1 See Memorandum to Operations Committee No. 10-99, SEC Rules Committee No. 20-99, and Technology Task
Force, dated March 18, 1999.
[10914]
April 19, 1999
TO: OPERATIONS COMMITTEE No. 16-99
SEC RULES COMMITTEE No. 29-99
TECHNOLOGY TASK FORCE
RE: INSTITUTE COMMENT LETTER ON EDGAR MODERNIZATION AND RELATED
RULE AMENDMENTS
______________________________________________________________________________
As we previously informed you, the Securities and Exchange Commission is modernizing the
Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system.1 When 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 filings with unofficial copies in Portable Document Format ("PDF"). In addition,
the Commission has proposed to amend certain rules and adopt new rules to accommodate
modernization of the EDGAR system. A copy of the Institute's comment letter on EDGAR
modernization and the related rule amendments is attached and is summarized below.
EDGAR Modernization
The Institute's comment letter supports the change from ASCII to HTML. HTML will enable
filers to improve the appearance of their documents filed with the SEC through the addition of varied
fonts, graphics and other features which are not available in the current ASCII based system. The
Institute's letter recommends a two year transition period during which the EDGAR system would
accept both ASCII and HTML formats. This transition period will enable filers to implement requisite
systems changes and staff training in an orderly manner.
The Institute's comment letter supports the ability of filers to include, at their option, an
unofficial PDF version of their official HTML filing. Many ICI member firms currently use PDF to
display fund disclosure documents on their Internet web sites. The Institute's letter expresses concern
with the additional filing volume attributable to PDF filings, and recommends that the SEC ensure that
the EDGAR system has sufficient capacity to accept registrants' filings in a timely manner as the
Commission moves forward with EDGAR modernization.
Rule Amendments
Proposed rule 105 would initially prohibit electronic filers from including in HTML documents
hypertext links to sites or documents outside the HTML document. The Institute's letter recommends
that the Commission consider permitting filers to include hypertext links from EDGAR filings to other
documents or web sites in the future. Hypertext links would enhance filer ability to present information
and provide greater public access to valuable information. The Institute's letter recommends that the
Commission consider following a similar approach to liability for hyperlinked material as it follows for
"attachments" to paper filings. For example, paper prospectuses filed with the Commission may attach a
document (e.g., a prospectus "wrapper"), which is not considered part of the prospectus for liability
purposes under the 1933 Act. Similarly, in the Internet context, a fund could attach a document to its
online prospectus via a hyperlink, whereby a user is led to the document by a clearly delineated box, set
apart in the prospectus, followed by a buffer page which alerts the user that he is leaving the prospectus
and entering a third-party site.
The Institute's comment letter supports amendments to investment company registration forms
that would delete the requirement to include a financial data schedule as an exhibit to the registration
statement. The letter recommends that these amendments be adopted as soon as possible so that filers
with December 31 year-ends can omit financial data schedules from their annual prospectus update to
be filed on May 1.
Gregory M. Smith
Director - Operations/
Compliance & Fund Accounting
Attachment