Congress passed the Financial Data Transparency Act (FDTA) in late 2022, a long-standing policy priority for the Data Foundation. When enacted, “covered agencies” in the financial regulatory community initiated a rapid implementation process, including reports to Congress from the Securities and Exchange Commission (e.g. Regarding Public and Internal Use of Machine-Readable Data for Corporate Disclosures).
Progress on Developing a Joint Rulemaking for Data Standards
FDTA requires “covered agencies” to develop and issue a joint rule on data standards governing the information financial institutions already report. The law also requires standards related to data collected from member agencies collected on behalf of the Financial Stability Oversight Council (FSOC).
According to the FDTA, the joint rule-making group has 18 months after enactment to publish a proposed rule for public comment. The interagency group signaled progress as part of the Fall Unified Regulatory Agenda, including references to the proposed rule publication date in June 2024. Details of intended standards and the scope of coverage are not yet available, but the intended publication date is an indication of progress and compliance with the FDTA.
Improving the Explainability of FDTA Data Standards
The FDTA amends securities and banking laws and requires covered agencies to develop common data standards, including common identifiers. Under the law, data standards must be fully searchable, facilitated by the requirement that data are “machine-readable” using the definitions in the OPEN Government Data Act. Data will be made available under an “open license” format and available for bulk download. But, the law does not stop with these characteristics.
The FDTA-required data standards should also carry the semantic meaning when used or transferred (see subsection on “Data Standards”), a topic that is further explored in a paper the Data Foundation published in 2023, “Implementing the FDTA: From Data Sharing to Meaning Sharing.” By requiring standardized, machine-readable financial regulatory data, the FDTA is a law that has the potential to improve the transparency, accuracy, and accessibility of financial data. Since enactment, the Data Foundation and the broader data community celebrated passage of the FDTA and worked to improve the explainability of the role of applying data standards for semantic meaning.
Catalyzing the Data Community to Facilitate Effective Implementation
Acting quickly to explore the details of the law and what it means for stakeholders, the Data Foundation hosted a webinar in January, “Next Steps: Implementing the Financial Data Transparency Act.” With an emphasis on education and collating resources related to the FDTA, the Data Foundation also launched the Financial Data Transparency Hub, to support effective implementation of financial data transparency laws and policies, providing the community with accessible resources.
In the spring, the Data Foundation hosted the RegTech Data Summit 2023, presented by Donnelley Financial Solutions, bringing together various stakeholders from industry, academia, and government with a programmatic focus on the FDTA and the law’s implementation. During the event, panelists and speakers considered lessons learned through the implementation of previous data modernization laws, like the Digital Accountability and Transparency (DATA) Act of 2014 and the Foundations for Evidence-Based Policymaking Act, interagency data sharing efforts, nuanced considerations of data standards, and how laws like the FDTA can improve data quality, reliability, and timeliness to the benefit of governments at all levels, as well as for those who they serve.
During the RegTech Data Summit, authors Dean Ritz, Senior Research Fellow at the Data Foundation, and Timothy Randle, Senior Advisory Consultant, presented an early draft of their paper that focused on the technical parts of the law and invited feedback from the community. After review and armed with helpful guidance from fellow data experts, Ritz and Randle unpacked what it means for “data standards [to] be expressed as machine-readable semantic data,” a key requirement of the FDTA, in their paper, “Implementing the FDTA: From Data Sharing to Meaning Sharing.”
Education, expertise, and energy will remain important as agencies tasked with the implementation of the FDTA work towards fulfilling the vision of the law for government and for regulated entities alike. The Data Foundation and data community have and will continue to provide relevant resources, opportunities for stakeholder engagement and collaboration, and forums to showcase cross-sector expertise.
Exploring the Expansive Value of the FDTA
Closing out the year, the Data Foundation convened 11 presenters with three expert judges for the FDTA 2023 PitchFest. Presenters exemplified the data communities’ creative thinking about how the FDTA could provide access to better, reliable, comparable, and timely financial regulatory data by diving deeper into how to address requirements of the FDTA, what existing technologies standardized, high-quality data could unlock, like artificial intelligence, knowledge graphs, and options for entity identification and verification.
The Data Foundation and our supporters began 2023 with excitement for the enactment of the Financial Data Transparency Act. The Data Foundation applauds the joint rule-making group as agencies and staff diligently work to remain on schedule and implement a law that carries much potential for improving regulatory data, reducing compliance burdens, and improving quality of data for stakeholders across government, industry, nonprofits, academia, and society. In 2024, the Data Foundation and our entire community looks forward to the upcoming publication of the proposed rule and building even stronger community efforts for engagement, education, and feedback.
ASHLEY NELLE-DAVIS is the Data Foundation’s Special Projects Director.
