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U.S. Securities and Exchange Commission



21st Century Disclosure Initiative

Frequently Asked Questions

1. What is the 21st Century Disclosure Initiative?

The 21st Century Disclosure Initiative is an agency-wide staff initiative of the Securities and Exchange Commission (SEC), announced by Chairman Christopher Cox on June 24, 2008. The Initiative's goal is a modernized disclosure system that leverages technology and to meet the marketplace's needs.

The Initiative has three phases. In the first phase, the staff of the SEC, led by Bill Lutz, J.D., Ph.D., will prepare a high-level plan for future SEC action to improve the usefulness and timeliness of disclosure for investors, and to streamline and modernize the collection of disclosure information from companies and regulated entities. The plan will be complete by the end of 2008. To guide the plan, the staff will conduct a formal roundtable gathering insights on how companies collect disclosure information for reporting to the SEC, and on how investors use that and other information to make investment choices.

In the second phase, the SEC will be asked to establish a Federal Advisory Committee in early 2009. The Federal Advisory Committee will review the staff's plan and make detailed recommendations to the SEC for implementing it.

In the third phase, the SEC will consider and begin acting on the Advisory Committee's recommendations, engaging normal notice and comment rulemaking processes.

2. What is the next-generation EDGAR system, and how is it related to the 21st Century Disclosure Initiative?

The next-generation EDGAR system refers to the successor to the SEC's EDGAR database. First announced in August 2008, the SEC's planned new platform for electronic information filing and dissemination is now under development. Unlike EDGAR, which stores disclosure data filed by companies as separate documents and forms, the new system's information is architected to allow disclosure information to be submitted and stored as electronically tagged interactive data, rather than as forms or text-only data. As proposed, the new system will also allow for both retail and institutional investors to retrieve the interactive data seamlessly from the SEC using third-party tools so that further and richer analyses can be conducted.

The 21st Century Disclosure Initiative's plan for a modernized disclosure system will utilize the new platform.

3. What are XBRL and interactive data?

XBRL (eXtensible Business Reporting Language) is an electronic markup language used to communicate financial and business data electronically. In other words, XBRL allows the individual elements of a financial statement to be electronically tagged. The SEC proposed in May 2008 to require the largest public companies to add XBRL tags to financial statements. XBRL tagging allows the elements of financial statements, including footnotes and financial statement schedules, to be separately manipulated for easy, interactive comparisons and calculations.

Interactive data refers to financial data, or other disclosure information, that has been tagged using XBRL or another method.

The 21st Century Disclosure Initiative's plan for a modernized disclosure system will incorporate the capabilities of XBRL tagging to make disclosure information dynamic, interactive, and easier to use.

4. What does the 21st Century Disclosure Initiative mean for investors?

The 21st Century Disclosure Initiative will propose a modernized disclosure system that provides all investors — whether institutional or retail — with improved access to dynamic disclosure information that is easier to use. Investors will be able to conduct more sophisticated data analyses using the SEC's website. Dynamic, downloadable disclosure information will also be available for seamless access by third-party software. As a result, investors who rely on freely-available information and those who rely on market information intermediaries will all benefit.

5. What does the 21st Century Disclosure Initiative mean for public companies and other filers?

The 21st Century Disclosure Initiative's plan for a modernized disclosure system could include an electronic interface for the submission of disclosure information by public companies and other filers. This interface would allow for easier integration of companies' reporting processes with their existing financial and accounting systems. The modernized disclosure system could also provide an opportunity for the SEC to eliminate complexity and redundancy in its reporting requirements.

Modified: 04/28/2009