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Background
The FDTA added Section 124, “Data Standards,” to Subtitle A, “Data Standards for Covered Agencies,” of the Financial Stability Act of 2010, which requires joint agency rulemaking for data standards. The proposed joint standards apply to “certain collections of information reported to each agency.” While the FDTA does not define “collections of information,” the proposed rule uses an existing definition from the Paperwork Reduction Act of 1995.
Crowe observation: The proposed rule does not apply to collections of information not reported to an agency.
Joint data standards
Identifiers
The joint standards propose specific identifiers and formats for the following:
- Legal entity identifiers (LEIs)
- Classes of financial instruments (for example, securities, swaps, and others)
- Date fields
- Geography (for example, U.S. state or country)
- Currency
Crowe observation: The proposed rule describes the exact identifier and its source (for example, for the LEI: the International Organization for Standardization [ISO] 17442-1:2020, "Financial Services – Legal Entity Identifier") as well as alternatives that were considered but are not being proposed.
Data transmission and schema and taxonomy format standards
The joint standards propose four properties for data transmission and schema and taxonomy formats. The formats should:
- Be fully searchable and render machine-readable data
- Deliver high-quality data through schemas, with accompanying metadata that clearly defines the semantic meaning of the data
- Consistently identify data elements or data assets as satisfying an underlying data collection requirement in machine-readable metadata
- Be nonproprietary or available under an open license
The proposed joint standards would not require any specific data transmission or schema and taxonomy format because any format that meets the four properties is assumed to be consistent with the standards. This would allow flexibility for future developments in data transmission formats.
Crowe observation: Several taxonomies exist under current agency reporting (for example, the U.S. GAAP financial reporting taxonomy published by the Financial Accounting Standards Board and the call report taxonomy published by the Federal Financial Institutions Examination Council for bank regulatory reporting purposes), but the FDTA and the proposed joint standards do not require the use of a specific taxonomy.
Requests for comment
The rule proposal requests general comment on all aspects of the proposal as well as on accounting and reporting taxonomies, including whether it is preferable to establish a joint standard for taxonomy properties or specific taxonomies.
Agency rulemaking
Each agency must adopt the joint standards through individual rulemaking at the agency level. Individual agencies could scale data reporting requirements for smaller entities and likely will seek to minimize disruptive changes to those institutions reporting information to the agencies. The FDTA provides flexibility for each agency to adopt other standards beyond the joint standards.
Crowe observation: Entities should monitor forthcoming proposals by each agency to understand potential agency-specific rulemaking implications.
Effective dates and comment letter period
The proposed effective date of the final joint data standards would be the first day of the next calendar quarter that begins at least 60 days after the final rule is published in the Federal Register. The FDTA requires that the agencies issue final joint standards within two years of Dec. 23, 2022, with individual agency rulemaking taking effect no later than two years after the final joint standards are issued.
Comments on the proposed rule are due Oct. 21, 2024.
