XBRL US comments on SEC’s proposal about SPACs & SECURITY-BASED swaps
XBRL for SPACs
The need for efficient data processing and generation has pushed SEC to introduce proposals encouraging Special Purpose Acquisition Companies (SPACs), Shell companies, and projections to use Inline XBRL for all their reporting requirements. The boom of the SPACs in the US and beyond has drawn the attention of the regulatory authorities. Asymmetric knowledge between those inside and the outside of the SPAC are some of the significant causes of concern. SEC’s disclosure rules proposal aims to increase transparency, accountability, and investor protection.
XBRL US welcomes SEC’s proposal
The XBRL US welcomes the use of Inline XBRL for the Security-Based Swap Execution and Registration and Regulation of Security-Based Swap Execution Facilities. This step is sure to benefit all the market participants and regulators. Increasing the transparency of the securities-based swaps market has been the goal of the SEC with this proposal. XBRL US encourages SPACs to tag new required disclosures using the Inline XBRL format.
Among the disclosures that the SPACs are required to tag, additional information such as information about the sponsor of the SPAC, potential conflict of interest, and dilution will need to be tagged in the Inline XBRL format as well. Additional disclosures concerning de-SPAC transactions, prospectus cover page, and any registration statements filed in connection with the SPAC’s IPO and de-SPAC transactions are also part of the list of disclosures that need to be tagged as per SEC’s proposal.
Tagging requirements in IPO Registration statements
SEC’s proposal also includes the tagging requirements for disclosures in the IPO registration statements of the SPACs. This step will increase the tagging obligations and other compliance burdens for the SPACs compared to other filers.
XBRL US also urges the SEC to provide a technical guide to tagging, sample instance documents, advance draft copies of the taxonomy, and a testing environment that allows you to beta test your compliance documents for at least 12-15 months before the date of compliance. All the SPACs in the IPO stage will be given ample time to get used to the XBRL systems as they will be using the XBRL applications for the first time.
XBRL US also commented on the SEC’s proposal on Rules Relating to Security-Based Swap Execution and Registration and Regulation of Security-Based Swap Execution Facilities. The SEC proposes that a new Form SBSEF be prepared by the security-based swap execution facilities. This Form is to be filed in the Inline XBRL format. It includes both quantitative facts as well as descriptive or narrative information. The quantitative facts will also include financial data. Form SBSEF is modelled on CFTC Form SEF as well as some exhibits of the SEF Form. The exhibits of the Form SEF include information relating to the filing entity’s financials, business organization, compliance, and legal and financial status.
SEC’s proposal to tag all the disclosures using the Inline XBRL format will help ensure investor protection and introduce a structured reporting system among the SPACs, Shell companies, and Projections.
Working with an XBRL Service Provider
Although these rules have a realistic transition period, reporting using the iXBRL format might not be easy for everyone. DataTracks is equipped to handle all your compliant reporting requirements that need to be filed with the regulatory authority in your country using XBRL and Inline XBRL formats.
The experts at DataTracks are skilled at producing quality, error-free services in a professional and time-sensitive manner. The DataTracks software is developed keeping in mind the nature of the regulatory requirements. With over 17 years of domain experience, DataTracks will only help you better your reporting structure with faster, better, and more efficient methods.
