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LEARN > Financial Data Transparency Hub > FDTA Proposed Joint Rule Comment Playbook

FDTA Proposed Joint Rule Comment Playbook

The Financial Data Transparency (FDTA) Act of 2022 requires the nine covered financial regulatory agencies within the Financial Stability Oversight Council (FSOC) issue a joint rule establishing common identifiers (by the end of year 2024). Within the two year period, the joint rulemaking body will post the proposed joint rule on data standards and identifiers, making the rule open to public comment before the final rule is published. The proposed joint rule is the focus of this playbook. 

The Data Foundation FDTA Proposed Joint Rule Comment Playbook provides

  • Context - 
    • Overview of the FDTA original phrasing 
    • Summary of the proposed joint rule 
    • Comment period and process
  • Call to Action - 
    • The Who? What? Why? How? of useful comments
    • Examples
  • Commentary -
    • Data Foundation’s initial response to the proposed rule

The Data Foundation recommends you use this resource to help orient you as you build your understanding of the proposed rule, but that you use the published proposed rule itself for a full understanding of the proposed standards and identifiers for your response and comments.


Download Comment Playbook: FDTA Proposed Joint Rule


Context: The Financial Data Transparency Act of 2022

 

The bipartisan Financial Data Transparency Act (FDTA) of 2022 amends securities and banking laws to make information reported to financial regulators electronically searchable and enable the development of regulatory technologies and artificial intelligence applications. The ultimate goal of the law (Title 58 of the NDAA FY23)  is to harmonize and reduce the private sector’s regulatory compliance burden while enhancing transparency and accountability. 

The FDTA requires covered agencies to develop common data standards governing the  information financial institutions report to each agency as well as data collected from member agencies on behalf of the Financial Stability Oversight Council (FSOC). 

The FDTA requires the covered agencies to establish “common identifiers” for information reported to covered regulatory agencies, which could include transactions and financial products/instruments. The law specifically requires the adoption of a common, non-proprietary legal entity identifier for regulated organizations. The entity identifier must be available under an “open license,” which in existing law (per 44 U.S.C. § 3502(21)) means “a legal guarantee that a data asset is made available - at no cost to the public; and with no restrictions on copying, publishing, distributing, transmitting, citing, or adapting such asset.” 

The FDTA requires each covered agency to publish collected information, as appropriate, as “open data.” The FDTA reiterates the requirement for agencies to make disclosable public data assets available as “open Government Data asset[s]” (per 44 U.S.C. § 3502(20)). This assures the data assets published under the regulatory authorities of the FDTA’s covered agencies are presented in a manner consistent with existing government-wide data policy (“machine-readable,” “open license,” and appropriate “metadata”). The FDTA directs that regulatory agencies make these data sets available for bulk download in a “human- readable format.”

The data standards require that data be rendered fully searchable – which is facilitated by the requirement to be “machine-readable.” “Machine readable” data are “data in a format that can be easily processed by a computer without human intervention while ensuring no semantic meaning is lost” (per 44 U.S.C. § 3502(18)). The data will be made available under an “open license” format, which will reduce barriers for industry, academia, and others to incorporate or reuse the data standards and information definitions into systems and processes.

The FDTA defines requirements for common data standards that build upon industry and technology best practices, account for lessons learned from existing federal regulatory standard setting, and incorporate relevant federal policy and international standards definitions. 

In establishing data standards, the FDTA requires the heads of covered agencies to consult with each other to promote interoperability of financial regulatory data across members of the Financial Stability Oversight Council. The covered agencies include the Department of the Treasury’s Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Consumer Financial Protection Bureau, Federal Housing Finance Agency, Commodity Futures Trading Commission, Securities and Exchange Commission, and Department of the Treasury.


Context: Summary of the joint proposed rule - Financial Data Transparency Act Joint Standards

 

The nine covered agencies invite public comments on the joint proposed rule, referred to collectively in the proposed rule as “the Agencies.” The Agencies request comments on each item listed below and note that comments accompanied by data and analysis with a consideration of future use and updates will be “of particular assistance.”

The “Joint Proposed Rule” begins with a definition of “Collections of Information,” as is defined by the Paperwork Reduction Act of 1995 (PRA); followed by subsections on specific identifiers proposed by the Agencies, including:

  • The International Organization for Standardardization (ISO) 17442-1:2020, Financial Services - Legal Entity Identifier (LEI) 
  • ISO 4914, Financial Services - Unique Product Identifier (UPI)
  • ISO identifiers for date fields, country codes, currency codes, 
  • An identifier for financial instruments, the Financial Instrument Global Identifier (FIGI)
  • U.S. Postal Service Abbreviations for identification of a “State” of the United States of America
  • Census Tract identifier, a commonly used geocoding standard 

As required by the FDTA, the Agencies are required to consider data transmission and how to ensure semantic meaning follows as data are shared. Schemas and taxonomies “can be used to validate and explain the data,” as the proposed rule describes. 

However, the Agencies do not recommend a single path forward for which schema or taxonomies to adopt. Rather, the proposed rule states that the Agencies will “establish a joint standard that refers to a list of properties rather than any specific data transmission schema and taxonomy.” The list of properties must satisfy the definitions outlined in the FDTA:  

  • Render data fully searchable and machine-readable;
  • Enable high quality data through schemas, with accompanying metadata documented in machine-readable taxonomy or ontology models, which clearly define the semantic meaning of the data, as defined by the underlying regulatory information collection requirements, as appropriate; 
  • Ensure that a data element or data asset that exists to satisfy an underlying regulatory information collection requirement be consistently identified as such in associated machine-readable metadata; and 
  • Be nonproprietary or available under an open license.

Following the review of the Agencies, “XML Schema Definition (XSD), eXtensible Business Reporting Language (XBRL) Taxonomy, and JSON Schema are currently available schema and taxonomy formats that have these properties,” with the intent that such schema and taxonomy formats will be interoperable and maintain flexibility for new open-source file formats as they are developed. 

Transitioning to accounting and reporting taxonomies, the Agencies determined that it would not be appropriate to establish specific taxonomies, but do invite comment on use of the term “taxonomy” and whether the Agencies should define the term by rule, and if so, how the term should be defined. Instead, the proposed rule recommends that agencies using accounting and reporting taxonomies, like “FFIEC Consolidated Reports of Condition and Income (FFIEC Call Report) Taxonomy, the Financial Accounting Board’s Generally Accepted Accounting Principles (U.S. GAAP) Financial Reporting Taxonomy, and the International Accounting Standards Board’s International Financial Reporting Standards Taxonomy,” continue to use applicable taxonomies for information collected. While this is the route the Agencies recommend continuing down, comments are requested on:

  • Whether to establish a joint standard for taxonomies based on certain properties, and if so, the properties that should be set forth in the joint standard; OR
  • Whether to establish specific taxonomies, and if so, the taxonomies that should be set forth in the joint standard (such as those listed above or other specific taxonomies). 

In connection with the second option immediately above, Agencies would “clarify in the final rule that use of one or more data element definitions from a taxonomy that is established as a joint standard would not preclude an Agencies from using data element definitions from another taxonomy or using additional taxonomies, including Agency-specific taxonomies, for the same collection of information.” Agencies would also be able to modify and tailor the joint standard taxonomy as it applies to an Agency’s mission, associated reporting entities, and applicable laws. The Agencies also invite comments on this two-fold approach and the feasibility of the flexibility offered, as well as the use of the terms "data transmission format" and "schema and taxonomy format."

The Agencies request a consideration of the following general questions in comment responses: 

  • Are there other data or semantic standards, data transmission formats, or schemas and taxonomies beyond those discussed in this preamble that the Agencies should consider in connection with potential future updates to the joint rule?
    • For example, if the Agencies were to update the joint rule in the future, should the Agencies consider adopting joint standards that help identify specific transactions for collections of information that gather transaction-level information?
  • Should the Agencies consider data standards that enable automatic verification of the identities of those submitting information? 
  • Several agencies, including the OCC, FDIC, NCUA, CFPB, and SEC, invite comments on their analysis of the economic impact on small entities. 

The proposed rule and questions provide opportunities for stakeholders to offer input on various aspects of the proposed rule, from technical details to potential economic impacts.


Context: Comment Period and Process

 

The comment period will be open for 60 days. Feedback is due by October 21, 2024. 

Each of the covered agencies provide specifics on how to submit comments within the preamble of the proposed rule, most of which will receive comments through the Federal eRulemaking Portal. Submissions must specifically address the intended agency for comment and reference the corresponding docket number (the docket ID will differ for each agency), regardless of the method of transmission for submitted comments. 

Those submitting comments should remember that all comments will be publicly available.


Call to Action: The Who? What? Why? How? of useful comments

 

Who should provide comments? All stakeholders across the data community. A diversity of stakeholders responding to the proposed rule will also represent different needs and uses of the data reported to the covered agencies. 

What should be included in the comments? While the Data Foundation has our own principles for supporting high quality, reliable, and useable data, we recommend that respondents consider the following questions, some of which are included in SEC Commissioner Hester Peirce’s response to the proposed rule, as well as listed by the Agencies in their “General Questions”:

  • Is the current scope of the proposed rule useful to harmonize information across federal financial regulatory agencies? Why or why not? 
  • Does the proposal strike the right balance between principles and prescription? If not, how should the approach change? (Peirce)
  • How will standardization of data reported to the Agencies impact your work flow? Data validation, entity resolution, market analysis, etc.

What is good about the rule? What did the Agencies get right? Where would you suggest change and why are your recommended changes the right way to go?  

Why submit comments? All comments will be read and can have meaningful impacts that improve the current proposed rule, which is also why the Data Foundation and rule-making bodies encourage feedback across stakeholder communities. 

How to submit comments? Most of the Agencies will accept submissions via the Federal eRulemaking Portal. However, commenters should review the requirements of specific agencies as they submit. Commenters should also consider submitting to multiple agencies. 

In your comments, be specific and support your comments with evidence, examples, and figures where appropriate. Use simple language that is easy to understand.

Please note that all comments will be publicly available. 

Example of comments and responses:


Commentary: The Data Foundation’s initial response

 

The Data Foundation applauds the publication of a Joint Notice of Proposed Rulemaking from the federal financial regulatory community implementing provisions of the bipartisan Financial Data Transparency Act (FDTA) of 2022. The proposed joint regulation from nine federal financial regulators in the Financial Stability Oversight Council is a result of collaborative and dedicated efforts that represents a significant step forward for modernizing federal financial reporting. 

Proposing standardizations for common data collected by the “covered agencies,” including for entity identification, geocoding, and common reference data points, like dates, currency, and “states” within the United States of America are indicative of ways data standardization can reduce common and significant errors within federal financial regulatory reporting. 

The Data Foundation also applauds the selection of pre-existing data standards and identifiers, and can be adaptable to future use. 

The FDTA passed as a bipartisan law with the purpose to modernize financial regulatory information by establishing data standards, schema, and taxonomies supporting data that are “electronically searchable, to further enable the development of regulatory technologies and artificial intelligence applications, to put the United States on a path towards building a comprehensive Standard Business Reporting program to ultimately harmonize and reduce the private sector’s regulatory compliance burden, while enhancing transparency and accountability, and for other purposes.” 

Data standards and use of interoperable schema and taxonomies for data validation could also reduce errors in information reported to financial regulators. Reliable, high quality, and verifiable data can become the expectation, leading to more efficient regulatory oversight. Additionally, regulators can shift resources to identifying market anomalies and preventing fraud, rather than focusing on data quality issues. 

“Over the next two months, our community of data experts will be closely reviewing the proposed rule to encourage agencies to advance data standards to meet modern expectations for using new and emerging technologies in the 21st century, while also recognizing the tremendous advancement that the proposed regulation already represents by enabling improved cooperation across our financial regulatory community,” said Nick Hart, President & CEO of the Data Foundation. 

 

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