As a result, issuers would be required to tag information that likely
is in substantially final form. Consequently, the information would be
useful to investors and issuers would be unlikely to need to revise the
information significantly in a way that would trigger multiple
submissions of interactive data. As each submission would be tagged to
indicate that the information in the submission has been revised, we
believe investors should be able to monitor changes in the interactive
data efficiently. Further, the rules as adopted provide that a
company's first filing to be subject to the interactive data
requirement would be a quarterly report or, for a foreign private
issuer not required to file quarterly reports, an annual report.
Accordingly, interactive data exhibits will not be required for initial
public offerings.
d. Registration Statements Under the Exchange Act Covered by the Rules
    We are not adopting a requirement to submit interactive data for
the financial statements contained in registration statements under the
Exchange Act on Forms 10, 20-F and 40-F. Although we only expressly
proposed to require interactive data in connection with Securities Act
registration statements, the proposing release solicited comment on
whether to require interactive data for the financial statements in
Forms 40-F and in registration statements under the Exchange Act on
Forms 10 and 20-F.
    One commenter suggested waiting in order to evaluate experience
with interactive data submission before requiring submission of
Exchange Act registration statements.\192\ Another commenter stated
that the interactive data requirements should apply to Canadian issuers
that report in accordance with U.S. GAAP and, ultimately, IFRS as
issued by the IASB.\193\ The rules as adopted will not require
interactive data files to be submitted as an exhibit to Forms 10, 20-F
or 40-F when used as Exchange Act registration statements. However, a
filer is permitted to voluntarily submit an interactive data exhibit
with these registration statements.
---------------------------------------------------------------------------

    \192\ See letter from UTC.
    \193\ See letter from EDGAROnline.
---------------------------------------------------------------------------

4. Initial Filing Grace Period
    As noted above, interactive data will be required at the same time
as the rest of the filing to which it relates. However, each company's
initial interactive data submission, regardless of filing type, will
have a 30 day grace period, and therefore will be permitted as an
amendment to a:
     Periodic report on Form 10-K, 20-F, 40-F or 10-Q within 30
days after the earlier of the due date or filing date of the related
report;
     Securities Act registration statement within 30 days after
the filing date of the price or price range as part of the related
registration statement; \194\ or
---------------------------------------------------------------------------

    \194\ The 30 day grace period would begin for a Securities Act
registration statement once the price or price range is filed as
part of it because it is at that time the interactive data filing
requirement becomes applicable.
---------------------------------------------------------------------------

     Report on Form 8-K or 6-K that contains revised or updated
financial statements that have been revised to reflect a subsequent
event rather than the correction of an error within 30 days after the
filing date of the related report.
    In addition, as noted above, in year two for the first filing that
is required to have footnotes and schedules tagged using all levels of
detail, the interactive data exhibit will be required within 30 days
after the due date or filing date of the related registration statement
or periodic, current or transition report or Form 6-K, as applicable.
    In the voluntary program, filers were permitted to provide the
interactive data at the time of filing or at any later time,

without a deadline.\195\ We believe that, consistent with our view
regarding the potential value of widespread market use of the
interactive data, companies should be required to provide the
interactive data at the time the registration statement or report is
filed or required to be filed, whichever is earlier. We do not believe
this timing requirement will place undue pressure on filers as
experience with tagging financial statements grows and software and
taxonomies develop. We believe, for example, based on our experience
with the voluntary program, that the time period for the quarterly or
annual report is sufficient for filers to convert their ASCII or HTML
financial statements into interactive data format and that the initial
grace periods help to alleviate concerns over timing burdens.
---------------------------------------------------------------------------

    \195\ The voluntary program permits filers to provide financial
information in interactive data form as an exhibit to a report on
Form 8-K or Form 6-K when the related traditional format financial
statements appear in a registration statement or periodic report.
The new rules, however, will require that interactive data be
provided as an exhibit to the registration statement or periodic
report that contains the related traditional format financial
statements.
---------------------------------------------------------------------------

    Commenters overwhelmingly supported a 30 day grace period for the
initial submission and initial detail tagged footnote submission of
interactive data and many supported a 30 day grace period for
additional submissions during the phase-in and, in some cases,
beyond.\196\
---------------------------------------------------------------------------

    \196\ See, e.g., letters from ACLI/AIA, AICPA, AllState,
Astoria, CNW Group (CNW), Comcast, Constellation, and EEI.
---------------------------------------------------------------------------

    Some commenters suggested that the grace period apply either for
all interactive data submissions during the first two years of the
phase-in period,\197\ or for every submission made during the entire
phase-in period.\198\ These commenters generally reasoned that during
the time specified, companies and service providers still would be
familiarizing themselves and developing expertise related to the
tagging process and, as a result, would need time to complete the
tagging process. Some of those that supported additional grace periods
noted that the tagging process will be an additional step to financial
statement preparation for years to come and that it will take time to
integrate the interactive data process with the financial statement
preparation process.\199\ One commenter noted that the grace period
following the filing of a Form 10-K offers little relief for smaller
companies due to the number of filings prepared shortly thereafter.
Specifically, this commenter noted that at many smaller companies, the
staff responsible for the preparation of a Form 10-K immediately turn
their time and attention to the preparation of the company's proxy
statement after filing the Form 10-K. The commenter stated that a Form
10-Q is not followed by a similar series of reporting obligations, so a
grace period following this report is consequently more helpful in
assisting companies avoid excessive expense and burden.\200 \
---------------------------------------------------------------------------

    \197\ See, e.g., letters from Constellation, EEI, and IBM.
    \198\ See, e.g., letters from AllState, Astoria, Comcast, Foley
& Lardner (Foley), Pfizer, and UBmatrix.
    \199\ See, e.g., letters from FEI and SCS.
    \200\ See letter from ABA.
---------------------------------------------------------------------------

    A few commenters suggested a grace period for submissions after the
phase-in period. Some stated that technical difficulties and the
limited availability of support services would necessitate the
permanent or temporary extension of a grace period and proposed, on an
on-going basis after the initial phase-in period, that interactive data
files be due within 4 or more days after the related official filing is
filed. Further, these commenters believed that this type of extension
would not ultimately impair the usefulness of interactive data while
moving the tagging procedures out of the financial reporting
preparation timeframe but still providing it to investors in a timely
fashion.\201\ However, other commenters were concerned that a grace
period beyond the periods proposed would diminish the usefulness of
interactive data submitted beyond the due date of the related official
filing.\202 \
---------------------------------------------------------------------------

    \201\ See, e.g., letters from AllState, EEI, SCS, and Southern.
    \202\ See, e.g., letters from CFA and EDGAR Online.
---------------------------------------------------------------------------

    We acknowledge all of these concerns and suggestions, and while we
are adopting the grace periods substantially as proposed, we are
deferring the start of the phase-in which we believe may help to
alleviate potential burdens by giving more time to prepare the initial
submission. We also believe that the eventual dropping of the grace
period after the initial submissions will help to make the interactive
data files more useful and relevant to investors by requiring the
submissions at the same time as the related official filing.
    Many commenters suggested that grace period submissions be filed as
exhibits to Form 8-K or 6-K rather than as exhibits to amendments to
Exchange Act periodic reports, so as to avoid negative connotations
associated with the filing of an amendment.\203\ One commenter even
suggested the creation of new forms for these amendments to distinguish
them from substantive amendments to periodic reports.\204\ We
acknowledge these concerns, but note that grace period submissions
filed with amended periodic reports need contain only the relevant
interactive data as an exhibit and therefore there should not be any
confusion that the amended report is being filed for any other reason.
In this regard we note that Rule 12b-15 under the Exchange Act \205\
generally provides that any amendment to a filing that required a
certification must contain another certification; however, we clarify
that, consistent with the exclusion of interactive data from the
disclosure certification requirements discussed in part II.C.4 below,
an amendment whose sole purposes is to submit interactive data as an
exhibit is not subject to the certification requirements of Rule 12b-15
under the Exchange Act. We therefore adopt the rules as proposed as
they relate to submitting interactive data as part of an amendment to
the form containing the related traditional format financial
statements.
---------------------------------------------------------------------------

    \203\ See, e.g., letters from AICPA, Constellation, Institute of
Management Accountants (IMA), NAREIT, Purnhagen, and Teva
Pharmaceutical Industries Limited (Teva).
    \204\ See letter from IBM.
    \205\ 17 CFR 240.12b-15.
---------------------------------------------------------------------------

5. Web Site Posting of Interactive Data
    We believe interactive data, consistent with our new rules, should
be easily accessible for all investors and other market participants.
As such disclosure becomes more widely available, advances in
interactive data software, online viewers, search engines and other Web
tools may in turn facilitate improved access to and usability of the
data, promoting its awareness and use. Encouraging widespread
accessibility to filers' financial information furthers our mission to
promote fair, orderly, and efficient markets, and facilitate capital
formation. We believe Web site availability of the interactive data
will encourage its widespread dissemination, thereby contributing to
lower access costs for users. We therefore are requiring, generally as
proposed, that each filer covered by the new rules provide the same
interactive data that it will be required to provide to the Commission
on its corporate Web site, if it has one, on the earlier of the
calendar day it filed or was required to file the related registration
statement or report, as applicable.\206\ The interactive

data should be accessible through the issuer's Web site address the
issuer normally uses to disseminate information to investors.\207\
Finally, the interactive data will be required to be posted for at
least 12 months, which is consistent with issuers' full one year
reporting cycle.
---------------------------------------------------------------------------

    \206\ New Rule 405 of Regulation S-T contains the Web site
posting requirement. We also are providing, however, that Web site
posting of the interactive data will not be required until the end
of any applicable grace period that applies to the submission of the
interactive data to the Commission. Similarly, we are providing that
Web site posting of the interactive data will not be required before
submission of the interactive data when submission of the data is
delayed in accordance with and during the term of any applicable
hardship exemption provided under Rule 201 or 202 as proposed to be
revised. Revisions to Rules 201 and 202 are more fully discussed
below in Part II.E.
    \207\ If the issuer has a corporate Web site but does not
normally disseminate information to investors through its Web site,
it should provide access to the interactive data through a location
on its Web site that it reasonably believes will facilitate user
access to the forms. We took a similar approach to Web site posting
location and 12 month time frame in connection with requiring that
issuers with corporate Web sites post on their Web sites beneficial
ownership reports filed with respect to their securities on Forms 3,
4 and 5 under Section 16(a) of the Exchange Act. See Section
16(a)(4)(C) [15 U.S.C. 78p(a)(4)(C)], Rule 16a-3(k) [17 CFR 240.16a-
3(k)] and Release No. 33-8230 (May 7, 2003) [68 FR 25788].
---------------------------------------------------------------------------

    We believe that access to the interactive data on corporate Web
sites will enable search engines and other data aggregators to more
quickly and cheaply aggregate the data and make them available to
investors because the data will be available directly from the filer,
instead of through third-party sources that may charge a fee. It could
also transfer reliability costs of data availability to the public
sector by reducing the likelihood that investors cannot access the data
through the Commission's Web site due to down-time for maintenance or
to increased network traffic. We also believe that availability of
interactive data on corporate Web sites will make it easier and faster
for investors to collect information on a particular filer if the
interactive data is on the filer's Web site already, rather than if
investors would be required to visit separately (for example, by
hyperlink) and search the Commission's Web site for information,
particularly if the investor is already searching the issuer's Web
site. To help further our goals of decreasing user cost and increasing
availability, we will not allow companies to comply with the Web
posting requirement by including a hyperlink to the Commission's Web
site.
    We believe this requirement will be consistent with the increasing
role that corporate Web sites perform in supplementing the information
filed electronically with the Commission by delivering financial and
other disclosure directly to investors. We also believe that this
requirement can provide an incentive for corporations to add content to
or otherwise enhance their Web sites, thereby improving investor
experience. For example, we note that since 2003 issuers with corporate
Web sites have been required to post on their Web sites, directly or by
hyper linking to a third-party Web site such as the Commission's Web
site, beneficial ownership reports filed with respect to their
securities on Forms 3, 4, and 5. We also note that many companies
provide on their Web sites access to their periodic reports, proxy
statements, and other Commission filings.\208\ The new rules will
expand such Web site posting by requiring companies with Web sites to
post their interactive data as well.\209 \
---------------------------------------------------------------------------

    \208\ Companies filing registration statements and accelerated
filers and large accelerated filers in their periodic reports are
required to disclose whether or not they make available free of
charge on or through their Web site, if they have one, their annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K, and amendments to those reports. Companies that do not
make their reports available in that manner also must disclose the
reasons they do not do so and whether they voluntarily provide
electronic or paper copies of their filings free of charge upon
request. See Item 101(e) of Regulation S-K.
    \209\ As further discussed in Part II.E, under the new rules a
company that fails to post its interactive data as required will be
deemed ineligible to use short form registration Forms S-3, S-8, and
F-3 and will be deemed not to have adequate public information
available for purposes of Rule 144(c)(1) unless and until it posted.
---------------------------------------------------------------------------

    Commenters had mixed views on the proposed Web site posting
requirement. Some commenters stated that it would be appropriate for a
company to post interactive data on its Web site because, for example,
many users of financial statements access such types of information
through corporate Web sites.\210\ Other commenters objected to the Web
site posting requirement, citing reasons including cost,\211\ lack of
investor benefit,\212\ and facilitating use of information out of
context.\213\ Finally, some commenters addressed posting details such
as when the interactive data must be posted and for how long it must
remain accessible.
---------------------------------------------------------------------------

    \210\ See, e.g., letters from FEI, CFA and UTC.
    \211\ See, e.g., letters from IBM and Starkman.
    \212\ See, e.g., letters from Starkman and VEC.
    \213\ See, e.g., letters from ABA and SCS.
---------------------------------------------------------------------------

    We believe that issuers that already have corporate Web sites can
post interactive data at a reasonable cost \214\ and that such posting
can benefit investors by facilitating their access to interactive data
\215\ and, as a result, facilitating their automated parsing and
analysis of financial information. Investors and analysts routinely
parse information out of filed financial statements, whether in paper
or electronic format. Interactive data merely facilitates the
parsing.\216\ In this regard, an issuer that wishes to provide access
to context beyond the posted interactive data would be free to indicate
on its Web site where a user could access the Commission filing to
which the interactive data is an exhibit. Similarly, an issuer could
provide access to the remainder of the filing directly on its Web site
or by hyperlink to the Commission's Web site.
---------------------------------------------------------------------------

    \214\ See Part IV.
    \215\ One commenter stated that an issuer should be able to
satisfy its posting requirement through a hyperlink. See letter from
IBM. Similarly, another commenter suggested dropping the posting
requirement because the information would be available on the
Commission's Web site and the requirement would be difficult to
monitor. See letter from E&Y. We believe, however, that search
engines and other data aggregators might be better able to access
the posted information directly from issuers' Web sites.
    \216\ We believe that parsing information in a filing is useful
but we continue to emphasize the need to evaluate the entirety of a
filing.
---------------------------------------------------------------------------

    Several commenters suggested that issuers not be required to post
interactive data on corporate Web sites on the same day they are
submitted to the Commission because that would be too burdensome.\217\
Commenters suggested grace periods to post such data such as 24 hours
\218\ or, in the case of foreign private issuers, two business days
\219\ after the related form has been filed with the Commission. As
proposed, issuers would have been required to post the interactive data
by the end of the business day on the earlier of the date the
interactive data is submitted or is required to be submitted to the
Commission. In order to make it easier for issuers to satisfy the
posting requirement by providing several more hours in which to comply
but still have the posted information available in a timely manner, the
new rules, as adopted, will require posting by the end of the calendar
rather than business day specified.
---------------------------------------------------------------------------

    \217\ See, e.g., letters from Foley, Liberty Global, Inc. (LGI),
NYCBA, Southern, and Teva.
    \218\ See, e.g., letter from LGI.
    \219\ See, e.g., letter from Teva.
---------------------------------------------------------------------------

    One commenter recommended that the Commission clarify the length of
time that issuers would be required to keep interactive data
posted.\220\ As a result, we are revising the proposed rules to require
that an issuer keep the information posted for at least 12 months. As
we stated in connection with adopting a 12-month posting period for
Forms 3, 4 and 5,\221\ we believe that such a period strikes an
appropriate balance between the issuer effort needed to post and the
investor benefit from having access to the posted material through the
additional source

of the issuer's Web site. In this regard, we note that the interactive
data would be available indefinitely on the Commission's Web site.\222\
---------------------------------------------------------------------------

    \220\ See letter from ABA.
    \221\ Rule 16a-3(k) [17 CFR 240.16a-3(k)].
    \222\ See Release No. 33-8230 (May 7, 2003) [68 FR 25788].
---------------------------------------------------------------------------

C. Accuracy and Reliability of Interactive Data

1. Voluntary Program
    Data must be accurate to be useful to investors. To help assure the
accuracy of interactive data in the voluntary program, the data, upon
receipt by our electronic filing system, undergoes a validation
separate from the normal validation of the traditional format
filing.\223\ Potential liability also helps ensure the accuracy and
reliability of the data. Although the voluntary program has provided
limited protections from liability under the federal securities laws
\224\ and excluded interactive data from being subject to officer
certification requirements under Exchange Act Rules 13(a)-14 and 15d-
14,\225\ interactive data in the voluntary program are subject to the
anti-fraud provisions of the federal securities laws. The voluntary
program also encourages participants' efforts to create accurate and
reliable interactive data that is the same as the corresponding
disclosure in the traditional electronic format filing by providing
that a participant is not liable for information in its interactive
data that reflects the same information that appears in the
corresponding portion of the traditional format filing, to the extent
that the information in the corresponding portion of the traditional
format filing was not materially false or misleading. To further
encourage reasonable efforts to provide accurate interactive data, the
voluntary program treats interactive data that do not reflect the same
information as the official version as reflecting the official version
if the volunteer meets several conditions. The volunteer must have made
a good faith and reasonable attempt to reflect the same information as
appears in the traditional format filing and, as soon as reasonably
practicable after becoming aware of any difference, the volunteer must
amend the interactive data to cause them to reflect the same
information.\226\
---------------------------------------------------------------------------

    \223\ If the traditional format filing meets its validation
criteria, but any interactive data fail their own validation
criteria, all interactive data are removed and the traditional
format filing is accepted and disseminated without the interactive
data file.
    \224\ Rule 402 under Regulation S-T provides these liability
protections.
    \225\ See Rules 13a-14(f) [17 CFR 240.13(a)-14(f)] and 15d-14(f)
[17 CFR 240.15d-14(f)].
    \226\ 17 CFR 232.402(b).
---------------------------------------------------------------------------

2. Use of Technology To Detect Errors
    Complete, accurate, and reliable financial statements and other
disclosures are essential to investors and the proper functioning of
the securities markets. Our new requirement to submit interactive data
with registration statements and reports is designed to provide
investors with new tools to obtain, review, and analyze information
from public filers more efficiently and effectively. To satisfy these
goals, interactive data must meet investor expectations of reliability
and accuracy. Many factors, including companies' policies and
procedures as buttressed by incentives provided by the application of
technology by the Commission, market forces and the liability
provisions of the federal securities laws, help further those goals.
    Building on the validation criteria referenced above for
interactive data in the voluntary program, we plan to use validation
software to check interactive data for compliance with many of the
applicable technical requirements and to help the Commission identify
data that may be problematic. For example, we expect the Commission's
technology to:
     Check if required conventions (such as the use of angle
brackets to separate data) are applied properly for standard and, in
particular, non-standard special labels and tags;
     Identify, count, and provide the staff with easy access to
non-standard special labels and tags; \227\
---------------------------------------------------------------------------

    \227\ For example, if a company uses the word ``liabilities'' as
the caption for a value data tagged as ``assets,'' the software
would flag the filing and bring it to the staff's attention. In
contrast, if the company used ``Total Assets'' or ``Assets, Total,''
the software would identify the use of these terms as a low risk
discrepancy.
---------------------------------------------------------------------------

     Identify the use of practices, including some the XBRL
U.S. Preparers Guide contains, that enhance usability; \228\
---------------------------------------------------------------------------

    \228\ The XBRL U.S. Preparers Guide, available from the XBRL
U.S. Web site, provides guidance to facilitate preparing information
in the interactive data format.
---------------------------------------------------------------------------

     Facilitate comparison of interactive data with disclosure
in the corresponding traditional format filing;
     Check for mathematical errors; and
     Analyze the way that companies explain how particular
financial facts relate to one another.\229\
---------------------------------------------------------------------------

    \229\ The technology used to show these relationships is known
as a ``linkbase.'' Linkbases are part of an XBRL taxonomy and serve
one of two primary purposes: (1) To define additional information
about a particular concept (for example to express the definition
for Inventory or to express the authoritative references for
Inventory); and (2) to express relationships between different
concepts (for example Inventory adds up to Current Assets or
Inventory appears after Accounts Receivable on the balance sheet,
but before Prepaid Expenses). The Commission will seek to ensure
that linkbases not only comply with technical requirements but also
are not used to evade accounting standards.
---------------------------------------------------------------------------

    The availability of interactive data to the staff may also enhance
its review of company filings. After the FDIC required submission of
interactive data, it reported that its analysts were able to increase
the number of banks they reviewed by 10% to 33%, and that the number of
bank reports that failed to fully meet filing requirements fell from
30% to 0%.\230\
---------------------------------------------------------------------------

    \230\ These bank reports require information that is more
structured and less varied than the information we will require. As
a result, the FDIC's efficiency gains from the use of interactive
data likely would be greater than ours.
---------------------------------------------------------------------------

    We believe analysts, individual investors and others outside the
Commission that use the interactive data submitted to us also will make
use of software and other tools to evaluate the interactive data and,
as a result, market forces will encourage companies to provide
interactive data that accurately reflects the corresponding traditional
format data in the traditional format filing. For example, the use of
non-standard special labels or tags (extensions) could introduce
errors, but we expect the open source and public nature of interactive
data and the list of tags for U.S. financial statement reporting would
enable software easily to detect and identify any modifications or
additions to the approved list of tags. Based on our knowledge of the
existing software market, we believe such software and other technology
will be widely available for free or at reasonable cost. Investors,
analysts, and other users therefore would be able to identify the
existence and evaluate the validity of any such modifications or
additions. We also anticipate that companies preparing their
interactive data and investors, analysts, and other users will use such
devices to search for and detect any changes made to the standard list
of tags. The ability of analysts and other users to discover mistakes
or alterations not consistent with the desired use of interactive data
may give filers an additional incentive to prepare such data with care
and promptly to correct any errors.
3. Application of Federal Securities Laws
    An interactive data file generally will be subject to the federal
securities laws in a modified manner similar to that of the voluntary
program under new Rule 406T if the filer submits the interactive data
file within 24 months of the time the filer first is required to submit

interactive data files \231\ but no later than October 31, 2014.\232\
Rule 406T provides that during the time a filer's interactive data
files are treated in this modified manner, they will be:
---------------------------------------------------------------------------

    \231\ The 24-month period would be exclusive of a grace period.
For example, a large accelerated filer first required to submit
interactive data for financial statements in a Form 10-Q for the
fiscal period ended June 30, 2009, would be required to submit the
interactive data by 30 days after the Form 10-Q's August 10, 2009
due date but its 24-month period would end August 10, 2011.
    \232\ In regard to liability and also similar to the voluntary
program, we are adopting as proposed an exclusion for interactive
data files from the officer certification requirements of Rules 13a-
14 and 15d-14 of the Exchange Act. That exclusion is discussed
further below in Part II.C.4.
---------------------------------------------------------------------------

     Subject to specified anti-fraud provisions \233\ except in
connection with a failure to comply with the tagging requirements that
occurs despite a good faith attempt to comply and is corrected promptly
after the filer becomes aware of the failure;
---------------------------------------------------------------------------

    \233\ The specified anti-fraud provisions are Section 17(a)(1)
of the Securities Act [15 U.S.C. 77q(a)(1)], Section 10(b) [15
U.S.C. 78j(b)] of Rule 10b-5 [17 CFR 240.10b-5] under the Exchange
Act and Section 206(1) [15 U.S.C. 80b-6(1)] of the Investment
Advisers Act of 1940 [15 U.S.C. 80b-1 et seq.].
---------------------------------------------------------------------------

     Deemed not filed or part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act and
not otherwise subject to liability under these sections;
     Deemed not filed for purposes of Section 18 of the
Exchange Act or Section 34(b) of the Investment Company Act and not
otherwise subject to liability under these sections; and
     Deemed filed for purposes of (and, as a result, benefit
from) Rule 103 under Regulation S-T.\234\

    \234\ Interactive data files will be deemed filed for purposes
of Rule 103 under Regulation S-T [17 CFR 232.103] and, as a result,
the issuer will not be subject to liability for electronic
transmission errors beyond its control if the issuer corrects the
problem through an amendment as soon as reasonably practicable after
the issuer becomes aware of the problem. Interactive data files will
be deemed filed for purposes of Rule 103 regardless of whether they
are eligible for the modified treatment provided by Rule 406T at the
time submitted. Rule 406T expressly provides that interactive data
files are deemed filed for purposes of Rule 103 to remove any
negative inference that otherwise might be drawn due to the fact
that Rule 406T deems interactive data files to be not filed for
other specified purposes.

In regard to correcting an interactive data file, we are adding the
term ``promptly'' to the list of defined terms in Rule 11 under
Regulation S-T. Rule 11 defines ``promptly'' as ``as soon as reasonably
practicable under the facts and circumstances at the time.'' The
definition is followed by a non-exclusive safe harbor. The safe harbor
generally provides that a correction made by the later of 24 hours or
9:30 a.m. on the next business day after the filer becomes aware of the
need for the correction is deemed promptly made. If a filer fails to
correct within the safe harbor timeframe, the filer still may have
corrected promptly depending on the applicable facts and circumstances.
    Despite the modified treatment of interactive data files under the
federal securities laws, a filer would be subject to actions under
circumstances where the protections of new Rule 406T do not apply. For
example, the Commission could bring an action against a filer under
Section 13(a) of the Exchange Act if the filer submits an interactive
data file with a periodic report and the interactive data file fails to
comply with the tagging requirements despite a good faith attempt,
where the filer fails to correct the interactive data file promptly
after it discovers the failure. On the other hand, the Commission would
not be able to bring an action against a filer under Sections 17(a)(2)
and (3) under the Securities Act if the filer submits an interactive
data file with a Securities Act registration statement if the
interactive data file fails to comply despite a good faith effort but
the filer acted negligently.
    New Rule 406T differs from proposed Rule 406 primarily by omitting
reference to interactive data in viewable form and applying only for a
specified time.
    We believe that interactive data in viewable form are best
addressed in relation to interactive data files and traditional
concepts of liability. Interactive data in viewable form that are
displayed on the Commission's Web site will reflect the related
interactive data file and, as a result, such interactive data in
viewable form should be treated in the same manner as the related
interactive data file in regard to a filer's failure to correctly tag
an interactive data file that results in a failure of the interactive
data in viewable form to reflect the related official filing.
Interactive data in viewable form that are displayed on other Web sites
would be subject to general anti-fraud principles applicable to
republication of another person's statements.\235\ Consistent with
traditional concepts of liability, a filer would incur no additional
liability for a failure that occurs in both an interactive data file
and the related interactive data in viewable form.
---------------------------------------------------------------------------

    \235\ These general anti-fraud principles include the concepts
of aiding and abetting and control person liability. In addition,
liability for interactive data in viewable form displayed by third
parties would depend in part on whether that information is
attributable to the filer. See, e.g., Release No. 34-58288 (Aug. 7,
2008) at Section II.B.2.
---------------------------------------------------------------------------

    We believe that limiting the modified application of the federal
securities laws to a specified period improves the balance between
avoiding unnecessary cost and expense and encouraging accuracy in
regard to interactive data because it recognizes that issuers and
service providers likely will grow increasingly skilled at and
comfortable with the tagging requirements.
    In the proposing release, the Commission sought comment on modified
treatment of interactive data under the federal securities laws.
Commenters overwhelmingly supported limiting liability,\236\ with a
fair number of commenters supporting the proposed approach, and a fair
number suggesting that the proposed approach be made less stringent.
One expressed the concern that the proposed approach should be made
more stringent.\237\ A significant number stated that the regulatory
text was confusing or unclear, especially as to viewable interactive
data. Finally, a few commenters made other liability-related
suggestions, sought clarification of the liability applicable to
situations not intended to be addressed expressly by the proposed rules
or expressed other concerns.
---------------------------------------------------------------------------

    \236\ See, e.g., letters from ABA and IBM.
    \237\ See letter from CII.
---------------------------------------------------------------------------

    Commenters supporting the proposed approach generally supported
having interactive data files be deemed furnished rather than
filed.\238\ New Rule 406T is consistent with the proposals and these
comments because it deems interactive data files not filed for purposes
of various provisions under the federal securities laws.
---------------------------------------------------------------------------

    \238\ See, e.g., letters from AICPA, Deloitte, NYCBA, SavaNet
LLC (SavaNet), and UTC.
---------------------------------------------------------------------------

    Commenters suggesting that the proposed approach be made less
stringent did so explicitly and implicitly. For example, while the
proposals generally provided that an interactive data file would be
protected from federal securities law liability if the issuer made a
good faith attempt to prepare it correctly, one commenter criticized
the good faith requirement explicitly \239\ and others did so
implicitly by stating there should be no liability where there is no
affirmative intent to mislead.\240\ The commenter that criticized the
good faith requirement explicitly stated that it would be problematic
because there would be litigation over its fulfillment. Upon further
reflection and in light of

these comments, new Rule 406T requires a ``good faith attempt'' to
comply with the tagging requirements rather than the proposed ``good
faith and reasonable attempt.'' We believe that omission of the
reference to ``reasonable'' should not result in a lesser degree of
effort by issuers but should help to avoid litigation over fulfillment
of the requirement. As discussed in detail above, under new Rule 406T
additional liability protection occurs when a filer makes a good faith
attempt and corrects any failure to comply with the tagging
requirements promptly after the filer becomes aware of the failure. In
this context, we interpret ``good faith'' as not having the scienter
required for purposes of the anti-fraud provisions.\241\ In a further
effort to help clarify what constitutes adequate effort for purposes of
receiving additional liability protection and as also discussed in
detail above, we have adopted a definition for the term ``promptly''
that includes a non-exclusive safe harbor.
---------------------------------------------------------------------------

    \239\ See letter from S&C.
    \240\ See, e.g., letters from Angel, Intel, LG, SCS, Southern,
and USS.
    \241\ See Ernst & Ernst v. Hochfelder, 425 U.S. 185, 206 (1976).
---------------------------------------------------------------------------

    Three commenters suggested that, at least at the outset of the
interactive data submission requirement, there should be essentially no
liability based on interactive data files or viewable interactive
data.\242\ Two of these commenters stated that there should be no
liability because tagging would be a ``new'' process.\243\ The third
commenter stated that interactive data are merely a repetition, in
another format, of information already required and there would be
little risk that issuers would affirmatively try to introduce
differences between the formats because any such differences would be
transparent. Similarly, one commenter stated there should be no
liability attributable to the posting of an interactive data file
because the information would be out of context.\244\ We acknowledge
these comments but, in general, believe the measured level of liability
that would apply at the outset of the mandated program is appropriate
in light of the current level of development in tagging processes and
the effect this level of liability should have on helping to assure
that interactive data are reliable.\245\
---------------------------------------------------------------------------

    \242\ See letters from NYCBA, Safeway, and S&C.
    \243\ See letters from NYCBA and Safeway.
    \244\ See letter from SCS.
    \245\ See Part II.B.5 for a discussion of commenter concerns
regarding interactive data's being out of context.
---------------------------------------------------------------------------

    Some commenters that supported limited liability at least at the
outset of the interactive data submission requirement suggested that
liability be revisited \246\ or increased \247\ later. Similarly, one
commenter suggested that the imposition of liability on viewable
interactive data be conditioned on the maturity of the tagging and
rendering technology.\248\ In that regard, three commenters suggested
that the good faith exception proposed for the interactive data file in
part could form the basis for an exemption for viewable interactive
data.\249\ As discussed above, we have decided to limit liability at
the outset of the mandated program but phase out the limitation of
liability over time. We believe that treatment of interactive data in
viewable form that appears on our Web site in a manner analogous to the
treatment of the related interactive data file for liability purposes
is appropriate in light of the maturity of tagging and rendering
technology. Similarly, we believe that treatment of interactive data in
viewable form that appears on other Web sites under general anti-fraud
principles applicable to republication of another person's statements
also is appropriate in light of the maturity of such technology.
---------------------------------------------------------------------------

    \246\ See, e.g., letters from AICPA, E&Y, and Grant Thornton.
    \247\ See, e.g., letters from SavaNet and UTC.
    \248\ See letter from ABA.
    \249\ See, e.g., letters from ABA, E&Y, and IBM.
---------------------------------------------------------------------------

    Commenters stated that the regulatory text was confusing or unclear
in various ways, with a focus on viewable interactive data. In terms of
specific items, commenters singled out, for example, the proposed Rule
406(c)(3)(C) provision attempting to draw a distinction between
substantive content and compliance with the tagging provisions of
proposed Rule 405.\250\ In terms of general items and viewable
interactive data, commenter concerns often related to the fact that the
proposed rules expressly addressed viewable interactive data only to
the extent, as converted by the Commission's viewer, it appeared
identical in all material respects to the related official filing. As a
result, commenters indicated that it was unclear what liability applied
to viewable interactive data as rendered by the Commission's viewer,
not identical in all material respects to the related official filing;
and as rendered by a non-Commission viewer.\251\ We believe that new
Rule 406T clarifies or omits the provisions of proposed Rule 406 that
commenters found confusing. As to viewable interactive data in
particular, we now omit reference in the rule to one particular
situation in favor of addressing viewable interactive data in general
under traditional legal and liability concepts as discussed in detail
above.
---------------------------------------------------------------------------

    \250\ See letters from ABA, Intel, and SCS.
    \251\ See, e.g., letters from ABA and S&C.
---------------------------------------------------------------------------

    We did not propose to permit or require legends for interactive
data files. One commenter expressly approved the absence of a legend
requirement,\252\ but four commenters suggested variously that the
Commission require a legend that states people should not rely on the
interactive data,\253\ that they should not rely on it because of
limited liability,\254\ or that people should not use the interactive
data in isolation.\255\ We believe that attempting to place in
interactive data legends of the type suggested would be impracticable
because interactive data will often be accessed in their machine-
readable form and, even if they were accessed in viewable form, might
not be accessed in a place where the legend would appear. As to a
legend that states people should not rely on the interactive data in
particular, such a legend would be unnecessary because there is no
reason the data should not be reliable and, were they not reliable,
they would have little value.
---------------------------------------------------------------------------

    \252\ See letter from CFA. Under the current voluntary program,
the filing with which interactive data are submitted must disclose
that the purpose of the interactive data is to test the related
format and technology and, as a result, investors should not rely on
the interactive data in making investment decisions.
    \253\ See, e.g., letters from AICPA, CAQ and PWC.
    \254\ See letters from CAQ and PWC.
    \255\ See letter from ABA.
---------------------------------------------------------------------------

    To assist filers in ensuring the accuracy of their interactive data
submissions, we plan to make available to filers the opportunity to
make a test submission with the Commission. The test submission will
enable the filer to learn how the validation system would respond if
the test submission were a live submission and then, if the filer
wishes, use the Commission's pre-viewer to see the viewable interactive
data that would be displayed on the Commission Web site if the
interactive data were accepted and disseminated.\256\ If the validation
system finds an error, it will advise the filer of the nature of the
error and as to whether the error was major or minor. As occurs in the
voluntary program, a major error in an interactive data exhibit that
was part of a live filing will cause the exhibit to be held in suspense
in the electronic filing system. The rest of the filing will be
accepted and disseminated if there are no major errors outside of the
interactive data exhibit. If that were to happen, the filer will need
to revise the interactive data exhibit to eliminate

the major error and submit the exhibit as an amendment to the filing to
which it is intended to appear as an exhibit. A minor error in an
interactive data exhibit that is part of a live filing will not prevent
the interactive data exhibit from being accepted and disseminated
together with the rest of the filing if there are no major errors in
the rest of the filing. We believe it will be appropriate to accept and
disseminate a filing without the interactive data exhibit submitted
with it if only the exhibit has a major error, in order to disseminate
at least as much information at least as timely as would have been
disseminated were there no interactive data requirement.
---------------------------------------------------------------------------

    \256\ The EDGAR Filer Manual addresses test submissions
primarily at Section 6.6.5 of Volume II.
---------------------------------------------------------------------------

    Some commenters sought clarifications on whether there might be
auditor liability on interactive data files.\257\ There is no
additional basis for auditor liability based on data tagging. Also, an
auditor will not be required to apply AU Sections 550, 711 or 722 to
interactive data provided in an exhibit or to the related viewable
interactive data.\258\
---------------------------------------------------------------------------

    \257\ See e.g., letter from E&Y.
    \258\ See Part II.C.4 below for a further discussion of AU
Sections 550, 711 and 722.
---------------------------------------------------------------------------

    In this regard, we also note that we are not requiring that filers
involve third parties, such as auditors or consultants, in the creation
of their interactive data filings. We are taking this approach after
considering various factors, including:
     Commenters' views;
     The availability of a comprehensive list of tags for U.S.
financial statement reporting from which appropriate tags can be
selected, thus reducing a filer's need to develop new elements; \259\
---------------------------------------------------------------------------

    \259\ We expect the same will be true with respect to the tags
for reporting under IFRS as issued by the IASB.
---------------------------------------------------------------------------

     The availability of user-friendly software with which to
create the interactive data file;
     The multi-year phase-in for each filer, the first year of
which entails the relatively straightforward process of tagging face
financial statements, as was done during the voluntary program, and
block tagging footnotes and financial statement schedules;
     The availability of interactive data technology
specifications, and of other XBRL U.S., XBRL International, and
Commission resources for preparers of tagged data; \260\
---------------------------------------------------------------------------

    \260\ An example of Commission resources includes the EDGAR
Filer Manual.
---------------------------------------------------------------------------

     The advances in rendering/presentation software and
validation tools for use by preparers of tagged data that can identify
the existence of certain tagging errors;
     The expectation that preparers of tagged data will take
the initiative to develop practices to promote accurate and consistent
tagging; and
     The filer's and preparer's liability for the accuracy of
the traditional format version of the financial statements.
    Many commenters believed that issuers should not be required to
obtain auditor assurance on their interactive data submissions at least
at the outset of the interactive data submission requirement,\261\ but
a few commenters favored requiring assurance to enhance
reliability.\262\ Some commenters suggested monitoring interactive data
submissions and considering whether to introduce an assurance
requirement in the future.\263\ We acknowledge the concerns of the
commenters that believe we should require assurance on interactive
data. For the reasons discussed above, however, we believe an assurance
requirement is not now necessary.
---------------------------------------------------------------------------

    \261\ See, e.g., letters from AICPA, Deloitte, FEI, Gen. Mills,
IMA, Illinois Society of Certified Public Accountants (ILSCPA), and
Teva.
    \262\ See, e.g., letters from CalPERS, CFA and CII. In
connection with stating their concerns about the lack of auditor
assurance, two of these commenters also stated their concern about
the absence of management certification of interactive data under
the proposed exclusion of interactive data from the officer
certification requirements of Rules 13a-14 and 15d-14. See letters
from CFA and CII.
    \263\ See, e.g., letters from AICPA, CAQ, Deloitte, E&Y, Grant
Thornton, and KPMG.
---------------------------------------------------------------------------

    A number of commenters, including many representing the auditing
profession, recommended that the Commission and the PCAOB provide
guidance to issuers and auditors for situations where an issuer wanted
to voluntarily obtain some form of auditor assurance on interactive
data.\264\ We note that issuers can obtain third-party assurance under
the PCAOB Interim Attestation Standard--AT sec. 101, Attest Engagements
on interactive data, and can start and stop obtaining assurance
whenever they choose.\265\ We understand that the PCAOB is aware of
sentiment in favor of interactive data-specific attestation standards.
---------------------------------------------------------------------------

    \264\ These included tagging in general (see, e.g., letters from
AICPA and UTC); extensions (see, e.g., letters from AICPA and UTC);
and correct associated data (see, e.g., letter from UTC).
    \265\ If an issuer wishes to refer in a filing to third party
assurance voluntarily obtained from an auditor or other party, the
issuer must comply with applicable consent requirements.
---------------------------------------------------------------------------

    Auditing firms generally did not support requiring issuers to
obtain auditor assurance on data tagging, and stated their concern that
users of interactive data financial statements may incorrectly assume
that auditor assurance has been provided on the data tagging.\266\
These auditing firms recommended:
---------------------------------------------------------------------------

    \266\ See, e.g., letters from CAQ, Deloitte, E&Y, Grant
Thornton, KPMG, and PWC.
---------------------------------------------------------------------------

     Requiring issuers' filings to specify clearly the extent
of auditor involvement with the interactive data exhibit; \267\
---------------------------------------------------------------------------

    \267\ See, e.g., letters from Deloitte, Grant Thornton, and PWC.
---------------------------------------------------------------------------

     Requiring the interactive data submission to state that it
is not subject to assurance when no assurance has been provided; \268\
---------------------------------------------------------------------------

    \268\ See, e.g., letters from Deloitte, E&Y and Grant Thornton.
---------------------------------------------------------------------------

     Prohibiting tagging the auditor's report; \269\ and
---------------------------------------------------------------------------

    \269\ See, e.g., letters from CAQ, Deloitte, E&Y, Grant
Thornton, and KPMG.
---------------------------------------------------------------------------

     Revising the standard audit report to clarify the extent
to which, if any, the audit extends to interactive data.\270\
---------------------------------------------------------------------------

    \270\ See, e.g., letter from Deloitte.
---------------------------------------------------------------------------

    Some commenters suggested monitoring the interactive data
submission program and considering whether to introduce an assurance
requirement in the future.\271\ As stated previously, the Commission
does not believe that auditor involvement is necessary with respect to
the interactive data file. We also believe that the rules as adopted
address some of the commenters' concerns regarding the perception of
auditor involvement in the creation of the interactive data exhibit.
Although Rule 405 as adopted does not include a requirement that
auditors' reports be tagged, the rules do not prohibit issuers from
indicating in the financial statements (such as in a footnote) the
degree of auditor involvement in the tagging process. Accordingly, we
believe that an issuer can make clear the level of auditor involvement
or lack thereof in the creation of the interactive data exhibit.
---------------------------------------------------------------------------

    \271\ See letters from AICPA, CAQ, Deloitte, E&Y, GT, and KPMG.
---------------------------------------------------------------------------

4. Officer Certifications and Integration of Interactive Data and
Business Information Processing
    Rules 13a-14 and 15d-14 generally require officers to certify in
periodic reports to various matters relating to internal control over
financial

reporting \272\ and disclosure controls and procedures.\273\
---------------------------------------------------------------------------

    \272\ Exchange Act Rules 13a-15(f) [17 CFR 240.13a-15(f)] and
15d-15(f) [17 CFR 240.15d-15(f)] define the term ``internal control
over financial reporting,'' in general, as a process designed by or
under the supervision of specified persons and effected by the
issuer's board of directors, management and other personnel ``to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with [GAAP] and includes [specified] policies
and procedures.'' Rules 13a-15 and 15d-15 generally require
specified issuers to maintain internal control over financial
reporting and require the management of those issuers to evaluate
the effectiveness of the issuer's internal control over financial
reporting. In addition, the certifications specified by Item
601(b)(31) of Regulation S-K and Instruction B(e) of Form 20-F that
relate to these specified issuers, generally must address the
establishment, maintenance, design, changes in and deficiencies and
material weaknesses related to the issuer's internal control over
financial reporting.
    \273\ Rules 13a-15(e) and 15d-15(e) define the term ``disclosure
controls and procedures'' as ``controls and other procedures of an
issuer that are designed to ensure that information required to be
disclosed by the issuer in [its periodic] reports * * * is recorded,
processed, summarized and reported within the time periods
[required].''
---------------------------------------------------------------------------

    We are adopting amendments that exclude interactive data from the
officer certification requirements of Rules 13a-14 and 15d-14. We
believe that adopting these amendments is part of striking an
appropriate balance between avoiding unnecessary cost and expense and
encouraging accuracy in regard to interactive data. A number of
commenters stated that interactive data submissions should not be
included within the scope of officer certifications,\274\ but two
commenters expressed concern about the exclusion \275\ and one
commenter recommended that they be included after the two-year phase-in
period.\276\ The commenters supporting the exclusion cited varying
reasons including, for example, that an officer should not be required
to certify to data that is not human-readable \277\ and that inclusion
would result in increased expense and exposure without commensurate
investor benefit.\278\ The commenters expressing concern cited the
exclusion together with the absence of an auditor assurance requirement
as together resulting in less confidence in the interactive data than
in traditional format information. As stated above in regard to
liability generally, we believe that adopting the officer certification
exclusion is part of striking an appropriate balance between avoiding
unnecessary cost and expense and encouraging accuracy. We intend to
monitor implementation and, if necessary, make appropriate adjustments
in the future regarding officer certifications.
---------------------------------------------------------------------------

    \274\ See, e.g., letters from FirstEnergy, LGI, NYCBA, Safeway,
Southern, Teva, USS, and WellPoint.
    \275\ See letters from CFA and CII.
    \276\ See letter from AICPA.
    \277\ See letter from Safeway.
    \278\ See letter from NYCBA.
---------------------------------------------------------------------------

    As the technology associated with interactive data improves,
issuers may integrate interactive data technology into their business
information processing, and such integration may have implications
regarding internal control over financial reporting no different than
any other controls or procedures related to the preparation of
financial statements. If this integration occurs, the preparation of
financial statements may become interdependent with the interactive
data tagging process and an issuer and its auditor should evaluate
these changes in the context of their reporting on internal control
over financial reporting. However, this evaluation is separate from the
preparation and submission of the interactive data file, and as such
the results of the evaluation would not require management to assess or
an auditor to separately report on the issuer's interactive data file
provided as an exhibit to a filer's reports or registration statements.
    Some commenters sought clarification of whether the basis for the
proposed exclusion of interactive data from officer certification is
that interactive data are not within the scope of disclosure controls
and procedures.\279\ In this regard, one of the commenters noted that
the Commission did not propose amendments related to Sarbanes-Oxley
requirements to Items 307 (disclosure controls and procedures), 308
(internal control over financial reporting) or 601 (exhibits) of
Regulation S-K. As a result, the commenter recommended that the final
rule explicitly address these areas to avoid misunderstandings and
potential delays in implementation.\280\ As discussed above, we are
excluding interactive data from the officer certification requirements
as part of our effort to strike an appropriate balance between avoiding
unnecessary cost and expense and encouraging accuracy in regard to
interactive data. Interactive data would fall within the definition of
``disclosure controls and procedures'' and, accordingly, we are not
adopting the exclusion on that basis.
---------------------------------------------------------------------------

    \279\ See, e.g., letters from Deloitte and KPMG.
    \280\ See letter from KPMG.
---------------------------------------------------------------------------

    SAS 8 (AU Section 550) was issued in December 1975 to address an
auditor's consideration of information in addition to audited financial
statements and the independent auditor's report on the audited
financial statements included in documents that are published by an
entity (e.g., an annual periodic report). Similarly, paragraph 18(f) of
SAS 100 (AU Section 722) addresses an auditor's consideration of other
information that accompanies interim financial statements included in
quarterly periodic reports. With respect to registration statements,
SAS 37 (AU Section 711) was issued in April 1981 to address the
auditor's responsibilities in connection with filings under the federal
securities statutes.
    As we stated in the proposing release in regard to the proposed
rules, with respect to the adopted rules, an auditor will not be
required to apply AU Sections 550, 722, or 711 to the interactive data
provided as an exhibit in a company's reports or registration
statements, or to the viewable interactive data. Several commenters
agreed that an auditor would not be required to apply AU Sections 550,
711 or 722 to the interactive data provided as an exhibit or to the
related viewable interactive data but wanted the PCAOB to formalize
that view.\281\ We understand that the PCAOB is aware of this matter.
---------------------------------------------------------------------------

    \281\ See, e.g., letters from BDO, CAQ Deloitte, E&Y and PWC.
---------------------------------------------------------------------------

5. Continued Traditional Format
    The new rules will not eliminate or alter existing filing
requirements that financial statements and financial statement
schedules be filed in traditional format. We believe investors and
analysts may wish to use the traditional format to obtain an electronic
or printed copy of the entire registration statement or report either
in addition to or instead of disclosure formatted using interactive
data.
    The vast majority of commenters stated that the Commission should
continue to require human-readable financial statements in traditional
format even if it required interactive data format as well.\282\ Most
of these commenters also stated that the Commission should monitor the
development of technology that could enable companies to file
information in a manner that provides the processing benefits of
interactive data and the visual clarity of the traditional format.
These commenters reasoned that when such technology is developed, it
would be appropriate to require only the single resulting format.
---------------------------------------------------------------------------

    \282\ See, e.g., letters from Southern, AICPA, IBM, National
City, NYSSCPA, and UTC.

---------------------------------------------------------------------------

D. Required Items

1. Data Tags
    To comply with the proposed rules, filers using U.S. GAAP will be
required to tag their financial statements using the most recent list
of tags for U.S. financial statement reporting, as released by XBRL
U.S. and required by the EDGAR Filer Manual.\283\ Each company will be
required to use one or more of the five standard industry-specific
lists identified in the EDGAR Filer Manual, as is appropriate for its
business.\284\
---------------------------------------------------------------------------

    \283\ The latest list of data tags for U.S. financial statement
reporting was released on April 28, 2008 and is available at http://
xbrl.us/pages/us-gaap.aspx. See XBRL U.S. Press Release, XBRL U.S.
Finalizes U.S. GAAP Taxonomies and Preparers Guide with Delivery to
SEC (May 2, 2008).
    \284\ We note that the vast majority of companies will fall
under the Commercial and Industrial industry group. Additional
guidance on the industry-specific lists is expected to appear in the
EDGAR Filer Manual.
---------------------------------------------------------------------------

    Regular updates to the list of tags for U.S. financial statement
reporting will likely be posted annually and be available for
downloading. In addition, interim extensions may be made available for
download in order to reflect changes in accounting and reporting
standards. To provide companies sufficient time to become familiar with
any such updates, we anticipate giving advance notice before requiring
use of an updated list of tags. Based on experience to date with the
most recent update to the list of tags, we believe that it is
sufficiently developed to support the interactive data disclosure
requirements in the new rules.
    Similarly, filers using IFRS as issued by the IASB will be required
to tag their financial information using the most recent list of tags
for international financial reporting, as released by the IASCF and
specified in the EDGAR Filer Manual.\285\ Although IFRS tags are not
currently supported by EDGAR, the Commission will give notice when
filers can voluntarily submit filings using the IFRS taxonomy.
---------------------------------------------------------------------------

    \285\ The International Accounting Standards Committee
Foundation has been developing the IFRS financial reporting tag list
since 2002. See http://www.iasb.org/xbrl/index.html. The 2008
version of the IFRS financial reporting tag list was, as noted
above, finalized in June 2008 and is planned to be updated annually
for changes in accounting and reporting standards.
---------------------------------------------------------------------------

    One of the principal benefits of interactive data is its
extensibility--that is, the ability to add to the standard list of tags
in order to accommodate unique circumstances in a filer's particular
disclosures. The use of customized tags, however, may also serve to
reduce the ability of users to compare similar information across
companies. This was the source of a significant amount of comment. Some
commenters were concerned that currently available standard taxonomies
do not cover many company specific extension needs and any increase in
customized taxonomy extensions would directly interfere with the
comparability of inter-company data.\286\ A number of commenters
suggested ways to facilitate interactive data tagging, which included
monitoring,\287\ cataloging,\288\ and discouraging \289\ extension use
as well as revising the Preparers Guide to put it in plain
English.\290\
---------------------------------------------------------------------------

    \286\ See, e.g., letter from EuropeanIssuers.
    \287\ See, e.g., letter from CFA.
    \288\ See, e.g., letter from ABA.
    \289\ See, e.g., letters from Grant Thornton, CFA, Morgan
Stanley, and Rivet.
    \290\ See, e.g., letter from Grant Thornton.
---------------------------------------------------------------------------

    We acknowledge these concerns. In order to promote comparability
across companies, the new rules, as proposed, will limit the use of
extensions to circumstances where the appropriate financial statement
element does not exist in the standard list of tags. The new rules also
require that wherever possible and when a standard element is
appropriate, preparers change the label for a financial statement
element that exists in the standard list of tags, instead of creating a
new customized tag. For example, the standard list of tags for U.S.
GAAP includes the financial statement element ``gross profit.'' The
list does not include ``gross margin,'' because this is definitionally
the same as ``gross profit''--both are generally used to mean ``excess
of revenues over the cost of revenues.'' A filer using the label
``gross margin'' in its income statement should use the tag
corresponding to the financial statement element ``gross profit.'' It
would then change the label for this item on the standard list to
``gross margin.''
    Finally, under Item 401(c) of Regulation S-T, voluntary filers'
interactive data elements must reflect the same information as the
corresponding traditional format elements. Further, no data element can
be ``changed, deleted or summarized'' in the interactive data
file.\291\ We are not changing this equivalency standard for financial
statements provided in interactive data format as required by the new
rules.
---------------------------------------------------------------------------

    \291\ Item 401(c)(2) of Regulation S-T.
---------------------------------------------------------------------------

2. Regulation S-T and the EDGAR Filer Manual
    The new rules require that filers provide interactive data in the
form of exhibits to related registration statements and reports.\292\
Interactive data will be required to comply with our Regulation S-T
\293\ and the EDGAR Filer Manual. The EDGAR Filer Manual is available
on our Web site. It includes technical information for making
electronic filings with the Commission. Volume II of this manual
includes guidance on the preparation, submission, and validation of
interactive data submitted under the voluntary program.
---------------------------------------------------------------------------

    \292\ The requirement to submit XBRL data as an exhibit will
appear in Item 601(b)(101) of Regulation S-K, paragraph 101 of the
Information Not Required to be Delivered to Offerees or Purchasers
of both Form F-9 and F-10, Item 101 of the Instructions to Exhibits
of Form 20-F, paragraph B.7 of the General Instructions to Form 40-F
and paragraph C.6 of the General Instructions to Form 6-K.
    \293\ Rule 405 of Regulation S-T directly sets forth the basic
tagging and posting requirements for the XBRL data and requires
compliance with the EDGAR Filer Manual. Consistent with Rule 405,
the EDGAR Filer Manual will contain the detailed tagging
requirements.
---------------------------------------------------------------------------

    In addition to both Regulation S-T, which will include rules we are
adopting, and the instructions in our EDGAR Filer Manual, filers may
access other sources for guidance in tagging their financial
information. These include the XBRL U.S. Preparers Guide; user guidance
accompanying tagging software; and financial printers and other service
providers. New software and other forms of third-party support for
tagging financial statements using interactive data are also becoming
widely available.

E. Consequences of Non-Compliance and Hardship Exemption

    The new rules provide, as proposed, that if a filer does not make
the required interactive data submission, or post the interactive data
on the company Web site, by the required due date, the filer will be
unable to use short form registration statements on Forms S-3, F-3, or
S-8.\294\ This disqualification will last until the interactive data
are provided. During the period of disqualification, the filer also
will be deemed not to have available adequate current public
information for purposes of the resale exemption safe harbor

provided by Rule 144.\295\ Once a filer complies with the interactive
data submission and posting requirements--provided it previously filed
its financial statement information in traditional format on a timely
basis--it will be deemed to be timely and current in its periodic
reports.
---------------------------------------------------------------------------

    \294\ Forms S-3, F-3, and S-8 are regarded as short form
registration statements because they enable eligible issuers to
register securities for offer and sale under the Securities Act by
providing information in a more streamlined manner than they
otherwise could. In order to be eligible to use these short forms,
an issuer must meet specified requirements, including being current
in its filing of Exchange Act reports. In general, an issuer is
current if it has filed all of its required Exchange Act reports for
the twelve months before filing the registration statement. Filers
that are unable to use short form registration also are unable to
incorporate by reference certain information into Forms S-4 and F-4.
See Item 12 of Forms S-4 and F-4.
    \295\ Rule 144 under the Securities Act creates a safe harbor
for the resale of securities under the exemption from Securities Act
registration set forth in Section 4(1) of the Securities Act [15
U.S.C. 77d(1)]. In order for some resales of securities to comply
with Rule 144, the issuer of the securities must be deemed to have
adequate current public information available as specified by Rule
144(c)(1) [17 CFR 230.144(c)(1)]. Rule 144(c)(1) deems an issuer
required to file reports under the Exchange Act to have adequate
public information available if it is current in its filing of
Exchange Act periodic reports. In general, an issuer would be deemed
current for this purpose if it has filed all of its required
Exchange Act periodic reports for the twelve months before the sale
of securities for which the Rule 144 safe harbor is sought.
---------------------------------------------------------------------------

    We believe that precluding the use of short form registration
statements during any period of failure to comply will appropriately
direct attention to the interactive data reporting requirement.
Allowing filers to reestablish their current status by later complying
with the interactive data reporting requirement will strike a
reasonable balance of negative consequences and recognition that the
company's traditional format reports will have been filed.
    Consistent with the treatment of other applicable reporting
obligations, we are adopting hardship exemptions for the inability to
timely submit interactive data. Rule 201 under Regulation S-T provides
for temporary hardship exemptions. Rule 202 under Regulation S-T
provides for continuing hardship exemptions.\296\
---------------------------------------------------------------------------

    \296\ We have amended Rule 12b-25 [17 CFR 240.12b-25] under the
Exchange Act, which, in general, deals with notification of the
inability to timely file or submit all or part of specified forms
and deems such forms to be timely filed under specified conditions.
We added paragraph (h) to state that the provisions of the rule do
not apply to interactive data files and that filers unable to submit
or post interactive data files when required must comply with the
hardship exemption requirements of either Rule 201 or 202 of
Regulation S-T. New paragraph (h) will treat interactive data files
in a manner similar to that which current Rule 12b-25(g) treats
electronic filings in general. When Rule 12b-25 provides that the
financial statements in traditional format are deemed filed timely
even though actually filed later, the related interactive data
exhibit must be submitted and posted on the date the related
traditional format financial statements are actually filed, not when
they are deemed to be filed under Rule 12b-25.
---------------------------------------------------------------------------

    Rule 201 generally provides a temporary hardship exemption from
electronic submission of information, without staff or Commission
action, when a filer experiences unanticipated technical difficulties
that prevent timely preparation and submission of an electronic filing.
The temporary hardship exemption permits the filer to initially submit
the information in paper but requires the filer to submit a confirming
electronic copy of the information within six business days of filing
the information in paper. Failure to file the confirming electronic
copy by the end of that period results in short form
ineligibility.\297\
---------------------------------------------------------------------------

    \297\ Rule 201 of Regulation S-T.
---------------------------------------------------------------------------

    We recognize the inherently electronic nature of interactive data.
In light of this and the consequences to an issuer of not timely
submitting interactive data, we are revising Rule 201, as proposed, to
provide a temporary hardship exemption that does not depend upon filing
a paper version. This exemption will apply without staff or Commission
action if a filer experiences unanticipated technical difficulties that
prevent the timely preparation and electronic submission of interactive
data. The revised temporary hardship exemption will cause the filer to
be deemed current for purposes of incorporation by reference, short
form registration, and Rule 144 for a period of up to six business days
from the date the interactive data were required to be submitted.\298\
If the filer does not electronically submit the interactive data by the
end of that period, from the seventh business day forward the filer
will not be deemed current until it does electronically submit the
interactive data. Similarly, we are revising Rule 201 to provide an
essentially mirror-image exemption from the new requirement for an
issuer that has a corporate Web site to post the interactive data on
its Web site.
---------------------------------------------------------------------------

    \298\ The information would not have to be filed in paper first,
as this would be meaningless in the case of interactive data.
---------------------------------------------------------------------------

    Rule 202 permits a filer to apply in writing for a continuing
hardship exemption if information otherwise required to be submitted in
electronic format cannot be so filed without undue burden or expense.
If the Commission or the staff, through authority delegated from the
Commission, grants the request, the filer must file the information in
paper by the applicable due date and file a confirming electronic copy
if and when specified in the grant of the request.
    We are revising Rule 202, as proposed, to provide that a grant of a
continuing hardship exemption for interactive data will not require a
paper submission and that the filer will be deemed current until the
end of the period for which the exemption is granted. Rule 202 also
provides that, if the exemption was granted for only a specified period
rather than indefinitely, the filer will be deemed current up to the
end of that period. If the filer does not electronically submit the
interactive data by the end of that period, from the next business day
forward the filer will not be deemed current until it does
electronically submit the interactive data. Similarly, we are revising
Rule 202 to provide an essentially mirror-image exemption from the new
requirement for an issuer that has a corporate Web site to post the
interactive data on its Web site.
    A few commenters generally supported the proposed consequences for
late submissions and Web site postings of interactive data files,\299\
but several objected.\300\ Some commenters objected to all of the
proposed consequences for late submissions and postings as, for
example, unduly harsh in general \301\ or inappropriate because the
same information would be on file already in traditional format.\302\
One commenter claimed that in analogous situations the Commission
decided not to impose similar consequences. The commenter noted that in
Release No. 34-49424,\303\ the Commission decided not to impose short
form eligibility or Rule 144 current public information loss for
failure to provide timely certain disclosures required by Form 8-
K.\304\ The disclosures involved, however, were required by items that
we stated ``may require management to make rapid materiality and other
judgments within the compressed Form 8-K filing timeframe'' and issuers
would not have been able to reestablish short form eligibility upon
compliance because they would have been deemed not timely rather than
not current.
---------------------------------------------------------------------------

    \299\ See, e.g., letters from CFA, E&Y, Grant Thornton, LG, and
UTC.
    \300\ See, e.g., letters from ABA, CSG, LGI, NYCBA, SCS,
Southern, and USS.
    \301\ See, e.g., letter from NYCBA.
    \302\ See, e.g., letter from CSG.
    \303\ Release No. 34-49424 (March 16, 2004) [69 FR 15594].
    \304\ See letter from ABA. This commenter also pointed out that
in Release No. 34-46464 (Apr. 8, 2003) [67 FR 58480], Release No.
34-46464A (Sept. 5, 2003) [67 FR 17880] the Commission stated that
it considered making Web site posting of reports a condition to
short form eligibility but concluded such an approach would be
overly burdensome.
---------------------------------------------------------------------------

    We acknowledge these concerns, but in adopting the rules as
proposed we believe that the consequences imposed will provide a useful
compliance incentive and that commenters' concerns are mitigated
somewhat by the availability of the temporary and continuing hardship
exemptions and the ability of filers to reestablish their

current status upon complying with their interactive data requirements.

III. Paperwork Reduction Act

A. Background
    The amendments contain ``collection of information'' requirements
within the meaning of the Paperwork Reduction Act of 1995, or PRA.\305\
The purpose of the amendments is to make financial information easier
for investors to analyze and to assist issuers in automating regulatory
filings and business information processing. We published a request for
comment on the collection of information requirements in the proposing
release, and submitted a request to the Office of Management and Budget
(OMB), for review in accordance with the PRA.\306\ OMB responded that
it will not act on the request until the Commission supplements the
request at the adopting stage with a discussion that includes the
Commission's response to comments received on the proposed rules. Our
new estimates that take into account variations between what we
proposed and what we are adopting reflect a burden that is not
significantly different than the estimates from the proposing release.
When we receive OMB clearance, we will publish notice in the Federal
Register. An agency may not conduct or sponsor, and a person is not
required to respond to, an information collection unless it displays a
currently valid OMB control number.
---------------------------------------------------------------------------

    \305\ 44 U.S.C. 3501 et seq.
    \306\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

    The title for the new collection of information the amendments will
establish is ``Interactive Data'' (OMB Control No. 3235-0645). This
collection of information relates to already existing regulations and
forms adopted under the Securities Act and the Exchange Act that set
forth financial disclosure requirements for registration statements as
well as periodic, current and transition reports and Forms 6-K. The
amendments will require issuers to submit specified financial
information to the Commission and post it on their corporate Web sites,
if any, in interactive data form. The specified financial information
already is and will continue to be required to be submitted to the
Commission in traditional format under existing registration statement
as well as periodic, current, and transition report and Form 6-K
requirements. Compliance with the amendments will be mandatory
according to the phase-in schedule previously described.\307\ Issuers
not yet phased-in, however, could comply voluntarily with the
amendments when the appropriate taxonomies are supported by EDGAR. The
information required to be submitted would not be kept confidential by
the Commission.
---------------------------------------------------------------------------

    \307\ See Part II.B.
---------------------------------------------------------------------------

B. Reporting and Cost Burden Estimates

1. Registration Statement and Periodic Reporting
    Form S-1 (OMB Control No. 3235-0065), Form S-3 (OMB Control No.
3235-0073), Form S-4 (OMB Control No. 3235-0324), and Form S-11 (OMB
Control No. 3235-0067) prescribe information that a filer must disclose
to register certain offers and sales of securities under the Securities
Act. Form F-1 (OMB Control No. 3235-0258), Form F-3 (OMB Control No.
3235-0256), Form F-4 (OMB Control No. 3235-0325), Form F-9 (OMB Control
No 3235-0377), and F-10 (OMB Control No. 3235-0380) prescribe
information that a foreign private issuer must disclose to register
certain offers and sales of securities under the Securities Act. Form
10-K (OMB Control No. 3235-0063) prescribes information that a filer
must disclose annually to the market about its business. Form 10-Q (OMB
Control No. 3235-0070) prescribes information that a filer must
disclose quarterly to the market about its business. Form 10 (OMB No.
3235-0064) prescribes information that a filer must disclose when
registering a class of securities pursuant to the Exchange Act. Form 8-
K (OMB No. 3235-0060) prescribes information an issuer must disclose to
the market upon the occurrence of certain specified events and enables
an issuer to disclose other information voluntarily. Form 20-F (OMB
Control No. 3235-0288) and Form 40-F (OMB No. 3235-0381) are used by a
foreign private issuer both to register a class of securities under the
Exchange Act as well as to provide its annual report required under the
Exchange Act. Form 6-K (OMB No. 3235-0116) prescribes information that
a foreign private issuer must disclose regarding certain specified
changes to its business and securities pursuant to the Exchange Act and
enables an issuer to disclose other information voluntarily.
    As previously noted, we are adopting the amendments substantially
as proposed. We expect the variations between what we proposed and what
we adopted to lessen the collection of information burden, even after
accounting for the amendments requiring companies to submit interactive
data for financial statements contained in additional forms--Securities
Act registration statements on Forms F-9 and F-10, periodic reports on
Forms 40-F and current reports on Forms 8-K and reports on Forms 6-K
that contain updated financial statements that have been revised to
reflect a subsequent event rather than the correction of an error.
    While we are adopting the proposed requirement to tag separately
each amount within a footnote (i.e., monetary value, percentage, and
number), in contrast to the proposals, we will permit, but not require,
filers to tag, to the extent they choose, each narrative disclosure. As
a result, the cost estimates for detailed tagging in the adopting
release are reduced by 30%, to 70 hours for the first filing, and 35
hours for subsequent filings. Permitting rather than requiring filers
to tag each narrative footnote disclosure contributes significantly to
lessening the estimated collection of information burden.\308\
---------------------------------------------------------------------------

    \308\ The other factor that contributes significantly to
lessening the estimated collection of information burden is the
reduction in the estimated number of filers subject to the
interactive data requirements due to the elimination of issuers of
asset-backed securities. Such issuers inadvertently were included in
the estimate made in connection with the proposed rules.
---------------------------------------------------------------------------

    As noted above, in contrast to the proposals, we are adopting
amendments requiring companies to submit interactive data for financial
statements contained in additional forms--Securities Act registration
statements on Forms F-9 and F-10, periodic reports on Forms 40-F and
current reports on Forms 8-K and reports on Forms 6-K that contain
updated financial statements that have been revised to reflect a
subsequent event rather than the correction of an error. The amendments
expanding the forms subject to the interactive data requirements tend
to increase the estimated collection of information burden but this
increase is more than offset by the factors that tend to decrease the
collection of information burden.
    We expect the following variations from the proposal will not
affect the collection of information burden in more than a negligible
and non-quantifiable way.
     The amendments will require that interactive data be
submitted with a Securities Act registration statement filing only
after a price or price-range has been determined and any later time
when the financial statements are changed rather than, as proposed,
requiring interactive data submissions with each filing.
     The timing of the required Web site posting has been
eased. A filer must

post the interactive data exhibit on its corporate Web site not later
than the end of the calendar day it submitted or was required to submit
the interactive data exhibit, whichever is earlier. As proposed, Web
site posting would have been required by the end of the business rather
than calendar day.
     Interactive data will be required to be posted for at
least 12 months on an issuer's Web site. The proposing release did not
specify this, but commenters requested clarification.
    The information required by the new collection of information we
are adopting will correspond to specified financial information now
required by these forms and will be required to appear in exhibits to
these forms and on filers' corporate Web sites. The compliance burden
estimates for the collection of information are based on the phase-in,
beginning with approximately 500 large accelerated filers subject to
the rules in the first year, followed by approximately 1,000 more
filers in year two and approximately 8,700 more filers in year three.
These numbers are estimated using the public float measured on the last
day of the second quarter following the company's most recent fiscal
year end--the same date used to determine a filer's accelerated filer
status. The proposing release estimated a larger number of filers being
phased in, including 1,300 in year two and 10,200 in year three. In
those estimates, issuers of asset-backed securities, who annually file
a Form 10-K, were included. Those issuers, however, typically are not
required to and do not include their financial statements in Forms 10-
K, and, as a result they would not be required to provide interactive
data files under the proposed rules. Consequently, they were removed
from the updated estimate reported here.
    Based on estimates from the voluntary filer participant
questionnaire results, we estimate that interactive data filers would
incur the following average:
     Internal burden hours to tag the face financials:
    [cir] 125 hours for the first filing under the requirements; and
    [cir] 17 hours for each subsequent filing.
     Out-of-pocket cost for software and filing agent services:
$6,140 for each filing.
    Based on qualitative assessments of time and modifications to the
proposed level four detailed tagging requirements that eliminate
required tagging of the narrative, we estimate that interactive data
filers would incur the following average internal burden hours:
     Footnotes
    [cir] 7 hours to block tag for each filing made during the first
year under the requirements;
    [cir] 70 hours to detail tag for the first filing made in the
second year under the requirements; and
    [cir] 35 hours to detail tag for each subsequent filing.
     Schedules
    [cir] 1 hour to block tag for each filing made during the first
year under the requirements;
    [cir] 7 hours to detail tag for the first filing made in the second
year under the requirements; and
    [cir] 3.5 hours to detail tag for each subsequent filing.
     Web site Posting: 4 hours to post all interactive data
submissions made during each year.
    In the proposing release, the number of hours to detail tag the
footnotes in the second year of the requirements was estimated at 100
hours for the first filing, and 50 for subsequent filings. Several
commenters provided alternative estimates. For example, one commenter
\309\ suggested that detailed tagging initially would require 80 hours
of time, while another commenter indicated that 40 hours would be
required on an ongoing basis.\310\ Although both of these estimates are
below our estimate, other commenters suggested that the time required
for detailed tagging of the footnotes would be hundreds of hours,\311\
three to four times higher than our estimate,\312\ and an order of
magnitude higher than our estimate.\313\
---------------------------------------------------------------------------

    \309\ See letter from FirstEnergy. It is unclear whether this
commenter believed that detailed tagging would require 80 hours on
an ongoing basis.
    \310\ See letter from National City.
    \311\ See letter from Intel.
    \312\ See letter from IBM.
    \313\ See letter from Constellation Energy.
---------------------------------------------------------------------------

    One of the considerations responsible for the wide variation in
predicted time for detailed tagging was the proposed requirement to tag
the narrative portion of the footnote. Unlike the discrete numerical
values in the face financials that are well-defined and easy to
quantify, the narrative portion of the footnotes provides a higher
degree of variability in the number and structure of reported items.
While we are adopting the proposed requirement to tag separately each
amount within a footnote (i.e., monetary value, percentage, and
number), we will permit, but not require, filers to tag, to the extent
they choose, each narrative disclosure. As a result, the cost estimates
for detailed tagging in the adopting release are reduced by 30%, to 70
hours for the first filing, and 35 hours for subsequent filings.
Nevertheless, it is reasonable to assume that many filers, particularly
the largest filers with the most complex filings, may require more than
70 hours to comply with the detailed tagging requirement. It is also
reasonable to assume that many filers will require significantly less
time than 70 hours, and 70 hours seems to fall within the range
suggested by commenters and what is anticipated by Commission staff. We
believe that the proposed requirement to tag each narrative disclosure
within a footnote that, as adopted, will be optional, probably was a
significant component of the higher estimates provided by commenters.
As discussed in greater detail above, a significant number of
commenters objected, in particular, to the proposed detailed footnote
tagging requirement and several of those commenters argued that
detailed footnote tagging would require significant effort by the
issuer.\314\
---------------------------------------------------------------------------

    \314\ See Part II.B.3.a.
---------------------------------------------------------------------------

    Based on the number of filers we expect to be phased in each of the
first three years under the requirements, the number of filings that we
expect those filers to make that would require interactive data \315\
and the internal burden hour and out-of-pocket cost estimates
described, we estimate that the average yearly burden of the
requirements over the first three years would be 916,846 internal hours
per year and $110.6 million in out-of-pocket expenses for software and
filing agent services per year and would be incurred by an average of
4,055 filers for an average yearly burden per filer of 226.1 internal
hours and $27,300 in out-of-pocket expenses. This estimate reflects a
reduction in average yearly burden compared to the proposing release,
where we estimated $1,164,690 internal hours per year and $129 million
out-of-pocket expenses per year. This reduction is in part attributed
to a smaller number of filers due to the elimination of issuers of
asset-backed securities that inadvertently were included in the
estimate made in connection with the proposed rules, and in part due to
a lower estimate for detailed tagging due to making optional the
proposed requirement to detail tag the narrative disclosures in
footnotes. Together, these cost reductions outweighed the increased
cost of requiring that interactive data be

submitted for the financial statements in additional forms.
---------------------------------------------------------------------------

    \315\ We include in the number of filings that would require
interactive data both initial filings and amended filings but we
estimate that the burden incurred in connection with an amended
filing would be one half the burden that would be incurred if the
amended filing were an initial filing.
---------------------------------------------------------------------------

    By the fifth year under the requirements, filers generally will
have been subject to the requirements for at least two years. As a
result, filers generally would incur burdens applicable to interactive
data filings made after the first filing in which the filer detail
tagged footnotes and schedules. Consequently, we estimate that in the
fifth year under the requirements, the burden on all filers would be
2,571,167 internal hours and $284 million in out-of-pocket expenses and
would be incurred by 10,229 filers for an average burden per filer of
251 internal hours and $27,800 in out-of-pocket expenses.\316\ The
higher average burden reported for year five relative to the average
from years one through three reflects the completed phase-in of all
filers and all requirements, including detailed tagging, by that time.
---------------------------------------------------------------------------

    \316\ We provide an estimate of the burden in the fifth year
under the new requirements because we believe the burden in the
fifth year may help indicate what the burden would be under the new
requirements on an ongoing basis.
---------------------------------------------------------------------------

2. Regulation S-K and Regulation S-T
    Regulation S-K (OMB Control No. 3235-0071) specifies information
that a registrant must provide in filings under both the Securities Act
and the Exchange Act. Regulation S-T (OMB Control No. 3235-0424)
specifies the requirements that govern the electronic submission of
documents. The changes to these items that we are adopting will add and
revise rules under Regulations S-K and S-T. The additional collection
of information burden that will result from these changes, however, are
included in the burden estimate for the new collection of information
``Interactive Data.'' The rules in Regulations S-K and S-T do not
impose any separate burden. We assign one burden hour each to
Regulations S-K and S-T for administrative convenience to reflect the
fact that these regulations do not impose any direct burden on
companies.

C. Comments on Collection of Information Burden

    We solicited comments in the proposing release on the PRA estimates
we provided there. One commenter addressed the PRA directly, while
others commented generally on the time and cost burden of the
amendments. The commenter that addressed the PRA directly stated that
our PRA cost estimates appeared low and that our estimates understated
software and non-software costs such as planning and ongoing quality
assurance.\317\ As discussed in detail above, other commenters provided
their own estimates of the amount of time it would take to tag
financial statements and footnotes.\318\
---------------------------------------------------------------------------

    \317\ See letter from Credit Suisse.
    \318\ See Part III.B.1.
---------------------------------------------------------------------------

    Some commenters who opposed the amendments generally asserted that
interactive data would not improve the usefulness of financial
information to analysts or investors \319\ or that the Commission
underestimated the complexity or cost of compliance in general \320\
and implementing interactive data would add significant costs to
purchase software, and pay for assistance and annual maintenance fees
for that software and that the costs of using interactive data
outweighed the benefits.\321\
---------------------------------------------------------------------------

    \319\ See letters from EEC, EuropeanIssuers, and FISD.
    \320\ See, for example, letters from CAQ, E&Y, FPL, Intel and
SCS.
    \321\ See letter from FPL.
---------------------------------------------------------------------------

    In contrast, some commenters that supported the required submission
of interactive data believed it would improve the usefulness of
financial information to companies and investors, and that mandated
interactive data use would provide the incentives to drive sufficient
investment in software to enable widespread adoption of interactive
data.\322\ Also in contrast, commenters that provide interactive data
services stated that issuers would need to expend only modest cost and
effort to comply with the requirements.\323\ One commenter stated that
it expected that costs would fall quickly, especially for small
companies, as interactive data became part of standard corporate
accounting software packages.\324\ Another commenter stated that, based
on its experience in the voluntary program, costs would fall
significantly for subsequent submissions.\325\
---------------------------------------------------------------------------

    \322\ See, e.g., letters from ABC, AICPA, National City,
NYSSCPA, and UTC.
    \323\ See letters from ECI, EDGARFilings and UBMatrix.
    \324\ See letter from Angel.
    \325\ See letter from Pepsico.
---------------------------------------------------------------------------

    We acknowledge the concerns some commenters hold regarding
usefulness and cost but believe that interactive data have the
potential to increase the speed, accuracy and usability of financial
disclosure, and eventually reduce costs and that the phase-in schedule
and the grace periods will provide issuers the time to learn more cost-
effective ways to comply. We also believe that the third year phase-in
for smaller reporting companies will permit them to learn from the
experience of the earlier filers. Further, as noted previously, we will
be monitoring the experiences of issuers during the phase-in periods to
assess commenters' concerns.

IV. Cost-Benefit Analysis

A. Benefits

    Requiring issuers to file their financial statement information
using the interactive data format would enable investors, analysts, and
the Commission staff to capture and analyze that information more
quickly and at a lower cost than is possible using the same financial
information provided in a static format.\326\ Even though the new
regime does not require any new information to be disclosed or
reported, certain benefits may accrue when issuers use an interactive
data format to provide their financial reports. These include the
following.
---------------------------------------------------------------------------

    \326\ See Part I.
---------------------------------------------------------------------------

1. More Financial Information Available to Investors
    Interactive data reporting could increase the amount of financial
data available to investors in at least three ways. First, there is
likely to be an increase in coverage of smaller reporting companies by
commercially available products that provide corporate financial data.
Second, the level of financial data available in electronic format by
these and other services will likely increase as a result of
interactive data tagging. Finally, there is likely to be an increase in
the number of suppliers of financial services products because of
requiring companies to provide interactive data. As a result, many
smaller filers will have greater investor awareness because of
interactive data reporting, and investors will have more financial data
readily available in machine-readable format to consider for all
filers.
    At present, many small companies are not included in commercially
available products that provide corporate financial data, possibly due
to high data collection costs relative to the value of providing
coverage. For example, two commonly used financial information vendors
cover approximately 70% of Commission filers.\327\ For the large number
of firms whose financial

statements are not currently reported in these databases, their absence
may reduce the likelihood that they receive coverage by financial
analysts who use commercially available products to assess issuer
performance. Consequently, if interactive data reporting increases
coverage of smaller companies by commercially available financial
information products, and this increases their exposure to analysts and
investors, then lower search costs for capital could result. In other
words, smaller companies could realize a lower cost of capital, or less
costly financing.
---------------------------------------------------------------------------

    \327\ Compustat and Thomson One Banker are two widely used, fee-
based vendors of corporate financial data that is formatted for
interactive data use. This analysis was performed by matching the
unique Commission issued Central Index Key (CIK) numbers from all
Forms 10-K, 10-KSB, 20-F, and 40-F filed in calendar year 2007, but
not including issuers of asset backed securities within Standard
Industrial Classification (SIC) code 6189, to the universe of
companies covered by both Standard and Poor's Compustat and Thomson
One Banker.
---------------------------------------------------------------------------

    While an increase in coverage could occur for some issuers, it is
possible that less than full coverage will remain in more sophisticated
products that provide analysis or reporting items beyond basic
financial information. This conclusion is based on an assumption that
many commercially available product offerings provide information
beyond what is reported in basic financial information, and the costs
of providing this additional information for every company may make
100% coverage prohibitive. In particular, the smallest issuers may not
offer sufficient market capitalization to make investment worthwhile to
larger investors, for whom these commercial products are primarily
designed.
    It is also possible that information quality in financial markets
could be higher if interactive data reporting were required than if
not, leading to more efficient capital allocation. Since financial
tagging will include footnotes and supplemental tables, as well as the
base financials reported in the standard tables, it is likely that as a
result of interactive data tagging, there will be more information
available to investors in a machine-readable format. That is,
information not currently collected on a broad scale by data
aggregators because of the costs of manual key entry, particularly data
found in the footnotes and supplemental tables, will be available to
investors in a tagged, machine-readable format. With more information
readily available to investors on all filers, they may be able to
better distinguish the merits of various investment choices, thereby
facilitating capital flow into the favored investment prospects. This
outcome is the main tenet of improved market efficiency, whereby
providing more widespread access to information concerning the value of
a financial asset, such as a company's shares, results in better market
pricing. Consequently, reducing the costs of accessing, collecting and
analyzing information about the value of a financial asset facilitates
this end.
    Finally, it is possible that requiring companies to provide
interactive data could improve the quality of financial information
available to end users, and help spur interactive data-related
innovation in the supply of financial services products, resulting from
a potential increased competition among suppliers of such products due
to lower entry barriers as a result of lower data collection costs.
2. Less Costly and More Timely Financial Information
    It is likely that the new interactive data requirements will lower
the cost of collecting corporate financial data in a machine-readable
format and allow it to be analyzed by investors and other end-users
more quickly than without interactive data. At present, financial
information is made available to investors in text formatted documents
that require manual key-entry of the data into a format that allows
statistical analysis and aggregation. Investors seeking broad financial
coverage of companies must either spend considerable time manually
collecting the data, or subscribe to a financial service provider that
specializes in this data aggregation process, but passes on the expense
of the data collection effort.
    Requiring companies to report interactive data should lower both
the time and expense for investors to access this data. Since company
financial data will be tagged and immediately downloadable into a
larger, more comprehensive database that includes other filers, there
will be no need for manual key entry of the data, eliminating this
expense. Moreover, with this manual key entry effort no longer
necessary, the delay between when the financial data are first filed
and when the data is available in machine-readable format will reduce
substantially. For instance, one unpublished study reports that as
recently as 2004, the average time required for one large data
aggregator to make financial data available to investors was 10.8
days.\328\ With interactive data reporting, company financials can be
integrated into subscriber databases within a matter of hours or
minutes. As a result of having data made available more quickly to
investors and other end-users, newly revealed information can be more
quickly priced into the market by a larger number of investors,
consistent with tenets of improved market efficiency.
---------------------------------------------------------------------------

    \328\ Julia D'Souza, K. Ramesh, and M. Shen, ``The
interdependence between institutional investor stock ownership and
information dissemination by capital market data aggregators,''
Michigan State University working paper, available at: http://
papers.ssrn.com/sol3/papers.cfm?abstract_id=1010834.
---------------------------------------------------------------------------

    If interactive data serves to lower the data aggregation costs as
expected, then it is further expected that smaller investors will have
greater access to financial data than before. In particular, many
investors that had neither the time nor financial resources to procure
broadly aggregated financial data prior to interactive data will have
lower cost access than before interactive data. Lower data aggregation
costs will allow investors to either aggregate the data on their own,
or purchase it at a lower cost than what would be required prior to
interactive data. Hence, smaller investors will have fewer
informational barriers that separate them from larger investors with
greater financial resources.
    It is also likely that a filer that uses a standardized interactive
data format at earlier stages of its reporting cycle also may increase
the usability of its internal financial information. For example,
filers that use interactive data may be able to consolidate enterprise
financial information more quickly and potentially more reliably across
operating units with different accounting systems.\329\ There has been
a growing development of software products to assist filers to tag
their financial statements using interactive data helping make
interactive data increasingly useful.\330\
---------------------------------------------------------------------------

    \329\ However, we recognize that at the outset, filers would
most likely prepare their interactive data as an additional step
after their financial statements have been prepared.
    \330\ Press Release No. 2007-253 (Dec. 5, 2007).
---------------------------------------------------------------------------

    Interactive data also could provide a significant opportunity for
issuers to automate their regulatory filings and business information
processing, with the potential to increase the speed, accuracy, and
usability of financial disclosure. This reporting regime may in turn
reduce filing and processing costs.
3. Fewer Errors
    Because a substantial portion of each financial report makes use of
the same information, a filer that uses a standardized interactive data
format at earlier stages of its reporting cycle may also increase the
accuracy of its financial disclosure by reducing the need for
repetitive data entry that could contribute human error and enhancing
the ability of a filer's in-house financial professionals to identify
and correct errors in the issuer's registration statements and periodic
reports filed in traditional electronic format. It is also possible
that there will be fewer errors in the aggregated financial data used
by

investors since manual key entry of data will no longer be required by
either the investor or a data aggregating service.
4. Increased Comparability and Interpretation of Financial Data
    Another potential information consequence of the new requirements
may be changes to the precision and comparability of the information
disseminated by data service providers since the interactive data
requirements would shift the source of data formatting that allows
aggregation and facilitates comparison and analysis from end-users to
issuers submitting interactive data. At present, data service providers
manually key financial information into a format that allows
aggregation. As a result, the data service provider makes interpretive
decisions on how to aggregate reported financial items so that they can
be compared across all companies. Consequently, when a subscriber of
the commercial product offered by a data service provider uses this
aggregated data, it can expect consistent interpretation of the
reported financial items. In contrast, a requirement for issuers to
submit interactive data information would require the issuers to
independently decide within the confines of applicable requirements
which financial ``tag'' best describes each financial item--lessening
the amount of interpretation required by data service providers or end-
users of the data. Once a standard tag is chosen, comparison to other
companies is straightforward. However, since companies have some
discretion in how to select tags, and can extend the taxonomy (create
new tags) when an appropriate tag does not exist, unique
interpretations by each company could result in reporting differences
from what current data service providers and other end-users would have
chosen. This view suggests that the issuer-submitted information
disseminated by data service providers may be, on the one hand, less
comparable because they have not normalized it across issuers but, on
the other hand, more accurate because the risk of human error in the
manual keying and interpretation of filed information would be
eliminated and more precise because it will reflect decisions by the
issuers themselves. Replicating prior methods would still be possible,
however, because issuers would continue to be required to file
financial information in traditional format. As a result, nothing would
prohibit data service providers from continuing to provide data in the
same manner that they did before. Nonetheless, interactive data
benefits could diminish if other reporting formats are required for
clarification in data aggregation.

B. Costs

    The primary cost of the rulemaking is the cost of filers'
implementation of the rule, which includes the costs of submitting and
posting interactive data. We discuss this cost element extensively
below. In addition, because the rule allows an increase in the flow of
financial information being reported directly to analysts and
investors, there will be a cost of learning on the part of the
investors in using and analyzing financial information at the
interactive data level. Finally, because interactive data provides a
standardized reporting format--a set of common tags from which filers
can select--this might affect a company's ability to communicate its
unique financial attributes to investors.
    As for the cost of implementation of the rule, based on currently
available data, we estimate the average direct costs of submitting and
posting interactive data-formatted financial statements and other
information for all issuers under the proposed rules would, based on
certain assumptions, be as follows:

     Table 1--Estimated Direct Costs of Submitting Interactive Data-Formatted Financial Statements and Other
                                                   Information
----------------------------------------------------------------------------------------------------------------
                                                             Subsequent                            Subsequent
                                       First submission   submission with    First submission   submission with
                                       with block-text       block-text       with detailed         detailed
                                         footnotes &        footnotes &        footnotes &        footnotes &
                                          schedules          schedules          schedules          schedules
----------------------------------------------------------------------------------------------------------------
Preparation face financials \331\...            $31,370             $4,310             $4,310             $4,310
Preparation footnotes \332\.........              1,750              1,750             17,500              8,750
Preparation schedules--Software and                 250                250              1,750                875
 filing agent services \333\........
                                                  6,140              6,140              6,140              6,140
Web site posting \334\..............              1,000              1,000              1,000              1,000
                                     ---------------------------------------------------------------------------
    Total cost......................             40,510             13,450             30,700             21,075
    Upper bound.....................             82,220             21,340             60,150             37,940
----------------------------------------------------------------------------------------------------------------

    The above estimates are based in part on questionnaire responses
from 22 issuers that have participated in the voluntary program.
Thirty-five participants were sent questionnaires, corresponding to a
response rate of 63%. These responses provided detail on the projected
costs of preparing the face financials and for purchasing software or
related filing agent services. \335\ The estimated total cost reported
in Table 1 reflects expenditures on

interactive data-related software, consulting or filing agent services
used, and the market rate for all internal labor hours spent (including
training) to prepare, review and submit the first interactive data
format information face financial statements. The major assumptions
used for this analysis are as follows.
---------------------------------------------------------------------------

    \331\ Estimates based on voluntary filer program questionnaire
responses, excluding participants with an interactive data-related
business interest. These data suggest that the time required for
tagging the face financials decreases by approximately 85% between
the first and second submissions, from 125.47 hours to 17.25 hours,
numbers which are rounded to 125 and 17 for PRA calculations. A $250
wage rate is assumed for all preparation cost estimates.
    \332\ The costs associated with block-tagging of footnotes and
schedules are assumed to remain constant in subsequent filings. In
contrast, anticipated learning benefits from more complicated
detailed tagging of footnotes and schedules are assumed to result in
a 50% reduction in cost for subsequent filings.
    \333\ Software licensing and the use of a print agent can be
substitutionary--companies can choose to do one or other, or do
both--and are thus aggregated.
    \334\ This is an annual cost, and as such, will not be incurred
for subsequent filings within the same year.
    \335\ Voluntary program participants were not required to tag
financial statement footnotes or schedules related to the financial
statements except that registered management investment company
participants were required to tag one specified schedule. Similarly,
voluntary program participants were not required to post on their
corporate Web sites, if any, the interactive data information they
submitted. Consequently, the costs of requirements to tag financial
statement footnotes and schedules related to financial statements
and post interactive data information are not derived from the
voluntary program participant questionnaire responses or discussed
in our analysis of those responses.
---------------------------------------------------------------------------

     Labor cost is estimated at $250 per hour, commensurate
with the wage rate of an external accountant; \336\
---------------------------------------------------------------------------

    \336\ These estimates are from the Securities Industry and
Financial Markets Association's Management and Professional Earnings
in the Securities Industry 2007, modified to account for an 1,800-
hour work-year and multiplied by 5.35 to account for bonuses, firm
size, employee benefits and overhead.
---------------------------------------------------------------------------

     Voluntary program participants reported a 85% average
reduction in time required to prepare face financials from the first to
second filing;
     Block tagging of footnotes is estimated at 7 hours for the
first filing, with a 50% reduction in time for subsequent filings; and
     Detailed tagging of footnotes is estimated at 70 hours for
the first filing, with a 50% reduction in time for the subsequent
filings.
1. Potential Variability in the Cost Estimate
    We report an upper bound for the estimated total cost based on (1)
the variation in responses from the voluntary program participants and
the likelihood of sampling error--respondents represent approximately
0.21% of all issuers that ultimately would be required to submit
interactive data \337\--and (2) the likelihood of sample selection bias
due to non random participation by filers in the voluntary filing
program. In particular, we estimate that:
---------------------------------------------------------------------------

    \337\ This is based on 10,672 domestic and foreign issuers that
filed an annual report in calendar year 2007. Under our proposed
rules, not all foreign private issuers would be required to submit
interactive data; only those foreign private issuers that prepare
their financial statements in accordance with U.S. GAAP or IFRS as
issued by the IASB would be required to submit interactive data.
Foreign private issuers that report in accordance with other
structures and reconcile to U.S. GAAP would not be required to
submit interactive data.
---------------------------------------------------------------------------

     Average cost estimates increase by 20% after removing
voluntary program participants in an interactive data-related business.
     Due to sampling error,\338\ there is a 1% chance that the
true costs are underestimated by up to 80%.
---------------------------------------------------------------------------