Electronic Submission – SBSD VDN and ANE Exception Notices

Summary

SIFMA provided comments to the U.S. Securities and Exchange Commission (SEC) to highlight critical concerns about certain requirements included in the SEC’s Electronic Submission of Certain Material Under the Securities Exchange Act of 1934; Amendments Regarding the FOCUS Report.

Excerpt

Background
In early 2023 the Commission approved a proposed rulemaking covering a broad number of different types of forms, filings and submissions that are required to be filed with or submitted to the Commission under the Securities and Exchange Act of 1934 and related rules and regulations thereunder (“Proposed Rule”). ¹ Among many proposed requirements, the Proposed Rule would require the electronic filing or submission on the Commission’s Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system, using structured data for certain materials, framed as part of the Commission’s effort to modernize its information collection and analysis methods.

In our comment letter submitted on May 22, 2023, ² SIFMA expressed its support for modernizing the document submission process for broker-dealers, over-the-counter derivatives dealers and SBSDs, and improving the utility and functionality of the forms and their data for the Commission, market participants, and dealers. These included, for example, updates to FOCUS reports which had been the subject of significant and productive discussions between staff and industry aimed at achieving these shared goals.

At the same time, however, we noted strong concerns with several requirements that would impose significant costs and burdens on market participants without providing a clear benefit. Further, we described many cases where there are mechanisms to achieve the Commission’s objectives that would be substantially less costly and burdensome for firms than those proposed. In addition, some aspects of the Proposed Rule, such as the requirement to submit fillable web forms on EDGAR in lieu of PDFs, would undermine the Proposed Rule’s goals by introducing inefficiencies and opportunities for human error.

On December 16, 2024, the Commission approved, three votes to two, the Final Rule, retaining most of the requirements we urged the Commission to reconsider. The two dissenting Commissioners in their December 16 statement pointed out one of the key themes we raised – that imposing structured data requirements without considering rapid technological advancement runs counter to the stated Commission objectives. ³