US Regulators Finalize Data Standards to Implement the Financial Data Transparency Act

Several federal financial regulators¹ (the “Agencies”) have approved an interagency final rule to establish data standards that promote interoperability of financial regulatory data (the “Final Rule”). The Final Rule was required by the Financial Data Transparency Act of 2022 (“FDTA”) and finalizes an interagency proposal that was issued in 2024. The Agencies received over 150 unique comments on the proposal from a wide range of stakeholders, including data standards organizations, financial services firms, industry and trade associations, academics, and governmental entities.

The Final Rule takes effect on October 1, 2026, but will not impact reporting requirements until it is applied by the Agencies in the context of issuing or updating specific reporting requirements over the next two years. In this Legal Update, we provide background regarding the FDTA and summarize key aspects of the Final Rule.

Background

The FDTA was enacted on December 23, 2022. The FDTA amended, among other statutes, the Financial Stability Act of 2010 (Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act, hereinafter, “Title I”) by adding a section 124 (“Section 124”). Section 124 requires the Agencies to jointly issue a rule to establish data standards for the collections of information reported to each Agency by financial entities under the jurisdiction of the Agencies and data collected from the Agencies on behalf of the Financial Stability Oversight Council (“FSOC”). The data standards must include a legal entity identifier with certain properties specified by the statute and should include other common identifiers. The data standards should, to the extent practicable, satisfy other criteria set forth in Section 124, including that the standards should render data machine-readable, define the semantic meaning of the data, and incorporate standards developed and maintained by voluntary consensus standards bodies.

The FDTA amended most of the Agencies’ enabling statutes to require them to implement the Final Rule in their own reporting regimes.

For example, the FDTA amended the Federal Deposit Insurance Act (the “FDI Act”) by adding a section 52 (“Section 52”), which requires the FDIC to issue rules (each rule, an “FDIC Rule”) adopting applicable data standards that have been established by the Agencies. The FDIC Rules must apply to collections of information with respect to information received by the FDIC from any depository institution under the FDI Act, or any financial company under title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Likewise, the FDTA amended the Investment Advisers Act of 1940, the Investment Company Act of 1940, the Securities Exchange Act of 1934, and the Securities Act of 1933 by adding new provisions that require the SEC to issue rules (each rule, an “SEC Rule”) adopting applicable data standards that have been established by the Agencies. The SEC Rules must apply to collections of information with respect to: (i) investment advisers’ reports; (ii) registration statements and reports under the Investment Company Act of 1940; (iii) information required to be submitted or published by nationally recognized statistical rating organizations; (iv) asset-backed securities disclosures; (v) corporate disclosures under the Securities Act of 1933; (vi) periodic and current corporate disclosures under the Securities Exchange Act of 1934; (vii) proxy and consent solicitation materials; and (viii) securities-based swap reporting.

The FDTA also amended the Securities Exchange Act of 1934 to require that the Municipal Securities Rulemaking Board and registered national securities associations also adopt data standards based on the Final Rule. Similar provisions were added to most of the other Agencies’ enabling statutes.²

Key Aspects of the Final Rule

The Final Rule establishes the joint standards substantially as proposed in 2024, with the following key changes:

• The Agencies did not establish the proposed joint standard of the Financial Instrument Global Identifier (“FIGI”) for the identification of financial instruments, following significant divergence in commenter views regarding its utility, benefits, and costs;
• The Agencies specified that ISO 10962 (“CFI”) is to be used for the classification, rather than identification, of financial instruments that are not swaps or security-based swaps;
• The Agencies established ISO 8601 for dates without reference to the Basic format option (e.g., YYYYMMDD), following commenter concerns that derivatives market participants have widely adopted the Extended format (e.g., YYYY-MM-DD); and
• The Agencies more explicitly stated that they may tailor the data standards they ultimately adopt, or adopt data standards not established in the Final Rule, consistent with the flexibility provided by the FDTA.

Collections of Information

The Final Rule establishes joint standards for collections of information reported to each Agency. Although the FDTA does not define the term “collections of information,” it is defined in the Paperwork Reduction Act of 1995 (“PRA”), an act to which the Agencies are subject. The Final Rule defines the term “collections of information” in the FDTA by reference to the definition of that term in the PRA. The Agencies noted that the PRA definition is widely understood by the Agencies and by public stakeholders and that all approved and pending PRA collections of information have been categorized and are accessible to the Agencies and the public.

Legal Entity Identifier

Section 124 requires the joint standards to include “a common nonproprietary legal entity identifier that is available under an open license for all entities required to report to” the Agencies. The Final Rule establishes International Organization for Standardization (“ISO”) 17442—Financial services—the Legal Entity Identifier (“LEI”) as the legal entity identifier joint standard. The LEI is a global, 20-character, alphanumeric identifier standard that uniquely identifies a legal entity. The LEI is nonproprietary and is made publicly available by the Global LEI Foundation (“GLEIF”) under an open license, free of charge to any interested user. To date, the LEI has mostly been used in the United States in relation to the derivatives markets, with most other regulators requiring its submission only if a reporter already has one (i.e., it is not mandatory to obtain an LEI).

The Agencies acknowledged that requiring entities to obtain an LEI would impose some cost. The LEI system is based on a cost-recovery model, and the cost associated with obtaining and renewing an LEI covers the administrative expenses associated with the LEI system. However, the Final Rule itself does not impose any requirements that any particular entity obtain an LEI and incur the associated costs; such requirements would be determined by the Agency-specific rulemakings.

Some commenters stated that the establishment of the LEI would be inappropriate because certain entities cannot obtain an LEI, including natural persons who are acting in a non-business capacity, and sole proprietorships and general partnerships in certain states. In the context of municipal securities, commenters noted that the LEI does not properly identify the obligated parties (or component entities or specific credits thereof, which may be the sole source of repayment for the securities but may not be separate legal entities) involved in municipal securities offerings. Additionally, some commenters requested that the Agencies specify that an LEI that has not been renewed, as is required annually, may still be used in collections of information.

The Agencies did not change the Final Rule in response to these concerns and indicated that they are retaining significant discretion in how they apply the Final Rule in Agency-specific rulemakings, including the LEI standard. For example, collections of information could allow for other entity identifiers, specify that a reporting entity need only report an LEI if the entity has one, or permit LEIs that have lapsed to nonetheless be reported.

Other Common Identifiers

In addition to the LEI, the Final Rule establishes the following common identifiers in the joint standards.

• UPI and CFI: For swaps and securities-based swaps, the Final Rule establishes ISO 4914—Financial services—Unique product identifier (“UPI”) as a standard. The UPI is already used in the derivatives markets.³ For classification of other types of financial instruments that are not swaps or securities-based swaps, the Final Rule establishes ISO 10962—Securities and related financial instruments—Classification of financial instruments (“CFI”) code. The proposal had contemplated using CFI for identification of financial instruments, but the Final Rule specifies that CFI is to be used for classification rather than identification of such instruments, as a CFI code categorizes a financial instrument but does not uniquely identify any specific instrument. The UPI and CFI are complementary standards and provide a taxonomic classification system for all types of financial instruments. The Agencies note in the Final Rule that these standards are useful for aggregating data and increasing global transparency, which may be beneficial in financial markets such as swaps, forwards, and non-listed options.
• Financial Instrument Identifier: The Agencies did not establish the FIGI or any other common financial instrument identifier as a joint standard. While the proposal had sought to establish FIGI as the identifier for financial instruments, the Agencies received significant comments both in support of and against the FIGI proposal. After considering the notable divergence in commenters’ views, including concerns about the utility, benefits, and costs of FIGI relative to other financial instrument identifiers (e.g., CUSIPs), the Agencies determined not to establish FIGI as a joint standard. This approach is intended to provide the Agencies with flexibility to consider what further action, if any, to take regarding FIGI either in a later joint Agency rulemaking or in each Agency’s own individual rules.
• Date: For date fields, the Final Rule establishes the date as defined by ISO 8601 as the standard. The order of the elements used to express date and time in ISO 8601 is year, month, day, hour, minutes, seconds, and milliseconds. The Agencies are not establishing the use of the Basic format option, as was proposed. Some commenters noted that derivatives market participants have widely adopted the Extended format in response to international guidance, and mandating the Basic format could force costly system changes for no apparent regulatory benefit. Because it is relatively straightforward to convert dates between Basic and Extended formats, the Agencies determined there is no need to specify the Basic format given this potential disruption. The Agencies note that consistent representation of dates may help facilitate data integration and interoperability across diverse collections. When displayed on forms, web pages, user interfaces, and other media, date and time can be presented in other formats (e.g., Month, Day, Year) if those formats preserve the semantic meaning of the data, but the underlying machine-readable data would follow the ISO format.
• State: For identification of a state, possession, military “state” of the United States of America, or a geographic directional, the Final Rule establishes the U.S. Postal Service Abbreviations, as published in Appendix B of Postal Addressing Standards, Mailing Standards of the United States Postal Service. The Agencies note that, compared to alternative numeric state codes, this standard is both human- and machine-readable and is more widely used.
• Countries: For identification of countries, the Final Rule establishes the country codes with the code(s) for subdivisions, as appropriate, as defined by the most recent version of Geopolitical Entities, Names, and Codes (“GENC”). GENC, which was developed by the Country Codes Working Group of the Geospatial Intelligence Standards Working Group, is the US government’s implementation of the ISO 3166 international country code standard and addresses requirements unique to the US government, including restrictions on recognition of the national sovereignty of a country, identification and recognition of geopolitical entities not included in ISO 3166, and use of names approved by the U.S. Board on Geographic Names. For example, the United States of America would be rendered as either “US” or “USA.”
  
  Some commenters expressed concern that the GENC modifications to the ISO 3166 standard would be impractical to use in the context of derivatives transactions and would be disruptive given the broad international adoption of the unmodified ISO 3166 standard, requiring industry to incur the costs of substantial system builds and adaptations. These commenters urged the Agencies to permit use of ISO 3166 without the GENC modifications.
  
  The Agencies considered these comments but determined not to revise the proposed standard. The Agencies noted that the GENC standard is required to be used among federal agencies and other entities in the United States and helps provide consistency and interoperability of references to geopolitical entities. While the Agencies recognized that subsequent adoption in an Agency-specific rulemaking could require some entities to incur additional system costs, they emphasized that the Final Rule does not mandate the use of any specific standard; the decision whether to require use of the standard is left to each individual Agency in its Agency-specific rulemakings.

• Currencies: For identification of currencies, the Final Rule establishes the alphabetic currency code as defined by ISO 4217 Currency Codes. The Agencies note that these internationally recognized codes are widely implemented (including in the derivatives market), used, and incorporated into many other data standards, and this standard supports interoperability, enables clarity, and reduces errors.

Data Transmission and Schema and Taxonomy Format Standards

The Final Rule sets forth four properties for the data transmission and schema and taxonomy formats used by the Agencies. Specifically, the Agencies established that the data transmission and schema and taxonomy formats will, to the extent practicable:

• Render data fully searchable and machine-readable;
• Enable high-quality data through schemas, with accompanying metadata documented in machine-readable taxonomy or ontology models, that clearly define the semantic meaning of the data, as defined by the underlying regulatory information collection requirements, as appropriate;
• Ensure that a data element or data asset that exists to satisfy an underlying regulatory information collection requirement is consistently identified as such in associated machine-readable metadata; and
• Be nonproprietary or available under an open license.

The Final Rule states that establishing the joint standards as a list of principles rather than any specific data transmission or schema formats provides the Agencies with flexibility in selecting their data transmission or schema format data standards, while promoting interoperability and allowing for adaptability to new technological developments. For example, the existing data transmission and schema formats associated with the Call Report, including XML and XBRL, satisfy these principles and would be compliant.

Standards Not Established

The Final Rule does not establish certain other standards that were considered during the rulemaking process, such as a potential joint standard for accounting and reporting taxonomies. However, an individual Agency may still apply additional taxonomies that facilitate data sharing, interoperability, and consistency in its Agency-specific rulemaking.

The Agencies also did not establish a joint standard for census tracts. The proposed joint rule had sought comment on whether to establish the 11-digit format census tract code defined by the U.S. Census Bureau as a joint standard. However, in light of limited engagement by commenters on this standard and its limited use in current Agency collections of information, the Agencies determined not to establish this standard at this time.

Additionally, one commenter suggested that the proposed joint standards should specify which version of a standard is being established in order to comply with Office of the Federal Register rules that prohibit dynamic incorporation by reference. The Agencies declined to modify the Final Rule for this purpose, noting that the Final Rule merely establishes the relevant data standards and no member of the public will be required to comply with, or be adversely affected by, this Final Rule; each Agency, when adopting the joint standards, can determine the level of specificity necessary in the context of specific reporting obligations.

Takeaways

The Final Rule does not mandate the use of any specific standard or impose any changes to collections of information. Rather, the joint standards in the Final Rule will be applied through subsequent Agency-specific rulemakings or other Agency actions. Pursuant to the FDTA, the data standards adopted by each implementing Agency through its respective Agency-specific rulemaking must take effect not later than two years after the Final Rule is promulgated.

Regulated financial entities should begin to consider how they will comply with the joint standards as they are implemented through Agency-specific rulemakings and identify any potential compliance issues, keeping in mind that each Agency has significant flexibility in how it implements the standards.

¹ The federal regulators who jointly issued the Final Rule include the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Consumer Financial Protection Bureau (CFPB), the Federal Housing Finance Agency (FHFA), the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the Department of the Treasury (Treasury). The FDTA notes that it is also applicable to “any other primary financial regulatory agency designated by the [Treasury].” On May 3, 2024, the Secretary of the Treasury designated the CFTC as a covered agency under the FDTA.

² The FDTA does not specifically require Treasury and the CFTC to issue individual rules adopting data standards. Treasury and the CFTC may adopt data standards for their collections of information at their discretion.

³ E.g., Press Release, Derivatives Service Bureau Launches the Unique Product Identifier UPI Service (Oct. 16, 2023).