Value of Data Standardization in Financial Transparency Act
The Financial Transparency Act and the Importance of Data Standardization
In March 2017, H.R.1530, also known as the Financial Transparency Act of 2017 (FTA) was introduced in the 115th Congress.
The FTA was the first US regulatory technology (“RegTech”) law and included measures designed to improve the regulatory reporting landscape. This article highlights some of the key features you should know about this Act.
Why was the Financial Transparency Act introduced?
According to the bill, the text of which can be read in full here, the purpose of the FTA is:
“To amend securities, commodities, and banking laws to make the information reported to financial regulatory agencies electronically searchable, to enable RegTech applications, and for other purposes.”
Prior to the introduction of the FTA, it was common for US financial regulatory agencies to use unstructured data to collect information. This lack of data standardization led to a variety of problems, including higher compliance costs for businesses and further difficulty for regulators, investors, and analysts to easily retrieve and analyze financial data.
The FTA aimed to address some of these issues and improve the overall regulatory reporting landscape in the US.
What does the Financial Transparency Act do?
The FTA applies to eight financial regulatory agencies, the full list of which can be read here.
The FTA requires that these agencies adopt a variety of measures, such as:
- Consistent data standards in relation to information the agencies already collect under existing securities, commodities and banking laws.
- Making use of open data for information that is already required to be published under existing laws. Such open data should be electronically searchable, able to be downloaded in bulk, and not subject to any registration or reuse restrictions.
- A common Legal Entity Identifier (LEI) across all financial regulatory reporting regimes. This is so that an entity’s filings with different regulators can be found more easily.
Who is impacted by the Financial Transparency Act?
While the FTA itself applies to the eight major financial regulatory agencies, the implications of the Act are much broader and affect a wide range of stakeholders.
For example, as a result of the FTA, having open data should permit more investors to easily find and access data that is useful to them, while those businesses in industry should also benefit from improved data standardization resulting in avoiding duplication of data reportable to multiple regulators. Finally, the regulatory agencies themselves should find some benefits in the FTA, as it opens up the potential to employ data analytics to observe trends and opportunities for improvement.
DataTracks has over a decade of experience in assisting clients with their regulatory reporting and compliance obligations, whether you need to file a report under the Securities Exchange Act, DATA Act and GREAT Act, Financial Transparency Act, or the Municipal Securities Rulemaking Board.
To find out more about how DataTracks can help you with your compliance and reporting obligations, visit our website or send an email to email@example.com