Promoting iXBRL for Enhanced SEC Data Collection: A Move By XBRL US

In a move to improve transparency and efficiency in financial reporting, XBRL US recently submitted a comment letter to the Securities and Exchange Commission (SEC). It advocated for significant changes in how nationally recognized statistical rating organizations (NRSROs) prepare and submit their annual financial and other reports.

The recommendations include using Inline XBRL (iXBRL) for these reports under Rule 17g-3. This shift intends to comply with the new Financial Data Transparency Act (FDTA) standards and transform the accessibility, consistency, and comparability of financial data.

The following blog delves into the specifics of XBRL US’s recommendations in the comment letter. Continue reading to find out.

Recommendations by XBRL US for SEC Data Collection

The advocacy does not end with simply adopting a new format. XBRL US is urging the SEC to mandate this data format for all Form NRSRO filings and supporting exhibits. FDTA came into law in 2022 and will be fully implemented within the next three years. The final rules mandate establishing data standards that must:

Incorporate common identifiers for legal entities
Be open and nonproprietary
Ensure data is searchable and machine-readable
Document financial reporting requirements in machine-readable taxonomies
Include standards developed and maintained by voluntary consensus standards bodies
Align with relevant accounting and reporting principles

XBRL US sees this as an ideal opportunity for the SEC to streamline compliance and ensure that all NRSRO documents under Rule 17g-3 follow this structured format.

Given that NRSROs are already familiar with the XBRL standard, this transition is likely to be smooth, allowing for more efficient management and analysis of large data volumes.

Suggested Changes in Credit Rating Actions

Besides the adoption of iXBRL, XBRL US proposes other adjustments to improve how credit rating actions are reported. These changes are as follows:

1.Related to Rule 17g-7:

XBRL US proposes a shift from the present XBRL-XML format to XBRL-CSV for credit rating actions, which is better suited to the large volume of such data. This update would make it easier for data users to obtain information while also simplifying the preparation process for NRSROs.
It suggests that credit rating action data be submitted through the SEC’s EDGAR System rather than being posted on the company’s website, as is currently done. This would give data users a complete history of submissions, prevent filers from changing the data after submission, and make it much easier to find and retrieve the data.
The embargo period for credit rating submissions should be reduced to 30 days to allow quick access to important financial information. This will also make the reported data more valuable to the end users.

2.Related to Rule 17 g-1:

Form NRSRO, especially Exhibit 1, which includes high-volume transition matrices, is required to be prepared in the XBRL-CSV format. This format is suitable for handling large datasets efficiently.

Bottom Line

XBRL US’ advocacy for the adoption of iXBRL and the proposed improvements to the data reporting practices is a significant step forward in financial transparency. By aligning data standards with the Financial Data Transparency Act and transitioning to more efficient data formats, XBRL US aims to enhance data quality and access. Once these changes are adopted, they will improve the reliability and utility of financial data for everyone, from regulators to investors.

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