One of DFIN’s strengths is our deep technical knowledge and our ability to provide clients with headlights into future regulatory changes.
The U.S. Securities and Exchange Commission’s (SEC) proposed modernization of the Electronic Data Gathering, Analysis, and Retrieval system, or EDGAR, is a good example. If adopted, filers would have to create individual user account credentials with a third-party service provider. In addition, each filer would have to assign a filer administrator, who would manage the permissions of individual users with a new management tool.
The process of EDGAR modernization began in earnest in January 2020, when the SEC adopted certain amendments related to Regulation S-K. According to the SEC, these changes were made to reduce the burden on registrants while continuing to provide investors with material information. Improving the readability and navigability of disclosure documents was another key aspect of the EDGAR modernization proposal. The beta testing will ensure that this SEC modernization can be deployed smoothly by the time the changes become permanent.
To evaluate the proposal, DFIN is participating in the beta program the SEC is rolling out in stages. So far, the Commission has made registration capability available. We’ve been able to register via login.gov as a filer administrator and user; and also test a new multifactor authentication feature, which is being contemplated for additional security.
Understanding EDGAR Next
The EDGAR modernization process has been branded "EDGAR Next" by the SEC. The key components of these proposed SEC rule changes include a requirement for unique account credentials from a third-party service provider for logging into EDGAR filing websites. Filers would need at least one filer administrator to manage their access. These administrators would be required to complete Form ID, the uniform application for EDGAR access. Once completed, these administrators would have the ability to add or remove users, change permissions of users to become filer administrators, and delegate filing authority, among additional functions.
This SEC modernization process is intended to enhance the security of EDGAR, make it easier for filers to maintain secure access to their accounts, facilitate responsible management of credentials, and streamline the procedure for access, according to the Commission. The purpose of this beta testing period is to ensure that any potential stumbling blocks will be found and resolved before the EDGAR filing update takes full effect.
Streamlining the Process
These SEC modernization efforts happen from time to time as the commission works to enhance procedures, regulate businesses, and digitize documentation. For example, other large-scale changes to Regulation S-K took effect in November. These were intended to modernize the description of business, legal proceedings, and risk factors in 10-Ks, 10-Qs, and registration statements. These were the first significant changes to business-description disclosures within the last 30 years, and they include new requirements for companies to disclose how they are managing their human capital.
When it comes to the proposed changes to EDGAR, the SEC says that it expects to roll out additional features of the beta program in November. We will have more to say once we evaluate all aspects of the proposed changes. Stay tuned!