data: Evidence from bank regulatory XBRL filings, Journal of Emerging Technologies in Accounting, Volume 10, Issue 1, pp. 41-62; Ariel Markelevich, Tracey Riley, and Lewis Shaw (2015) Towards harmonizing reporting standards and communication of international financial information: The status and the role of IFRS and XBRL, Journal of Knowledge Globalization Volume 8, Issue 2; Elizabeth Blankespoor (2012) The impact of investor information processing costs on firm disclosure choice: evidence from the XBRL mandate, working paper, available at http://fisher.osu.edu/supplements/10/11702/Job%20Market%20Paper_Blakespoor_12-4-11(2).pdf (retrieved Aug. 30, 2016); Jeff Zeyun Chen, Hyun A. Hong, Jeong-Bon Kim, and Ji Woo Ryou (2016) Information processing costs and corporate tax aggressiveness: Evidence from the SEC's XBRL mandate, working paper, available at http://ssrn.com/abstract_id=2754427 (retrieved Aug. 30, 2016) (relating the reduction in information processing costs associated with XBRL to a decrease in tax avoidance). But see Elizabeth Blankespoor, Brian P. Miller, and Hal White (2014) Initial evidence on the market impact of the XBRL mandate, Review of Accounting Studies, Volume 19, Issue 4, pp. 1468-1503. See also Singh (discussing the benefits of structured disclosure for filers, investors, and other data users; stating that “costs (or savings) and benefits realized are largely dependent on how financial executives view XBRL mandates: narrowly, as a simple compliance requirement, or more broadly, as a business reporting supply chain standardization opportunity to streamline and cost effectively enhance a broad range of compliance processes . . . SMEs [small and medium-sized enterprises] should balance the cost of tagging against the cost of capital. XBRL filings make the financial information of SMEs more accessible to investors and lead to a reduction in the cost of capital”) and Arif Perdana, Alastair Robb, and Fiona Rohde (2015) An integrative review and synthesis of XBRL research in academic journals, Journal of Information Systems, Volume 29, Issue 1, pp. 115-153 (surveying academic research on XBRL). Several commenters also have addressed the benefits of XBRL. See, e.g., XBRL US Letter 3 (stating that “[t]he benefits of standardized financials for companies—regardless of size—are significant in terms of faster delivery of comparable data to market and greater usability,” and “[d]ata providers can process XBRL-formatted data much more quickly and inexpensively than traditional data types”); Data Coalition Letter 2 (stating that “[f]or structured data to be most effective for regulators and investors, it is important to have a complete data set for all reporting entities”); Letter from Merrill Corporation (Jul. 19, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-153.pdf (stating that the tagging requirement should be the same for all registrants); Letter from New York State Society of CPAs (Jul. 19, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-150.pdf (stating that, if any companies are exempt from using XBRL, their reports would not be readily comparable to other reports, thereby leading investors to assign a greater risk profile to these companies); Letter from Morningstar (Jul. 20, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-179.pdf; Letter from CFA Institute (Mar. 2, 2016), available at http://www.sec.gov/comments/s7-20-15/s72015-50.pdf (stating that the expanded use of XBRL is an opportunity to leverage data, enhance analysis, and facilitate company comparisons); Letter from AFSCME (Jul. 21, 2016), available at http://www.sec.gov/comments/s7-06-16/s70616-269.pdf (stating that “data-tagging facilitates more accurate, less costly extraction and use of information, creating more usable disclosure”). While we lack the ability to quantify the incremental contribution of Inline XBRL to potential increases in the use of XBRL data and the broader benefits of XBRL, we anticipate that the contribution would depend on several factors, including the extent of XBRL data quality improvements following the transition to Inline XBRL, changes in the extent of reliance by investors, other market participants, and other data users on XBRL data and technological innovation in XBRL preparation and analytics solutions. Inline XBRL also could enhance how users view XBRL data related to Commission disclosures. With Inline XBRL, the EDGAR system would enable users to view information about the reported XBRL data embedded in Inline XBRL filings on the Commission's Web site, using any recent standard Internet browser, without the need to access a separate document. With this feature, when [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2017-04366. Public record. Not legal advice.