What is the FDTA?

The Financial Data Transparency Act (FDTA) (Title 58 of the FY 2023 National Defense Authorization Act) amends securities and banking laws to make the information already reported to financial regulators electronically searchable and to further enable the development of regulatory technologies and artificial intelligence applications. The ultimate goal is to harmonize reporting requirements, reduce the private sector’s regulatory compliance burden, and enhance transparency and accountability.

The covered financial regulatory agencies have two years from the date of enactment to issue a joint rulemaking to promulgate data standards governing the information financial institutions report to each agency as well as data collected from covered agencies. The covered agencies will have two additional years to implement the standards from the final rule.

What agencies are included in the “covered agencies”?

Members of the Financial Stability Oversight Council (FSOC), that include the Department of the Treasury, Securities and Exchange Commission, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Bureau of the Consumer Financial Protection, Federal Reserve System, National Credit Union Administration, and Federal Housing Finance Agency.

What does “common identifiers” refer to?

The FDTA requires covered agencies to establish common identifiers for reported information, which could include transactions and financial products (or instruments). The law specifically requires the adoption of a common, non-proprietary legal entity identifier that will be made available under an “open license.”

How does the FDTA build on previous data laws like the Evidence Act and the DATA Act?

The FDTA defines requirements for common data standards that are consistent with previous data focused laws, like the Foundations for Evidence-Based Policymaking Act (Evidence Act) and the Digital Accountability and Transparency Act (DATA Act). The FDTA require that data be rendered fully searchable – which is facilitated by the requirement to be “machine-readable,” and where allowable, be made available as an “open Government Data asset” ( 44 U.S.C. § 3502(18)) and (44 U.S.C. § 3502(20)), both defined in the Evidence Act. This assures the data assets collected under the regulatory authorities of the FDTA’s covered agencies are consistent with existing government-wide data policy. (See “Annotating the Law’s Text for the Financial Regulatory Environment,” in Implementing the FDTA: From Data Sharing to Data Meaning for additional information.)

What are the initial milestones of the FDTA? When Should we expect to see the first proposed rule?

The first milestone was a semi-annual report to congress from the Securities and Exchange Commission (SEC) on “on the public and internal use of machine-readable data for corporate disclosures;” delivered June 2023.

July 2024, or 18 months after enactment, the heads of the covered agencies will release a proposed rule for public comment that establishes data standards for information reported to members of the FSOC and collected from covered agencies on behalf of the Council.

December 2024, or two years after enactment, the heads of the covered agencies will publish the final rule that takes the public comments into account. 

What type of rulemaking will be used for the FDTA?

Congress directed the covered agencies to pursue a joint rulemaking. A joint rulemaking is a common procedure that supports cooperative action while identifying shared data standards and reporting requirements.

What does “open license” mean?

Open license 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.” (44 U.S.C. § 3502(21))

Will the reported and collected data be open by default?

No. The FDTA only requires each covered agency to publish the data that it already makes public as an open Government data asset. The law does not grant any new authority to covered agencies to make data public.

What does this mean for state and local governments?

So far as state and local governments report to the Municipal Securities Review Board (MSRB) or other regulatory agencies, the governments will update reporting standards that will further support transparency and good governance at a local level through consistent, machine-readable submissions.

The FDTA directs individual agencies under the “covered agencies” to develop rules that establish data standards for their data of information reported to their specific agency as another step of report harmonization over a span of a few years.