\218\ See supra note 86.
---------------------------------------------------------------------------

    The facing page of Form X-17A-5 Part III is currently a fillable
form that EDGAR converts into a custom XML data language, and would
remain so under the proposal. As a result, data users would be unable
to incorporate the custom XML disclosures on the facing page into the
same datasets and applications as the Inline XBRL disclosures on the
rest of Form X-17A-5 Part III, and run analyses across the differently
formatted Form X-17A-5 Part III disclosures, without undertaking data
conversion processes that are frequently burdensome and imprecise.
Similarly, any technical validations programmed into EDGAR would be
unable to check for any inappropriate inconsistencies between
disclosures on Inline XBRL exhibits and disclosures on custom XML
exhibits on a given Form X-17A-5 Part III, thus reducing the benefit of
improved data quality that would be likely to result from structured
data requirements. Finally, some Form X-17A-5 Part III filers may
already be using Inline XBRL to structure similar data for internal
business purposes, such as through the use of ERP systems; these filers
may prefer to use Inline XBRL to file the entirety of Form X-17A-5 Part
III.\219\ Nonetheless, the Commission believes the benefits associated
with requiring data languages more technically suitable for the
particular disclosures on each exhibit, as described earlier in this
section, would justify any such drawbacks.
---------------------------------------------------------------------------

    \219\ See infra note 570 (discussing the integration of XBRL
into many ERP systems).
---------------------------------------------------------------------------

B. Rule 17h-2T and Form 17-H

    Under section 17(h) of the Exchange Act and Rule 17h-2T, broker-
dealers that are part of a holding company structure and that maintain
capital of at least $20 million must file quarterly and annual risk
assessment reports with the Commission.\220\ The reports are filed
using Form 17-H.\221\ The form elicits information concerning the
financial and securities activities of the holding company and
affiliates and subsidiaries of the broker-dealer that are reasonably
likely to have a material impact on the financial or operational
condition of the broker-dealer. Certain of this information must be
entered directly onto the form in individually numbered fields. Other
information--which is specified in Items 1, 2, 3, and 4 of the form--is
provided by submitting copies of documents, narrative descriptions, or
financial statements.\222\
---------------------------------------------------------------------------

    \220\ On June 29, 2020, the Commission exempted from the
requirements of Rules 17h-1T and 17h-2T broker-dealers that do not
hold funds or securities for, or owe money or securities to,
customers and do not carry customer accounts, or that are exempt
from Rule 15c3-3 pursuant to paragraph (k)(2) of that rule, and that
maintain total assets of less than $1 billion and capital, including
debt subordinated in accordance with appendix D of Rule 15c3-1 under
the Exchange Act (``Rule 15c3-1d''), of less than $50 million. See
Order Under Section 17(h)(4) of the Securities Exchange Act of 1934
Granting Exemption from Rule 17h-1T and Rule 17h-2T for Certain
Broker-Dealers Maintaining Capital, Including Subordinated Debt of
Greater than $20 Million but Less than $50 Million, Exchange Act
Release No. 89184 (June 29, 2020), available at https://www.sec.gov/rules/exorders/2020/34-89184.pdf.
    \221\ See 17 CFR 249.328T. Form 17-H is available at http://www.sec.gov/about/forms/form17-h.pdf.
    \222\ See Form 17-H, Item 1 (copy of organizational chart), Item
2 (copies of financing, capital adequacy, and risk management and
other policies or systems), Item 3 (description of any material
pending legal or arbitration proceedings), and Item 4 (certain
consolidated and consolidating financial statements).
---------------------------------------------------------------------------

    Paragraph (a)(2) of Rule 17h-2T requires that the reports be filed
with the Commission at its principal office in Washington, DC. The
reports must be filed within 60 calendar days of the end of each fiscal
quarter, but the year-end financial statements included in the reports
may be filed separately from the remainder of the broker-dealer's
fiscal fourth quarter report within 105 calendar days of the end of
that quarter. Presently, broker-dealers may choose to file these
reports on EDGAR.\223\ As of September 30, 2022, approximately 238 of
the 245 broker-dealers subject to Rule 17h-2T utilized EDGAR to make
their required Form 17-H filings. The remaining firms submitted them in

paper form. For electronic filing on EDGAR, the facing page of Form 17-
H and Part II of Form 17-H are fillable forms that EDGAR subsequently
converts into a structured, XML-based data language specific to Form
17-H. The information required by Items 1, 2, 3, and 4 of Part I of
Form 17-H is uploaded in separate documents. These documents are
currently generally uploaded as PDF documents.
---------------------------------------------------------------------------

    \223\ See supra note 230 at 8.2.23.
---------------------------------------------------------------------------

    The Commission proposes amending paragraph (a)(2) of Rule 17h-2T to
require that the quarterly and annual risk assessment reports be filed
with the Commission electronically through EDGAR. The process used to
access EDGAR would be the same used by those broker-dealers voluntarily
using EDGAR for their respective quarterly and annual risk assessment
reports. As proposed to be amended, the paragraph would also provide
that the financial statements required by Item 4 of Form 17-H must be
submitted in Inline XBRL.\224\ With respect to the proposed Inline XBRL
requirement, the proposed process would mirror the proposed process
described above for broker-dealers filing annual reports in Inline
XBRL.\225\ Specifically, broker-dealers would apply machine-readable
Inline XBRL tags to the financial statements included in the quarterly
and annual risk assessment reports. The existing custom XML requirement
for the facing page and Part II of Form 17-H would remain in place, as
would the PDF requirement for Item 1, 2, and 3 of Form 17-H (which
require copies of organizational charts, risk management procedures,
and descriptions of pending legal proceedings that the broker-dealer
maintains pursuant to paragraph (a)(1) of Rule 17h-1T).\226\
---------------------------------------------------------------------------

    \224\ For further discussion of the proposed structured data
requirements, including Inline XBRL requirements, see infra section
VII.A.
    \225\ See supra section IV.A.4.
    \226\ See 17 CFR 240.17h-1T(a)(1).

           Proposed Structured Data Requirements for Form 17-H
------------------------------------------------------------------------

------------------------------------------------------------------------
Inline XBRL...............................  Item 4.
Custom XML................................  Execution page, Part II.
Unstructured PDF..........................  Items 1, 2, and 3.
------------------------------------------------------------------------

    The Commission believes requiring Form 17-H to be structured would
make the information filed on Form 17-H more readily accessible for
retrieval, aggregation, and comparison across different broker-dealers.
For example, Commission staff could leverage the machine-readability of
the financial statements to automatically flag broker-dealers with
current asset ratios lower than a certain value, and assess whether any
such broker-dealers warrant further examination. Without the proposed
structured data requirements, performing these types of analyses would
need to be done manually, such as by gathering the current and former
financial statements for each Form 17-H filer and entering all
financial line items of interest into databases, resulting in a
significantly less efficient and precise process. In addition, the
proposed structured data requirement would enable EDGAR to perform
technical validations (i.e., programmatic checks to ensure the
documents are appropriately standardized, formatted, and complete) upon
intake of the reports, thus potentially improving the quality of the
filed data by decreasing the incidence of non-substantive errors (such
as the omission of values from fields that should always be populated).
    The proposed Inline XBRL requirement would apply specifically to
the financial statements required by Item 4 of Form 17-H. The
Commission believes an Inline XBRL would be appropriate for the
financial statements, because Inline XBRL was designed to accommodate
financial statement information, including the particular metadata
(e.g., the relevant fiscal period, whether the line item is on the
balance sheet, whether the line item is a credit or debit) that must be
linked to each data point within the financial statements to fully
convey its semantic meaning to a machine reader.
    By contrast, the facing page and Part II of Form 17-H are currently
fillable forms that EDGAR converts into a custom XML data language, and
would remain so under the proposal. As a result, data users would be
unable to incorporate the custom XML disclosures on the facing page and
Part II into the same datasets and applications as the Inline XBRL
disclosures on Item 4, and run analyses across the differently
formatted Form 17-H disclosures, without undertaking data conversion
processes that are frequently burdensome and imprecise. Similarly, any
technical validations (i.e., automated checks to ensure filed documents
are appropriately standardized, formatted, and complete) programmed
into EDGAR would be unable to check for any inappropriate
inconsistencies between disclosures on the facing page and Part II and
disclosures on Item 4 on a given Form 17-H, thus reducing the benefit
of improved data quality that often arises from structured data
requirements. Finally, some Form 17-H filers may already be using
Inline XBRL to structure similar data for internal business purposes,
such as through the use of ERP systems; these filers may prefer to use
Inline XBRL to file the entirety of Form 17-H.\227\ Nonetheless, the
Commission believes the benefits of retaining the existing custom XML
requirement for the facing page and for Part II--specifically, the
alleviation of compliance burdens to be incurred by broker-dealers as a
result of the proposed requirements--would justify any such drawbacks.
---------------------------------------------------------------------------

    \227\ See infra note 570 (discussing the integration of XBRL
into many ERP systems).
---------------------------------------------------------------------------

    The Commission is proposing to require Form 17-H filers to file
copies of existing documents, such as copies of organizational charts
and risk management procedures, as unstructured PDF attachments. The
Commission believes requiring Form 17-H filers to retroactively
structure these existing documents, which were prepared for purposes
outside of fulfilling the Commission's disclosure requirements, would
likely impose costly compliance burdens on broker-dealers without
justifying the commensurate informational benefit associated with more
efficient disclosure use. Thus, the Commission does not believe
structured data requirements would be warranted for these copies of
existing documents.
Request for Comment
    42. Would it be appropriate to require the annual reports or annual
supplemental reports that must be filed with the Commission under Rule
17a-5, Rule 18a-7, and Rule 17a-12 to be submitted electronically with
the Commission on the EDGAR system? If so, explain why. If not, explain
why not. If the Commission requires that the annual reports or annual
supplemental reports that must be filed with the Commission under Rule
17a-5, Rule 18a-7, and Rule 17a-12 be submitted electronically with the
Commission on the EDGAR system, would it be appropriate to require
those annual reports or annual supplemental reports to be filed in a
structured data language? If so, explain why. If not, explain why not.
    43. Would broker-dealers, OTC derivatives dealers, SBSDs, MSBSPs,
or certain of these firms, experience practical difficulties or incur
significant costs in preparing and submitting these reports
electronically on EDGAR in a structured data language? If so, explain
why they would experience difficulties and quantify the costs. What, if
any, costs would be associated with requiring these firms to file their
annual reports electronically on EDGAR in a

structured data language? Are those costs more, less or the same as
those currently expended to file annual reports?
    44. Does the current requirement to file annual reports and annual
supplemental reports either in paper or via email or on EDGAR (where
they are generally uploaded as PDF documents) provide flexibility to
broker-dealers, OTC derivatives dealers, SBSDs, or MSBSPs that could be
lost if these filings were required to be made electronically on EDGAR
in a structured data language? Explain why or why not. Should the
Commission instead require that all of the annual reports or annual
supplemental reports be filed electronically on EDGAR as PDF documents,
as broker-dealers have the option of doing currently under the Annual
Reports No-Action Letter? Explain, and identify the costs of these two
alternatives.
    45. If the Commission requires the annual reports and annual
supplemental reports to be filed in a structured data language, should
the Commission require broker-dealers, OTC derivatives dealers, SBSDs,
and MSBSPs to use Inline XBRL or a custom XML data language for the
reports or another structured data language? If not, which data
language, if any, should the Commission permit or require and why? If
certain firms were not required to file their annual reports and annual
supplemental reports using Inline XBRL or a custom XML data language,
should they be required to file these reports electronically using PDF
format? Would a requirement to file these reports in a structured data
language impose additional costs on or create cost efficiencies for
these firms as compared to other languages? Would a requirement to file
these reports in a structured data language enable the public to
analyze the public information in the reports more efficiently and
effectively? If yes, how would this efficiency and effectiveness affect
investors, securities markets, broker-dealers, OTC derivatives dealers,
SBSDs, or MSBSPs? Would a requirement to file these reports in a non-
structured data language result in similar benefits for lower costs as
compared to a structured data language? Even if the proposal to require
these reports to be filed electronically on EDGAR in a structured data
language would provide greater benefits as compared to the current
requirement to file via paper or on EDGAR in an unstructured data
language, would an alternative manner of filing provide even more
benefits than the Commission's proposal relative to the costs of the
alternative approach? If so, identify the alternative approach and
explain why or why not.
    46. If the Commission requires the annual reports or annual
supplemental reports to be filed in a structured data language on
EDGAR, should the Commission apply these requirements to all broker-
dealers, OTC derivatives dealers, SBSDs, and MSBSPs? Explain why or why
not. If not, identify an alternative and provide empirical support for
the alternative. If the structured data requirement should not apply to
all of these firms, should the Commission exempt certain firm types?
For example, should the Commission apply the structured data
requirement to a subset of broker-dealers consisting of some or all of
the following types of broker-dealers: (1) broker-dealers that carry
customer accounts and receive or hold customer cash and securities; (2)
broker-dealers that are OTC derivatives dealers; (3) broker-dealers
with a net capital requirement below a certain amount (e.g., $250,000);
(4) broker-dealers below a certain asset threshold, such as $500,000 or
less in total assets; (5) broker-dealers with less than $250,000 or
less in total revenues; (6) broker-dealers with capital less than $50
million and with less than $1 billion in total assets; (7) broker-
dealers with an aggregate amount outstanding under repurchase
agreements, securities loan contracts, and bank loans less than a
certain threshold (e.g., $1 billion); (8) broker-dealers with less than
a certain amount of free credit balances and other credit balances
(e.g., $1 million); or (9) broker-dealers with less than a certain
amount of tentative net capital (e.g., $500 million).\228\ Commenters
should also identify whether a combination of the aforementioned
criteria; or some other criteria would be appropriate.
---------------------------------------------------------------------------

    \228\ Tentative net capital is defined in Rule 15c3-1. See 17
CFR 240.15c3-1(c)(15).
---------------------------------------------------------------------------

    47. Would it be appropriate to require ANC broker-dealer and OTC
derivatives dealer supplemental reports to be submitted electronically
on EDGAR? If so, explain why. If not, explain why not. Would it be
appropriate to require ANC broker-dealer and OTC derivatives dealer
supplemental reports to be submitted in Inline XBRL? If so, explain
why. If not, explain why not. If a different structured data language
should be required, explain why. If there should be no structured data
language requirement for the ANC broker-dealer and OTC derivatives
dealer supplemental reports, explain why not.
    48. Would it be appropriate to require Form 17-H to be submitted
electronically with the Commission on the EDGAR system? If so, explain
why. If not, explain why not. If the Commission requires Form 17-H to
be submitted electronically with the Commission on the EDGAR system,
would it be appropriate to require Form 17-H to be filed in a
structured data language? If so, explain why. If not, explain why not.
    49. Would Form 17-H filers experience practical difficulties or
incur significant costs in preparing and submitting these reports
electronically on EDGAR in a structured data language? If so, explain
why they would experience difficulties and quantify the costs. What, if
any, costs would be associated with requiring these firms to file Form
17-H electronically on EDGAR in a structured data language? Are those
costs more, less or the same as those currently expended to file Form
17-H?
    50. Does the current requirement to file Form 17-H either in paper
or via email or on EDGAR provide flexibility to Form 17-H filers that
could be lost if these filings were required to be made electronically
on EDGAR in a structured data language? Explain why or why not. Should
the Commission instead require that the entirety of Form 17-H be filed
electronically on EDGAR as PDF documents? Explain, and identify the
costs of these two alternatives.
    51. Would requiring different structured data languages for
different Items of Form 17-H provide benefits to data users or filers
that justify any drawbacks associated such an approach? Please explain
the nature of such benefits and drawbacks, and why the benefits would
justify the drawbacks (or vice versa).
    52. If a mix of structured data languages would be appropriate,
should the specific data languages proposed for each Form 17-H Item be
modified? For example, are there Form 17-H Items proposed as custom XML
documents that would be better suited as Inline XBRL documents, or vice
versa? Please explain why or why not.
    53. Would requiring Form 17-H filers to file copies of existing
documents as unstructured PDF attachments, rather than requiring filers
to retroactively structure those documents in machine-readable data
languages, ease compliance burdens on Form 17-H filers? If so, would
the benefits to data users of structuring these existing documents
justify the reduced compliance burden on Form 17-H filers? Please
explain why or why not.
    54. Rules 15c3-1, 15c3-3, 17a-4, 17a-5, 17a-11, and 17a-12 require
a broker-dealer to send notices to the

Commission after the occurrence of certain events. Similarly, Rules
18a-1, 18a-4, 18a-6, 18a-7, and 18a-8 require SBS Entities to send
notices to the Commission after the occurrence of certain events.
Currently, such notices must be transmitted to the Commission through
an email address provided on the Commission's website, or
alternatively, delivered to the principal office of the Commission in
Washington, DC and the regional office of the Commission for the region
in which the broker or dealer has its principal place of business.
Should the Commission require such reports to be submitted through the
EDGAR system in a structured data language? Explain why or why not.

V. Other Forms, Reports or Notices

    The Commission proposes that the following forms, reports and
notices be filed or submitted on EDGAR:

------------------------------------------------------------------------
                                 Filer/submitter
    Form, report or notice             type         Proposed amendments
------------------------------------------------------------------------
Form X-17A-19: Information      Exchange or        The form and
 Required of National            Association.       instructions to the
 Securities Exchanges and                           form (17 CFR
 Registered National                                249.635), and
 Securities Associations                            corresponding
 pursuant to sections 17 and                        Exchange Act Rule
 19 of the Exchange Act and                         17a-19 (17 CFR
 Rule 17a-19 thereunder.                            240.17a-19).
Report of Change in Membership  .................  Rule 101(a) of
 Status.                                            Regulation S-T (17
                                                    CFR 232.101(a)).
Notices pursuant to Rule 3a71-  Certain            17 CFR.240.3a71-
 3(d)(1)(vi) That Associated     registered SBSDs   3(d)(1)(vi) (Rule
 Persons of Certain              or registered      3a71-3(d)(1)(vi)).
 Registrants May Conduct         brokers that      17 CFR 232.101(a),
 Arranging, Negotiating, or      meet certain       232.201(a), and
 Executing Activity in           capital and        232.202(a) (Rule
 Reliance on the Conditional     other              101(a), 201(a) and
 Exception from SBSD De          requirements.      202(a) of Regulation
 Minimis Thresholds (and any                        S-T).
 withdrawals of notices).
Notices (and any amendments to  SBS Entity.......  17 CFR 240.15fi-3(c)
 the notices) to the                                (Rule 15fi-3(c)).
 Commission of Security-Based                      17 CFR 232.101(a) and
 Swap Valuation Disputes                            (d) (Rule 101(a) and
 pursuant to Rule 15fi-3(c).                        (d) of Regulation S-
                                                    T).
Compliance Reports pursuant to  SBS Entity.......  17 CFR 240.15fk-
 Rule 15fk-1(c)(2)(ii)(A).                          1(c)(2)(ii)(A).
                                                    (Rule 15fk-
                                                    1(c)(2)(ii)(A)).
                                                   17 CFR 232.101(a)
                                                    (Rule 101(a) of
                                                    Regulation S-T).
------------------------------------------------------------------------

A. Notices Pursuant to Rule 17a-19 and Form X-17A-19

    Generally, before commencing business activities, a broker-dealer
must become a member of an SRO. SROs assist the Commission in
regulating the activities of broker-dealers. Rule 17a-19 requires every
national securities exchange and registered national securities
association to file a Form X-17A-19 with the Commission at its
principal office in Washington, DC and with the Securities Investor
Protection Corporation (``SIPC'') within five business days of the
initiation, suspension, or termination of any member and, when
terminating the membership interest of any member, to notify that
member of its obligation to file financial reports as required by
paragraph (b) of Rule 17a-5.\229\ As of June 15, 2022, there were 24
national securities exchanges and one registered national securities
association.\230\
---------------------------------------------------------------------------

    \229\ 17 CFR 240.17a-5(b).
    \230\ See Self-Regulatory Organization Rulemaking, available at
https://www.sec.gov/rules/sro.shtml.
---------------------------------------------------------------------------

    The instructions to Form X-17A-19 provide that the original of the
form must be mailed to the Commission at its principal office and a
copy of the form must be mailed to SIPC. Both the original and the copy
must be ``executed by a manual signature.'' Upon the Commission's
receipt of a Form X-17A-19 filing, the information is entered into a
database, which is regularly shared with the SROs. Commission staff use
the information contained in Form X-17A-19 to assign the appropriate
SRO as the designated examining authority for the member firms. This
information is also used by SIPC in determining which SRO is the
collection agent for the SIPC Fund.\231\
---------------------------------------------------------------------------

    \231\ SIPC members are required to pay annual assessments to the
SIPC Fund which is used to protect customer assets when a SIPC-
member brokerage firm fails financially.
---------------------------------------------------------------------------

    The Commission proposes to amend this requirement to provide that
Form X-17A-19 must be filed with the Commission electronically on EDGAR
in accordance with the EDGAR Filer Manual, as defined in Rule 11 of
Regulation S-T, and in accordance with the requirements of Regulation
S-T. Accordingly, Form X-17A-19 would be filed in a custom XML-based
data language.\232\ As is the case with most of the Commission's other
XML-based forms, such as the aforementioned facing page to Form X-17A-5
Part III,\233\ national securities exchanges and registered national
securities associations would comply with the custom XML requirement by
either inputting the information into a fillable web form that EDGAR
would then convert into the custom XML-based data language, or
submitting the information directly to EDGAR in the custom XML-based
data language.
---------------------------------------------------------------------------

    \232\ Requirements to submit forms on EDGAR in custom XML
structured data languages are set forth in the EDGAR Filer Manual,
and the specific XML requirements for Form X-17A-19, if adopted,
would be included in an updated version of the EDGAR Filer Manual.
See supra note 230 at 8.
    \233\ See supra section IV.A.4.
---------------------------------------------------------------------------

    The Commission expects the proposed custom XML requirement for
filing Form X-17A-19 would provide similar benefits to those described
for the proposed Inline XBRL requirements for Form X-17A-5 Part
III.\234\ Like Inline XBRL, the proposed custom XML requirement for
Form X-17A-19 would make the information included on the form more
readily accessible for retrieval, sorting, filtering, and other
analysis. The enhanced usability of the information on Form X-17A-19
may be particularly helpful given the high volume of filings on Form X-
17A-19 that the Commission receives annually.\235\ In addition, the
proposed structured data requirement would enable EDGAR to perform
technical validations (i.e., programmatic checks to ensure the
documents are appropriately standardized, formatted, and complete) upon
intake of the forms, thus potentially improving the quality of the
filed data by decreasing the incidence of non-substantive errors (such
as the

omission of values from fields that should always be populated).
---------------------------------------------------------------------------

    \234\ See supra section IV.A.4; see infra section X.C.1.b.
    \235\ See infra sections IX.D.11 and X.C.1.b.
---------------------------------------------------------------------------

    The Commission also proposes making conforming amendments to the
``General Instructions'' to Form X-17A-19. Instruction 2 would be
amended to replace the instruction to mail the original of the form to
the Division with an instruction to file the original ``electronically
on EDGAR in accordance with the EDGAR Filer Manual, as defined in Rule
11 of Regulation S-T (Sec.  232.11) and in accordance with the
requirements of Regulation S-T.'' Instruction 2 would also be amended
to instruct filers to send copy number 1 of Form X-17A-19 to SIPC at
SIPC's updated address. Instruction 3 would be amended to replace the
words ``shall be executed with a manual signature'' with the words
``shall be signed.'' Instruction 4 would be deleted (and subsequent
instructions would be renumbered accordingly), because the instruction
about what to do if there is insufficient space in the form is
unnecessary if the filing is submitted on EDGAR. Renumbered instruction
6 (formerly instruction 7) would be amended to provide that copies of
the form may be obtained ``on the Commission's website'' instead of
``from the main office of the Securities and Exchange Commission in
Washington, DC''
Request for Comment
    55. Would it be appropriate to require Form X-17A-19 to be filed
with the Commission electronically on EDGAR? If so, explain why. If
not, explain why not. Would it be appropriate to require Form X-17A-19
to be filed in a custom XML-based data language? If so, explain why. If
not, explain why not. What alternative approaches would be appropriate
instead?

B. Notice (and Any Withdrawal of a Notice) Filed Pursuant to Rule 3a71-
3(d)(1)(vi)

1. Exchange Act Rule 3a71-3(d)(1)(vi) Notice Filing Requirement
    The Commission's rules under the Exchange Act define when a person
is an SBSD.\236\ Those rules set de minimis thresholds for security-
based swap dealing activity below which a person is deemed not to be an
SBSD.\237\ For purposes of determining whether non-U.S. persons will be
deemed to be SBSDs, 17 CFR 240.3a71-3(b)(1)(iii)(C) (``Rule 3a71-
3(b)(1)(iii)(C)'') provides that non-U.S. persons must count, against
the applicable de minimis threshold, their security-based swap dealing
transactions that were arranged, negotiated, or executed by personnel
located in a U.S. branch or office, or by personnel of an agent of such
non-U.S. person located in a U.S. branch or office (``ANE
Activity'').\238\ Exchange Act Rule 3a71-3(d),\239\ however, includes a
conditional exception to this counting requirement (the ``ANE
Exception'').\240\
---------------------------------------------------------------------------

    \236\ See 17 CFR 240.3a71-1 et seq.
    \237\ See 17 CFR 240.3a71-2.
    \238\ See Rule 3a71-3(b)(1)(iii)(C).
    \239\ See 17 CFR 240.3a71-3(d).
    \240\ The exception does not apply to dealing activities
involving U.S. counterparties or U.S. guarantees. See Exchange Act
Release No. 87780 (Dec. 18, 2019), 85 FR 6270, 6278 (Feb. 4, 2020)
(``Cross-Border Adopting Release'').
---------------------------------------------------------------------------

    One of the conditions to the ANE Exception is that all ANE Activity
for which the non-U.S. person is relying on the exception (the
``Relying Entity'') be conducted by the U.S. personnel in their
capacity as persons associated with a majority-owned affiliate \241\ of
the Relying Entity that is either a registered SBSD or a registered
broker that meets certain capital and other requirements (such a
registered majority-owned affiliate, the ``Registered Entity'').\242\
Before an associated person of the Registered Entity commences this ANE
Activity pursuant to the ANE Exception, the Registered Entity must file
with the Commission a notice that its associated persons may conduct
such activity (an ``ANE Exception Notice'').\243\ Exchange Act Rule
3a71-3(d)(1)(vi) currently requires the Registered Entity to file the
ANE Exception Notice by submitting it to the electronic mailbox
described on the Commission's website at www.sec.gov at the ``ANE
Exception Notices'' section.\244\ The Commission is required to
publicly post filed ANE Exception Notices on the same section of its
website.\245\ The Relying Entity is able to review ANE Exception
Notices published on the Commission's website to determine whether its
affiliated Registered Entity's notice has been successfully filed, and
thus whether the Rule 3a71-3(d)(1)(vi) notice condition to the ANE
Exception has been satisfied.
---------------------------------------------------------------------------

    \241\ For this purpose, an entity is a majority-owned affiliate
of another entity if the entity directly or indirectly owns a
majority interest in the other, or if a third party directly or
indirectly owns a majority interest in both entities, where
``majority interest'' is the right to vote or direct the vote of a
majority of a class of voting securities of an entity, the power to
sell or direct the sale of a majority of a class of voting
securities of an entity, or the right to receive upon dissolution,
or the contribution of, a majority of the capital of a partnership.
See 17 CFR 240.3a71-3(a)(10).
    \242\ See 17 CFR 240.3a71-3(d)(1).
    \243\ See 17 CFR 240.3a71-3(d)(1)(vi).
    \244\ See www.sec.gov/tm/ane-exception-notices.
    \245\ See 17 CFR 240.3a71-3(d)(1)(vi).
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    The ANE Exception also is subject to a cap on the amount of certain
inter-dealer security-based swaps positions.\246\ Positions subject to
the cap include security-based swaps between a Relying Entity and a
non-U.S. person that is, or is an affiliate of, any Registered Entity
that has filed an ANE Exception Notice with the Commission.\247\ All
such positions of the Relying Entity and certain of its affiliates are
counted toward the cap.\248\ The Relying Entity and its affiliates can
review the ANE Exception Notices published on the Commission's website
to determine whether any of the filed ANE Exception Notices are
relevant to the Relying Entity's or any of its affiliates' progress
toward the cap on inter-dealer security-based swaps.
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    \246\ See 17 CFR 240.3a71-3(d)(1)(vii).
    \247\ See 17 CFR 240.3a71-3(a)(13).
    \248\ See 17 CFR 240.3a71-3(d)(6).
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2. Proposed Amendment to Exchange Act Rule 3a71-3(d)(1)(vi)
    The Commission is proposing an amendment to Exchange Act Rule 3a71-
3(d)(1)(vi) to change the method of filing the ANE Exception Notice.
Instead of filing the notice via email to an electronic mailbox
specified on the Commission's website, the proposed amendment would
require the Registered Entity to file the notice electronically through
the Commission's EDGAR system. For all Registered Entities, only the
manner of filing an ANE Exception Notice, and not its content, would
change. The ANE Exception Notice would continue to consist of the name
of the Registered Entity whose associated persons may conduct activity
covered by the ANE Exception, the fact that those associated persons
may conduct such activity, and the date. ANE Exception Notices filed
electronically on EDGAR also would be permitted, but not required, to
include contact details of a person or department at the Registered
Entity that counterparties may contact regarding the ANE Exception.
Each ANE Exception Notice thus contains a minimal amount of
information. As of January 31, 2023, only three Registered Entities had
filed an ANE Exception Notice, and the Commission estimates that up to
24 entities that engage in security-based swap dealing activity may
rely on the ANE Exception.\249\ Because of the minimal amount of, and
basic, narrative nature of, the information included in ANE Exception
Notices, the Commission preliminarily believes that, even if Registered
Entities file ANE Exception Notices (and the withdrawals described in
this section below) in a structured data language,

users of this data would be unlikely to employ structured data tools to
analyze the data, as these tools typically would assist in making
analysis of large data sets more efficient. Unless and until use of the
ANE Exception increases substantially, the benefits of structured data
in ANE Exception Notices may be limited. Accordingly, the Commission
believes that accepting ANE Exception Notices (and the withdrawals
described in this section below) in unstructured data format would make
the better use of the resources of the Commission and market
participants who use the data.
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    \249\ See Cross-Border Adopting Release, 85 FR at 6336 n.642.
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    The proposed change would require the Registered Entity to have
EDGAR access credentials and the ability to file electronically via
EDGAR. The Commission believes that requiring submission of ANE
Exception Notices electronically through EDGAR is appropriate because
most Registered Entities should already have access to EDGAR by virtue
of having used the system to register or file information with the
Commission,\250\ and should therefore also be familiar with how to use
the system. For those Registered Entities, the Commission would expect
there to be no additional burden associated with mandating EDGAR filing
of ANE Exception Notices, and would help to streamline and manage those
filings. A small number of Registered Entities may be first-time EDGAR
filers who would need to obtain EDGAR access credentials.\251\ If a
Registered Entity does not already have an EDGAR account, the proposed
amendment would require it to obtain EDGAR access credentials and be
able to file electronically on EDGAR before it could file an ANE
Exception Notice. Further, because reliance on the ANE Exception, which
requires the filing of an ANE Exception Notice, is voluntary, and
because the Commission provided the ANE Exception only for Relying
Entities whose affiliated Registered Entity is operationally capable of
complying with certain disclosure, communication and recordkeeping
conditions, the Commission would not provide for the possibility of
temporary or continuing hardship exemptions to allow the ANE Exception
Notice (or the withdrawals described in this section below) to be filed
on paper.\252\ An inability to file an ANE Exception Notice using the
Commission's EDGAR system may indicate that a Registered Entity's
operational conditions would present undue risk if the ANE Exception
were available to permit Relying Entities to defer registration as
SBSDs. Further, the ANE Exception is premised in part on the public
availability of the notice to Relying Entities. For these reasons, as
well as the simplicity of the expected filings and sophistication of
filing entities, the Commission does not believe there would be a need
for a hardship exemption.
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    \250\ A Registered Entity that is an SBSD must file its
application for registration on EDGAR, and this requirement has been
in place from the original compliance date for registration of
SBSDs. See 17 CFR 240.15Fb2-1(c). Additionally, a Registered Entity
that is a broker may be required to file with the Commission certain
information that is currently permitted to be filed on EDGAR. See,
e.g., 17 CFR 240.17a-5(d); supra note 197 and accompanying text.
    \251\ A party that succeeds to the registration of a Registered
Entity in a merger, conversion, or other corporate transaction may
not yet have EDGAR access credentials.
    \252\ See proposed amendments to 17 CFR 232.201(a), and 17 CFR
232.202(a).
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    The Commission believes that requiring an ANE Exception Notice to
be filed electronically on the Commission's established EDGAR filing
system would, among other things, facilitate more efficient and timely
transmission and dissemination of information and would benefit the
Commission, the Registered Entities, the Relying Entities, and other
market participants.\253\ The Commission additionally believes that
electronic EDGAR filing of ANE Exception Notices is appropriate because
it will enhance the ability of Relying Entities and their affiliates to
access and use the filed ANE Exception Notices to determine their
progress toward the ANE Exception's cap on inter-dealer security-based
swaps. Other members of the public also would be able to access and
review ANE Exception Notices more efficiently. Instead of reviewing
each notice individually in PDF format, users would be able to access
the public-facing portion of the Commission's EDGAR system to search
for a specific filer, for ANE Exception Notices filed after the
effective date of the amendment to Rule 3a71-3(d)(1)(vi), and/or for
withdrawals of ANE Exception Notices. Further, electronic EDGAR filing
of the ANE Exception Notices as proposed is intended to provide market
participants with access to such notices, including the names of the
Registered Entities that have filed notices, together with the date of
each notice, on EDGAR promptly after filing. The proposed EDGAR filing
requirement is intended to allow for the ANE Exception Notices to be
made available for public viewing promptly after filing without the
need for manual staff processing and the associated delays and demands
on Commission resources.
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    \253\ Currently, Rule 3a71-3(d)(1)(vi) provides that the
Commission shall publicly post ANE Exception Notices at the ``ANE
Exception Notices'' section of its website. The proposed amendment
to the rule would provide that such notices filed after the
effective date of the amendment would instead be publicly
disseminated through the Commission's EDGAR system.
---------------------------------------------------------------------------

    The proposed amendment to Exchange Act Rule 3a71-3(d)(1)(vi) would
include a new mechanism for withdrawing the ANE Exception Notice filed
through EDGAR. Currently, a Registered Entity whose associated persons
will no longer conduct ANE Activity pursuant to the ANE Exception and
who wishes to withdraw a filed ANE Exception Notice may contact the
Commission to request that the notice be manually removed from the ANE
Exception Notices web page.\254\ Upon removal of the notice from the
website, the ANE Exception Notice would be withdrawn and a Relying
Entity would no longer be able to rely on the ANE Exception unless
another relevant ANE Exception Notice is filed. The Commission also is
proposing to specify that, if the Registered Entity later becomes
unregistered or otherwise ineligible to serve as the Registered Entity
for purposes of the ANE Exception, the Registered Entity must promptly
withdraw its ANE Exception Notice.\255\ This would help to ensure that
ANE Exception Notices published on EDGAR remain accurate for market
participants and other users of the information.
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    \254\ See Cross-Border Adopting Release, 85 FR at 6283 n.138.
    \255\ Though the proposed requirement to withdraw would require
prompt filing of the withdrawal, this promptness standard would not
extend a Relying Entity's ability to rely on the ANE Exception after
the Registered Entity is no longer registered or otherwise no longer
satisfies the conditions described in 17 CFR 240.3a71-3(d)(1)
(``Rule 3a71-3(d)(1)'') but before the Registered Entity withdraws
the ANE Exception Notice. The proposed changes to Rule 3a71-
3(d)(1)(vi) to include a new mechanism for withdrawing the ANE
Exception Notice filed through EDGAR do not change whether a Relying
Entity can rely on the exception. Regardless of whether a withdrawal
is filed by the Registered Entity, each condition of Rule 3a71-
3(d)(1) must be satisfied in order for the Relying Entity to rely on
the exception.
---------------------------------------------------------------------------

    The Commission's proposal to move the ANE Exception Notice to EDGAR
would require the Registered Entity to file any withdrawal
electronically via EDGAR. If the original ANE Exception Notice was
filed on EDGAR, it would not be removed from EDGAR; rather, a
withdrawal filing on EDGAR would identify the notice as no longer
active.\256\ Users would have the ability

to search for ANE Exception Notices filed after the effective date of
the amendment to Rule 3a71-3(d)(1)(vi) that have not been withdrawn,
i.e., the notices that remain eligible to satisfy the ANE Exception's
notice condition. These filed and not withdrawn ANE Exception Notices
would help identify the Registered Entities who, together with their
affiliates, could cause a transaction to fall under the ANE Exception's
cap on certain inter-dealer security-based swaps. The inclusion of ANE
Exception Notices previously filed on EDGAR and withdrawn in EDGAR's
publicly available data further would aid Relying Entities and their
affiliates in determining their progress toward the ANE Exception's cap
at a particular point in the past.\257\ This functionality is not
available under the current email-based filing system, as the
Commission retains only currently active notices on the ``ANE Exception
Notices'' web page.
---------------------------------------------------------------------------

    \256\ Consistent with current Rule 3a71-3(d)(1)(vi), the EDGAR
system also would not allow for amendments to an ANE Exception
Notice. To report a name change or change of contact details on an
ANE Exception Notice via EDGAR, a Registered Entity must file a new
notice with the updated information.
    \257\ The inclusion of ANE Exception Notices previously filed on
EDGAR and withdrawn in EDGAR's publicly available data also may aid
Relying Entities and their affiliates in determining their progress
toward the cap during the 12-month period described in 17 CFR
240.3a71-3(d)(1)(vii) (``Rule 3a71-3(d)(1)(vii)''). Security-based
swap positions that counted toward the cap before withdrawal of an
ANE Exception Notice continue to count toward the cap after such
withdrawal for the period described in Rule 3a71-3(d)(1)(vii).
---------------------------------------------------------------------------

Request for Comment
    56. Should the Commission require ANE Exception Notices, and
withdrawals of ANE Exception Notices, to be filed electronically on
EDGAR? Explain why or why not.
    57. Does the current requirement to file this information via email
provide flexibility to Registered Entities, or promote efficiency for
Relying Entities and other market participants who use the information
in the ANE Exception Notices, that could be lost if these filings were
required to be made electronically on EDGAR? Explain why or why not.
    58. Would Registered Entities experience any practical difficulties
in preparing and filing an ANE Exception Notice or withdrawal of an ANE
Exception Notice on EDGAR as proposed? Explain why or why not.
    59. Does any market participant that acts, or expects to act, as a
Registered Entity for purposes of the ANE Exception not have, or expect
not to have, EDGAR access credentials? If yes, describe any burdens
that the Registered Entity would face in obtaining EDGAR access
credentials and explain whether the benefits of mandatory EDGAR
filing--for the Registered Entity, the Relying Entity, other users of
the ANE Exception Notices, and the Commission--justify those burdens.
    60. Would Relying Entities and/or other market participants that
use the information in the ANE Exception Notices experience any
practical difficulties in accessing or utilizing information in ANE
Exception Notices and withdrawals of ANE Exception Notices on EDGAR?
Explain why or why not. Would Relying Entities and/or other market
participants that use the information in the ANE Exception Notices
experience greater efficiency in identifying currently active ANE
Exception Notices on EDGAR? Would these users find it helpful to be
able to search for previously filed and withdrawn ANE Exception
Notices? Explain why or why not.
    61. Should an alternative manner of filing ANE Exception Notices
and withdrawals of ANE Exception Notices be required? Even if the
proposal to require these filings to be made electronically on EDGAR
would provide greater benefits as compared to filings made via email,
would an alternative manner of filing provide even more benefits than
the proposal? Please describe any alternative manner in detail and
assess how the alternative would impact Registered Entities, Relying
Entities, other market participants, and the Commission. For example,
should the Commission instead permit, but not require, ANE Exception
Notices to be filed electronically on EDGAR? Should the Commission
instead retain the current email-based filing system? Should the
Commission implement another method for filing ANE Exception Notices
and withdrawals of ANE Exception Notices?
    62. Should the Commission require or allow a specific unstructured
or structured data format for ANE Exception Notices and withdrawals of
ANE Exception Notices? If yes, describe the format and why it is
appropriate. If no, explain why not.
    63. Should the Commission require a Registered Entity to promptly
withdraw its ANE Exception Notice if it becomes unregistered or
otherwise ineligible to serve as the Registered Entity for purposes of
the ANE Exception? If yes, explain how this withdrawal information
would be useful to Registered Entities, Relying Entities and/or other
market participants. If no, explain how Relying Entities and other
market participants could use other methods to determine that any
particular Registered Entity is eligible or ineligible, particularly if
the Registered Entity is a broker who must comply with certain capital
requirements to maintain eligibility.
    64. Should the Commission allow Registered Entities to file ANE
Exception Notices and/or withdrawals of ANE Exception Notices on paper
in case of a temporary or continuing hardship in accordance with Rules
201 and 202 of Regulation S-T? \258\ Explain why or why not.
---------------------------------------------------------------------------

    \258\ 17 CFR 232.201 and 232.202.
---------------------------------------------------------------------------

    65. What, if any, costs would be associated with preparing ANE
Exception Notices and withdrawals for filing on EDGAR? Are those costs
more, less or the same as those under the current filing processes?
    66. How does the cost of the proposed amendments to Rule 3a71-
3(d)(1)(vi) compare to the cost of current requirements and the cost of
the alternatives described above or other alternatives?

C. Notice (and Any Amendment, Including Notice of Dispute Termination)
Provided Pursuant to Rule 15fi-3(c)

1. Overview of Valuation Dispute Notice Requirements
    Rule 15fi-3 under the Exchange Act generally requires SBS Entities
to: (1) engage in periodic portfolio reconciliation activities with
counterparties who are also SBS Entities; and (2) establish, maintain,
and follow written policies and procedures reasonably designed to
ensure that they engage in periodic portfolio reconciliation with
counterparties who are not SBS Entities with respect to their
outstanding (and uncleared) security-based swaps.\259\ Among other
things, Rule 15fi-3 specifies the requirements applicable to an SBS
Entity for purposes of engaging in portfolio reconciliation with either
type of counterparty, with regard to: (1) the information that the two
sides are required to exchange as part of the reconciliation process;
(2) the frequency by which an SBS Entity is required to reconcile its
security-based swap portfolios with its counterparties; (3) the
required policies and procedures specifying the means and timeframes by
which an SBS Entity is required to resolve discrepancies with respect
to either the valuation or a material term of a security-based swap;
and (4) the requirement that an SBS Entity agree in writing with each
of its counterparties on the terms of the portfolio reconciliation,
including agreement of the selection of any third-party service
provider.\260\
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    \259\ See 17 CFR 240.15Fi-3(a) and (b).
    \260\ See id.
---------------------------------------------------------------------------

    Rule 15fi-3 also contains a reporting requirement. Specifically,
Rule 15fi-3(c) requires each SBS Entity to promptly

notify the Commission and any applicable prudential regulator \261\ of
any security-based swap valuation dispute in excess of $20,000,000 (or
its equivalent in any other currency), at either the transaction or
portfolio level, if not resolved within: (1) three business days, if
the dispute is with a counterparty that is an SBS Entity; or (2) five
business days, if the dispute is with a counterparty that is not an SBS
Entity.\262\
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    \261\ The term ``prudential regulator'' is defined in 17 CFR
240.15Fi-1(m) to have the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a) and includes the Federal
Reserve, the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, the Farm Credit Association, and the
Federal Housing Finance Agency, as applicable to the SBS Entity.
    \262\ See 17 CFR 240.15fi-3(c).
---------------------------------------------------------------------------

    SBS Entities are also required to notify the Commission and any
applicable prudential regulator if the amount of any security-based
swap valuation dispute that was the subject of a previous notice
increases or decreases by more than $20,000,000 (or its equivalent in
any other currency), at either the transaction or portfolio level.\263\
Such amendments are required to be provided to the Commission and any
applicable prudential regulator no later than the last business day of
the calendar month in which the applicable security-based swap
valuation dispute increases or decreases by the applicable dispute
amount.\264\
---------------------------------------------------------------------------

    \263\ Id.
    \264\ Id.
---------------------------------------------------------------------------

    Rule 15fi-3(c) requires that the notices to the Commission be
submitted ``in a form and manner acceptable to the Commission.'' When
the Commission first proposed Rule 15fi-3(c), the Commission explained
that including the phrase ``in a form and manner acceptable to the
Commission'' was intended to provide SBS Entities with flexibility to
determine the most efficient and cost-effective means of making such
submissions, so long as it is deemed to be acceptable by the
Commission.\265\ Such flexibility was important for a number of
reasons, including the fact that SBS Entities that are dually
registered with the CFTC as either a swap dealer or major swap
participant (each, a ``Swap Entity'') have been subject to a comparable
CFTC requirement since 2013.\266\ In providing flexibility, SBS
Entities currently have two options for submitting these notices: (1)
an electronic submission using EDGAR; or (2) submission to a dedicated
Commission email address. Under both submission types, the system is
capable of accepting the notice using unstructured data in PDF format,
either as an attachment to an email or as an uploaded document to
EDGAR.
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    \265\ See Risk Mitigation Techniques for Uncleared Security-
Based Swaps, Exchange Act Release No. 84861 (Dec. 19, 2018), 84 FR
4614, 4621, n. 47 (Feb. 15, 2019).
    \266\ See Confirmation, Portfolio Reconciliation, Portfolio
Compression, and Swap Trading Relationship Documentation
Requirements for Swap Dealers and Major Swap Participants, 77 FR
55904 (Sep. 11, 2012).
---------------------------------------------------------------------------

    Security-based swap valuation dispute notices are not required to
include specific fields. However, SBS Entities are encouraged to
include in the notice basic information about the security-based swap
valuation dispute, including: (1) identifying information about both
counterparties (including each party's Legal Entity Identifier); (2)
the date of the dispute (or the termination date, if applicable); (3)
the type of dispute; (4) disclosure about which counterparty is the
receiver and which is the payer; and (5) the disputed amount, in U.S.
Dollars (``USD'').\267\ This information is consistent with the notices
that Swap Entities are required to provide to the NFA, which receives
notices from Swap Entities pursuant to CFTC Rule 23.502(c) \268\
regarding swap valuation disputes.\269\ SBS Entities also are
encouraged to provide any applicable identifier about the relevant
security-based swap (such as the product ID), the notional amount of
the security-based swap, and disclosure about which counterparty is
calling the dispute (i.e., the direction of the dispute).\270\
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    \267\ See Security-Based Swap Valuation Dispute Notices, Staff
Statement on Submitting Security-Based Swap Valuation Dispute
Notices, available at https://www.sec.gov/tm/Security-Based-Swap-Valuation-Dispute-Notices.
    \268\ 17 CFR 23.502(c).
    \269\ See NFA Interpretive Notice 9072 to Compliance Rule 2-49:
Swap Valuation Dispute Filing Requirements (May 18, 2017), available
at https://www.nfa.futures.org/rulebook/rules.aspx?Section=9&RuleID=9072 (``NFA Interpretive Notice 9072'')
and Effective date of Interpretive Notice to NFA Compliance Rule 2-
49: Swap Valuation Dispute Filing Requirements, Notice I-17-13 (July
20, 2017), available at https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=4827 (``NFA Notice to Members I-17-13''
together with NFA Interpretive Notice 9072, ``NFA Swap Valuation
Dispute Guidance'').
    \270\ See supra note 285.
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2. Proposal To Require Valuation Dispute Notices To Be Submitted in
EDGAR
    Based on the Commission's experience over the course of
implementing Rule 15fi-3(c), the Commission believes that it is now
appropriate to require that the security-based swap valuation dispute
notices be submitted to the Commission electronically on EDGAR using a
structured data language. Accordingly, the Commission is now proposing
to amend Rule 15fi-3(c) to affirmatively require SBS Entities to submit
these notices electronically in EDGAR using a custom XML-based data
language specific to the notices.\271\ This requirement would apply to
initial notices of a dispute and amendments of such notices, including
notices of termination of disputes.\272\ If these proposed changes are
adopted, SBS Entities would no longer be able to submit dispute notices
to the Commission using a dedicated email address or in PDF format on
EDGAR.\273\ As explained in further detail below, the Commission is
encouraging SBS Entities to include specific disclosures in their
dispute notices, and the custom XML-based data language that the
Commission would create for the dispute notices would include specific
elements reflecting those specific disclosures; however, SBS Entities
would also be permitted to leave those specific fields unpopulated and
provide their own description of the dispute in a separate field.\274\
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    \271\ SBS Entities relying on Commission orders granting
substituted compliance pursuant to 17 CFR 240.3a71-6 may be required
to provide the Commission reports regarding disputes between
counterparties, among other conditions in the orders. See, e.g.,
Exchange Act Release No. 93411 (Oct. 22, 2021), 86 FR 59797, 59815
(Oct. 28, 2021) (File No. S7-08-21). To satisfy that requirement,
SBS Entities currently can use either of the submission methods
available for submitting notices under Rule 15fi-3(c). If the
Commission adopts the proposed amendment to Rule 15fi-3(c), the
remaining method available for SBS Entities to provide the dispute
notices required by the Commission orders would be to submit them
electronically in EDGAR using the custom XML-based data language
specific to valuation dispute notices.
    \272\ Under the proposal, SBS Entities would be required to
submit amendments electronically in EDGAR using the custom XML-based
data language if the valuation dispute increases or decreases by the
amount specified in Rule 15fi-3(c)(2), regardless of the method the
SBS Entity used to submit the original notice or previous
amendments.
    \273\ The proposed changes to Rule 15fi-3(c) would require SBS
Entities with a U.S. prudential regulator to notify the prudential
regulator in a form and manner acceptable to the prudential
regulator. See proposed amendments to paragraph (c) of Rule 15fi-3,
17 CFR 240.15fi-3(c). Currently, Rule 15fi-3(c) does not specify how
SBS Entities must notify the prudential regulator. The Commission
believes that this additional proposed specificity in the rule would
provide additional guidance to SBS Entities, while allowing them the
flexibility to notify any applicable U.S. prudential regulator in
any form and manner acceptable to that regulator.
    \274\ See infra note 296 and accompanying text.
---------------------------------------------------------------------------

    The Commission believes that requiring submission of security-based
swap valuation dispute notices electronically on EDGAR and in a
structured data language is appropriate at this time for at least three
reasons. First, an SBS Entity should already have access to EDGAR (and
have already

completed a Form ID, the form used to apply for EDGAR access) at the
time it becomes required to submit a valuation dispute notice (or a
related amendment, including a termination notice), as the SBS Entity
would have to use EDGAR to register with the Commission in such
capacity, and should therefore be familiar with how to use the system.
As such, the Commission would not expect there to be any additional
burden associated with expressly mandating EDGAR submission.
    Second, the Commission understands that the security-based swap
valuation dispute notices may contain information that is sensitive to
one or both of the counterparties. The Commission does not intend for
these notices to operate as a means for providing public disclosure of
security-based swap valuation disputes. To the extent that the notices
provided to the Commission include confidential information that is
otherwise not publicly available, the SBS Entity can request the
confidential treatment of the information.\275\ If such a confidential
treatment request is made, the Commission anticipates that it would
keep the information confidential, subject to the provisions of
applicable law; \276\ whether any material is confidential is
determined pursuant to applicable law, including but not limited to the
Freedom of Information Act and Commission rules governing requests for
confidential treatment. As such, the Commission believes that using
EDGAR--as opposed to a dedicated email inbox--provides a more efficient
and secure way to submit these notices and allows SBS Entities to
electronically access and sort their notices.
---------------------------------------------------------------------------

    \275\ See 17 CFR 200.83.
    \276\ See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing
the public availability of information obtained by the Commission).
See also Risk Mitigation Techniques for Uncleared Security-Based
Swaps, Exchange Act Release No. 87782 (Dec. 18, 2019), 85 FR 6359,
6389-90. (Feb 4, 2020) (``Risk Mitigation Adopting Release'').
---------------------------------------------------------------------------

    Third, the Commission expects that the proposed requirement to
submit security-based swap valuation dispute notices in a structured
data language would enable the Commission to analyze the information in
those notices more efficiently and effectively. Under the current
requirements, should Commission staff seek to analyze the dispute
notice information (such as to identify trends in the incidence and
magnitude of disclosed valuation disputes across SBS Entities or a
given population thereof), the analysis would require significant
manual effort because the notices are not machine-readable. In
addition, the proposed structured data requirement would enable EDGAR
to perform technical validations (i.e., programmatic checks to ensure
the notices are appropriately standardized and formatted) upon intake
of the notices, thus potentially improving the quality of the submitted
data by decreasing the incidence of non-substantive errors (such as the
inclusion of text characters in a field designated to accept only
numeric characters).
    Under the proposal, SBS Entities would no longer be permitted to
submit PDF versions of dispute notices to the Commission. SBS Entities
currently may email or submit on EDGAR PDF versions of dispute notices,
and in some cases these notices may have been prepared using systems
that were designed also to comply with NFA swap valuation dispute
notice requirements. The proposal to require SBS Entities to submit
security-based swap valuation dispute notices to the Commission in a
structured data language would not allow SBS Entities to continue to
upload notices in a non-machine-readable, unstructured data language,
and instead would require SBS Entities to format these notices using a
custom XML-based data language.
    As a general matter, the Commission believes that the type of
information that Swap Entities are currently required to include in the
valuation dispute notices pursuant to the NFA Swap Valuation Dispute
Guidance should generally satisfy what the Commission believes to be
one of the primary objectives of Rule 15fi-3(c), which is to inform the
Commission and its staff that such a dispute has arisen, allowing the
Commission and staff to consider whether additional follow-up is
warranted. Accordingly, as a general matter, the Commission believes it
is likely that a timely notice provided to the Commission with respect
to a security-based swap valuation dispute would satisfy Rule 15fi-
3(c), as proposed to be amended, if it continued to contain the
information currently required by the NFA Swap Valuation Dispute
Guidance (but for the fact that such notice pertains to a security-
based swap).\277\ While Rule 15fi-3(c) is intended to provide SBS
Entities with flexibility to submit the required information to the
Commission in a manner that is most efficient for each SBS Entity,\278\
the Commission encourages SBS Entities to include in the notice basic
information about the security-based swap valuation dispute, including:
(1) identifying information about both counterparties (including each
party's Legal Entity Identifier); (2) the date of the dispute (or the
termination date, if applicable); (3) the type of dispute; (4)
disclosure about which counterparty is the receiver and which is the
payer; and (5) the disputed amount, in U.S. Dollars (``USD''). SBS
Entities are also encouraged to provide any applicable identifier about
the relevant security-based swap (such as the product ID), the notional
amount of the security-based swap, and disclosure about which
counterparty is calling the dispute (i.e., the direction of the
dispute). In amendments to previously submitted notices by SBS
Entities, including notices of termination of a dispute, SBS Entities
would be encouraged to provide information to assist the Commission in
understanding the purpose of the amendment or the circumstances of
termination of a dispute. Such information would assist staff in
focusing the scope of any follow-up inquiries and thus reduce both
Commission and SBS Entity resources used in connection with valuation
dispute reports.
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    \277\ See supra note 287. See also Risk Mitigation Adopting
Release 85 FR at 6368.
    \278\ See Risk Mitigation Adopting Release 85 FR at 6368; see
also Security-Based Swap Valuation Dispute Notices, available at
https://www.sec.gov/tm/Security-Based-Swap-Valuation-Dispute-Notices
(where the staff notes that, ``In terms of the contents of the
notice, the Commission explained when it adopted Rule 15fi-3(c) that
the notice is not required to include specific fields, `in order to
provide SBS Entities with the flexibility to submit the required
information to the Commission in a manner that is most efficient for
each SBS Entity.' '').
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    Consistent with this approach, the Commission's custom XML-based
data language would include discrete XML elements for each of the
encouraged disclosures listed above, and the associated fillable web
form on EDGAR would contain discrete fields mirroring those XML
elements. However, to provide the flexibility inherent to the
Commission's approach to dispute notices, the custom XML data language
(and associated fillable web form) would also contain an XML element
(and fillable field) to capture any information provided by SBS
Entities that does not fall within the encouraged disclosures listed
above. For the same reason, the custom XML data language for dispute
notices would permit SBS Entities to refrain from populating one or
more of the XML elements (and associated fillable fields) that reflect
the encouraged disclosures if responsive information is not needed to
report the dispute.
Request for Comment
    67. Should the Commission require security-based swap valuation
dispute notices and amendments, including

notices of dispute termination, to be submitted electronically with the
Commission through the EDGAR system? Explain why or why not.
    68. Does the current requirement to submit security-based swap
valuation dispute notices and amendments to the Commission via either
email or EDGAR provide flexibility to SBS Entities that could be lost
if these submissions were required to be made electronically on EDGAR
in a structured data language? Explain why or why not.
    69. Would SBS Entities experience practical difficulties in
preparing and submitting these notices electronically on EDGAR in a
structured data language? If so, explain why.
    70. What, if any, costs would be associated with valuation dispute
notices for submission on EDGAR? Are those costs more, less or the same
as those currently expending under the current submission processes?
    71. Should the Commission instead require that security-based swap
valuation dispute notices, and amendments (including dispute
termination notices) be submitted through a different process, such as
by email to a dedicated mailbox? If so, explain why and whether such
process should be adopted in lieu of requiring the notices to be
submitted electronically on EDGAR system in a structured data language,
or as a non-exclusive alternative (as is currently the case). How would
that process affect costs and implementation of the proposed amendment
to Rule 15fi-3(c) as compared to the current requirements?
    72. Even if the proposal to require these notices to be submitted
to the Commission electronically on EDGAR in a structured data language
would provide greater benefits as compared to the current requirement
to submit via email or EDGAR in an unstructured data format, would an
alternative manner of submission provide even more benefits than the
proposal, or be more appropriate? Why would an alternative manner of
submission be appropriate or more appropriate? Please describe any
alternative manner in detail and assess how the alternative would
impact SBS Entities, security-based swap markets and the Commission.
For example, should the Commission instead permit, but not require,
security-based swap valuation dispute notices to be submitted
electronically on EDGAR in structured data language? Should the
Commission instead retain the current email-based submission system
and/or the current unstructured data format for these reports made on
EDGAR? Should the Commission implement another method for submitting
security-based swap valuation dispute notices and amendments, including
notices of dispute termination? How would these or other alternatives
affect costs and implementation of the proposed amendment to Rule 15fi-
3(c) as compared to the current requirements?
    73. Should the Commission require security-based swap valuation
dispute notices, and amendments, including notices of dispute
termination, to be made in a structured data language? If yes, should
the Commission require SBS Entities to use a custom XML data language
for these reports or another structured data language? If no, which
data language should the Commission permit these reports to use and
why? Would a requirement to submit these reports in a structured data
language impose additional costs on, or create cost efficiencies for,
SBS Entities as compared to other (non-structured) data languages?
Please explain the benefits and costs of a requirement to submit these
reports in a non-structured data format, as compared to the benefits
and costs of requiring them in a structured data language.

D. Compliance Reports Submitted to the Commission Pursuant to Rule
15fk-1(c)(2)(ii)(A)

    Rule 15fk-1(c) requires that the chief compliance officer (``CCO'')
of an SBS Entity prepare and sign an annual compliance report (``CCO
report'') that must be submitted to the Commission within 30 days
following the deadline for filing the SBS Entity's annual financial
report with the Commission pursuant to section 15F of the Exchange Act
and the rules and regulations thereunder.\279\ Rule 15fk-1(c) does not
specify the manner in which the CCO report must be submitted, whether
in paper or electronic format.\280\ Accordingly, an SBS Entity may
submit its CCO report as a paper or electronic submission.
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    \279\ 17 CFR 240.15Fk-1(c).
    \280\ See id.
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    To facilitate submission of the CCO reports, the Commission has
prepared the EDGAR system to receive the reports electronically. The
Commission is proposing to amend Rule 15fk-1(c)(2)(ii)(A) to require
the CCO report to be submitted electronically in Inline XBRL (i.e., as
an Interactive Data File in accordance with Rule 405 of Regulation S-T)
\281\ through EDGAR.\282\ Requiring the electronic submission of these
reports through EDGAR would specify the manner of submission,
streamline and simplify the filing process for an SBS Entity and the
Commission, eliminate the need to establish manual processes that may
introduce error, and make submissions available immediately to
Commission staff. Furthermore, requiring the report to be submitted
electronically in Inline XBRL would facilitate access to the
information included on the CCO reports, enabling Commission staff to
perform more efficient retrieval, aggregation, and comparison across
different SBS Entities and time periods, as compared to an unstructured
PDF, HTML, or ASCII format requirement for the reports.\283\ The
functionality enabled by a machine-readable data requirement would
allow Staff to better utilize CCO reports to gauge the soundness of SBS
Entity compliance programs (e.g., by enabling efficient staff
identification of material changes to compliance policies or material
non-compliance matters) to ensure compliance with the Exchange Act and
rules and regulations thereunder applicable to security-based swaps,
thus ultimately furthering the Commission's mission of maintaining
fair, orderly, and efficient markets.\284\ In addition, the proposed
structured data requirement would enable EDGAR to perform technical
validations (i.e., programmatic checks to ensure the reports are
appropriately standardized, formatted, and complete) upon intake of the
reports, thus potentially improving the quality of the submitted data
by decreasing the incidence of non-substantive errors. The Commission
is proposing Inline XBRL (and not custom XML) as the structured data
language to be required for CCO reports, because those reports consist
of extended narrative descriptions, and whereas custom XML data
languages only have the capacity to accommodate brief narrative
descriptions, Inline XBRL can accommodate longer narrative

descriptions with presentation capabilities that preserve human-
readability while maintaining machine-readability.
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    \281\ 17 CFR 232.405.
    \282\ The proposed amendment would not change what is required
to be included in the CCO report under Exchange Act Rule 15fk-1(c).
See 17 CFR 240.15Fk-1(c).
    \283\ For further discussion of the proposed structured data
requirements, see infra section VII.A.
    \284\ See Business Conduct Standards for Security-Based Swap
Dealers and Major Security-Based Swap Participants, Exchange Act
Release No. 77617 (Apr. 14, 2016) 81 FR 29959, 30054 (May 13, 2016)
(stating that the proposed (and subsequently adopted) requirements
for Rule 15fk-1, including the requirement for the chief compliance
officer to prepare an annual compliance report that is submitted
with the Commission, ``underscore[s] the central role that sound
compliance programs play to ensure compliance with the Exchange Act
and rules and regulations thereunder applicable to security-based
swaps''); see also Business Conduct Standards for Security-Based
Swap Dealers and Major Security-Based Swap Participants, Exchange
Act Release No. 64766 (June 29, 2011), 76 FR 42395, 42435 (July 18,
2011).
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Request for Comment
    74. Should the Commission require CCO reports to be submitted
electronically with the Commission through the EDGAR system in a
structured data language? Explain why or why not.
    75. Would SBS Entities experience practical difficulties in
preparing and submitting CCO reports electronically on EDGAR in a
structured data language? If so, explain why.
    76. Should the Commission instead require that CCO reports be
submitted through a different process or format? If so, explain why and
whether such process or format should be adopted in lieu of requiring
CCO reports to be submitted electronically on EDGAR system in a
structured data language.
    77. Even if the proposal to require CCO reports to be submitted
electronically on EDGAR in a structured data language would provide
greater benefits as compared to submitting via email or on EDGAR in an
unstructured data language, would an alternative manner of submitting
provide even more benefits than the proposal, or be more appropriate?
Please describe any alternative manner in detail and assess how the
alternative would impact SBS Entities, security-based swap markets and
the Commission. For example, should the Commission instead permit, but
not require, CCO reports to be submitted electronically on EDGAR in
structured data language? Should the Commission require a different
structured data language, such as custom XML, for the CCO reports?
Should the Commission implement another method for filing CCO reports?
    78. Would a requirement to submit CCO reports in a structured data
language impose additional costs on, or create any benefits for, SBS
Entities as compared to other (non-structured) data languages? How
would the benefits and costs of a requirement to submit CCO reports in
an unstructured data language compare to the benefits and costs of a
requirement to submit in a structured data language?

VI. Amendments Regarding the FOCUS Report and Signature Requirements in
Rule 17a-5, 17a-12, and 18a-7 Filings

    Until 2021, broker-dealers were the only entities required to file
Parts II and IIA of Form X-17A-5, the FOCUS Report, which are used to
report unaudited financial and operational information on a monthly or
quarterly basis. In 2019, as part of a new regime to regulate security-
based swap activity, the Commission amended FOCUS Report Part II to:
(1) elicit additional information about the security-based swap
activities of broker-dealers that file Part II; (2) add OTC derivatives
dealers and SBS Entities that are not dually registered as broker-
dealers (``stand-alone SBS Entities'') as additional filers for FOCUS
Report Part II; and (3) adopt new FOCUS Report Part IIC to be filed by
SBS Entities with a prudential regulator (``bank SBS Entities'').\285\
Since these changes have taken effect, and firms have begun to file
these forms, it has come to the Commission's attention that amendments
are needed regarding the FOCUS Report to correct certain technical
errors and to provide clarifications. These proposed changes will help
improve the accuracy of the information the Commission collects on the
FOCUS Report, consistent with the goals set forth in section IV of this
release to require these reports to be filed in structured data
language. In addition, the Commission is proposing to allow electronic
signatures in Rule 17a-5, 17a-12, and 18a-7 filings, including the
FOCUS Report. The proposed amendments are described in more detail
below.
---------------------------------------------------------------------------

    \285\ See Recordkeeping and Reporting Requirements for Security-
Based Swap Dealers, Major Security-Based Swap Participants, and
Broker-Dealers, Exchange Act Release No. 87005 (Sept. 19, 2019), 84
FR 68550 (Dec. 16, 2019) (``SBS Recordkeeping and Reporting Adopting
Release'').
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A. Corrective and Clarifying Amendments to the FOCUS Report Part II

1. Computation of Minimum Regulatory Capital Requirements
    In the Calculation of Minimum Net Capital Requirement in the
Computation of Minimum Regulatory Capital Requirements section of the
FOCUS Report Part II, firms have noted that Rule 15c3-1 \286\ instructs
a broker-dealer that is also a futures commission merchant (``FCM'') to
report the greater of the broker-dealer ratio requirement or ``4
percent of the funds required to be segregated'' pursuant to the CFTC
rules.\287\ However, the form does not include a line for firms to
report the 4% of segregated funds. In addition, the FOCUS Report does
not align with Rule 15c3-1 in instructing firms at what point in the
net capital computation to compute the percentage of the risk margin
amount (if applicable) \288\ and the 10% addition for broker-dealers
engaged in reverse repurchase agreements.\289\ To align the FOCUS
Report's net capital computation with Rule 15c3-1, the Commission
proposes to add a line for the reporting of 4% of segregated funds and
to renumber other lines to clarify in the FOCUS Report when certain
computations should be made as set forth in Rule 15c3-1's net capital
computation. These changes are intended to conform the FOCUS Report to
Rule 15c3-1, with no substantive impact on the broker-dealer's required
capital computation under Rule 15c3-1.\290\
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    \286\ See 17 CFR 240.15c3-1 (``Rule 15c3-1'').
    \287\ See 17 CFR 240.15c3-1(a)(1)(iii).
    \288\ See 17 CFR 240.15c3-1(a)(7)(i) and (a)(10).
    \289\ See 17 CFR 240.15c3-1(a)(9)(i) through (iii).
    \290\ To align the FOCUS report's net capital computation with
Rule 15c3-1, the Commission is proposing the following changes to
the Calculation of Minimum Net Capital Requirement sub-section in
the Computation of Minimum Regulatory Capital Requirements section
of FOCUS Report Part II: (1) Delete old Line 5Bi; (2) Add new Line
5C; (3) Add a subtotal line as new Line 5D and renumber subsequent
lines and line references accordingly; and (4) Move old Line 5D to
new Line 7 and renumber subsequent lines and line references
accordingly.
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2. Statement of Income (Loss) or Statement of Comprehensive Income, As
Applicable
    The Commission is also proposing amendments to the FOCUS Report
Part II income statement. Currently, the income statement only provides
fields for reporting revenue from securities commissions, even though
firms may generate revenue from other types of commissions (e.g.,
commodity transactions and insurance products). Because it is important
for the Commission to receive comprehensive data on all types of firms'
commission revenue to ensure compliance with relevant rules and
properly supervise firms as part of the Commission's mission, the
Commission proposes to revise the revenue section of the income
statement to account for these other types of commission revenue.\291\
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    \291\ In summary, the Commission is proposing to revise Line 1E
and add new Lines 1F-1H in the Revenue sub-section in the Income
Statement section of FOCUS Report Part II.
---------------------------------------------------------------------------

3. Computation of CFTC Minimum Capital Requirements
    CFTC rules permit a firm that is registered with the CFTC as an
introducing broker, an FCM, or a swap dealer, and also registered with
the Commission as a broker-dealer or SBS Entity, to file the FOCUS
Report in lieu of the unaudited financial reports required under the
CFTC regulations.\292\ Because the CFTC is not receiving its own form
from these dual registrants and relies upon the Commission's FOCUS
Report as a source of data for these firms, the Commission's FOCUS

Report includes several sections or schedules set forth in the CFTC's
Form 1-FR that address the segregation of customer funds and the
calculation of CFTC minimum capital requirements to ensure the CFTC
receives complete information about these firms.\293\
---------------------------------------------------------------------------

    \292\ See 17 CFR 1.10(h); 17 CFR 23.105(d)(3).
    \293\ See FOCUS Report Part II's Computation of CFTC Minimum
Capital Requirements, Statement of Segregation Requirements and
Funds in Segregation for Customers Trading on U.S. Commodity
Exchanges, Statement of Cleared Swaps Customer Segregation
Requirements and Funds in Cleared Swaps Customer Accounts under
Section 4d(f) of the Commodity Exchange Act, Statement of
Segregation Requirements and Funds in Segregation for Customers'
Dealer Options Accounts, Statement of Secured Amounts and Funds Held
in Separate Accounts for Foreign Futures and Foreign Options
Customers Pursuant to CFTC Regulation 30.7.
---------------------------------------------------------------------------

    While CFTC FCMs are required to complete the Computation of CFTC
Minimum Capital Requirements section of FOCUS Report Part II, the FOCUS
Report does not instruct CFTC introducing brokers or swap dealers not
also registered as an FCM (``stand-alone introducing brokers'' or
``stand-alone swap dealers,'' respectively) to complete this section of
the form. Therefore, the Commission proposes to require CFTC-registered
introducing brokers and swap dealers (that are also registered with the
Commission as a broker-dealer or SBS Entity) to complete the
Computation of CFTC Minimum Capital Requirements section of FOCUS
Report Part II.

B. Harmonizing FOCUS Report Part IIC With the Call Report

    In 2019, the Commission adopted FOCUS Report Part IIC, a new
unaudited financial report to be filed by bank SBS Entities.\294\ FOCUS
Report Part IIC requires bank SBS Entities to report certain
information domestic banks already report on Federal Financial
Institutional Examination Council (``FFIEC'') Form 031 (also known as
the ``Call Report''),\295\ in an effort to reduce the administrative
burden of completing FOCUS Report Part IIC. The FOCUS Report Part IIC
is closely modelled on FFIEC Form 031, and when the same information is
solicited in both FFIEC Form 031 and FOCUS Report Part IIC, the same
line item number is used in both forms, except that the FOCUS Report
Part IIC line item ends with an additional ``b'' character.\296\
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    \294\ See SBS Recordkeeping and Reporting Adopting Release.
    \295\ See Federal Financial Institutions Examination Council,
Consolidated Reports of Condition and Income for a Bank with
Domestic and Foreign Offices--FFIEC 031, available at https://www.ffiec.gov/pdf/FFIEC_forms/FFIEC031_202203_f.pdf.
    \296\ See id. at 68581.
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    However, since FOCUS Report Part IIC was adopted, FFIEC Form 031
has been updated to, among other things, reflect changes in the
prudential regulators' capital rules and generally accepted accounting
principles.\297\ This has resulted in inconsistencies between FOCUS
Report Part IIC and FFIEC Form 031, and SEC staff have received a
number of phone calls seeking assistance on how to reconcile these
incompatibilities. For example, FFIEC Form 031 now includes a third
type of securities to be reported on the Balance Sheet section, while
FOCUS Report Part IIC continues to solicit values for the original two
types of securities.\298\ Similarly, FOCUS Report Part IIC continues to
solicit Tier 3 capital in the Regulatory Capital section even though
this concept no longer exists in the prudential regulators' capital
rules or in FFIEC Form 031, and FFIEC Form 031 now solicits a new
capital ratio (common equity tier 1 capital ratio) that is not
solicited in FOCUS Report Part IIC.\299\ Therefore, the Commission
proposes amendments to the assets and liabilities subsections of the
Balance Sheet section,\300\ the Regulatory Capital section,\301\ and
the Income Statement section \302\ of FOCUS Report Part IIC to
harmonize FOCUS Report Part IIC with FFIEC Form 031. In sum, the
proposed changes would simplify the filing of FOCUS Report Part IIC by
bank SBS Entities by permitting such entities to file with the
Commission the identical information required by the current version of
the Call Report, without the current inconsistencies raising questions
from filers regarding whether the Commission is seeking information
different than that required by the comparable line in the Call Report.
---------------------------------------------------------------------------

    \297\ See Federal Financial Institutions Examination Council,
Reporting Forms--FFIEC 031, Consolidated Reports of Condition and
Income for a Bank with Domestic and Foreign Offices, available at
https://www.ffiec.gov/forms031.htm (identifying current and
historical versions of FFIEC Form 031).
    \298\ Compare FFIEC Form 031, Schedule RC--Balance Sheet, Lines
2a-2c, with FOCUS Report Part IIC, Balance Sheet, Lines 2a-2b.
    \299\ Compare FFIEC Form 031, Schedule RC-R--Regulatory Capital,
with FOCUS Report Part IIC, Regulatory Capital, Line 4.
    \300\ The Commission is proposing the following changes to the
Balance Sheet section of FOCUS Report Part IIC: (1) Add new Line 2C;
(2) Revise Lines 4B, 4D, 10, 15, and 16; and (3) Delete Lines 10A
and 10B.
    \301\ The Commission is proposing the following changes to the
Regulatory Capital section of FOCUS Report Part IIC: (1) Delete Line
4 and renumber subsequent lines; (2) Revise renumbered Lines 4, 9,
and 10, and parenthetical note after Capital Ratios subheading; and
(3) Add new Line 8.
    \302\ The Commission is proposing the following changes to the
Income Statement section of FOCUS Report Part IIC: (1) Revise Line
7; and (2) Add new Lines F.i, F.ii, G.i, and G.ii, and delete Lines
F and G's fill-in fields due to addition of sub-lines.
---------------------------------------------------------------------------

C. OTC Derivatives Dealer FOCUS Report Filing Requirement

    Most broker-dealers file the FOCUS Report electronically on the
FINRA eFOCUS system developed by the Financial Industry Regulatory
Authority, Inc. (``FINRA''). These broker-dealers file the FOCUS Report
pursuant to a plan established by the broker-dealer's SRO, the
procedures and provisions of which have been submitted to and declared
effective by the Commission pursuant to paragraph (a)(3) of Exchange
Act Rule 17a-5.\303\ Domestic stand-alone SBS Entities and bank SBS
Entities are not dually registered as broker-dealers, and therefore are
not subject to these SRO plans, but they are subject to a Commission
order that separately requires these firms to file the FOCUS Report
electronically on the system developed by the Commission, the ``SEC
eFOCUS system.'' \304\ Although the SEC eFOCUS system is separate from
the FINRA eFOCUS system, it appears the same to users, is developed and
maintained by FINRA, and is modelled on the FINRA eFOCUS system. The
Commission order designating FINRA to receive FOCUS Reports from stand-
alone SBS Entities and bank SBS Entities reasoned that FINRA is
uniquely qualified to provide the Commission with a familiar and
consolidated platform for these firms to file the FOCUS Report, uniform
ancillary ongoing services associated with these filings, and a
consolidated platform for transmitting this data to the
Commission.\305\
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    \303\ See 17 CFR 240.17a-5(a)(3).
    \304\ See Order Designating Financial Industry Regulatory
Authority, Inc., to Receive Form X-17A-5 (FOCUS Report) from Certain
Security-Based Swap Dealers and Major Security-Based Swap
Participants, Exchange Act Release No. 88866 (May 14, 2020), 85 FR
29993 (May 19, 2020).
    \305\ See id.
---------------------------------------------------------------------------

    OTC derivatives dealers are a type of broker-dealer that engages in
limited securities activities and is exempt from SRO membership.\306\
OTC derivatives dealers are required to file FOCUS Report Part II, but
unlike other broker-dealers and stand-alone SBS Entities, OTC
derivatives dealers are required to file FOCUS Report Part II in paper
``at the Commission's principal office in Washington, DC.'' \307\ Given
the similarities between OTC derivatives dealers and the broker-dealers
and stand-alone SBS Entities filing FOCUS Report Part II, the
Commission proposes to require OTC derivatives dealers to file the
FOCUS Report Part II on the SEC eFOCUS system developed and

maintained by FINRA. Because OTC derivatives dealers are required to be
affiliated with a broker-dealer,\308\ OTC derivatives dealers'
operational staff already are familiar with the FINRA eFOCUS system's
interface, and would be able to use the same preexisting templates,
software, and procedures currently used by the broker-dealer to file
FOCUS Reports on the FINRA system. This would help contain costs and
time burdens on OTC derivatives dealers associated with the proposed
amendment to electronically submit these reports. Having this
information submitted in the eFOCUS system would furthermore facilitate
the ability of Commission staff to compare data between these different
types of entities in a consistent manner and in the same database,
which would allow staff to monitor these registrants more
comprehensively and effectively.\309\ For these reasons, the Commission
proposes to amend paragraph (a)(2) of Rule 17a-12 to require OTC
derivatives dealers to file FOCUS Report Part II on the SEC eFOCUS
system maintained by FINRA.\310\
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    \306\ See 17 CFR 240.3b-12.
    \307\ See 17 CFR 240.17a-12(a).
    \308\ See 17 CFR 240.3b-12.
    \309\ As an alternative, the Commission considered whether to
require OTC derivatives dealers to file their FOCUS Reports on
EDGAR, but preliminarily concludes that filing on SEC eFOCUS is
preferable because the SEC eFOCUS system is already set up to
receive FOCUS Report filings, OTC derivatives dealers' staff are
already familiar with the SEC eFOCUS system, and Commission staff
would be better able to compare data between different entity types
if FINRA eFOCUS or SEC eFOCUS is used by all firm types to file the
FOCUS Report.
    \310\ The Commission also proposes to amend paragraph (a)(2) of
Rule 17a-12 to replace ``deemed to be confidential'' with ``deemed
to be confidential for the purposes of section 24(b) of the Act''
for consistency with the language used in other rules (e.g.,
paragraph (c)(4) of Exchange Act Rule 17h-2T) and to clarify the
legal basis of the rule. This proposed amendment is not intended to
change the substantive meaning of the sentence.
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D. Signature Requirements in Rule 17a-5, 17a-12, and 18a-7 Filings

1. Number of Signatures on FOCUS Report
    The cover pages of Parts II, IIA, and IIC of the FOCUS Report
include signature lines for the filer's principal executive officer,
principal financial officer, and principal operations officer (or their
comparable officers).\311\ In the time since the revised FOCUS Report
was adopted, it has come to the Commission's attention that obtaining
the signatures of all three principal officers on or close to the same
day may be burdensome, especially with respect to larger firms with
thousands of employees. Further, the Commission believes that obtaining
the signatures of two of the three senior officers would help ensure
that the broker-dealer's senior executives are responsible for the
accuracy of the information being filed with the Commission. Therefore,
the Commission proposes to require only two of the three principal
officers' signatures in an effort to balance the Commission's desire
for individual accountability with the burden on the filer.
---------------------------------------------------------------------------

    \311\ FOCUS Report Part IIA uses slightly different wording:
Principal Executive Officer or Managing Partner, Principal Financial
Officer or Partner, and Principal Operations Officer or Partner.
---------------------------------------------------------------------------

2. Electronic Signatures in Rule 17a-5, 17a-12, and 18a-7 Filings
    The Commission also proposes to allow signatories on Rule 17a-5,
17a-12, and 18a-7 filings to choose between providing either manual or
electronic signatures.\312\ Remote work has increased in frequency in
the wake of COVID-19, ``increase[ing] the difficulties associated with
obtaining manual `wet' signatures,'' while ``improvements in electronic
signature software technology make it possible to confirm (with at
least equal confidence to the collection of manual signatures) who has
signed a document and when it was signed.'' \313\
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    \312\ See proposed amendments to paragraphs (f)(3)(v)(B),
(i)(1)(ii), and (p) of Rule 17a-5; paragraphs (g)(2), (j)(1), and
new paragraph (q) of Rule 17a-12; paragraphs (e)(3)(v)(B),
(h)(1)(ii), and (j) of Rule 18a-7; FOCUS Report Part IIA and
instructions; FOCUS Report Part II instructions; FOCUS Report Part
IIC instructions.
    \313\ See Electronic Signatures in Regulation S-T Rule 302,
Exchange Act Release No. 10889 (Nov. 17, 2020), 85 FR 78224 (Dec. 4,
2020) (``Electronic Signatures Release'') (quoting comment letter
from Richard Blake, et al., available at https://www.sec.gov/comments/4-760/4760-7278993-217809.pdf).
---------------------------------------------------------------------------

    The Commission proposes that the signing process for an electronic
signature would need to, at a minimum: ``(1) Require the signatory to
present a physical, logical, or digital credential that authenticates
the signatory's individual identity; (2) Reasonably provide for non-
repudiation of the signature; (3) Provide that the signature be
attached, affixed, or otherwise logically associated with the signature
page or document being signed; and (4) Include a timestamp to record
the date and time of the signature.'' \314\ These requirements, which
were first identified in the Commission's Electronic Signatures
Release, are needed so that the Commission can verify the authenticity
of the electronic signature, but are intended to be technologically
neutral and allow for different types and forms of electronic
signatures, provided that the signing process satisfies the
aforementioned conditions that relate to the validity and
enforceability of an electronic signature.\315\
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    \314\ See proposed amendment to instructions for FOCUS Report
Parts II, IIA, and IIC. An example of an electronic signature using
this signing process is Adobe Acrobat's digitally signed
certificate, when the document is locked after signing.
    \315\ See Electronic Signatures Release, 85 FR at 78225.
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Request for Comment
    79. Are there any lines in the FOCUS Report Parts II, IIA, or IIC
that should be added or removed because they result in inaccuracies or
inconsistencies with other portions of the FOCUS Report? If so,
identify the lines and explain why they should be added or removed. For
example, should the Commission update Line 10 (Market risk exposure--
for Basel 2.5 firms) of the Computation of Net Capital (Filer
Authorized to Use Models) section of FOCUS Report Part II to reflect
that firms are now using Basel 3? If so, explain why how Line 10 should
be updated, and why. Are there any lines in the FOCUS Report that
require further clarification or instruction? If so, identify the lines
and explain the needed clarification or instruction.
    80. The Commission is proposing amendments to FOCUS Report Part II.
Do commenters agree or disagree with these proposed amendments? Explain
why or why not. Should the Commission adopt its proposal to amend the
Calculation of Minimum Net Capital Requirement subsection to include 4%
of funds required to be segregated under the CFTC's rules even though
the CFTC's rules no longer include the 4% of segregated funds ratio
requirement? If so, what should the 4% of segregated funds be defined
with respect to? If not, what standard should be used, and should Rule
15c3-1 be amended for consistency with the FOCUS Report? Explain. What,
if any, costs would be associated with adopting the proposed amendments
to FOCUS Report Part II? Are those costs more, less or the same as not
amending the FOCUS Report? How do firms currently complete the
Calculation of Minimum Net Capital Requirement subsection, and why?
Should the reference to the CFTC's ratio net capital requirement be
added to the Commission's ratio net capital requirement, or should
firms be instructed to apply the greater of the CFTC or Commission
ratio net capital requirements? Explain.
    81. Please address whether the proposed amendments would be
appropriate, and discuss any potential alternatives to the proposed
amendments. For instance, as an alternative to amending the FOCUS

Report to include the 4% of segregated funds ratio amount, should the
Commission instead amend Rules 15c3-1 and 15c3-1d to remove references
to these requirements that are no longer in effect under the CFTC's
rules? In particular, Rules 15c3-1 and 15c3-1d include references to 4,
6, or 7 ``percent of the funds required to be segregated pursuant to
the Commodity Exchange Act and the regulations thereunder (less the
market value of commodity options purchased by option customers on or
subject to the rules of a contract market, each such deduction not to
exceed the amount of funds in the option customer's account)'' that
impose additional requirements that apply to broker-dealers that are
also registered with the CFTC as FCMs.\316\ However, the CFTC's rules
no longer include a requirement linked to segregated funds. Removing
these references from Rules 15c3-1 and 15c3-1d would mean that broker-
dealers that also are registered as FCMs would no longer be subject to
these additional requirements based on CFTC requirements that are no
longer in effect. However, as FCMs, they will remain subject to capital
and other financial responsibility requirements under the Commodity
Exchange Act and the CFTC's rules thereunder. Therefore, broker-dealers
that are FCMs would continue to be required to comply with the capital
requirements of Rule 15c3-1 and its appendices (excluding the
requirements linked to the CFTC's requirements that are no longer in
effect) and to comply with the capital and other financial
responsibility rules of the Commodity Exchange Act and the CFTC's rules
thereunder. In light of this, should the Commission amend Rules 15c3-1
and 15c3-1d to remove all references to the CFTC's segregated ratio
requirement, which is no longer in effect? Explain why or why not. How
would this impact the capital of broker-dealers also registered as
FCMs?
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    \316\ See 17 CFR 240.15c3-1(a)(1)(iii) (4%), (e)(2)(ii) (7%); 17
CFR 240.15c3-1d(b)(6)(iii) (7%), 17 CFR 240.15c3-1d(b)(7) (7%), 17
CFR 240.15c3-1d(b)(8)(i)(A) (6%), 17 CFR 240.15c3-1d(b)(10)(ii)(B)
(4%), 17 CFR 240.15c3-1d(c)(2) (6%), 17 CFR 240.15c3-1d(c)(5)(i)(B)
(7%).
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    82. As a second alternative to amending the FOCUS Report to include
the 4% of segregated funds ratio amount, should the Commission replace
the references to the CFTC's segregated ratio requirement with the
ratio requirement currently used in the CFTC rules? For example, should
the capital requirements for FCMs referenced in existing paragraph
(a)(1)(iii) of Rule 15c3-1 be modified to refer to ``the FCM's risk-
based capital requirement pursuant to the Commodity Exchange Act (7
U.S.C. 1 et seq.) and the regulations thereunder''? \317\ Explain why
or why not. In addition, where the other requirements of Rules 15c3-1
and 15c3-1d currently reference specific percentages that are multiples
of the FCM's segregated funds requirement (e.g., 7% under Rule 15c3-
1d(b)(6)(iii)),\318\ should the references be modified to read ``120%
of the aggregate amount of the FCM's risk-based capital requirement''?
Explain why or why not.
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    \317\ See 17 CFR 1.17(a)(1)(i)(B) (prescribing an FCM's risk-
based capital requirement, as the sum of: (1) 8% of the total risk
margin requirement for positions carried by the FCM in customer
accounts and noncustomer accounts; and (2) for an FCM that is also a
registered swap dealer, 2% of the total uncleared swap margin).
    \318\ See 17 CFR 240.15c3-1(e)(2)(ii) (referencing 7%); 17 CFR
240.15c3-1d(b)(6)(iii) (referencing 7%), 17 CFR 240.15c3-1d(b)(7)
(referencing 7%), 17 CFR 240.15c3-1d(b)(8)(i)(A) (referencing 6%),
17 CFR 240.15c3-1d(b)(10)(ii)(B) (referencing 4%), 17 CFR 240.15c3-
1d(c)(2) (referencing 6%), 17 CFR 240.15c3-1d(c)(5)(i)(B)
(referencing 7%).
---------------------------------------------------------------------------

    83. Should the Commission amend FOCUS Report Part IIC to align with
FFIEC Form 031? Explain why or why not. If the prudential regulators
make further amendments to FFIEC Form 031 before the Commission issues
an adopting release, if any (e.g., to how assets, liabilities, or
equity capital are reported on FFIEC Form 031's Schedule RC, to how
regulatory capital or capital ratios are reported on FFIEC Form 031's
Schedule RC-R, to how income is reported on FFIEC Form 031's Schedule
RI), should the Commission make additional amendments to FOCUS Report
Part IIC to align the form with FFIEC Form 031, as amended? Explain why
or why not.
    84. The Commission is proposing four minimum standards that an
electronic signature must satisfy. Should the Commission specify
standards for electronic signatures? Explain why or why not. Instead of
proposing the four minimum standards, should the Commission instead
rely the E-Sign Act's more general definition of a digital signature
(which is consistent with the four minimum standards)? \319\ Explain
why or why not. Are any of these standards unnecessary or should any
additional standards be added? Explain why. Are any of these standards
unclear? If so, explain how they could be clarified. What, if any,
costs would result from adopting the proposed standards for an
electronic signature, as opposed to the aforementioned alternatives?
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    \319\ The E-Sign Act states: ``The term `electronic signature'
means an electronic sound, symbol, or process, attached to or
logically associated with a contract or other record and executed or
adopted by a person with the intent to sign the record.'' 15 U.S.C.
7006.
---------------------------------------------------------------------------

    85. The Commission is proposing to require two of the three
signature lines to be signed on the cover page of the FOCUS Report. Do
commenters agree? Explain, and if not, identify an alternative
approach. Should the Commission require all three signature lines to be
signed? Should the Commission require two of the three signature lines
to be signed as a general rule, but allow only one of the three
signature lines to be signed when FINRA permits a single person at the
broker-dealer to fill two of the roles identified on the signature
lines? Explain why or why not. What, if any, costs would result from
adopting the proposal to require two of the three signature lines to be
signed on the cover page of the FOCUS Report?
    86. The Commission is proposing to require OTC derivatives dealers
to file their FOCUS Reports on the SEC eFOCUS system. What would be the
burden of requiring OTC derivatives dealers to file their FOCUS Reports
on the SEC eFOCUS system maintained by FINRA? Explain. Should the
Commission require OTC derivatives dealers to file their FOCUS Reports
on another electronic platform, such as the Commission's EDGAR system?
Explain why or why not. What, if any, costs would result from requiring
OTC derivatives dealers to file their FOCUS Reports on the SEC eFOCUS
system, as compared to allowing these firms to file by paper or on
EDGAR?

VII. Proposed Amendments to Regulation S-T (Including Structured Data
Requirements) and Rule 24b-2

A. Proposed Amendments to Regulation S-T (Including Structured Data
Requirements)

    The Commission is proposing to amend Rule 101(a) of Regulation S-T
to designate Form X-17A-5 Part III, broker-dealer supplemental reports
filed pursuant to paragraph (k) of Rule 17a-5, OTC derivatives dealer
supplemental reports filed pursuant to paragraphs (k), (l), and (m) of
Rule 17a-12, Form 17-H, Form X-17A-19, notices (and withdrawals of
notices) filed pursuant to Rule 3a71-3(d)(1)(vi), notices (and
amendments, including notices of dispute termination) submitted to the
Commission pursuant to Rule 15fi-3(c), and compliance reports submitted
with the Commission pursuant to Rule 15fk-1(c)(2)(ii)(A) (``Covered
EDGAR Documents'') as mandated electronic

submissions.\320\ Further, the Commission is proposing to amend Rule
101(d) of Regulation S-T to require that all documents, including any
information with respect for which confidential treatment is requested,
filed pursuant to paragraphs (d) or (k) of Rule 17a-5, paragraphs (b),
(k), (l), or (m) of Rule 17a-12, Rule 17a-19, Rule 17h-2T, or paragraph
(c) of Rule 18a-7, and all notices and amendments provided pursuant to
paragraph (c) of Rule 15fi-3, must be filed or submitted in electronic
format.
---------------------------------------------------------------------------

    \320\ The Commission is also proposing a technical update to
Rule 100(c) of Regulation S-T, 17 CFR 232.100(c), to update the name
of the Division of Trading and Markets from the previously used
Division of Market Regulation.
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    Regulation S-T, in conjunction with the EDGAR Filer Manual and
other applicable rules, regulations, and forms, governs the electronic
submission of documents filed with or otherwise submitted to the
Commission on EDGAR.\321\ The Commission is proposing to add the
following filings to Rule 101(a), Mandated Electronic Submissions and
Exceptions, of Regulation S-T:
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    \321\ Item 10(a) of Regulation S-T. The EDGAR Filer Manual
contains the technical specifications needed for filers to make
submissions through the EDGAR system. The Commission originally
adopted the EDGAR Filer Manual on Apr. 1, 1993, with an effective
date of Apr. 26, 1993. See Adoption of EDGAR Filer Manual,
Securities Act Release No. 6986 (Apr. 1, 1993), 58 FR 18638 (Apr. 9,
1993).

 Form X-17A-5 Part III
 ANC broker-dealer supplemental reports filed pursuant to
paragraph (k) of Rule 17a-5
 OTC derivatives dealer supplemental reports filed pursuant to
paragraph (k), (l), and (m) of Rule 17a-12
 Form 17-H
 Form X-17A-19
 Notices (and withdrawals of notices) filed pursuant to Rule
3a71-3(d)(1)(vi)
 Notices (and amendments, including notices of dispute
termination) provided to the Commission pursuant to Rule 15fi-3(c)
 Compliance reports submitted with the Commission pursuant to
Rule 15fk-1(c)(2)(ii)(A)

    These proposed amendments would incorporate the new electronic
submission requirements into the existing structure of Regulation S-T
and would ensure that the EDGAR rules in Regulation S-T apply to the
forms and other documents proposed to be submitted electronically on
EDGAR.\322\ The filings would be added as mandatory electronic
submissions under Regulation S-T; however, pursuant to the existing
procedures in Rules 201 and 202 of Regulation S-T,\323\ filers of these
filings (except for notices and withdrawals of notices filed pursuant
to Rule 3a71-3(d)(1)(vi)) \324\ could request temporary or continuing
hardship exemptions.
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    \322\ As such, rules such as 17 CFR 232.12 (addressing, among
other things, the time during which documents may be submitted by
EDGAR) and 17 CFR 232.13 (addressing, among other things, the
business day on which documents are deemed to be submitted) would be
applicable to the documents proposed to be included in Rule 101(a)
of Regulation S-T.
    \323\ 17 CFR 232.201 and 202.
    \324\ The Commission is proposing to amend Rules 201 and 202 of
Regulation S-T to preclude the possibility of temporary or
continuing hardship exemptions from electronic filing for ANE
Exception Notices and withdrawals. See supra note 270 and
accompanying text.
---------------------------------------------------------------------------

Structured Data Requirements
    The Commission is also proposing amendments to Rule 405 of
Regulation S-T to implement the proposed Inline XBRL requirements. Rule
405 sets forth the Interactive Data File requirements for Commission
filings, and specifies that Inline XBRL is the structured data language
that must be used for Interactive Data Files.\325\ The Commission's
proposed amendments would expand Rule 405 of Regulation S-T to add
Inline XBRL requirements for CCO reports and for portions of Form X-
17A-5 Part III and related annual filings, Form 17-H, Form 1, and Form
CA-1.\326\
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    \325\ See 17 CFR 232.405.
    \326\ See supra Sections II, IV.A, and V.D.

                    Proposed Inline XBRL Requirements
------------------------------------------------------------------------
                                                Proposed Inline XBRL
                   Form                             requirements
------------------------------------------------------------------------
Form CA-1.................................  Schedule A, Exhibits C, F,
                                             H, J, K, L, M, O, R, S.
Form 1....................................  Exhibits D, E (in part), I.
Form X-17A-5 Part III.....................  All disclosures except
                                             facing page.
Form 17-H.................................  Item 4 (financial
                                             statements).
CCO Reports...............................  All disclosures.
------------------------------------------------------------------------

    For Form CA-1, Schedule A and Exhibits C, F, H, J, K, L, M, O, R, S
would be filed in Inline XBRL.\327\ For Form 1, Exhibits D, E (in
part), and I would be filed in Inline XBRL.\328\ For Form X-17A-5 Part
III, all disclosures except the facing page would be filed in Inline
XBRL. For Form 17-H, Item 4 (the filer's financial statements) would be
filed in Inline XBRL. Finally, for CCO reports, all disclosures would
be submitted in Inline XBRL.
---------------------------------------------------------------------------

    \327\ Schedule A to the execution page requires certain
descriptive responses to complement the clearing agency's execution
page disclosures. Exhibit C requires a description of the clearing
agency's organizational structure. Exhibit F requires a description
of material pending legal proceedings involving the clearing agency.
Exhibit H requires the clearing agency's financial statements.
Exhibit J requires a description of the clearing agency's services
and functions. Exhibit K requires a description of the clearing
agency's security measures and procedures. Exhibit L requires a
description of the clearing agency's safeguarding measures and
procedures. Exhibit M requires a description of the clearing
agency's backup systems. Exhibit O requires a description of
criteria governing access to the clearing agency's services and a
description of the reasons for imposing such criteria. Exhibit R
requires a schedule of prohibitions and limitations on access to the
clearing agency's services. Exhibit S requires, if applicable, a
statement explaining why the clearing agency should be exempt.
    \328\ Exhibit D requires the financial statements of the
exchange's subsidiaries and affiliates. Exhibit E requires, in
relevant part, a description of the manner of operation of the
electronic trading system that the exchange uses to effect
transactions (however, the proposed structuring requirement would
not include the copy of the users' manual). Exhibit I requires the
exchange's financial statements.
---------------------------------------------------------------------------

    In 2009, the Commission adopted rules requiring operating company
financial statements (including footnotes and schedules thereto) and
mutual fund risk return summaries to be provided in a structured,
machine-readable data language using eXtensible Business Reporting
Language (``XBRL'').\329\ In 2018, the Commission adopted modifications
to these requirements by requiring issuers to use Inline XBRL, which
yields documents that are both machine-readable and human-readable, to
reduce the time and effort associated with preparing XBRL filings and
improve the quality and usability of XBRL data for investors.\330\
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    \329\ See Interactive Data to Improve Financial Reporting,
Securities Act Release No. 9002 (Jan. 30, 2009), 74 FR 6776 (Feb.
10, 2009) (``2009 Financial Statement Information Adopting
Release'') and Interactive Data for Mutual Fund Risk Return/Summary,
Securities Act Release No. 9006 (Feb. 11, 2009), 74 FR 7748 (Feb.
19, 2009) (``2009 Mutual Fund Risk/Return Summary Adopting
Release'') (requiring submission of an Interactive Data File to the
Commission in exhibits to such filings).
    \330\ See Inline XBRL Filing of Tagged Data, Securities Act
Release No. 10514 (June 28, 2018), 83 FR 40846, 40847 (Aug. 16,
2018). Inline XBRL allows filers to embed XBRL data directly into an
HTML document, eliminating the need to tag a copy of the information
in a separate XBRL exhibit. Id. at 40851. The Commission has since
adopted rules adding Inline XBRL requirements for certain closed-end
investment company disclosures, certain variable contract issuer
disclosures, and disclosures relating to Commission filing fees. See
Updated Disclosure Requirements and Summary Prospectus for Variable
Annuity and Variable Life Insurance Contracts, Investment Company
Act Release No. 33814 (Mar. 11, 2020), 85 FR 25964 (May 1, 2020)
(requiring variable contracts to use Inline XBRL to submit certain
required prospectus disclosures); Securities Offering Reform for
Closed-End Investment Companies, Investment Company Act Release No.
10771 (Apr. 8, 2020), 85 FR 33290 (June 1, 2020) (requiring business
development companies to submit financial statement information, and
registered closed-end funds and business development companies to
tag registration statement cover page information and specified
prospectus disclosures using Inline XBRL); Filing Fee Disclosure and
Payment Methods Modernization, Securities Act Release No. 10997
(Oct. 13, 2021), 86 FR 70166 (Dec. 9, 2021).

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    The Commission is proposing to require some or all of each Covered
SRO Form, the information required by Exchange Act Rule 19b-4(e), Form
X-17A-19, Form X-17A-5 Part III, Form 17-H, and the notices to the
Commission (and any amendments to the notices) required by Exchange Act
Rule 15fi-3(c) to be provided in custom XML-based data languages rather
than in Inline XBRL.\331\ While the majority of EDGAR filings are
submitted in HTML or ASCII, certain EDGAR filings are submitted using
machine-readable, XML-based languages that are each specific to the
particular EDGAR document type being submitted.\332\ For these custom
XML filings in EDGAR, filers or submitters are typically provided the
option to either submit the filing directly to EDGAR in the XML-based
data language, or manually input their disclosures in an online web
application and/or web form developed by the Commission that converts
the completed form into an EDGAR-specific XML document.\333\
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    \331\ The Commission is not adding a structured data requirement
for the Covered Supplementary Materials or the notices required by
Exchange Act Rule 3a71-3(d)(1)(vi). See supra section V.B.
    \332\ Unlike the Inline XBRL requirements, the custom XML
requirements for EDGAR documents are not explicitly set forth in a
separate rule within Regulation S-T; instead, they are set forth in
the EDGAR Filer Manual. As such, the proposed amendments that expand
Regulation S-T to require electronic filing or submission of the
affected documents in accordance with the EDGAR Filer Manual also
implement the proposed custom XML requirements. See 17 CFR
232.101(a); 17 CFR 232.301. See also Current and Draft Technical
Specifications, available at https://www.sec.gov/edgar/filer-information/current-edgar-technical-specifications.
    \333\ See supra note 230 at 8 and 9.
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    In addition to the custom XML documents that the Commission
currently requires registrants to file on EDGAR, the Commission
separately requires broker-dealers to post reports on order routing and
execution on their own websites (i.e., not on EDGAR) using an XML-based
language specific to those reports.\334\ In doing so, broker-dealers
must use the custom XML schema (i.e., data language) and associated PDF
renderer that the Commission has published on its website. The
Commission proposes to amend Exchange Act Rule 19b-4(e) to require SROs
similarly to post the information required under the rule on their own
websites using the most recent versions of the related custom XML
schema and the associated PDF renderer that the Commission would
publish on its website.
---------------------------------------------------------------------------

    \334\ See 17 CFR 242.606; 2020 Order Handling Data Schema and
Report Renderer for Broker-Dealers, available at https://www.sec.gov/structureddata/dera_taxonomies.
---------------------------------------------------------------------------

    The Commission believes that requiring the Proposed Structured
Documents to be filed or submitted in a structured data language would
provide the same benefits to data users that have been observed from
other structured data requirements in Commission rules. For example,
structured data requirements for the aforementioned broker-dealer order
routing disclosures have been leveraged by financial academics to
compare execution quality across broker-dealers.\335\ As another
example, the Commission has used structured order execution disclosures
to inform its rulemaking efforts.\336\ The Commission therefore expects
structured data language requirements for the Proposed Structured
Documents would similarly make the reported disclosures more readily