On June 28, the SEC voted 4 to 1 in favor of mandatory Inline XBRL tagging, phasing in the requirement over the next three years, with the rule becoming effective 30 days after publication in the Federal Register.
Open-end management investment companies and ETFs that are currently subject to risk/return summary XBRL requirements will be required to comply with the rule, beginning with an initial registration statement or post-effective amendment that is an annual update to an effective registration statement, as follows:
- Large mutual funds, with $1 billion in net assets will need to begin compliance with the ruling in 2 years, with smaller funds (less than $1 billion in net assets) beginning in 3 years.
- Eliminates the 15-business day filing period funds currently have between submitting the information in HTML and submitting the tagged XBRL version.
- XBRL no longer files as a separate exhibit.
- Eliminates the requirement for funds to post the Interactive Data Files (XBRL format) on their websites.
As one commissioner noted, the comments received by the SEC reflecting the viewpoint of funds, uniformly stated that requiring inline XBRL and eliminating the 15-business day filing period would require considerable changes to fund workflow, may require switching vendors, and would impose meaningful costs on funds and their shareholders.
The SEC is modernizing
The SEC has been increasing its commitment to structured data as a filing format and to modernizing the EDGAR platform with Inline XBRL being the next step.
Inline XBRL has the potential to provide a number of benefits to users of the information. The goal of Inline XBRL is to decrease filing preparation costs, improve the quality of structured data, improving data quality and increase the use of XBRL data by investors and other market participants.
What does this mean for Mutual Fund filers?
Since the same content will need to be tagged for Inline XBRL as with the current risk/return summary requirements, the amount of work to for us to create the XBRL files is generally the same. However, the presentation of the XBRL is significantly different. Inline XBRL enables you to embed XBRL data directly into an HTML document instead of creating and submitting the information separately.
Merrill is here to help. We’ll have the system, processes and workflows in place to make the transition from how XBRL is currently supported to how it will need to be serviced in the future. We have experience creating inline tags from our work on Corporate Finance filings and have the tools in place to support the transition for Mutual Fund Risk/Return Summary filers.