On May 20, 2015, House representatives, Darrell Issa, Ralph Abraham and Jared Polis introduced the Financial Transparency Act of 2015. The act would standardize the way financial reporting processes are run to make data more accessible and machine-readable.
The Purpose of the Financial Transparency Act
If passed, the bill will require nine financial regulatory agencies to adopt consistent data standards for information gathered under securities, commodities, and banking laws. Agencies affected include:
- Commodity Futures Trading Commission.
- Consumer Financial Protection Bureau.
- Federal Deposit Insurance Corporation.
- Federal Housing Finance Agency.
- Federal Reserve.
- National Credit Union Administration.
- Office of the Comptroller of the Currency.
- Treasury Department.
- Securities and Exchange Commission (SEC).
These regulatory agencies will be required to transform their reporting systems from disconnected documents (for example PDFs and plain-text HTML) to more accessible, machine-readable formats like XML and XBRL. Structured data will allow regulators to consolidate and analyze financial information, and enhance fraud and risk detection. It will also enable compliance automation for banks, firms and public companies.
The Financial Transparency Act provides:
- Adoption of a legal entity identifier (LEI) within reporting systems to help agencies match filings with multiple regulators.
- Data standards for financial regulatory reporting.
- Improvements to reporting at the Security Exchange Commission (SEC).
- Open, searchable data disclosure of public information. Note: Agencies will only be required to share information that they have had to deliver in previous reports. The intent is to make already available information more accessible.
This bill was referred to a congressional committee on the day it was announced. The Financial Transparency Act will be considered by the House Agriculture and House Financial Services to determine if it will be passed onto the House of Representatives and the Senate. No votes have been made at this point.
The Future of Open Data
The Financial Transparency Act would take the nation one step closer to cross-industry implementation of open data reporting processes by transforming the financial regulatory world in the same way that the DATA Act did grants and contracts.
To learn about the reporting precedent set by the DATA Act, download our fact sheet.
With data standardization, reporting can be automated, information made readily available to the public, and risk and fraud avoided early.
How will open data initiatives affect your industry? Share with us in the comments below.
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