On December 23, 2022, President Biden signed into law H.R. 7776, the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 which includes TITLE LVIII, the Financial Data Transparency Act (FDTA). The FDTA calls for the use of data standards by member agencies of the U.S. Financial Stability Oversight Council, including U.S. Treasury, the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency, the Bureau of Consumer Financial Protection, the Federal Reserve System, the National Credit Union Administration, and the Federal Housing Finance Agency. The FDTA also includes a requirement for standardized data related to municipal securities to be implemented by the SEC. Data standards to be established under the final rules shall include common identifiers, be open and nonproprietary, and render data searchable and machine-readable.
XBRL US, as a nonprofit standards consortium, supports the use of data standards called for in the FDTA, as the most effective method to improve efficiencies in data preparation, collection, and analysis, for government and business. XBRL is a free and open data standard used in over 200 implementations worldwide, for reporting by public and private companies, and banks, as well as government agencies. The XBRL standard is used in the United States by entities reporting to the SEC, the FDIC, and the Federal Energy Regulatory Commission.
“We appreciate the work of many in Congress to make this legislation a reality. Requiring standardized data and identifiers across government agencies will reduce costs, increase transparency, improve the usability and timeliness of information, and will make it easier and less expensive for regulators to revise reporting requirements when needed,” said Campbell Pryde, CEO of XBRL US, “We look forward to assisting government agencies in the successful implementation of the FDTA.”
XBRL US and the Center for Local, State and Urban Policy (CLOSUP) at the University of Michigan’s Ford School of Public Policy have created open data standards to support local government entity reporting for general purpose governments, as well as some categories of special districts. These financial data standards can be leveraged by municipal bond issuers in support of the FDTA.
“Making government financial data open and accessible to all is the right thing to do, and it is long overdue”, said Stephanie Leiser, Fiscal Health Project Lead at the University of Michigan CLOSUP, “Financial transparency is absolutely essential to maintaining trust between governments and the public. Equally important is giving governments the resources to get the most value out of the data they produce.”
“If the SEC implements government financial reporting standards effectively, it could produce significant cost savings for issuers in the $4 trillion bond market benefiting taxpayers who ultimately pay debt service costs,” said Marc Joffe, Chair of the XBRL US Standard Government Reporting working group. “By commoditizing financial data and replacing proprietary instrument identifiers, the SEC could greatly simplify the task of analyzing municipal securities, opening the door to new categories of investors.”
XBRL US and CLOSUP are conducting a free webinar on January 24, at 3:00 PM ET on the data standards available and how governments can benefit. Register here: https://xbrl.us/events/230124/