1 SEC Release No. IC-23735 (March 16, 1999).
[10812]
March 18, 1999
TO: OPERATIONS COMMITTEE No. 10-99
SEC RULES COMMITTEE No. 20-99
TECHNOLOGY TASK FORCE
RE: SEC PROPOSES RULE CHANGES TO ACCOMMODATE EDGAR
MODERNIZATION
______________________________________________________________________________
The Securities and Exchange Commission is modernizing the Electronic Data gathering,
Analysis, and Retrieval (“EDGAR”) system. When the programming for the new system is completed,
EDGAR will be able to accept filings submitted in HyperText Markup Language (“HTML”), as well as
the current ASCII format. Also, filers will have the option of accompanying their required filings with
unofficial copies in Portable Document Format (“PDF”). The attached release describes the
modernization and proposes changes to certain rules and filing requirements to accommodate the
system changes.1
Comments on the proposed rule changes must be filed by April 15th. If there are issues you
would like the Institute to consider addressing in its comment letter, please call the undersigned
(202/326-5851) or e-mail your comments (smith@ici.org) by April 7th.
I. EDGAR Modernization
Under the current EDGAR system, filers must submit electronic filings in a text-based ASCII
format which precludes the use of graphics, varied fonts and other visual displays. The SEC plans to
change EDGAR to a HTML/PDF environment so that it will be able to accept and display filings that
use graphic and other visual presentations. Filers will be able to submit documents to the EDGAR
system that can appear in substantially the same graphic format as those prepared by the issuer for
delivery to investors.
The release notes that the HTML/PDF environment will greatly expand the amount and kinds
of information that the SEC can make available to investors through the EDGAR system. At the same
time, modernization should ease burdens on filers, by enabling the submission of documents to the
EDGAR system in a format similar to that in which issuers present documents to the public and
investors.
Filers will be required to submit most filings in HTML or ASCII. The SEC expects that
eventually, HTML will replace ASCII for most filings. Filers may also submit unofficial copies of filings
in PDF. However, PDF filings may not be used to satisfy filing requirements. The modernization
schedule provides that the EDGAR system will accept HTML/PDF documents beginning on May 24,
1999. However, there will be an initial implementation period for HTML filings, extending to year 2000,
during which the SEC will impose certain limitations on HTML filings. During the implementation
period, only certain tags (commands and identifying information) will be accepted by the EDGAR
system.
A. Use of HTML and PDF
The SEC expects to require HTML for most filings as soon as practicable. The release requests
comment on whether the SEC should continue to support ASCII, or whether, in the future, the
Commission should require all documents to be filed in HTML. The release also requests comment on
the use of eXtensible Markup Language ("XML") for EDGAR submission header tags.
Appendix A to the release includes a list of HTML tags that could be used during the
implementation period. The permissible tags provide formatting capability while eliminating active
content and certain classes of hypertext links. Filings which contain tags not included in Appendix A
would be suspended by the EDGAR system. The release requests comment on the proposed tag set,
including whether the SEC should permit, require, or prohibit any particular tag.
In addition to HTML, the SEC intends to permit filers to submit a single unofficial PDF copy of
each document included in the filing. Filers may wish to submit the unofficial copy since PDF
documents retain all fonts, formatting, colors, images and graphics contained in an original document. If
a filer chooses to submit an unofficial PDF copy, it must be “substantially equivalent” to the document
contained in the official filing of which it is a copy. To be considered substantially equivalent, the
documents must be the same in all respects except for the formatting and inclusion of graphics. Filers
cannot make submissions consisting solely of PDF documents.
The release requests comment on the proposal to allow filers to submit unofficial PDF copies of
official filings. Should the unofficial PDF copy contain a legend or disclaimer that it is not the official
filing? How else could users of the dissemination system be alerted to the unofficial status of the PDF
copy?
B. Graphic and Image Material
During the HTML implementation period, the SEC will not accept graphic or image material in
HTML documents. However, the optional, unofficial PDF copy of an EDGAR document may contain
graphic and/or image material. Further, during the HTML implementation period, neither HTML
documents nor unofficial PDF copies may contain animated graphics (e.g., files with moving corporate
logos or other animation).
The SEC intends to permit graphic and image material in HTML documents after the HTML
implementation period. Due to concerns about data storage limitations and ease of viewing, the SEC
may propose restrictions on the type and size of graphic and image material that may be included. The
release requests comment on the circumstances and manner in which the SEC might limit file size and
the type of graphic and image material.
The SEC is considering whether, once the implementation period is over, requiring graphic and
image material to be included in HTML documents under certain circumstances. For example, where
SEC rules require information to be in graphic form (e.g., the bar chart and performance graph required
by Items 2 and 5 of Form N-1A), should filers be required to present the graphic, rather than merely
giving the data? Alternatively, should the presentation of graphic and image material continue to be
optional to alleviate the burden on filers who do not currently have the resources to prepare graphic and
image material?
C. File Transmission and Security
After the HTML implementation period, filers will be able to make EDGAR filings through
Internet-based technology via an internet service provider of their choice. The SEC plans to revise its
EDGARLink filing transmission software to support Internet-based filing. The Commission intends to
provide for security through “Secure Socket Layer” (i.e., encrypted transmissions) and server side
certificates. The release indicates that the SEC is considering whether filers should be allowed or
required to acquire and present client side certificates from one or more Commission designated
vendors. The release requests comment on these security precautions.
D. Document Appearance and Layout
Different Internet browsers used by filers or investors may display the information presented in
an HTML document in a different fashion. The release indicates that this problem would be especially
evident when a filing printed in hard copy from one browser appears significantly different from the
same filing printed out from another browser. To maximize the likelihood of consistent document
appearance across different browsers, the SEC intends to specify HTML 3.2 as the required standard for
HTML documents. The Commission is also considering specifying a standard screen size (e.g., 800 by
600 pixels) for HTML document preparers to use to assure documents will fit viewers’ browser screens.
The release requests comment on these proposed standards. The release also requests comment on
what steps the SEC can take to ease filer burden while maintaining the usability of filings.
Rule Amendments to Accommodate EDGAR Modernization
The release proposes to amend various Commission rules, regulations and forms to
accommodate EDGAR modernization. The significant proposed amendments of interest to investment
companies are described below.
Amendments to Regulation S-T
1. Proposed Rule 104
Proposed Rule 104 would provide that an electronic submission may include one unofficial PDF
copy of each electronic document contained in an electronic submission. Each unofficial PDF copy
would have to be substantively equivalent to its associated ASCII or HTML document contained in the
submission. The rule would make it clear that unofficial PDF copies are not official filings and that
unofficial PDF copies that are prospectuses retain prospectus liability under Section 12 of the Securities
Act of 1933.
2. Proposed Rule 105
Proposed Rule 105 would prohibit electronic filers from including in HTML documents
hypertext links to sites or documents outside the HTML document. The release notes that links or
references in an EDGAR filing to external sites present significant issues concerning what constitutes an
"official filing" submitted to the SEC. The content of linked sites or documents could change on a
regular basis, even after the "official filing" was made with the SEC. As a result, someone trying to
determine the content of the "official filing" at a later date would not necessarily be able to re-create the
document as it was originally filed. Proposed Rule 105 further provides that, if an accepted filing
includes external links in contravention of the rule, the linked material will not be considered part of the
official filing for determining compliance with reporting obligations, but such material will be subject to
the civil liability and anti-fraud provisions of the federal securities laws. The release requests comment
on whether allowing hypertext links to other documents or web sites in the future is advisable.
Proposed Rule 105 would prohibit Form N-SAR, Form 13F, and Financial Data Schedules from
being submitted in HTML. These documents would continue to be submitted in ASCII so that filers
could continue to use the standard format and tagging applications that the SEC has developed for these
filings.
3. Proposed Rule 106
To protect the integrity of the EDGAR system and database, proposed Rule 106 would prohibit
"executable" or "disruptive" code in an official submission or an unofficial PDF copy. Executable code
is defined as instructions to a computer to carry out operations that use features beyond the viewer's,
reader's, or Internet browser's native ability to interpret and display HTML, PDF, and static graphic files.
Disruptive code is defined as any program or set of instructions that modifies, damages, destroys or
disrupts any computer, file, database or system. The SEC staff would have the authority to suspend any
attempted submission that it determines contains executable or disruptive code.
4. Amendments to Rule 101(b)
The amendments to Rule 101(b) would require that all exhibits to Form N-SAR be filed
electronically; filing exhibits in paper would no longer be permitted.
B. Other Rule and Form Amendments in Connection with EDGAR Modernization
1. Rule 497
Rule 497 under the 1933 Act currently requires filers to submit additional copies of certain
forms of profiles in the primary form intended for distribution to investors (e.g., paper), or, if the profile
is distributed primarily on the Internet, to provide the electronic address (URL). The amendments to
Rule 497 would instead allow filers to satisfy this requirement by filing an unofficial PDF copy.
2. Financial Data Schedules
The release proposes to eliminate provisions in Forms N-1, N-1A, N-2, N-3, N-4, N-5 and S-6
requiring submission of financial data schedules. Investment companies would continue to be required
to submit financial data schedules with Form N-SAR.
Gregory M. Smith
Director - Operations/
Compliance & Fund Accounting
Attachment