Interactive Data To Improve Financial Reporting

Federal RegisterJun 10, 2008

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SECURITIES AND EXCHANGE COMMISSION

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

[Release Nos. 33-8924; 34-57896; 39-2455; IC-28293; File No. S7-11-08]

RIN 3235-AJ71

Interactive Data To Improve Financial Reporting

AGENCY:

Securities and Exchange Commission.

ACTION:

Proposed rule.

SUMMARY:

We are proposing rules requiring companies to provide financial statement information in a form that would improve its usefulness to investors. Under the proposed rules, financial statement information could be downloaded directly into spreadsheets, analyzed in a variety of ways using commercial off-the-shelf software, and used within investment models in other software formats. The rules would apply to domestic and foreign public companies that prepare their financial statements in accordance with generally accepted accounting principles as used in the United States (U.S. GAAP), and foreign private issuers that prepare their financial statements using International Financial Reporting Standards (IFRS) as promulgated by the International Accounting Standards Board (IASB). Companies would provide their financial statements to the Commission and on their corporate Web sites in interactive data format using the eXtensible Business Reporting Language (XBRL). The interactive data would be provided as an exhibit to periodic reports and registration statements, as well as to transition reports for a change in fiscal year. The proposed rules are intended not only to make financial information easier for investors to analyze, but also to assist in automating regulatory filings and business information processing. Interactive data has the potential to increase the speed, accuracy, and usability of financial disclosure, and eventually reduce costs.

DATES:

Comments should be received on or before August 1, 2008.

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

); or

• Send an e-mail to

rule-comments@sec.gov

. Please include File Number S7-11-08 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 in triplicate to Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number S7-11-08. This file number should be included on the subject line if e-mail 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 public inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 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.

FOR FURTHER INFORMATION CONTACT:

James C. Lopez, Legal Branch Chief, Division of Corporation Finance at (202) 551-3790; Mark W. Green, Senior Special Counsel (Regulatory Policy), Division of Corporation Finance at (202) 551-3430; Jeffrey W. Naumann, Assistant Director, Office of Interactive Disclosure at (202) 551-5352; or Melanie Jacobsen, Office of the Chief Accountant at (202) 551-5300, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION:

We propose to add Rules 405 and 406 to Regulation S-T,

and revise Item 601

of Regulation S-K,

Rules 11,

201,

202,

305,

401,

and 402

of Regulation S-T, Rule 144

under the Securities Act of 1933 (Securities Act),

and Rules 13a-14

and 15d-14

under the Securities Exchange Act of 1934 (Exchange Act).

We also propose to revise Forms S-3,

S-8,

and F-3

under the Securities Act and Forms 20-F

and 6-K

under the Exchange Act.

17 CFR 232.10

et seq.

17 CFR 229.601.

17 CFR 229.10.

et seq.

17 CFR 232.11.

17 CFR 232.201.

17 CFR 232.202.

17 CFR 232.305.

17 CFR 232.401.

17 CFR 232.402.

17 CFR 230.144.

15 U.S.C. 77a

et seq.

17 CFR 240.13a-14.

17 CFR 240.15d-14.

15 U.S.C. 78a

et seq.

17 CFR 239.13.

17 CFR 239.16b.

17 CFR 239.33.

17 CFR 249.220f.

17 CFR 249.306.

Table of Contents

I. Introduction and Background

A. Introduction

B. Current Filing Technology and Interactive Data

C. The Commission's Multiyear Evaluation of Interactive Data and Overview of Proposed Rules

II. Discussion of the Proposed Amendments

A. Submission of Financial Information Using Interactive Data

B. Phase-In Under the Proposed Rules

1. Overview

2. Companies and Filings Covered by the Proposed Rules and Phase-In

3. Documents and Information Covered by the Proposed Rules

a. Financial Statements and Financial Statement Schedules

b. Registration Statements Covered by the Proposed Rules

4. Initial Filing Grace Period

5. Web Site Posting of Interactive Data

C. Accuracy and Reliability of Interactive Data

1. Voluntary Program

2. Use of Technology To Detect Errors

3. Integration of Interactive Data and Business Information Processing

4. Continued Traditional Format and Interactive Data Cautionary Disclosure

D. Required Items

1. Data Tags

2. Regulation S-T and the EDGAR Filer Manual

E. Consequences of Non-Compliance and Hardship Exemption

III. General Request for Comments

IV. Paperwork Reduction Act

V. Cost-Benefit Analysis

VI. Consideration of Burden on Competition and Promotion of Efficiency, Competition and Capital Formation

VII. Initial Regulatory Flexibility Act Analysis

VIII. Small Business Regulatory Enforcement Fairness Act

IX. Statutory Authority and Text of Proposed Amendments

I. Introduction and Background

A. Introduction

Over the last several decades, developments in technology and electronic data communication have significantly decreased the time and cost of filing disclosure documents with us. Technological developments also have facilitated greater transparency in the form of easier access to, and analysis of, financial reporting and disclosures. Most notably, in 1993 we began to require electronic filing on our Electronic Data Gathering, Analysis and

Retrieval System (EDGAR).

Since then, widespread use of the Internet has vastly decreased the time and expense of accessing disclosure filed with us.

In 1993, we began to require domestic issuers to file most documents electronically. Release No. 33-6977 (Feb. 23, 1993) [58 FR 14628]. Electronic filing began with a pilot program in 1984. Release No. 33-6539 (June 27, 1984) [49 FR 28044].

We continue to update our filing standards and systems as technologies improve. These developments assist us in our goal to promote efficient and transparent capital markets. For example, since 2003 we have required electronic filing of certain ownership reports

filed on Forms 3,

and 5

in a format that provides interactive data, and recently we adopted similar rules governing the filing of Form D.

In addition, recently we have encouraged, and in some cases required, public reporting companies and mutual funds to provide disclosures and communicate with investors using the Internet.

Now, as part of our continuing efforts to assist filers as well as investors who use Commission disclosures, we propose to require that financial statements be provided in a format that makes the information they contain interactive.

Release No. 33-8230 (May 7, 2003) [68 FR 25788 and 37044 (correction)] (required electronic filing of ownership reports) and Release No. 33-8891 (Feb. 6, 2008) [73 FR 10592] (required electronic filing of Form D [17 CFR 239.500]).

17 CFR 249.103 and 274.202.

17 CFR 249.104 and 274.203.

17 CFR 249.105.

17 CFR 239.500.

See,

e.g.

, Release No. 34-56135 (July 26, 2007) [72 FR 42222]; Release No. 34-55146 (Jan. 22, 2007) [72 FR 4148]; Release No. 34-52056 (July 19, 2005) [70 FR 44722]; Release No. 33-8861 (November 21, 2007) [72 FR 67790]; and Release No. 34-57172 (Jan. 18, 2008) [73 FR 4450].

Our proposal builds on our voluntary filer program, started in 2005,

that allowed us to evaluate the merits of interactive data. The voluntary program allows companies to submit financial statements on a supplemental basis in interactive format as exhibits to specified filings under the Exchange Act and the Investment Company Act of 1940 (Investment Company Act).

Companies that participate in the program still are required to file their financial statements in American Standard Code for Information Interchange (ASCII) or HyperText Markup Language (HTML).

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

15 U.S.C. 80a-1

et seq.

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

In 2007, we extended the program to enable mutual funds voluntarily to submit in interactive data format supplemental information contained in the risk/return summary section of their prospectuses.

Over 75 companies have participated in the voluntary program. These companies span a wide range of industries and company characteristics, and have a total public float of over $2 trillion.

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

Financial reporting based on interactive data would create new ways for investors, analysts, and others to retrieve and use financial information in documents filed with us. For example, users of financial information could download it directly into spreadsheets, analyze it using commercial off-the-shelf software, or use it within investment models in other software formats. Through interactive data, what is currently static, text-based information can be dynamically searched and analyzed, facilitating the comparison of financial and business performance across companies, reporting periods, and industries.

Interactive data also could provide a significant opportunity to automate regulatory filings and business information processing, with the potential to increase the speed, accuracy, and usability of financial disclosure. Such automation could eventually reduce costs. A company that uses a standardized interactive data format at earlier stages of its reporting cycle could reduce the need for repetitive data entry and, therefore, the likelihood of human error. In this way, interactive data may improve the quality of information while reducing its cost.

Also, to the extent investors currently are required to pay for access to annual or quarterly report disclosure that has been extracted and reformatted into an interactive data format by third-party sources, the availability of interactive data in Commission filings could allow investors to avoid additional costs associated with third party sources.

We believe that requiring issuers to file their financial statements using interactive data format would enable investors, analysts, and the Commission staff to capture and analyze that information more quickly and at less cost than is possible using the same financial information provided in a static format. Any investor with a computer would have the ability to acquire and download interactive financial data that have generally been available only to large institutional users. The proposed interactive data requirements would not change what is currently reported, but would add a requirement to include financial statements in a new format as an exhibit. Thus, the proposal to require that filers provide financial statements using interactive data will not alter the disclosure or formatting standards of periodic reports, registration statements,

or transition reports,

which would continue to be available as they are today for those who prefer to view the traditional text-based document.

Although registration statements can be filed under federal securities laws other than the Securities Act, we use the term “registration statement” in this release only to refer to those filed under the Securities Act unless we expressly state otherwise.

Transition reports generally must be filed when an issuer changes its fiscal closing date. The transition report covers the resulting transition period between the closing date of its most recent fiscal year and the opening date of its new fiscal year. Rule 13a-10 [17 CFR 240.13a-10]; Rule 15d-10 [17 CFR 240.15d-10]. Unless otherwise stated, when we refer to Exchange Act reports, periodic reports, or “reports,” we mean quarterly and annual periodic reports as well as transition reports.

Throughout this release, we solicit comment on many issues concerning the use of interactive data, including specifically whether financial information in interactive data format should be required as exhibits to Securities Act registration statements and Exchange Act periodic and transition reports filed with us. We are seeking comment from investors, registrants, accountants, analysts and any other parties or individuals who may be affected by the use of interactive disclosure in Commission filings, and any other members of the public.

B. Current Filing Technology and Interactive Data

Companies filing electronically are required to file their registration statements, quarterly and annual reports, and transition reports in ASCII or HTML format.

Also, to a limited degree, our electronic filing system uses other formats for internal processing and document-type identification. For example, our system uses eXtensible Markup Language (XML) to process reports of beneficial ownership of equity securities on Forms 3, 4, and 5 under section 16(a) of the Exchange Act.

Rule 301 under Regulation S-T [17 CFR 232.301] requires electronic filings to comply with the EDGAR Filer Manual, and Section 5.1 of the Filer Manual requires that electronic filings be in ASCII or HTML format. Rule 104 under Regulation S-T [17 CFR 232.104] permits filers to submit voluntarily as an adjunct to their official filings in ASCII or HTML unofficial PDF copies of filed documents. Unless otherwise stated, we refer to filings in ASCII or HTML as traditional format filings.

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

Electronic formats such as HTML, XML, and XBRL are open standards

that define or “tag” data using standard definitions. The tags establish a consistent structure of identity and context. This consistent structure can be recognized and processed by a variety of different software applications. In the case of HTML, the standardized tags enable Web browsers to present Web sites' embedded text and information in predictable format. In the case of XBRL, software applications, such as databases, financial reporting systems, and spreadsheets, recognize and process tagged financial information.

The term “open standard” is generally applied to technological specifications that are widely available to the public, royalty-free, at minimal or no cost.

XBRL was derived from the XML standard. It was developed and continues to be supported by XBRL International, a collaborative consortium of approximately 550 organizations representing many elements of the financial reporting community worldwide in more than 20 jurisdictions, national and regional. XBRL U.S., the international organization's U.S. jurisdiction representative, is a non-profit organization that includes companies, public accounting firms, software developers, filing agents, data aggregators, stock exchanges, regulators, financial services companies, and industry associations.

In 2006, the Commission contracted with XBRL U.S. to develop the standard list of tags necessary for financial reporting in interactive format consistent with U.S. GAAP and Commission regulations.

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

Financial reporting in interactive format requires a standard list of tags. These tags are similar to definitions in an ordinary financial dictionary, and they cover a variety of financial concepts that can be read and understood by software applications. For financial statements prepared in accordance with U.S. GAAP, a filer would use the list of tags for U.S. financial statement reporting.

This list of tags contains descriptive labels, definitions, authoritative references to U.S. GAAP and Commission regulations where applicable, and other elements, all of which provide the contextual information necessary for interactive data

to be recognized and processed by software.

Unless stated otherwise, when we refer to the “list of tags for U.S. financial statement reporting” we mean the interactive data taxonomy as approved by XBRL U.S. that is based on U.S. GAAP, Commission regulations, and common financial reporting practices used in the preparation of financial statements in the U.S.

The proposed rules would define the interactive data necessary to create human-readable disclosure as the “interactive data file,” which would be required with every interactive data submission. The EDGAR Filer Manual would identify any necessary supporting files.

For example, contextual information would identify the entity to which it relates, usually by using the filer's CIK number. A hypothetical filer converting its traditional electronic disclosure of $1,000,000 of net sales would have to create interactive data that identify what the 1,000,000 represents, net sales, and the currency in which it is disclosed, dollars. The contextual information would include other information as necessary; for example, whether it relates to an annual report or quarterly report, the financial reporting period, continuing or discontinued operations, or actual, restated, forecast, pro forma or other type of disclosure.

Applying data tags to financial statements is accomplished using commercially available software that guides a preparer in mapping information in the financial statements to the appropriate tags in the standard list. Each element in the standard list of tags has a standard label. A company can therefore match the standard labels to each caption in its financial statements. Occasionally, because filers have considerable flexibility in how financial information is reported under U.S. reporting standards, it is possible that a company may wish to use a non-standard financial statement line item that is not included in the standard list of tags.

In this situation, a company would create a company-specific element, called an extension.

In other cases, without a relevant and appropriate tag in the list of tags, a company would be required to create an extension in order to provide interactive data that appears the same as the corresponding portion of traditional format filing.

For example, what a company identifies in its traditional format financial statements as “operating revenues” may be associated with an element that has “net revenues” as the standard label. In this situation, a company would need to change, or extend, the standard label to become “operating revenues” when tagging that disclosure with the element.

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

A company may choose to tag its own financial statements using commercially available software, or it may choose instead to outsource the tagging process. In the event a company relies upon a service provider to tag the company's financial statements, the company would want to carefully review the tagging done by the service provider in order to make sure that the tagged financial statements are accurate and consistent with the information the company presents in its traditional format filing.

Similarly, to create interactive data-formatted financial statements prepared in accordance with IFRS as issued by the IASB, a filer would use the IFRS list of tags.

The IFRS list of tags contains descriptive labels, authoritative references to IFRS where applicable, and other elements and concepts that provide the contextual information necessary for interactive data to be recognized and processed by software. The International Accounting Standards Committee Foundation (IASCF) has developed the IFRS list of tags.

To create interactive data using the IFRS list of tags, an issuer generally would need to follow the same mapping, extension and tagging process as would a company that uses the list of tags for U.S. financial statement reporting. As further discussed below, the IASCF is collaborating with XBRL U.S. and other parties to align practices designed to develop the IFRS list of tags. This collaboration involves the development of the appropriate scope for the IFRS list of tags' content and technology architecture.

Unless stated otherwise, when we refer to the “IFRS list of tags” we mean the list of tags for financial statements prepared in accordance with IFRS as issued by the IASB.

See

http://www.iasb.org/xbrl/index.html.

The IASCF released the 2008 taxonomy (list of tags) on March 31, 2008. See IASB Press Release, The IASC Foundation publishes IFRS Taxonomy 2008, (March 31, 2008).

As previously noted, in 2006 we contracted with XBRL U.S. to develop the standard tags necessary for financial reporting in interactive format consistent with U.S. GAAP and Commission regulations. That contract has been completed.

Because financial statements in interactive data format, referred to as the interactive data file,

are intended to be processed by software applications, the unprocessed data is not readable. Thus, viewers are necessary to convert the interactive data file to human readable format. Some viewers are similar to Web browsers used to read HTML files.

See note 40 above.

The Commission's Web site currently provides links to four viewers that allow the public to easily read company disclosures filed using interactive data.

These viewers demonstrate the capability of downloading interactive data into software such as Microsoft Excel as well as into other applications that are widely available on the Internet. In addition, we are aware of other applications under development that may provide additional and advanced functionality.

See viewers available at

http://www.sec.gov/xbrl.

C. The Commission's Multiyear Evaluation of Interactive Data and Overview of Proposed Rules

In 2004, we began assessing the benefits of interactive data and its potential for improving the timeliness and accuracy of financial disclosure and analysis of Commission filings.

As part of this evaluation, we adopted rules in 2005 permitting filers, on a voluntary basis, to provide financial disclosure in interactive data format as an exhibit to certain filings on our electronic filing system. The voluntary program has been based on an earlier version of the list of tags for U.S. financial statement reporting, which does not include a full array of standard elements for financial statement footnotes and schedules. After more than two years of increasing participation, over 75 companies have chosen to provide interactive data financial reporting.

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

A viewer for the voluntary program is available at

http://www.sec.gov/spotlight/xbrl/xbrlwebapp.shtml.

This viewer, one of several funded by the Commission to demonstrate interactive data, maintains a running total of companies and filers submitting data as part of the voluntary program. As of April 17, 2008, 78 companies had submitted 350 interactive data reports.

During this time, we have kept informed of technology advances and other interactive data developments. We note that several U.S. and foreign regulators have begun to incorporate interactive data into their financial reporting systems. The Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, and the Office of the Comptroller of the Currency (OCC) require the use of XBRL.

As of 2006, approximately 8,200 U.S. financial institutions were using XBRL to submit quarterly reports to banking regulators.

Countries that have required or instituted voluntary or pilot programs for XBRL financial reporting include Australia, Belgium, Canada, China, Denmark, France, Germany, Ireland, Israel, Japan, Korea, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Thailand and the United Kingdom.

Since 2005, the FDIC, Federal Reserve, and the OCC have required the insured institutions that they oversee to file their quarterly Consolidated Reports of Condition and Income (called Call Reports) in interactive data format using XBRL. Call Reports, which include data about an institution's balance sheet and income statement, are used by these federal agencies to assess the financial health and risk profile of the financial institution.

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

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

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

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

We also have kept informed of relevant advances and developments by hosting roundtables on the topic of interactive data financial reporting,

creating the Commission's Office of Interactive Disclosure,

and meeting with international securities regulators to discuss, among other items, timetables for implementation of interactive data initiatives for financial reporting.

Also, staff of the Commission have attended meetings of the Advisory Committee on Improvements to Financial Reporting (CIFiR) in which the committee discussed proposals for financial reporting using interactive data.

We also have reviewed written statements and public comments received by CIFiR on its XBRL developed proposal.

See materials available at

http://www.sec.gov/spotlight/xbrl/xbrl-meetings.shtml.

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

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

For example, CIFiR conducted an open meeting on March 14, 2008 in which it heard reactions from an invited panel of participants to CIFiR's developed proposal regarding required filing of financial information using interactive data. An archived webcast of the meeting is available at

http://sec.gov/about/offices/oca/cifir.shtml.

The March 14, 2008 panelists presented their views and engaged with CIFiR members regarding issues relating to requiring interactive data tagged financial statements, including tag list and technological developments, implications for large and small public companies, needs of investors, necessity of assurance and verification of such tagged financial statements, and legal implications arising from such tagging. Also, CIFiR has provided to the Commission an interim progress report that contains a developed proposal that the Commission, over the long term, require the filing of financial information using interactive data once specified conditions are satisfied. See Progress Report of the Advisory Committee on Improvements to the Financial Reporting to the United States Securities and Exchange Commission (Feb. 14, 2008) (Progress Report), available at

http://www.sec.gov/about/offices/oca/acifr/acifr-pr-021408-final.pdf.

CIFiR's developed proposal is discussed more fully in Part II.C.2 below.

The XBRL developed proposal appears in chapter 4 of the Progress Report. Written statements of panelists at the March 14, 2008 meeting and public comments received on the Progress Report are available at

http://sec.gov/comments/265-24/265-24.shtml.

Building on our experience monitoring the voluntary program, and our participation in the other initiatives described above, we are now proposing rules to require financial reporting using interactive data. The proposed rules would apply to domestic and foreign public companies that prepare their financial statements in accordance with U.S. GAAP, and foreign private issuers

that prepare their financial statements in accordance with IFRS as issued by the IASB. Interactive data would be required to be provided on a company's Web site

and with the filer's Securities Act registration statements,

annual reports, quarterly reports if applicable,

and transition reports.

We believe this has the potential to provide advantages for the investing public by making financial data more accessible, timely, inexpensive and easier to analyze.

Exchange Act Rule 3b-4(c) [17 CFR 240.3b-4(c)] defines “foreign private issuer” as a foreign issuer other than a foreign government that either has 50 percent or less of its outstanding voting securities held of record by U.S. residents or, if more than 50 percent of its outstanding voting securities are held by U.S. residents, about which none of the following is true: (1) A majority of its executive officers or directors are U.S. citizens or residents; (2) more than 50 percent of its assets are located in the U.S.; or (3) the issuer's business is administered principally in the U.S.

The proposed Web site posting requirement would apply only to the extent a filer already maintains a corporate Web site.

Interactive data would be required as an exhibit to a Securities Act registration statement that contains financial statements, such as a Form S-1 [17 CFR 239.11] used in connection with an initial public offering. Interactive data would not be required as an exhibit to a Securities Act registration statement that does not contain financial statements, such as a Form S-3 filed by an issuer that is eligible to and does incorporate by reference all required financial statements from its periodic reports.

Foreign private issuers filing on Form 10-Q would be required to provide financial statements in quarterly reports using interactive data.

The proposed rules would not include any investment company that is registered under the Investment Company Act or any “business development company,” as defined in Section 2(a)(48) of that Act [15 U.S.C. 80a-2(a)(48)]. Business development companies are a category of closed-end investment companies that are not required to register under that Act. The proposed rules also would not include any entity that reports under the Exchange Act and prepares its financial statements in accordance with Article 6 of Regulation S-X [17 CFR 210.6-01

et seq.

]. The proposed rules would not apply to these entities because the standard list of tags for investment management is not yet fully developed.

By enabling filers to further automate their financial processes, interactive data may eventually help filers improve the speed at which they generate financial information, while reducing the cost of filing and potentially increasing the accuracy of the data. For example, with standardized interactive data tags, registration statements and periodic reports may require less time for information gathering and review. Also, standardized interactive data tagging may enhance the ability of an issuer's in-house financial professionals to identify and correct errors in the issuer's registration statements and periodic reports filed in traditional electronic format. Filers also may gain benefits not directly related to public financial disclosures. For example, filers that use interactive data may be able to consolidate enterprise financial

information more quickly and potentially more reliably across operating units with different accounting systems. However, we recognize that at the outset, filers would most likely prepare their interactive data as an additional step after their financial statements have been prepared.

The principal elements of the proposal are as follows:

• Domestic and foreign large accelerated filers

that use U.S. GAAP and have a worldwide public common equity float above $5 billion

as of the end of their most recently completed second fiscal quarter would provide to the Commission a new exhibit.

The exhibit would contain their financial statements,

and any applicable financial statement schedules in interactive data format. The requirement would apply beginning with fiscal periods ending on or after December 15, 2008.

Exchange Act Rule 12b-2 [17 CFR 240.12b-2] generally defines “large accelerated filer” as an issuer that has common equity held by unaffiliated persons with a value of at least $700 million, has been subject to the Exchange Act's periodic reporting requirements for at least 12 months, has filed at least one annual report, and is not eligible to use the disclosure requirements available to smaller reporting companies for its periodic reports.

As of the end of 2006, the $5 billion cutoff would establish a category of approximately 500 filers.

The exhibit would be required with such filers' registration statements, quarterly, if applicable, and annual reports, and transition reports.

When we refer to financial statements, we mean the face of the financial statements and accompanying footnotes. The face of the financial statements refers to the statement of financial position (balance sheet), income statement, statement of comprehensive income, statement of cash flows, and statement of owners' equity, as required by Commission regulations. References to the financial statements as required for interactive data reporting include any required schedules to the financial statements, unless we expressly state otherwise.

The proposed schedule is premised on the rules being adopted this fall in time for affected filers to implement this schedule, and could be adjusted depending on when the Commission adopts any final rules.

• All other domestic and foreign large accelerated filers using U.S. GAAP would be subject to the same interactive data reporting requirements the following year, beginning with fiscal periods ending on or after December 15, 2009.

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

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

would be subject to the same interactive data reporting requirements beginning with fiscal periods ending on or after December 15, 2010.

Item 10(f)(1) of Regulation S-K [17 CFR 229.10(f)(1)], Rule 405 under the Securities Act [17 CFR 230.405] and Rule 12b-2 under the Exchange Act [17 CFR 240.12b-2] define the term “smaller reporting company,” in general, as a company that has common equity securities held by non-affiliates with a market value of less than $75 million or, if that value cannot be calculated, had less than $50 million in revenue in the prior fiscal year.

The proposed rules would not require foreign private issuers that prepare their financial statements in accordance with a variation of IFRS as issued by the IASB to provide interactive data.

We do not propose to require foreign private issuers to provide in interactive data format interim financial information contained in Form 6-K or any financial information prepared in accordance with non-U.S.GAAP that must be reconciled to U.S. GAAP in the foreign private issuer's Exchange Act reports.

• Filers providing financial statements in interactive data format would be required to use the most recent and appropriate list of tags released by XBRL U.S. or the IASCF as required by the EDGAR Filer Manual. Filers also would be required to tag a limited number of document and entity identifier elements, such as the form type, company name, and public float. As with interactive data for the financial statements, these document and entity identifier elements would be formatted using the appropriate list of tags as required by the EDGAR Filer Manual.

The appropriate list of tags for document and entity identifier elements would be a list released by XBRL U.S., but would not be specific to U.S. GAAP or IFRS as issued by the IASB and would be required to be used by all issuers required to submit interactive data regardless of whether reporting in U.S. GAAP or IFRS as issued by the IASB.

• A filer required to provide financial statements in interactive data format to the Commission also would be required to post those financial statements in interactive data format on its corporate Web site on the same day it filed or was required to file the related registration statement or report with the Commission, whichever is earlier.

The day the registration statement or report is submitted electronically to the Commission may not be the business day on which it was deemed officially filed. For example, a filing submitted after 5:30 p.m. generally is not deemed officially filed until the following business day. Under the proposed rules, the Web posting would be required to be posted at any time on the same day that the related registration statement or report is deemed officially filed or required to be filed, whichever is earlier.

• The proposed rules would not alter the requirements to provide financial statements and any required financial statement schedules with the traditional format filings.

When we established the voluntary program, we stated in the adopting release that the interactive data submission would be supplemental to filings and not replace the required traditional electronic format of the financial information it contains. We also said that volunteers would be required to continue to file their traditional electronic filings. See Part II.D of Release No. 33-8529 (Feb. 3, 2005) [70 FR 6556, 6559].

• Financial statements in interactive data format would be provided as exhibits identified in Item 601(b) of Regulation S-K and Form 20-F.

• Financial statement footnotes and financial statement schedules initially would be tagged individually as a block of text. After a year of such tagging, a filer also would be required to tag the detailed disclosures within the footnotes and schedules.

• Viewable interactive data as displayed through software available on the Commission's Web site, and to the extent identical in all material respects to the corresponding portion of the traditional format filing, would be subject to all the same liability provisions of the federal securities laws as the corresponding data in the traditional format part of the official filing.

• Data in the interactive data file submitted to us generally would be subject to the federal securities laws in a manner similar to that of the voluntary program and, as a result, would be

○ Excluded from the officer certification requirements under Rules 13a-14 and 15d-14 of the Exchange Act;

17 CFR 240.13a-14 and 17 CFR 240.15d-14.

○ Deemed not filed for purposes of specified liability provisions; and

○ Protected from liability for failure to comply with the proposed tagging and related requirements if the interactive data file either

☐ Met the requirements; or

☐ Failed to meet those requirements, but the failure occurred despite the issuer's good faith and reasonable effort, and the issuer corrected the failure as soon as reasonably practicable after becoming aware of it.

• The proposed rules would require the financial information and document and entity identifier elements to be tagged according to Regulation S-T and the EDGAR Filer Manual.

Proposed Rule 405 of Regulation S-T would directly set forth the basic tagging requirements and indirectly set forth the rest of the tagging requirements through the requirement to comply with the EDGAR Filer Manual. Consistent with proposed Rule 405, the Filer Manual would contain the technical tagging requirements.

• The initial interactive data exhibit of a filer would be required within 30 days of the earlier of the due date or filing date of the related report or registration statement, as applicable. In year two, a filer would have a similar 30 day grace period for its first interactive data exhibit that includes detailed tagging of its footnotes and schedules. All other interactive data exhibits would be required at the same time as the rest of the related report or registration statement.

• Filers that do not provide or post required interactive data on the date required would be deemed not current with their Exchange Act reports and, as a result, would not be eligible to use the short forms S-3, F-3, or S-8, or elect under Form S-4 or F-4 to provide information at a level prescribed by Form S-3 or F-3. Similarly, such filers would not be deemed to have available adequate current public information for purposes of the resale exemption safe harbor provided by Rule 144.

A filer that was deemed not current solely as a result of not providing an interactive data exhibit when required would be deemed current and timely upon providing the interactive data. Therefore it would regain the ability to incorporate by reference, short form registration statement eligibility, and current status for purposes of determining adequate current public information under Rule 144. As such, it would not lose its status as having “timely” filed its Exchange Act reports solely as a result of the delay in providing interactive data.

17 CFR 230.144.

• Although we have not proposed at this time to require interactive data for executive compensation disclosure because a definitive list of tags for this purpose is not yet completed, we are soliciting comment on the usefulness to investors and others of such interactive data, as well as the extent of the related costs and associated questions.

• We anticipate that if the proposed rules become effective, companies that are not required to provide interactive data until a later time would have the option to do so earlier.

• We also anticipate that the voluntary program would be modified, if the proposed rules are adopted, to permit investment companies to participate, but to exclude non-investment company participation. As a result, the voluntary program would continue for the financial statements of investment companies that are registered under the Investment Company Act, and business development companies and other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X. The voluntary program also would continue for the risk/return summary section of mutual fund prospectuses.

See Release No. 33-8823 (July 11, 2007) [72 FR 39290]. On May 21, 2008, the Commission voted to propose rules that would require interactive data for the risk/return summary section of mutual fund prospectuses. See Press Release No. 2008-94 (May 21, 2008).

II. Discussion of the Proposed Amendments

A. Submission of Financial Information Using Interactive Data

For several years XBRL U.S. and its related entities have developed and refined the list of tags to classify and define financial information in accordance with U.S. financial reporting practices and Commission regulations.

Many investors, auditors, accountants, and others, including companies that have been providing interactive data disclosure in the voluntary program, have helped in this process.

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

Interactive data financial statements using the list of tags for U.S. financial statement reporting have been submitted voluntarily to us by over 75 companies, some of which have done so since the start of the voluntary program approximately three years ago. The list of tags for U.S. financial statement reporting has improved significantly since the original version available for the voluntary program.

During this period, there has been a growing development of software products for users of interactive data, as well as of applications to assist companies to tag their financial statements using interactive data.

The growing number of software applications available to preparers and consumers is helping make interactive data increasingly useful to both institutional and retail investors, as well as to other participants in the U.S. and global capital markets. On this basis, we believe interactive data, and in particular the XBRL standard, have become widespread and that the updated list of tags for U.S. financial statement reporting is now sufficiently advanced to require that U.S. GAAP-reporting companies provide their interactive financial statements in interactive data format.

When we adopted the voluntary program, the list of tags for U.S. GAAP financial statement reporting contained approximately 4,000 data elements. The list of tags released on April 28, 2008 contains approximately 13,000 data elements, with the most significant additions relating to the development of elements for standard U.S. GAAP footnote disclosure.

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

As previously noted in Part I.C, however, the proposed rules would not apply to investment companies registered under the Investment Company Act and other entities. See footnote 61 above.

With respect to the list of tags for IFRS financial reporting, the IASCF has, over several years, developed a list of tags designed to classify and define financial information in accordance with international accounting standards as promulgated by the IASB. Over the course of the past year, the IASCF has worked to strengthen the development of its list of tags by forming an XBRL Advisory Committee and an XBRL Quality Reporting Team, both consisting of international representatives from investors, auditors, accountants, regulators and others. On March 31, 2008, the IASCF published a near final version of the list of tags for IFRS financial reporting,

which is subject to public comment through May 30, 2008.

In addition, the IASCF is collaborating with XBRL U.S. and other parties to align practices designed to develop the IFRS list of tags. This collaboration involves the development of the appropriate scope for the IFRS list of tags' content and technology architecture. On this basis, we believe that the updated IFRS list of tags will be sufficiently advanced to require that foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB provide their financial statements in interactive data format under the phase-in schedule we are proposing.

Unless stated otherwise, when we refer to the “list of tags for IFRS financial reporting” we mean the interactive data taxonomy that is based on IFRS as issued by the IASB.

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

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

As discussed in more detail below, our proposed rules would set forth a phase-in period beginning with domestic and foreign large accelerated U.S. GAAP filers with a worldwide public common equity float above $5 billion as of the end of their most recently completed second fiscal quarter. These large accelerated filers would be subject to the proposed rules beginning with their Securities Act registration statements, periodic reports, and transition reports that contain financial statements for fiscal periods ending on or after December 15, 2008. Although it would not be required, we encourage other U.S. GAAP filers to provide financial information in interactive data format during the phase-in period. We also encourage foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB to provide financial information in interactive data format during the phase-in period. In each instance, these filers' voluntary interactive data submissions would be under the proposed rules instead of the existing rules of the voluntary program.

We are proposing that filers be required to provide the same information in interactive data format that companies have been providing in the voluntary program,

together with the following items: The footnotes to the financial statements; any applicable schedules to the financial statements; financial statements for Securities Act registration statements; and document and entity identifier tags, such as company name and public float. As was the case in the voluntary program, the proposed requirement for interactive data reporting is intended to be disclosure neutral. We do not intend the rules to result in companies providing more, less, or different disclosure for a given disclosure item depending upon the format whether ASCII, HTML, or XBRL.

Unlike the voluntary program, unless otherwise stated, an interactive data file would be required to be provided with the traditional format filing to which it relates. Companies would not be permitted to provide the interactive data file with a Form 8-K or 6-K.

We propose to continue requiring the existing electronic formats now used in filings because we believe it is necessary to monitor the usefulness of interactive data reporting to investors and the cost and ease of providing interactive data before attempting further integration of the interactive data format. However, the proposed rules would treat viewable interactive data as displayed through software available on the Commission's Web site, and interactive data generally,

as part of the official filing, instead of a supplement as is the case in the voluntary program. Further evaluation will be useful with respect to the availability of inexpensive, sophisticated interactive data viewers. Currently there are many software providers and financial printers that are developing interactive data viewers. We anticipate that these will become widely available and increasingly useful to investors.

As further discussed below in Part II.C, interactive data generally would be deemed not filed for purposes of specified liability provisions.

We expect that the open standard feature of XBRL format will facilitate the development of applications and software, and that some of these applications may be made available to the public for free or at a relatively low cost. The expected continued improvement in this software would give the public increasingly useful ways to view and analyze company financial information. After evaluating the use of the new interactive data technologies, software, and lists of tags, we may consider proposing rules to eliminate financial statement reporting in ASCII or HTML format. Or we may consider proposing rules to require a filing format that integrates ASCII or HTML with XBRL.

We believe XBRL is the appropriate interactive data format with which to supplement ASCII and HTML. Our experience with the voluntary program and feedback from company, audit, and software communities point to XBRL as the appropriate open standard for the purposes of this rule. As a derivative of the XML standard, XBRL data would be compatible with a wide range of open source and proprietary XBRL software applications. As discussed above, many XBRL-related products exist for analysts, investors, public and private companies, and others to more easily create and compare financial data; still others are in development, and that process would likely be hastened by public company reporting using interactive data. Comments on our 2004 concept release and proposed rules in 2004 and 2007 generally supported interactive data and XBRL in particular.

Several other factors support our views regarding XBRL's broad and growing acceptance, internationally as well as in the U.S. For example, as noted above, in addition to the use of XBRL by other U.S. agencies,

several foreign securities regulators have adopted voluntary or required XBRL financial reporting.

We understand that several U.S. public and private companies use XBRL in connection with financial reporting or analysis.

Release No. 33-8497 (Sept. 27, 2004) [69 FR 59111] (Concept Release); Release No. 33-8496 (Oct. 1, 2004) [69 FR 59098]; Release No. 33-8781 (Feb. 12, 2007) [72 FR 6676]. See,

e.g.

, letter from Deloitte & Touche LLP regarding the Adopting Release and letter from PR Newswire Association LLC regarding the Concept Release. We also note that participants in the voluntary program provided positive feedback with respect to possible required use of XBRL. For example, the vast majority of voluntary program participants that submitted responses and views to a questionnaire answered in the affirmative to the question “Based on your experience to date, do you think it would be advisable for the Commission to continue to explore the feasibility and desirability of the use of interactive data on a more widespread and, possibly, mandated basis?” See question V.f in the Interactive Data Voluntary Program Questionnaire available at

http://www.sec.gov/cgi-bin/XBRL_Questionnaire.

See note 49 above. Also we note CIFiR's support of XBRL as referenced above in Part B.2

For example, such countries include Canada, China, Israel, Japan, Korea and Thailand.

Whenever we seek comment in this release, we request that commenters distinguish in their responses, as appropriate, between the proposed requirements applicable to U.S. GAAP filers and those applicable to foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB, regardless of whether our question distinguishes between or references one or both of these types of issuers.

Request for Comment:

• Should we adopt rules that require each filer's financial statements to be provided in interactive data format? If we do so, should we include a phase-in period or temporary exception for detailed tagging of the financial statement footnotes? Should schedules to the financial statements be tagged? What are the principal factors that should be considered in making these decisions? Is it useful to users of financial information to continue to have, in addition to interactive data, duplicate, human-readable financial statements in ASCII or HTML format?

• What opportunities exist to improve the display of financial statements prepared using interactive data? For example, if the technology is sufficiently developed, should we propose rules to encourage or require a format that embeds interactive data tags in HTML so that the entire set of financial statements can be viewed in a browser? How should these affect any continued requirement to file ASCII- or HTML-formatted financial statements? What obstacles exist to making such improvements in the display of XBRL information?

• Is it appropriate to require public companies to provide interactive data using XBRL? Alternatively, in place of such a requirement, should the Commission instead wait to see whether interactive data reporting by public companies is voluntarily adopted? Without a requirement, would the development of products for producing and using interactive data from private and public companies meet the needs of investors, analysts, and others who seek interactive data? Would a large percentage of public companies provide interactive data voluntarily, and following the same standard, if not required to do so?

• If we do not adopt the proposed rules and instead wait to see whether companies on their own expand their use of interactive data, would such data be less comparable among companies? Is there a “network effect,” such that interactive data would not be useful unless many or all filers provide their financial statements using interactive data? Would the development of software for retail investors to obtain and make use of such data be slowed without a requirement that companies provide interactive data?

• What advantages are there to investors having the company responsible for preparing financial information in interactive data format, as opposed to a model in which third parties independently prepare the

information in interactive format and charge a fee for it?

• Do commenters agree that compared to reports using ASCII and HTML, interactive data would require less manually-transferred data? If so, do commenters believe that the proposed rules would result in less human error and therefore contribute to reduced costs?

• If we require interactive data reporting and the proposed rules result in more effective and efficient financial reporting with reduced human error and cost, would fees charged by financial printers or other service providers be likely reduced to reflect such lower costs?

• If we adopt rules requiring interactive data financial reporting, is the XBRL standard the one that we should use? Are any other standards becoming more widely used or otherwise superior to XBRL? What would the advantages of any such other standards be over XBRL?

• Is the XBRL format for interactive data sufficiently developed to require its use at this time with regard to both U.S. GAAP and IFRS as issued by the IASB? If not, what indicators should we use to determine when it has become sufficiently developed to require its use?

• Are vendors likely to develop and make commercially available software applications or Internet products that will be able to deliver the functionality of interactive data to retail investors?

• How important is it that many different types of viewers with varying levels of sophistication and functionality be available to investors? In addition to the free viewer provided on the SEC Web site, are there likely to be other such products available at low or no cost?

• If we require interactive data financial reporting, what are the principal challenges facing the eventual integration of such reporting with the current filing formats, ASCII and HTML, so that filing in all three formats would no longer be necessary?

B. Phase-In Under the Proposed Rules

1. Overview

The proposed rules initially would require interactive data reporting only by domestic and foreign large accelerated filers that use U.S. GAAP and have a worldwide public common equity float above $5 billion as of the end of their most recently completed second fiscal quarter.

If the rules are adopted by this fall, we anticipate that the first required submissions would be for periods ending on or after December 15, 2008. For calendar year companies, this would first apply to their December 31, 2008 annual reports filed on Form 10-K or 20-F and any Securities Act registration statement that contains financial statements for a period ended on or after December 15, 2008.

We are sensitive to concerns that undue expense and burden should not accompany the adoption of required interactive data financial reporting. We therefore propose a 30-day grace period for each filer's initial interactive data submission, and a 30-day grace period in year two of each filer's interactive data reporting when its footnotes and schedules initially would be required to be tagged in detail.

This would amount to approximately 500 companies. We propose the end of the most recently completed second fiscal quarter because that date is consistent with when a filer is required to determine its status as an accelerated and large accelerated filer.

For companies with a September 30 fiscal year end, the requirement would first apply to their December 31, 2008 quarterly report filed on Form 10-Q and any Securities Act registration statement that contains financial statements for a period ended on or after December 15, 2008.

We discuss more fully at Part II.C liability related to required submissions of interactive data in general and the continuation of some of the limitations on liability used in the voluntary program in particular.

Filers under the proposed rules would be required to convert their financial statements into an interactive data file using the list of tags for U.S. financial statement reporting or the IFRS list of tags, in either case as approved for use by the Commission. The submission also would be required to include any supporting files as prescribed by the EDGAR Filer Manual. Interactive data would be required for the entirety of the financial statements, although tagging of the footnotes and schedules by increasing level of detail would be phased in the following year. We are not proposing at this time that filers be required to provide interactive data for their Management's Discussion and Analysis, executive compensation, or other financial, statistical or narrative disclosure. We solicit comment, however, on the advisability of permissible optional interactive data for financial disclosures that are not part of the current lists of tags for U.S. GAAP financial statement reporting and IFRS financial reporting.

We also solicit comment on the usefulness to investors of interactive data of executive compensation and the burden such reporting would have on companies. For example, we solicit comment on whether the scope of interactive data available on the Executive Compensation Reader, which we posted on our Web site on December 21, 2007,

would be an appropriate level of executive compensation data. Our requests for comment regarding interactive data and executive compensation follow up and expand on previous requests in 2006.

We also note substantial interest in interactive disclosure of executive compensation, for example a draft list of tags for executive compensation that has been made available for public comment

and financial Web pages that link to our Executive Compensation Reader to provide streamlined Internet viewers of executive compensation. We ask detailed questions at the end of Part II.B.3.a.

See Press Release No. 2007-268 (Dec. 21, 2007).

Release No. 33-8655 (Jan. 27, 2006). Two commenters addressed this series of questions. One commenter supported tagging executive compensation disclosure using XBRL; the other commenter believed it would not be helpful.

See “

Broadridge Releases Draft XBRL Proxy Statement Taxonomy for Public Comment,

” Reuters December 4, 2007.

See Part II.B.3.a, below.

The following tables identify the registration statements and periodic reports that would be required to include interactive data according to the company's filing status.

Transition reports that contain financial statements of the type and for the periods specified also would be required to be submitted in interactive data format under the proposed rules. Note that these dates apply to the initial required interactive data disclosure and that detailed tagging of the financial statement footnotes and schedules would not be required for an additional year, as described below in section II.B.3.a.

Domestic and Foreign Large Accelerated Filers Using U.S. GAAP with Worldwide Public Common Equity Float above $5 Billion as of the End of Their Most Recently Completed Second Fiscal Quarter

Registration statements containing financial statements for a period ending on or after December 15, 2008, Form 10-Q

for quarterly periods or Form 10-K

or 20-F

for annual periods ending on or after December 15, 2008.

All Other Large Accelerated Filers Using U.S. GAAP

Registration statements containing financial statements for a period ending on or after December 15, 2009, Form 10-Q for quarterly periods or Form 10-K or 20-F for annual periods ending on or after December 15, 2009.

All Remaining Filers Using U.S. GAAP

Registration statements containing financial statements for a period ending on or after December 15, 2010, Form 10-Q for quarterly periods or Form 10-K or 20-F for annual periods ending on or after December 15, 2010.

Foreign Private Issuers with Financial Statements Prepared in Accordance with IFRS as Issued By the IASB

Registration statements containing financial statements for a period ending on or after December 15, 2010 or Form 20-F for annual periods ending on or after December 15, 2010.

2. Companies and Filings Covered by Proposed Rules and Phase-In

The proposed

rules would cover all companies reporting in either U.S. GAAP, including smaller reporting companies and foreign private issuers that report in U.S. GAAP or, in the case of foreign private issuers, in accordance with IFRS as issued by the IASB.

100

The proposed phase-in would require domestic and foreign large accelerated filers that report in U.S. GAAP and meet the minimum worldwide common equity float of greater than $5 billion to provide their initial interactive data submissions in year one of the phase-in period discussed above. All other U.S. GAAP filers that meet the definition of large accelerated filer would be required to provide their initial interactive data submissions in year two of the phase-in period. All remaining U.S. GAAP filers, including smaller reporting companies and companies not previously subject to periodic reporting requirements, would be required to provide their initial interactive data submissions in year three of the phase-in period.

17 CFR 249.308a.

17 CFR 249.310.

17 CFR 249.220f.

100

As noted in Part I.C, however, the proposed rules would not apply to investment companies registered under the Investment Company Act, business development companies, or other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X.

Foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB would be required to provide their initial interactive data submissions in year three of the phase-in period.

The additional phase-in time for all but the largest accelerated filers is intended to permit companies to plan and implement their data tagging with the benefit of the experience of year one filers. It also is intended to enable us to monitor implementation and, if necessary, make appropriate adjustments during the phase-in period. In the case of IFRS filers, the phase-in also would provide the necessary time for development and testing of the list of tags for IFRS financial reporting.

Our multiyear experience with the voluntary program has helped us understand the extent to which a filer would incur additional costs to create and submit its existing financial disclosures in interactive data format. Based on that experience, we believe that the process of converting a filer's existing ASCII or HTML financial statements into interactive data would not impose a significant burden or cost. The voluntary program clearly demonstrated that companies can, if they choose, tag their financial statements using currently available software without need of outside services or consultants; alternatively, they could rely on financial printers, consultants, and software companies for assistance, although they would retain ultimate responsibility for both their financial statements and their tagged data. As discussed in more detail in the cost-benefit analysis below,1

101

we believe that modest first-year costs for a company would decrease in subsequent periods, particularly once footnote tagging is implemented. We also believe that these costs would be justified by interactive data's benefits. As with domestic registrants, we believe foreign private issuers that report in U.S. GAAP or prepare their financial statements in accordance with IFRS as issued by the IASB would be able to comply with the rules without incurring significant costs.

101

See Part V.

We expect that smaller companies, which generally are disproportionately affected by regulatory costs, also would be able to provide their reports in interactive data format without undue effort or expense. While interactive data reporting involves changes in reporting procedures mostly in the initial reporting periods, we expect that these changes would provide efficiencies in future periods. As a result, there may be potential net savings to the filer, particularly if interactive data become integrated into the filer's financial reporting process. While we recognize that requiring interactive data financial reporting would likely result in start-up expenses for smaller companies, these expenses may be substantially lower than those of larger filers, given that smaller filers tend to have simpler financial statements than larger companies, with fewer elements and disclosures to tag. In addition, we expect that both software and third-party services will be available to help meet the needs of smaller filers. We also intend that the third year phase-in for smaller reporting companies would permit them to learn from the experience of the earlier filers. It would also give them a longer period of time across which to spread first-year data tagging costs.

As noted above,

102

CIFiR has issued a Progress Report that contains a developed proposal that the Commission phase in the requirement that companies file financial statements using interactive data after the satisfaction of specified preconditions relating to:

102

See Part I.C above.

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

• The capacity of reporting companies to file interactive data using the new list of tags for U.S. financial statement reporting; and

• The ability of the Commission's electronic filing system to provide an accurate human-readable version of the interactive data.

103

We are giving careful consideration to CIFiR's developed proposal. We believe that the factors they cite as preconditions will occur before the start of a requirement to provide interactive data. We expect to consider the factors in connection with determining whether to adopt the proposed interactive data submission requirements with regard to companies that prepare their financial statements in accordance with U.S. GAAP. We also expect to consider the same factors for companies that prepare their financial statements in accordance with IFRS as issued by the IASB.

The Progress Report's developed proposal recommends that we phase in financial statements using interactive data by requiring the largest 500 domestic registrants,

104

as determined by the value of shares held by unaffiliated persons, to furnish (rather than file) interactive data for the face of their financial statements and, in block-tagged form,

105

the footnotes to the financial statements. The Progress Report's developed proposal also

recommends that, one year after we impose this requirement on the first group of registrants, we impose the same requirement on the remaining domestic registrants that fall within the definition of “large accelerated filer.” Finally, the Progress Report's developed proposal recommends that, once the specified conditions have been satisfied and the second phase-in period has been implemented, we evaluate whether and when to require that the domestic large accelerated filers file rather than furnish financial statements in interactive data format, as well as the inclusion of all other reporting companies.

104

The developed proposal does not address foreign companies. We do not believe that whether a U.S. GAAP reporting company is domestic or foreign should determine the applicability of the proposed rules, and therefore foreign companies using U.S. GAAP would be included in the phase-in schedule along with their domestic counterparts. As noted, foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB also are included in the proposal, although they would not be phased in until year three.

105

By “block” text we mean that the entire footnote or other discrete item, such as a schedule or table, would be tagged as an individual element.

We have carefully considered the Committee's thoughtful developed proposal, including the recommended phase-in of 500 initial companies and delayed consideration of non-accelerated and other filers until after two years. We propose a phase-in schedule similar to the one for which the Committee calls.

106

However, instead of waiting until after the second year to determine whether to propose extending the applicability of the rules to all filers, the proposed rules would establish a phase-in for the remaining companies' required interactive data submissions that would begin in the third year. Based on participants' experience with the voluntary program and our consultations with filers, software providers and filing intermediaries, we believe the proposed rules would accelerate the improvement and availability of inexpensive software. This, in turn, would generate more options and assistance for non-accelerated filers, smaller reporting companies, and foreign private issuers so that they could become proficient in the use of interactive data without undue burden.

106

As previously noted, the proposed worldwide public float cutoff of $5 billion would result in approximately 500 companies subject to the proposed rules in year one.

Although including a larger number of filers in the initial phase-in might increase the overall commercial and analytical value of the interactive data, which in turn would likely increase the supply of software for analyzing and presenting interactive data to analysts and investors, we believe the establishment of a firm schedule for all U.S. GAAP- and IFRS-reporting companies to file their financial statements using interactive data would serve nearly as well to stimulate the further development of interactive data-related software and services while also affording most companies additional time to learn from the experience of others.

We also believe that concurrently adopting a phase-in for non-accelerated filers, smaller reporting companies, and foreign private issuers using IFRS as issued by the IASB would establish an appropriate and measured timeline, which we would be able to monitor and, if necessary, reconsider during the first two years of the phase-in.

Request for Comment:

• Is the proposed schedule for implementation of interactive data tagging appropriate?

• Should we delay the first required interactive data submissions until the second half of 2009 or later? What benefits would there be to advancing or delaying implementation of the proposed rules? How much lead time do large accelerated filers need to familiarize themselves with interactive data and the process of mapping financial statements using the list of tags for U.S. financial statement reporting or IFRS financial reporting?

• Should the initial submission required by the proposed rules be a periodic report? If so, should it be a Form 10-Q for domestic issuers?

107

Would this be an easier report for companies to prepare, or would it be best for companies to begin providing interactive data with respect to the fiscal year end financial statements?

107

We note that when the Commission adoped the electronic filing requirements, the first required electronic filing was a Form 10-Q rather than a registration statement or Form 10-K. Release No. 33-6977 (Feb. 23, 1993) [58 FR 14628].

• Instead of a cut-off using a worldwide public common equity float of $5 billion at the end of the issuer's most recently completed second fiscal quarter, would an initial phase-in including all large accelerated filers or large accelerated filers with a smaller public float better accomplish the goals outlined in the release? If we use a public float, should it be $5 billion or some other amount lower or higher than the proposed cut-off, such as $3 billion or $10 billion? Would some other cut-off, or some other schedule be preferable? Would it be better to measure the public float as of a time other than the end of the issuer's most recently completed second fiscal quarter and, if so, when?

• Would the initial phase-in include enough companies to encourage potential vendors of interactive data products and services to invest in the development and marketing of new and improved products and services? If not, how would such a level affect the markets for both filer and investor products and services?

• Should the phase-in schedules differ as between U.S. GAAP non-accelerated and smaller reporting companies and foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB?

• Is the proposed third-year phase-in approach for companies other than large accelerated filers necessary or sufficient for them to familiarize themselves with interactive data and the process of mapping financial statements using the list of tags for U.S. financial statement reporting or IFRS financial reporting?

• Is the proposed third-year phase-in sufficient for smaller reporting companies and foreign private issuers to allocate the necessary resources and meet the proposed requirements, or would a more delayed schedule be appropriate?

• Should smaller reporting companies and foreign private issuers reporting in U.S. GAAP be subject to the proposed rules at all? Should compliance with the proposed rules be solely voluntary for smaller reporting companies or foreign private issuers reporting in U.S. GAAP?

• Would requiring interactive data from foreign private issuers reporting in U.S. GAAP create a disincentive for these issuers to use U.S. GAAP in preparing their financial statements? Is this offset by the proposed requirement that foreign private issuers reporting in IFRS as issued by the IASB use interactive data within three years? Should the requirements extend only to foreign private issuers reporting in U.S. GAAP that file on domestic forms?

• Should foreign private issuers that prepare their financial statements in accordance with IFRS as issued by the IASB be subject to the new rules, as proposed? Should the proposed rules also apply to foreign private issuers that prepare their financial statements in their local GAAP and reconcile to U.S. GAAP for Exchange Act reporting purposes if their home jurisdictions have developed interactive data reporting programs? Would the proposed rules' current exclusion of such issuers create a disincentive for foreign private issuers to use IFRS as issued by the IASB for their Exchange Act reporting?

• Are there extra burdens that foreign private issuers reporting in U.S. GAAP or IFRS as issued by the IASB would incur under the proposed rules? Do any such burdens necessitate a one year or other delay in the proposed phase-in requirement as and when it otherwise would apply to them?

• Do foreign private issuers using foreign filing agents have comparable or

sufficient access to interactive data software and support services?

• Should the proposed new rules apply to a Canadian issuer's financial statements prepared in accordance with U.S. GAAP and filed with the Commission under cover of Form 40-F?

108

Should the proposed new rules apply to a Canadian issuer's registered offering on Form F-9

109

or F-10, or any other forms available under the Multijurisdictional Disclosure System?

110

108

17 CFR 249.240f. Certain Canadian foreign private issuers file registration statements and annual reports under the Multijurisdictional Disclosure System, which permits eligible Canadian companies to use their disclosure documents prepared in accordance with Canadian requirements in filings with the Commission.

109

17 CFR 239.39.

110

17 CFR 239.40.

• Should we permit or require foreign private issuers filing their annual financial statements using U.S. GAAP also to provide in interactive data format any interim financial information that they furnish on Form 6-K? If so, what factors should we consider in determining whether to require or permit such submissions? Should such a requirement be phased in? What are the answers to these questions if the foreign private issuer uses IFRS as issued by the IASB?

• Should investment companies registered under the Investment Company Act, business development companies or other entities that report under the Exchange Act and prepare their financial statements in accordance with Article 6 of Regulation S-X be subject to the proposed rules? Is the current investment management list of tags sufficiently developed for required use by these companies?

• The Commission recently proposed to accelerate the filing deadline for annual reports filed on Form 20-F by foreign private issuers under the Exchange Act by shortening the filing deadline from 6 months to within 90 days after the foreign private issuer's fiscal year-end in the case of large accelerated and accelerated filers, and to within 120 days after a foreign private issuer's fiscal year-end for all other issuers, after a two-year transition period.

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In light of this rule proposal, should we lengthen the proposed phase-in deadlines for foreign private issuers, for example, by one year if the issuer is not a large accelerated filer?

111

Release No. 33-8900 (Feb. 29, 2008) [73 FR 13404].

3. Documents and Information Covered by the Proposed Rules

a. Financial Statements and Financial Statement Schedules

The proposed rules would require interactive data tagging of a filer's complete financial statements and any required financial statement schedules.

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As with the voluntary program, the proposed rules would require companies to provide the interactive data in an exhibit. Interactive data would be required for all periods included in the filer's financial statements. The proposed rules would not, however, require interactive data submissions for other financial statements that may be required of filers, including those provided pursuant to Rules 3-05, 3-09, 3-10, 3-14, and 3-16 of Regulation S-X.

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As previously noted, proposed Rule 405 of Regulation S-T would directly set forth the basic tagging requirements and indirectly set forth the rest of the tagging requirements through the requirement to comply with the EDGAR Filer Manual. Consistent with proposed Rule 405, the EDGAR Filer Manual would contain the detailed tagging requirements.

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17 CFR 210.3-05, 17 CFR 210.3-09, 17 CFR 210.3-10, 17 CFR 210.3-14, 17 CFR 210.3-16.

As with the voluntary program, the proposed rules would require that the line item descriptions and amounts presented on the face of the financial statements in the traditional format filing be the same as in the interactive data format. Also, the rules would prohibit partial presentation of face financial statements in interactive data format. For example, excluding comparative financial information for prior periods would not be permitted. Unlike the voluntary program, our proposed rules require companies using U.S. GAAP or foreign private issuers using IFRS as issued by the IASB to provide tagged data for the footnotes and schedules to the financial statements. At the time of our adopting release for the voluntary program in 2005, we stated that we recognized technical issues made it difficult to tag the notes to the financial statements. We did, however, provide volunteers with the option of tagging the notes to the financial statements.

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Since the time of the adopting release, the necessary list of tags has been completed and the available software has advanced sufficiently to require that the financial statement footnotes and schedules be included in the proposed rules.

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See section II.E. of Securities Act Release No. 8529 (February 3, 2005) [70 FR 6556, 6559].

The voluntary program adopting release recommended that if participants voluntarily provided footnotes in interactive data format, then they should provide enough detail so that the tagging would be of practical value to users. The release stated that a single tag for the entire group of footnotes in a filing would cover too much information to be useful to the user. We still believe that one tag for the entire group of footnotes would be confusing and provide little benefit. Tagging each footnote separately, however, would allow users the ability to compare footnote disclosure between periods and across filers while minimizing the burden on preparers. We are therefore proposing that the footnote disclosures in the traditional format filing be the same as in the interactive data format. This would be accomplished by tagging the footnotes using four different levels of detail:

(i) Each complete footnote tagged as a single block of text;

(ii) Each significant accounting policy within the significant accounting policies footnote tagged as a single block of text;

(iii) Each table within each footnote tagged as a separate block of text; and

(iv) Within each footnote, each amount (

i.e.

, monetary value, percentage, and number) separately tagged and each narrative disclosure required to be disclosed by U.S. GAAP (or IFRS as issued by the IASB, if applicable), and Commission regulations separately tagged.

To allow filers time to become familiar with tagging footnotes, we are proposing that in each filer's first year of interactive data reporting only level (i) would be required. All four levels would be required starting one year from the filer's initial required submission in interactive data. In year two, when a filer would first be required to tag its footnotes and schedules using multiple levels of detail, the filer would be given an additional 30 days beyond the due date or filing date of its report or registration statement to file the interactive data exhibit. Subsequent interactive data exhibits using all of the levels would be required at the same time as the rest of the related report or registration statement. We believe the one-time 30-day grace period would help a filer comply with the more detailed tagging requirements.

We propose requiring these various levels of detailed tagging for the financial statement footnotes after considering the range of needs of investors, analysts, and other consumers of financial information. We believe the block-text tagging required under levels (i) through (iii) would satisfy the need of those who desire disclosures within the context of an entire footnote or an entire table. The detail tagging of

individual amounts and narrative disclosures within the footnotes required under level (iv) would satisfy the need of those who desire to analyze specific pieces of information or data.

The requirement that in the second year a filer tag separate each amount within a footnote (

i.e.

, monetary value, percentage, and number) and each narrative disclosure required to be disclosed by U.S. GAAP (or IFRS as issued by the IASB, if applicable), and Commission regulations should not affect a filer's decisions regarding what to disclose in its traditional format filing. We are aware of questions as to whether the contextual information or data elements chosen from the standard list of tags could potentially reveal information that the rest of the related registration statement or periodic report would not otherwise make known. However, we do not believe that the contextual information or data elements chosen should provide any additional substantive disclosure.

To clarify the intent of the rules, we propose to include an instruction to proposed Rule 405 of Regulation S-T stating that the rules require a disclosure format, but do not change substantive disclosure requirements. The rules also would state clearly that the information in interactive data format should not be more or less than the information in the ASCII or HTML part of the related registration statement or report.

In connection with their annual and transition reporting on Forms 10-K or 20-F, filers may be required under existing financial reporting requirements to include certain supplementary financial statement schedules with their financial statements. The form and content of these schedules are governed by Article 12 of Regulation S-X.

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The list of tags for U.S. financial statement reporting enables companies to tag individual facts in these financial statement schedules, or to block tag each entire schedule.

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See Rules 5-04 and 7-05 of Regulation S-X and Items 17 and 18 of Form 20-F.

We propose that filers also be required to include with their interactive data any financial statement schedules prescribed by Article 12 of Regulation S-X. These financial statement schedules would be tagged using two different levels of detail; only the first level would be required in the first year. Both levels would be required starting one year from the filer's initial required submission in interactive data format. Similar in concept to the tagging approach proposed for the financial statement footnotes, the required levels of detail would be: (i) Each complete financial statement schedule tagged as a block of text; and (ii) each amount (

i.e.

, monetary value, percentage, and number) separately tagged and each narrative disclosure required to be disclosed by Commission regulations separately tagged.

A filer may revise its previously filed financial statements for a variety of reasons, such as the retrospective application of a new accounting principle or the correction of an error. Our proposed rules would require a filer to provide revised interactive data at the same time it files the revised financial statements with the traditional format filing.

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Under the proposed rules, filers also would be required to provide interactive data for transition reports on Forms 10-Q, 10-K, or 20-F.

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Revised interactive data would be required so that the financial information would be the same in both the traditional format filing and the interactive data file. If the financial statements are not revised in connection with an amended registration statement, periodic report, or transition report, the exhibit index would indicate that the interactive data file was already provided.

Request for Comment:

• Are the proposed four levels of detail appropriate for footnote tagging? What alternative footnote disclosure items or criteria do commenters recommend we establish for tagging footnotes? Why would those be more appropriate than what we propose?

• Should we require all four levels for footnotes in the first year instead of using the phase-in approach for the more detailed tagging? Should detailed tagging of a filer's footnotes and schedules not be required until more than one year after its initial interactive data submission, for example, in year three or four?

• Are the proposed two levels of detail appropriate for financial statement schedule tagging? If not, what alternatives would be more appropriate?

• Should we require both levels for financial statement schedules in the first year instead of using the phase-in approach for more detailed tagging?

• Is the most detailed level of tagging too prescriptive, or is it too broad? Would it help to achieve comparability among filers? Would it impose an unnecessary burden on filers in preparing their XBRL data compared to the potential benefit to consumers of data? What problems or obstacles may be encountered in applying the proposed requirement?

• Would the most detailed level of tagging result in the creation of a high number of company-specific extensions? If so, would the additional effort needed to create new extensions diminish once a filer has tagged at this level of detail? Should the tagging requirement instead be only to require detailed tagging to the extent a standard tag already exists in the standard list of tags?

• Does the proposed rule provide adequate and effective guidance on how to tag information in the footnotes to the financial statements? For example, would it be feasible for companies to identify the narrative disclosure required by U.S. GAAP or IFRS as issued by the IASB that needs to be tagged separately? Should it be more principles-based? If so, what should those principles be?

• Do the standards we propose for tagging provide clear enough guidance for preparers so that we can expect to achieve consistency among filers?

• Should schedules to the financial statements be omitted from our proposed rule? If so, why?

• What additional costs and burdens would there be with detailed tagging of the financial statement footnotes and financial statement schedules as opposed to “block” tagging?

• Would investors and other users of tagged data benefit from the tagging of individual amounts (

i.e.

, monetary values, percentages, and numbers) and narrative disclosures within each footnote together with block text?

• Should we require that filers reporting in U.S. GAAP, or in IFRS as issued by the IASB, tag their document and entity

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information? Would this information be useful in interactive data format?

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See footnote 70 above.

• Is it reasonable to expect that requiring interactive data-formatted financial statements in general or footnotes in particular will not change the discretionary content that companies provide in the traditional format filing? Would the availability of tagged data possibly cause competitive pressures on filers to choose to make more disclosures that are permissible, encouraged, or otherwise not required by Commission regulations? Alternatively, might the availability of tagged data possibly cause filers to choose to curtail such disclosures? What types of disclosures would those be?

• Should transition reports not be subject to the proposed rules? If not, why not?

• Would users of financial information find tagged financial statement schedules useful for analytical purposes?

• Should the proposed rules require interactive data submissions for a filer's

financial information provided under Forms 8-K and 6-K, such as earnings releases or interim financial information? If so, what level of tagging detail would be appropriate, and would a reasonable grace period from the date of the Form 8-K or 6-K to the deadline for interactive data (

e.g.

, one, three, or five days) address concerns that filers require additional time to provide interactive data for such financial information? Does financial information provided under Form 8-K or 6-K, such as earnings releases, present additional burdens compared to other forms that would warrant excluding them from the proposed rules?

• Should the proposed rules require interactive data submissions for other financial statements that may be provided by filers, including those provided pursuant to Rules 3-05, 3-09, 3-10, 3-14 and 3-16 of Regulation S-X? If so, how should a requirement be phased in?

• Should we provide an opportunity for non-investment company issuers to submit voluntarily interactive data format information other than that which they would be required to submit as interactive data? If so, should we permit such interactive data format information to be subject to provisions governing the proposed required filing of interactive data? Should we instead permit such interactive data format information to be submitted under a modified voluntary program that would apply to such information in a manner similar to the way it applies to XBRL-Related Documents under the current voluntary program?

• Should we require or permit interactive data submissions for executive compensation? Would interactive data of executive compensation be useful to investors? Approximately how much additional cost would interactive reporting of executive compensation require of companies?

• If we were to require or permit interactive data for executive compensation, should all narrative and numerical disclosure required in the traditional electronic filing

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be required in interactive data format? If we were to require only a subset of the required disclosure, what subset should be required? For example, would it be appropriate to required tagging of only the Summary Compensation Table and other tables as applicable? Would it present an accurate picture of the compensation? How should an interactive data requirement for executive compensation treat the footnotes and narrative disclosure?

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See Item 402 of Regulation S-K, 17 CFR 229.402.

• If we were to require or permit interactive data for executive compensation, should we require the same data provided by the Executive Compensation Reader currently available on our Web site?

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The Executive Compensation Reader displays the Summary Compensation Table disclosure of 500 large companies that followed the new executive compensation rules in reporting 2006 compensation information in their proxy statements filed with the Commission. By using the reader, an investor can view amounts included in the Summary Compensation Table Stock Awards and Option Awards columns based on either the full grant date fair value of the awards granted during the fiscal year, or the compensation cost of awards recognized for financial statement reporting purposes with respect to the fiscal year, and recalculate the Total Compensation column accordingly.

• If we were to require or permit interactive data for executive compensation, should the interactive data be filed with the proxy statement, which often contains the executive compensation disclosure, or as an amendment to the Form 10-K, which often incorporates the executive compensation disclosure by reference?

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Would it diminish significantly the value to investors if interactive data for executive compensation were not required to be submitted until, for example, 30 or 45 days after it was required to be submitted in traditional format? If there were such a 30- or 45-day delay in the requirement, would it be advisable to permit the delayed submission to be made in an exhibit to a Form 8-K or to an amendment on Form 10-K?

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General Instruction G.3. to Form 10-K.

• How should a requirement to provide interactive data for executive compensation apply to foreign private issuers?

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Item 6.B of Form 20-F.

• Should we require or permit interactive data submissions for other financial, statistical or narrative disclosure, such as beneficial ownership of management and five percent or greater shareholders or tabular disclosure of contractual obligations?

122

17 CFR 229.403, 17 CFR 229.303(a)(5).

b. Registration Statements Covered by the Proposed Rules

We are proposing that, subject to the phase-in period described above, all registration statements filed under the Securities Act, including initial public offerings, be required to include interactive data when financial statements are included directly in the registration statement, rather than being incorporated by reference. This would include all periods included in the registration statement as required by Regulation S-X and our rules. We believe analysts, investors, the public, and others would benefit from the enhanced ability of interactive data to locate and compare financial data included in registration statements. Under the proposed rules, interactive data would be required for the acquiring company, the filer, but not for the company being acquired, in the context of a business combination. The additional burden of configuring disclosure from traditional electronic format into interactive data format in the context of a registered offering is not anticipated to significantly add to the time or expense of companies filing registration statements.

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As noted above, if an amended registration statement is filed that does not involve any change in the financial statements, the interactive data exhibit would not be required to be re-filed. The exhibit index would simply note that the exhibit had already been filed.

Request for Comment:

• Should registration statement financial information be subject to the new rules, as proposed? In particular, should registrants making initial public offerings in year three (and later years) of the phase-in period be required to provide interactive data if, as would be typical, they were not already required to file periodic reports subject to the requirement to submit an interactive data exhibit?

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Should we permit rather than require interactive data to be provided in initial public offerings or other registration statements?

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An issuer might already be required to submit periodic reports subject to the requirement to submit an interactive data exhibit without ever having made an initial public offering registered under the Securities Act. An issuer could be in that position, even during year one of the phase-in, for example, if the issuer became publicly held as a result of the type of spin-off Staff Legal Bulletin No. 4 (Sept. 16, 1997) describes as not requiring registration under the Securities Act.

• If we require interactive data, should the proposed rules apply to registration statement financial information based on the size of the registrant (for example, distinguishing between large accelerated filers and smaller reporting companies)?

• Should the proposed rules require filers to include interactive data with respect to all filings of the registration statement when the registration statement is filed multiple times due to amendments? If not, which filings of the registration statement should be subject to the interactive data submission requirement? Should we, for example, limit the Securities Act filings that would require interactive data to those that contain a preliminary prospectus that is circulated?

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Should the

proposed rules apply to a final prospectus supplement filed under Securities Act Rule 424?

126

If we require interactive data with filings that do not currently include exhibits, such as final prospectuses, should we require that the interactive data be provided as schedules or exhibits? Once interactive data are provided with a registration statement, should we limit the requirement to provide interactive data for amendments to only the amendments that reflect substantive changes from or additions to the financial information? Would revising interactive data that previously were provided in connection with a registration to reflect changes to the registration statement involve much burden?

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The instruction to Item 501(b)(3) of Regulation S-K [17 CFR 229.501(b)(3)] addresses disclosure

requirements applicable to specified circulated preliminary prospectuses.

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17 CFR 230.424. Currently, Rule 424 prospectuses do not have a provision for exhibits, so additional EDGAR programming would be needed.

• Should interactive data be required only in connection with initial public offering registration statements under the Securities Act, rather than, as proposed, all Securities Act registration statements?

• In a registration statement on Form S-4 or F-4, or proxy statement relating to a proposed merger, should interactive data be required for the company being acquired as well as the acquiring company? Should interactive data of the company being acquired be required only if that company already is subject to interactive data reporting under the proposed rules?

• Should we also require interactive data to be provided in connection with Exchange Act registration statements on Form 10 and Form 20-F?

4. Initial Filing Grace Period

As noted above, interactive data would be required at the same time as the rest of the filing to which it relates. Each company's initial interactive data submission, however, would be permitted as an amendment to a registration statement within 30 days of the date of filing or as an amendment to Form 10-K, 20-F, or 10-Q within 30 days of the due date for filing of the rest of the related report. In addition, as discussed above in Part II.B.3.a, in year two when a filer would first be required to tag its footnotes and schedules using all levels of detail, the interactive data exhibit would be required within 30 days of the due date or filing date of the related report or registration statement, as applicable.

Currently in the voluntary program, filers may provide the interactive data at the time of filing or at any later time, without a deadline.

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We believe that, consistent with our view regarding the value of widespread market use of the interactive data, companies should be required to provide the interactive data at the time the registration statement or report is required to be filed. We do not believe this timing requirement would place undue pressure on filers. We believe, for example, based on our experience with the voluntary program, that the time period for the quarterly or annual report is sufficient for filers to convert their ASCII or HTML financial statements into interactive data format.

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The voluntary program permits filers to provide the initial and any such restated financial information in interactive data format using Form 8-K. The proposed rules, however, would require that interactive data be provided as an exhibit to the filing itself, including any restated Forms 10-K, 10-Q, or 20-F.

Request for Comment:

• Should we permit interactive data information to be provided later than the related filing for the first year, rather than just the first filing? Should we provide a grace period for the first filing as to which the issuer is required to tag financial statement footnotes in detail? Is a grace period not needed?

• Should any grace period either for the first filing or for subsequent filings be for fewer or more than 30 days, such as five, 20 or 45 days? What would the impact of a grace period be on the usefulness of interactive data?

5. Web Site Posting of Interactive Data

We believe interactive data, consistent with our proposed rules, should be easily accessible for all investors and other market participants. As such disclosure becomes more widely available, advances in interactive data software, online viewers, search engines and other Web tools may in turn facilitate access and usability of the data. Encouraging widespread accessibility to filers' financial information furthers our mission to promote fair, orderly, and efficient markets, and facilitate capital formation. We believe Web site availability of the interactive data would encourage its widespread dissemination, thereby contributing to lower access costs for users. We therefore propose that each filer covered by the proposed rules be required to provide the same interactive data on its corporate Web site, if it has one, that would be required to be provided to the Commission on the earlier of the day it filed or was required to file the related registration statement or report, as applicable.

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Proposed Rule 405 would contain the Web site posting requirement. We also propose to provide, however, that Web site posting of the interactive data would not be required until the end of any applicable grace period that would apply to the submission of the interactive data to the Commission. Similarly, we propose to provide that Web site posting of the interactive data would not be required before submission of the interactive data when submission of the data is delayed in accordance with and during the term of any applicable hardship exemption provided under Rule 201 or 202 as proposed to be revised. Proposed revisions to Rules 201 and 202 are more fully discussed below in Part II.E.

We believe access to the interactive data on corporate Web sites would enable search engines and other data aggregators to more quickly and cheaply aggregate the data and make them available to investors because the data would be available directly from the filer, instead of through third-party sources that may charge a fee. To help further our goals of decreasing user cost and increasing availability, we do not propose to allow companies to comply with the Web posting requirement by including a hyperlink to the documents available electronically on the Commission's Web site.

We believe this requirement would be consistent with the increasing role that corporate Web sites perform in supplementing the information filed electronically with the Commission by delivering financial and other disclosure directly to investors. For example, we note that since 2003 issuers with corporate Web sites have been required to post on their Web sites beneficial ownership reports filed with respect to their securities on Forms 3, 4, and 5 under Section 16(a) of the Exchange Act.

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We also note that many companies provide on their Web sites access to their periodic reports, proxy statements, and other Commission filings.

130

This proposal would expand such Web site posting by requiring companies with Web sites to post their interactive data as well.

131

129

Section 16(a)(4)(C) [15 U.S.C. 78p(a)(4)(C)], Rule 16a-3(k) [17 CFR 240.16a-3(k)].

130

Companies filing registration statements and accelerated filers and large accelerated filers in their periodic reports are required to disclose whether or not they make available free of charge on or through their Web site, if they have one, their annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports. Companies that do not make their reports available in that manner also must disclose the reasons they do not do so and whether they voluntarily provide electronic or paper copies of their filings free of charge upon request. See Item 101(e) of Regulation S-K.

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As further discussed in Part II.E, we propose that a company that failed to post its interactive data as required would be deemed ineligible to use short form registration Forms S-3, S-8, and F-3 and would be deemed not to have adequate public information available for purposes of Rule 144(c)(1) unless and until it posted.

Request for Comment:

• Should we adopt rules that require each filer to post interactive data from

registration statements and periodic and transition reports on its corporate Web site, if it has one?

• What advantages, if any, would dual Internet and EDGAR availability have for users, search engines, software developers, and others involved in the extraction and processing of financial data? Would it be helpful if our Web site provided the option to download the interactive data submission from our Web site or the issuer's Web site? Would it add a significant burden if an issuer were required to submit with its interactive data the URL that would link specifically to that interactive data as posted on the issuer's Web site or, alternatively, link to a part of the issuer's Web site from which there would be easy access to the interactive data as posted there? What would facilitate the realization of any advantages of Web site posting, for example the use of a standardized URL for interactive data? Would a standardized URL add significant cost to posting?

• Instead of requiring Web site posting, should we require that filers disclose in their registration statements or reports whether or not they provide free access to their interactive data on their corporate Web sites and, if not, why not?

• What impact would be realized by filers that do not currently provide Web sites? Would the proposed rules affect whether filers create or maintain Web sites?

• Would Web site posting decrease the time and cost required for aggregators of financial information and users to access disclosure formatted using interactive data?

• If we require Web site posting of interactive data, should we also require that the Web site include language stating that the entire registration statement, or periodic report also is available for free at the Commission's Web site?

• If we require Web site posting of interactive data, should we require, as proposed, that each filer provide the interactive data on its corporate Web site on the same day as the related filing, instead of at the same time?

C. Accuracy and Reliability of Interactive Data

1. Voluntary Program

To help ensure the accuracy of interactive data in the voluntary program, the data has undergone validation upon receipt by our electronic filing system separate from the normal validation of the traditional format filing.

132

Potential liability also helps ensure the accuracy and reliability of the data. Although the voluntary program has provided limited protections from liability under the federal securities laws

133

and excluded interactive data from being subject to officer certification requirements under Exchange Act Rules 13a-14 and 15d-14,

134

interactive data in the voluntary program are subject to the anti-fraud provisions of the federal securities laws. The voluntary program also encourages participants' efforts to create accurate and reliable interactive data that is the same as the corresponding disclosure in the traditional electronic format filing by providing that a participant is not liable for information in its interactive data that reflects the same information that appears in the corresponding portion of the traditional format filing, to the extent that the information in the corresponding portion of the traditional format filing was not materially false or misleading. To further encourage reasonable efforts to provide accurate interactive data, the voluntary program treats interactive data that do not reflect the same information as the official version as reflecting the official version if the volunteer meets several conditions. The volunteer must have made a good faith and reasonable attempt to reflect the same information as appears in the traditional format filing and, as soon as reasonably practicable after becoming aware of any difference, the volunteer must amend the interactive data to cause them to reflect the same information.

135

132

If the traditional format filing meets its validation criteria, but any interactive data fail their own validation criteria, all interactive data are removed and the traditional format filing is accepted and disseminated without the interactive data file.

133

Rule 402 under Regulation S-T provides these liability protections.

134

See Rules 13a-14(f) [17 CFR 240.13a-14(f)] and 15d-14(f) [17 CFR 240.15d-14(f)].

135

17 CFR 232.402(b).

2. Use of Technology To Detect Errors

Complete, accurate, and reliable financial statements and other disclosures are essential to investors and the proper functioning of the securities markets. Our proposed requirement to submit interactive data with registration statements and reports is designed to provide investors with new tools to obtain, review, and analyze information from public filers more efficiently and effectively. To satisfy these goals, interactive data must meet investor expectations of reliability and accuracy. Many factors, including company policies and procedures buttressed by incentives provided by the application of technology by the Commission, market forces and the liability provisions of the federal securities laws, help further those goals.

Building on the validation criteria referenced above for interactive data in the voluntary program, we plan to use validation software to check interactive data for compliance with many of the applicable technical requirements and to help the Commission identify data that may be problematic. For example, we expect the validation software to

• Check if required conventions (such as the use of angle brackets to separate data) are applied properly for standard and, in particular, non-standard special labels and tags;

• Identify, count, and provide the staff with easy access to non-standard special labels and tags;

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For example, if a company uses the word “liabilities” as the caption for a value data tagged as “assets,” the software would flag the filing and bring it to the staff's attention. In contrast, if the company used “Total Assets” or “Assets, Total,” the software would identify the use of these terms as a low risk discrepancy.

• Identify the use of practices, including some the XBRL U.S. Preparers Guide contains, that enhance usability;

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The XBRL U.S. Preparers Guide, available from the XBRL U.S. Web site, would provide guidance to facilitate preparing information in the interactive data format that we propose to require.

• Facilitate comparison of interactive data with disclosure in the corresponding traditional format filing;

• Check for mathematical errors; and

• Analyze the way that companies explain how particular financial facts relate to one another.

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The technology used to show these relationships is known as a “linkbase.” The Commission will seek to ensure that linkbases not only comply with technical requirements but are not used to evade accounting standards.

The availability of interactive data to the staff may also enhance its review of company filings. After the FDIC required submission of interactive data, it reported that its analysts were able to increase the number of banks they reviewed by 10% to 33%, and that the number of bank reports that failed to fully meet filing requirements fell from 30% to 0%. These bank reports require information that is more structured and less varied than the information we would require. As a result, the FDIC's efficiency gains from the use of interactive data likely would be greater than ours.

We believe analysts, individual investors and others outside the Commission that use the interactive data submitted to us also will make use of software and other tools to evaluate the interactive data and, as a result, market forces will encourage companies

to provide interactive data that accurately reflects the corresponding traditional format data in the traditional format filing. For example, the use of non-standard special labels or tags (extensions) could introduce errors, but we expect the open source and public nature of interactive data and the list of tags for U.S. financial statement reporting would enable software easily to detect and identify any modifications or additions to the approved list of tags. We believe such software and other technology will be widely available for free or at reasonable cost. Investors, analysts, and other users therefore would be able to identify the existence and evaluate the validity of any such modifications or additions. We also anticipate that companies preparing their interactive data and investors, analysts, and other users would use such devices to search for and detect any changes made to the standard list of tags. Because analysts and other users would rapidly discover mistakes or alterations not consistent with the desired use of interactive data, filers would have a powerful incentive to prepare such data with care and promptly correct any errors.

With this proposal, we seek the rapid adoption and use of interactive data without imposing unnecessary cost and expense on filers. We therefore propose that the interactive data itself provided to us generally would be subject to a liability regime under the federal securities laws similar to that governing the voluntary program. We also propose that viewable interactive data as displayed through software available on the Commission's Web site, as described above and further discussed below, would be subject to the same liability under the federal securities laws as the corresponding portions of the traditional format filing.

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Proposed Rule 406 of Regulation S-T would set forth the liability applicable to interactive data and viewable interactive data that is displayed through software available on the Commission's Web site. Proposed Rule 406 also would clarify that disclosures in the traditional format part of the related official filing with which the interactive data appear as an exhibit remain subject to the federal securities laws as in the past and that nothing in proposed Rule 405 of Regulation S-T (setting forth content, format and other requirements related to interactive data) or proposed Rule 406 would affect the liability otherwise applicable to the traditional format data. Proposed revised Rules 13a-14(f) and 15d-14(f) would exclude interactive data from the officer certification requirements.

Interactive data would be subject to the following liability-related provisions:

• Deemed not filed or part of a registration statement or prospectus for purposes of sections 11 and 12 of the Securities Act;

• Deemed not filed for purposes of section 18 of the Exchange Act and section 34(b) of the Investment Company Act;

• Not otherwise subject to the liabilities of these sections;

• Subject to other liability under these Acts for the substantive content of the financial disclosures (as distinct from compliance with proposed Rule 405) in the same way and to the same extent as the traditional format part of the related official filing. The content of the financial disclosure refers, for example, to the numerical values in the financial statements or footnotes and the statements in the footnotes. The Rule 405 requirements generally refer to the process of tagging and formatting the content of the financial statements for the interactive data file;

• Deemed filed for purposes of (and, as a result, benefit from) Rule 103 under Regulation S-T;

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The viewed data would be deemed filed for purposes of Rule 103 under Regulation S-T [17 CFR 232.103] and, as a result, in general, the issuer would not be subject to liability for electronic transmission errors beyond its control if the issuer corrects the problem through an amendment as soon as reasonably practicable after the issuer becomes aware of the problem.

• Protected from liability under these Acts for failure to comply with the requirements of proposed Rule 405 if the interactive data either:

○ Met the requirements of proposed Rule 405 of Regulation S-T; or

○ Failed to meet those requirements but the failure occurred despite the issuer's good faith and reasonable effort and the issuer corrected the failure as soon as reasonably practicable after becoming aware of it; and

• Excluded from the officer certification requirements under Exchange Act Rules 13a-14 and 15d-14.

None of the proposed liability-related provisions for interactive data submitted to the Commission, however, would affect the application of the anti-fraud provisions under the federal securities laws, whether the interactive data is submitted to the Commission or posted on an issuer's Web site.

Rule 405 is being proposed, in part, under the Commission's authority to specify information required to be submitted to the Commission in, for example, registration statements and periodic reports. To encourage accurate filing of interactive data without fear of making good faith errors, the Commission is proposing Rule 406. Although not expressly addressed in proposed Rule 406, the Commission would have the authority to enforce compliance with proposed Rule 405 because it has the authority to enforce compliance with any of its rules.

We believe these liability-related provisions strike an appropriate balance between avoiding unnecessary cost and expense and encouraging accuracy in light of the nature of the interactive data to which they apply and the additional accuracy incentives that may be provided by our validation software and market forces.

Other aspects of the proposal would supplement the Commission's objective of supplying reliable and accurate information to investors. First, the financial statements and other disclosures in the traditional format part of the related official filing with which the interactive data appear as an exhibit would continue to be subject to the usual liability provisions of the federal securities laws. For example, the traditional format part of the related official filing would continue to be subject to section 10(b) and Rule 10b-5

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of the Exchange Act and, in the appropriate circumstance, to section 11 of the Securities Act. Form 10-K would continue to be considered filed, while the information required by Items 1, 2, and 3 of Form 10-Q would continue to be considered furnished for purposes of section 18 of the Exchange Act.

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17 CFR 240.10b-5.

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General Instruction F. Form 10-Q: “Filed Status of Information Presented.”

Second, we propose that the usual liability provisions of the federal securities laws also would apply to human-readable interactive data that is identical in all material respects to the corresponding data in the traditional format filing

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as displayed by a viewer that the Commission provides. Under these circumstances, for example, a Form 10-K's viewable interactive data would be deemed filed and subject to section 18 of the Exchange Act, consistent with the liability applicable to the corresponding part of the traditional format Form 10-K, and a Form 10-Q's viewable interactive data would be deemed furnished and not subject to section 18 of the Exchange Act, consistent with the liability applicable to the corresponding part of the traditional format Form 10-Q. And a Securities Act registration statement's viewable interactive data as displayed through software available on the Commission's Web site and identical in all material respects to the corresponding data in the traditional

format filing would be subject to section 11 of the Securities Act. In that regard, such viewable interactive data disclosure therefore would have exactly the same potential liability as the corresponding portions of the traditional format part of the filing. We believe applying liability for such viewable interactive data displayed through software on the Commission's Web site would further investors' interests in filers providing accurate interactive data under our proposal.

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The human-readable interactive data would be identical to the corresponding data in the traditional format filing if the filer complied with the interactive data tagging requirements of proposed Rule 405.

We expect that each filer would be in the best position to determine the appropriate manner in which to assure the accuracy of the interactive data it would be required to submit and the viewable interactive data that would result. We also expect that software providers and other private sector third parties would help develop procedures and tools to help in that regard. As an adjunct to those private sector efforts, we plan to make available to filers, on an optional basis, the opportunity to help assure accuracy by making a test submission with the Commission or using software we provide to create viewable interactive data.

A filer would have the opportunity to submit an interactive data exhibit as part of a test submission just as a filer can make test submissions today.

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The validation system would process the test submission with an interactive data exhibit similar to the way it processes test submissions today. If it found an error, it would advise the filer of the nature of the error and as to whether the error was major or minor. As occurs in the voluntary program, a major error in an interactive data exhibit that was part of a live filing would cause the exhibit to be held in suspense in the electronic filing system while the rest of the filing would be accepted and disseminated if there were no major errors outside of the interactive data exhibit. If that were to happen, the filer would need to revise the interactive data exhibit to eliminate the major error and submit the exhibit as an amendment to the filing to which it is intended to appear as an exhibit. A minor error in an interactive data exhibit that was part of a live filing would not prevent the interactive data exhibit from being accepted and disseminated together with the rest of the filing if there were no major errors in the rest of the filing. We believe it would be appropriate to accept and disseminate a filing without the interactive data exhibit submitted with it if only the exhibit has a major error, in order to disseminate at least as much information as timely as would have been disseminated were there no interactive data requirement.

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The EDGAR Filer Manual addresses test submissions primarily at Section 6.6.5 of Volume II.

We are not proposing that filers be required to involve third parties such as auditors or consultants in the creation of the interactive data provided as an exhibit to a filer's periodic reports or registration statements, including assurance. We are taking this approach after considering various factors, including:

• The availability of a comprehensive list of tags for U.S. financial statement reporting from which appropriate tags can be selected, thus reducing a filer's need to develop new elements;

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We expect the same would be true with respect to the tags for reporting under IFRS as issued by the IASB.

• The availability of user-friendly software with which to create the interactive data file;

• The multi-year phase-in for each filer, the first year of which entails the relatively straightforward process of tagging face financial statements, as was done during the voluntary program, and block tagging footnotes and financial statement schedules;

• The availability of interactive data technology specifications, and of other XBRL U.S., and XBRL International resources for preparers of tagged data;

• The advances in rendering/presentation software and validation tools for use by preparers of tagged data that can identify the existence of certain tagging errors;

• The expectation that preparers of tagged data will take the initiative to develop sufficient internal review procedures to promote accurate and consistent tagging; and

• The filer's and preparer's liability for the accuracy of the traditional format version of the financial statements that will also be provided using the interactive data format.

Request for Comment:

• Do the proposed rules strike an appropriate balance to promote the availability of reliable interactive data without imposing undue additional costs and burdens? If not, what balance of liability will best encourage filers to prepare reliable interactive data without subjecting them to undue fear of mis-tagging? How does the “extensibility” of interactive data,

i.e.

, a filer's ability to customize the standard list of tags to correspond more closely to the company's particular financial information, affect your answer?

• What are the risks to investors under the proposed liability rules? Will investors still find the interactive data sufficiently reliable to use it?

• Should interactive data be subject to liability if a filer does not tag its financial information in a manner consistent with the standards approved by the Commission, irrespective of the filer's good faith effort? If the answer is yes, what should the filer's liability be for such errors, and should liability attach even if the mistake is inadvertent? What if the error is the result of negligent tagging practices, but there was no affirmative intent to mislead?

• If interactive data are subject to liability as proposed, is it necessary or appropriate for viewable interactive data to be subject to liability as and to the extent proposed or otherwise? Should the answer depend on the degree of liability to which the interactive data are subject? Should viewable interactive data be subject to liability in a manner or to an extent different than as proposed?

• Should any or all interactive data be encompassed within the scope of officer certifications? Is there any reason to treat interactive data differently from traditional format data in this respect?

• Should any or all interactive data be deemed filed for purposes of Section 34(b) of the Investment Company Act and, if so, should it be regardless of compliance with proposed rule 405 or a filer's good faith and reasonable efforts to comply?

• Should the liability for interactive data be exactly the same as it is for XBRL-Related Documents under the voluntary program?

• Would software be commercially available and reasonably accessible to all required interactive data filers, investors and analysts that would make detection of tagging errors, such as the use of inappropriate tags or improper extensions, easy and cost-effective? If so, would such monitoring by investors and analysts likely discourage the improper use of extensions or negligent conduct in the tagging process?

• Would the use of software to search for and detect any differences between a filer's interactive data and the Commission-approved interactive data tags, financial statement captions, and other attributes depend on the degree of analyst coverage or investor interest?

• Should a rule expressly state that the Commission retains the authority to enforce compliance with proposed Rule 405?

• Should we require the involvement of auditors, consultants, or other third parties in the tagging of data? If assurance should be required, what should be its scope, and should any such requirement be phased in?

• Should we phase in increasing levels of liability over time? Are the proposed limitations on liability necessary and appropriate at the outset, for example, the first year that a company is subject to the interactive data requirement, but inappropriate at a later time? Should we require that interactive data be subject to more liability later?

• Should the validation software, as contemplated, cause an interactive data exhibit with a major error to be held in suspense in the electronic filing system while the rest of the filing would be accepted and disseminated if there were no major errors outside of the interactive data exhibit? In that case, should the validation software hold the entire filing in suspense or reject or accept the entire filing or interactive data exhibit?

3. Integration of Interactive Data and Business Information Processing

As the technology associated with interactive data improves, issuers may integrate interactive data technology into their business information processing. When this integration occurs, the preparation of financial statements may become interdependent with the interactive data tagging process. As this occurs, an issuer and its auditor should evaluate these changes in the context of their reporting on internal control over financial reporting.

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However, the evaluation would not require an auditor to separately report on an issuer's interactive data provided as an exhibit to a filers' reports or registration statements.

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Exchange Act Rules 13a-15(f) [17 CFR 240.13a-15(f)] and 15d-15(f) [17 CFR 240.15d-15(f)] define the term “internal control over financial reporting,” in general, as a process designed by or under the supervision of specified persons and effected by the issuer's board of directors, management and other personnel “to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with [GAAP] and includes [specified] policies and procedures.” Rules 13a-15 and 15d-15 generally require specified issuers to maintain internal control over financial reporting and require the management of those issuers to evaluate the effectiveness of the issuer's internal control over financial reporting. In addition, the certifications specified by Item 601(b)(31) of Regulation S-K and Instruction B(e) of Form 20-F that relate to these specified issuers generally must address the establishment, maintenance, design, changes in and deficiencies and material weaknesses related to the issuer's internal control over financial reporting.

SAS 8 (AU Section 550) was issued in December 1975 to address an auditor's consideration of information in addition to audited financial statements and the independent auditor's report on the audited financial statements included in documents that are published by an entity (

e.g.

, an annual periodic report). Similarly, paragraph 18(f) of SAS 100 (AU Section 722) addresses an auditor's consideration of other information that accompanies interim financial statements included in quarterly periodic reports. With respect to registration statements, SAS 37 (AU Section 711) was issued in April 1981 to address the auditor's responsibilities in connection with filings under the federal securities statutes. With respect to our proposed rules, an auditor would not be required to apply AU Sections 550, 722, or 711 to the interactive data provided as an exhibit in a company's reports or registration statements, or to the viewable interactive data.

4. Continued Traditional Format and Interactive Data Cautionary Disclosure

The proposed rules would not eliminate or alter existing filing requirements that financial statements and financial statement schedules be filed in traditional format. We believe investors and analysts may wish to use these electronic formats to obtain an electronic or printed copy of the entire registration statement or Form 10-Q, 10-K, or 20-F, either in addition to or instead of disclosure formatted using interactive data. In addition, we propose to no longer require or permit the cautionary disclosure from the voluntary program for required interactive data, which states that investors should not rely on the interactive data information in making investment decisions. We believe that such language would be inconsistent with the proposal that interactive data be part of the related registration statement or report.

Request for comment:

• Should the proposed rules eliminate the requirement that the financial information be submitted in traditional format, in addition to interactive data format? Should cautionary language from the voluntary program be eliminated or modified and, if not, why not?

D. Required Items

1. Data Tags

To comply with the proposed rules, filers using U.S. GAAP would be required to tag their financial information using the most recent list of tags for U.S. financial statement reporting, as released by XBRL U.S. and required by the EDGAR Filer Manual.

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Each company would be required to use one or more of the five standard industry-specific lists identified in the EDGAR Filer Manual, as is appropriate for its business.

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The latest list of data tags for U.S. financial statement reporting was released on April 28, 2008 and is available at

http://xbrl.us/pages/us-gaap.aspx

. See XBRL U.S. Press Release, XBRL U.S. Finalizes U.S. GAAP Taxonomies and Preparers Guide with Delivery to SEC (May 2, 2008).

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We note that the vast majority of companies would fall under the Commercial and Industrial industry group. Additional guidance on the industry-specific lists is expected to appear in the EDGAR Filer Manual.

Regular updates to the list of tags for U.S. financial statement reporting will likely be posted annually and be available for downloading. In addition, interim extensions may be made available for download in order to reflect changes in accounting and reporting standards. To provide companies sufficient time to become familiar with any such updates, we anticipate giving advance notice before requiring use of an updated list of tags. Based on experience to date with the most recent update to the list of tags, we believe that it is sufficiently developed to support the interactive data disclosure requirements in the proposed rules.

Similarly, filers using IFRS as issued by the IASB would be required to tag their financial information using the most recent list of tags for international financial reporting, as released by the IASCF and specified in the EDGAR Filer Manual.

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The International Accounting Standards Committee Foundation has been developing the IFRS financial reporting tag list since 2002. See

http://www.iasb.org/xbrl/index.html.

The 2008 version of the IFRS financial reporting tag list is planned to be finalized in June 2008 and updated annually for changes in accounting and reporting standards.

One of the principal benefits of interactive data is its extensibility—that is, the ability to add to the standard list of tags in order to accommodate unique circumstances in a filer's particular disclosures. The use of customized tags, however, may also serve to reduce the ability of users to compare similar information across companies. In order to promote comparability across companies, our proposed rules would limit the use of extensions to circumstances where the appropriate financial statement element does not exist in the standard list of tags. We are also proposing that wherever possible, preparers change the label for a financial statement element that exists in the standard list of tags, instead of creating a new customized tag. For example, the standard list of tags for U.S. GAAP includes the financial statement element “gross profit.” The list does not include “gross margin,” because this is definitionally the same

as “gross profit”—both are generally used to mean “excess of revenues over the cost of revenues.” A filer using the label “gross margin” in its income statement should use the tag corresponding to the financial statement element “gross profit.” It can then change the label for this item on the standard list to “gross margin.”

Under Item 401(c) of Regulation S-T, voluntary filers' interactive data elements must reflect the same information as the corresponding traditional format elements. Further, no data element can be “changed, deleted or summarized” in the interactive data file. We do not propose to change this equivalency standard for financial statements provided in interactive data format as required by the proposed rules.

Request for Comment:

• Is our focus on comparability appropriate? Instead of stressing ease of financial statement comparability, should our rules permit greater use of customized data tags?

• Should we codify any other principles to encourage comparability without unduly reducing the extensibility of interactive data?

2. Regulation S-T and the EDGAR Filer Manual

We propose to require that filers provide interactive data in the form of exhibits to the related registration statements or reports.

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Interactive data would be required to comply with our Regulation S-T

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and the EDGAR Filer Manual. The EDGAR Filer Manual is available on our Web site. It includes technical information for making electronic filings to the Commission. Volume II of this manual includes guidance on the preparation, submission, and validation of interactive data submitted under the voluntary program. Before adoption of our proposed rules, we plan to update our manual with additional instructions for filers of interactive data.

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The requirement to submit XBRL data as an exhibit would appear in Item 601(b)(101) of Regulation S-K and Item 101 of the Instructions to Exhibits of Form 20-F.

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Proposed Rule 405 of Regulation S-T would directly set forth the basic tagging and posting requirements for the XBRL data and require compliance with the EDGAR Filer Manual. Consistent with proposed Rule 405, the EDGAR Filer Manual would contain the detailed tagging requirements.

In addition to both Regulation S-T, which would include the rules we are proposing, and the instructions in our EDGAR Filer Manual, filers may access other sources for guidance in tagging their financial information. These include the XBRL U.S. Preparers Guide; user guidance accompanying tagging software; and financial printers and other service providers. New software and other forms of third-party support for tagging financial statements using interactive data are also becoming widely available.

Request for Comment:

• What specific guidance should be provided in Regulation S-T for interactive data filers?

• Does the XBRL U.S. Preparers Guide provide useful guidance to promote consistent tagging between periods and among various companies?

• Is the user guidance accompanying tagging software, and the guidance available from financial printers and other service providers helpful for filers to tag their financial statements? What other sources of guidance might prove useful?

E. Consequences of Non-Compliance and Hardship Exemption

We propose that if a filer does not provide the required interactive data submission, or post the interactive data on the company Web site, by the required due date, the filer would be unable to use short form registration statements on Forms S-3, F-3, or S-8.

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This disqualification would last for so long as the interactive data are not provided. During the period of disqualification, the filer would be deemed not to have available adequate current public information for purposes of the resale exemption safe harbor provided by Rule 144.

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Once a filer complies with the interactive data submission and posting requirements—provided it previously filed its financial statement information in traditional format on a timely basis—it would be deemed to have timely filed all of its periodic reports.

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Forms S-3, F-3, and S-8 are regarded as short form registration statements because they enable eligible issuers to register securities for offer and sale under the Securities Act by providing information in a more streamlined manner than they otherwise could. In order to be eligible to use these short forms, an issuer must meet specified requirements, including being current in its filing of Exchange Act reports. In general, an issuer is current if it has filed all of its required Exchange Reports for the twelve months before filing the registration statement. Filers that are unable to use short form registration also are unable to incorporate by reference certain information into Forms S-4 and F-4. See Item 12 of Form S-4 and F-4.

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Rule 144 under the Securities Act creates a safe harbor for the resale of securities under the exemption from Securities Act registration set forth in Section 4(1) of the Securities Act [15 U.S.C. 77d(1)]. In order for some resales of securities to comply with Rule 144, the issuer of the securities must be deemed to have adequate current public information available as specified by Rule 144(c)(1) [17 CFR 230.144(c)(1)]. Rule 144(c)(1) deems an issuer required to file reports under the Exchange Act to have adequate public information available if it is current in its filing of Exchange Act periodic reports. In general, an issuer would be deemed current for this purpose if it has filed all of its required Exchange Act periodic reports for the twelve months before the sale of securities for which the Rule 144 safe harbor is sought.

We believe that precluding the use of short form registration statements during any period of failure to comply would appropriately direct attention to the proposed interactive data reporting requirement. And allowing filers to reestablish their current and timely status by later complying with the interactive data reporting requirement would strike a reasonable balance of negative consequences and recognition that the company's traditional format reports would have been filed.

Consistent with the treatment of other applicable reporting obligations, we propose to provide hardship exemptions for the inability to timely electronically submit interactive data. Rule 201 under Regulation S-T provides for temporary hardship exemptions. Rule 202 under Regulation S-T provides for continuing hardship exemptions.

Rule 201 generally provides a temporary hardship exemption from electronic submission of information, without staff or Commission action, when a filer experiences unanticipated technical difficulties that prevent timely preparation and submission of an electronic filing. The temporary hardship exemption permits the filer to initially submit the information in paper but requires the filer to submit a confirming electronic copy of the information within six business days of filing the information in paper. Failure to file the confirming electronic copy by the end of that period results in short form ineligibility.

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Rule 201 of Regulation S-T.

We recognize the inherently electronic nature of interactive data. In light of this and the consequences to an issuer of not timely submitting interactive data, we propose to revise Rule 201 to provide a temporary hardship exemption. This exemption would apply without staff or Commission action if a filer experiences unanticipated technical difficulties that prevent the timely preparation and electronic submission of interactive data. The proposed temporary hardship exemption would cause the filer to be deemed current for purposes of incorporation by reference, short form registration, and Rule 144 for a period of up to six business days from the date the interactive data were required to be

submitted.

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If the filer did not electronically submit the interactive data by the end of that period, from the seventh business day forward the filer would not be deemed current until it did electronically submit the interactive data.

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The information would not have to be filed in paper first, as this would be meaningless in the case of interactive data.

Rule 202 permits a filer to apply in writing for a continuing hardship exemption if information otherwise required to be submitted in electronic format cannot be so filed without undue burden or expense. If the staff, through authority delegated from the Commission, grants the request, the filer must file the information in paper by the applicable due date and file a confirming electronic copy if and when specified in the grant of the request.

We propose to revise Rule 202 to provide that a grant of a continuing hardship exemption for interactive data would not require a paper submission and that filer would be deemed current until the end of the period for which the exemption is granted. Rule 202 also would provide that, if the exemption was granted for only a specified period rather than indefinitely, the filer would be deemed current up to the end of that period. If the filer did not electronically submit the interactive data by the end of that period, from the next business day forward the filer would not be deemed current until it did electronically submit the interactive data. Similarly, we propose to revise Rule 202 to provide an essentially mirror-image exemption from the proposed requirement for an issuer that has a corporate Web site to post the interactive data on its Web site.

Request for Comment:

• Are the consequences for failure to comply with the interactive data submission requirements appropriate?

• Should the proposed rules treat companies that do not comply as not current? Should the proposed rules provide similar treatment whether the failure to comply relates to interactive data submission, or to corporate Web site posting?

• Alternatively, should the proposed rules go further and treat companies that do not comply as not timely?

• Should the proposed rules treat a filer's compliance with interactive data reporting as an express condition to the filer's registration statement's being declared effective?

• Does our proposed rule strike the correct balance of positive and negative consequences when a filer meets its requirements to provide traditional format documents but fails to provide interactive data?

• Do commenters believe that the proposed revisions to the hardship exemptions would be sufficient to cover unanticipated technical difficulties associated with interactive data? If insufficient, why would they be insufficient and how should the hardship exemptions be tailored to address technical difficulties associated with interactive data? For example, would six business days be an appropriate period for the temporary hardship exemption to apply? If not, would a shorter or longer period be appropriate, and why?

III. General Request for Comments

We request comment on the specific issues we discuss in this release, and on any other approaches or issues that we should consider in connection with the proposed amendments. We seek comment from any interested persons, including those required to file information with us on the EDGAR system, as well as investors, disseminators of EDGAR data, industry analysts, EDGAR filing agents, and any other members of the public.

IV. Paperwork Reduction Act

A. Background

The proposed amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995, or PRA.

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The purpose of the proposed amendments is to make financial information easier for investors to analyze and to assist issuers in automating regulatory filings and business information processing. We are submitting the proposed amendments to the Office of Management and Budget (OMB), for review in accordance with the PRA.

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An agency may not conduct or sponsor, and a person is not required to respond to, an information collection unless it displays a currently valid OMB control number.

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44 U.S.C. 3501

et seq.

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44 U.S.C. 3507(d) and 5 CFR 1320.11.

The title for the new collection of information the proposed amendments would establish is “Interactive Data” (OMB Control No. 3235-XXXX). This collection of information relates to already existing regulations and forms adopted under the Securities Act and the Exchange Act that set forth financial disclosure requirements for registration statements and periodic reports. The proposed amendments would require issuers to submit specified financial information to the Commission and post it on their corporate Web sites, if any, in interactive data form. The specified financial information already is and would continue to be required to be submitted to the Commission in traditional format under existing registration statement and periodic report requirements. Compliance with the proposed amendments would be mandatory according to the phase-in schedule previously described.

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Issuers not yet phased-in, however, could comply voluntarily with the proposed amendments. The information required to be submitted would not be kept confidential by the Commission.

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See Part II.B.

B. Reporting and Cost Burden Estimates

1. Registration Statement and Periodic Reporting

Form S-1 (OMB Control No. 3235-0065), Form S-3 (OMB Control No. 3235-0073), Form S-4 (OMB Control No. 3235-0324), and Form S-11 (OMB Control No. 3235-0067) prescribe information that a filer must disclose to register certain offers and sales of securities under the Securities Act. Form F-1 (OMB Control No. 3235-0258), Form F-3 (OMB Control No. 3235-0256) and Form F-4 (OMB Control No. 3235-0325) prescribe information that a foreign private issuer must disclose to register certain offers and sales of securities under the Securities Act. Form 10-K (OMB Control No. 3235-0063) prescribes information that a filer must disclose annually to the market about its business. Form 10-Q (OMB Control No. 3235-0070) prescribes information that a filer must disclose quarterly to the market about its business. Form 20-F (OMB Control No. 3235-0288) is used by a foreign private issuer both to register a class of securities under the Exchange Act as well as to provide its annual report required under the Exchange Act.

The information required by the new collection information we propose, would correspond to specified financial information now required by these forms and would be required to appear in exhibits to these forms and on filers' corporate Web sites. The compliance burden estimates for the proposed collection of information are based on the proposed phase-in, beginning with approximately 500 large accelerated filers subject to the rules in the first year, followed by approximately 1,300 more filers in year two and approximately 10,200 more filers in year three.

Based on estimates from the voluntary filer participant questionnaire results,

we estimate that interactive data filers would incur the following average:

• Internal burden hours to tag the face financials:

• 125 hours for the first filing under the proposed requirements; and

• 17 hours for each subsequent filing.

• Out-of-pocket cost for software and filing agent services: $6,140 for each filing.

Based on qualitative assessments of time, we estimate that interactive data filers would incur the following average internal burden hours:

• Footnotes

• 7 hours to block tag for each filing made during the first year under the proposed requirements;

• 100 hours to detail tag for the first filing made in the second year under the proposed requirements; and

• 50 hours to detail tag for each subsequent filing.

• Schedules

• 1 hour to block tag for each filing made during the first year under the proposed requirements;

• 10 hours to detail tag for the first filing made in the second year under the proposed requirements; and

• 5 hours to detail tag for each subsequent filing.

• Web site Posting: 4 hours to post all interactive data subm

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