SEC’s Dave Sanchez: FDTA conversations welcomed

While the first round of Financial Data Transparency Act regulations has yet to be finalized, Dave Sanchez, director of the Securities and Exchange Commission’s Office of Municipal Securities, has encouraged those with concerns about phase two not to wait to make them known. 

The FDTA, signed into law in December 2022, involves a two-phase rulemaking process. First, the FDTA directs various federal agencies to jointly establish data standards. The second phase involves agency-specific rulemaking by the SEC and other agencies.

Sanchez, who spoke July 30 during a two-day virtual conference co-hosted by XBRL US and the University of Denver, encouraged “folks to write in or request meetings” if they have concerns regarding the FDTA.  

Once things proceed to phase two, OMS expects “a flurry of outreach,” Sanchez said. Still, “I don’t want people to feel like they have to wait,” he said. 

“We’re always happy to have these conversations,” Sanchez said. “We’re actively thinking about this all the time.” 

Marc Joffe, a visiting fellow at the California Policy Center and an XBRL US board member, also spoke during the conference session, which focused on the future of the FDTA.

Industry participants had expected the first round of FDTA regulations to be finalized at the beginning of 2025, “but the release has yet to appear,” said Joffe, who asked Sanchez if he could provide any news regarding the status of the regulations. 

“As you know, we generally do not comment on timing of regulation,” Sanchez said. “This is a multi-agency rulemaking. There’s nine agencies, many of which are having changes in leadership.”

Consequently, there is some expectation that things might be delayed due to changes at various agencies, he said. 

An important thing to remember is that any of the data standards ultimately adopted as part of the multi-agency rulemaking “will then be independently considered by each agency with respect to the data standards that are under its purview,” Sanchez said, adding that “Congress had built in a number of flexibilities with respect to any of these data standards.” 

“So one, you can tailor them for small entities,” he said. “You can tailor them to minimize disruptive changes to the market.” 

Particularly with regard to the municipal securities market, the SEC “can tailor any of the standards as we see fit with respect to that particular market,” Sanchez said. 

According to its website, XBRL US, a not-for-profit organization, supports “the implementation of digital reporting standards for business and government through the development of taxonomies for use by U.S. public and private sectors, with a goal of interoperability between sectors, and by promoting XBRL adoption through marketplace collaboration.” 

XBRL – or eXtensible Business Reporting Language –  is a free, open-data standard that enables financial and business data to be expressed in digital, machine-readable format. XBRL is used by publicly listed companies for their financial reporting. XBRL is also used in the U.S. by banks reporting to the Federal Deposit Insurance Corporation and utilities reporting to the Federal Energy Regulatory Commission, an XBRL US spokesperson said. 

Outside the U.S., XBRL has been implemented in 217 regulatory programs across the world, the spokesperson said.