[Federal Register Volume 61, Number 7 (Wednesday, January 10, 1996)]
[Notices]
[Pages 739-741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-370]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36683; File No. S7-3-96]
EDGAR Request For Information
AGENCY: Securities and Exchange Commission.
ACTION: Request for comments.
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SUMMARY: The Securities and Exchange Commission is publishing
alternative system architectures for possible use in preparing a
Request for Proposals which will be used to recompete the contract for
its electronic filing system known as EDGAR. Comments and information
received will assist the agency and the Congress in making decisions as
to how EDGAR filings will be structured, presented, formatted, filed,
processed and disseminated. Information received will also be used to
make determinations as to whether certain portions of the EDGAR system
can or should be privatized.
DATES: Comments should be received on or before January 22, 1996.
ADDRESSES: Comments should be submitted to Jonathan G. Katz, Secretary,
Securities and Exchange Commission, 450 Fifth Street, NW., Washington,
DC 20549. Comments should refer to File No. S7-3-96. All comments will
be available for public inspection and copying in the Commission's
Public Reference Room, 450 Fifth Street, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Michael Bartell or David Copenhafer,
Office of Information Technology, Securities and Exchange Commission at
(202) 942-8800.
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission (SEC)
is publishing this second Request for Information (RFI) from companies
and individuals with experience, capabilities or interests relating to
the SEC's electronic filing system known as EDGAR. The need for this
second RFI arises from SEC wishes to supplement the thoughtful and
helpful comments received in response to the first request, and as a
result of recent SEC discussions held internally, with industry and
academic experts, and with the Congress.
This request solicits comment on several potential EDGAR system
architectures, the characteristics of which are described below.
Comment is solicited not just from a technical point of view, or from
the perspective of potential bidders, but also from filers and the many
users of SEC disclosure information as well. Comment on the legal and
commercial implications of each architecture are also sought.
Respondents should note that their comments will be considered
public information by the SEC, and that the SEC will not be able to
honor any requests for comments to be kept confidential.
This notice, as published, cannot accommodate drawings of the
architectures being considered. Respondents who wish to make reference
to the SEC's diagrams depicting the interrelationships among the
various elements of the system can secure copies from the SEC's World
Wide Web site (http://www.sec.gov) or by requesting them at the address
shown at the beginning of this notice.
Brief descriptions of each principal model the SEC has under
consideration are provided below. The order of presentation is not
intended to convey any preference for one approach over another. All
models also assume the SEC will retain its Internet site and continue
to offer the current level of EDGAR document dissemination service (one
day delay and FTP bulk download capability).
I. Evolve the Current Model
A. All filings come to the SEC for receipt and acceptance.
B. Filings are disseminated, as received, through a single, high
volume, high speed, high reliability, commercial point of distribution.
C. The Commission requests comment on three possible dissemination
pricing structures:
(1) Subscriber pricing based upon the cost and agreed-upon rate of
return of a privatized, single point of dissemination similar to the
approach used currently.
(2) Alternatively, the SEC could ask for and accept a bid from a
vendor offering the lowest cost to subscribers based upon a bid, fixed
schedule of prices. Comment is sought on the appropriate duration of
such a contract (e.g., 1, 2, or 3 years).
(3) As a third alternative within this Model I, the SEC could bring
the first tier disseminator ``in house'' and have the cost paid by the
SEC. The SEC would establish the price of each of the services offered
to the second tier and would apply revenues to offset a variety of
system costs (assuming the establishment of a suitable mechanism to
permit the agency to retain such revenues).
D. Document structure would evolve from the current ASCII-SGML
structure. The first addition would be to permit attached,
standardized, image files of a specified maximum size. Later changes
would move toward a richer text format which would not impose any undue
burdens on the filer, the SEC, or the dissemination and public viewing
structures. This richer text probably would be achieved through the
addition of certain, allowable HTML commands or possibly through
conversion to PDF format. The SEC might limit by rule the type of
information that would be permitted to be filed inside an image file.
Issuers also would be free to enhance the electronic information they
distribute to shareholders and investors.
E. Contracting would be done through separate contracts for: (1)
Receipt and Acceptance, and (2) Dissemination.
The fundamental advantages of this Model I and its variants are:
(1) It preserves the existing financial investment in SEC systems; (2)
it allows for needed (albeit slow, evolutionary) changes for solving
the image and document format concerns; and (3) it minimizes ``end to
end'' costs of the system (i.e., for all parties) in the short term, in
that it does not require any significant new investment on the part of
filers, the SEC, disseminators or document users. Long term cost-
benefits of this option are not clear.
The disadvantages of Model I are: (1) Filers are still faced with
the cost and difficulty of having to convert their documents to ASCII;
(2) ASCII is retained throughout the system, and information users are
denied (for the immediate future) a more attractive document; and (3)
financing alternative 3 would require the SEC to invest in the design,
construction and operation of the first tier dissemination capability.
II. Multiple Dissemination Points Model
A. Receipt and Acceptance would remain as described in Model I
above.
B. The approach to dissemination would be modified such that the
SEC would disseminate EDGAR data to possibly three, high speed, high
volume, high reliability, commercial distribution points instead of
one. These disseminators would sell Level I and Level II services to
large end users and resellers.
C. The disseminators would be selected through a bid process.
D. Each disseminator would have a separate contract, and would pay
the SEC either an agreed-upon fixed fee or possibly a percentage of
revenues derived from the sale of EDGAR data.
One advantage of Model II beyond those stated for Model I is that
the dissemination process may be improved as a result of competition
among multiple depositories/disseminators. Its disadvantage is that the
SEC might be required to slightly enhance its current dissemination
capabilities to handle three recipients instead of one.
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III. Single Depository Filing and Dissemination Point Model
A. Filers would have a choice of filing directly, at no cost other
than existing filing fees, with the SEC in ASCII, or through an
approved depository which would accept documents in a number of native
word processing formats for which a fee could be charged.
B. The depository would convert the documents it receives to ASCII
for official transmission to the SEC.
C. The SEC would provide the depository with a copy of every ASCII
file received directly from a registered entity.
D. (1) Within one variant of Model III, the SEC would provide an
acceptance message to the depository service upon SEC acceptance of a
filing in order to let the service know the document was available for
dissemination. (2) Within a second variant, the depository would assume
the responsibility for official acceptance, in which case, no
acceptance message would be necessary.
E. The depository would be responsible for all dissemination
outside of the SEC's Internet offering and would recover the cost of
its document conversions and dissemination services through
dissemination fees and fees to filers.
F. One criterion used to select the single depository would be the
duration of the contract. By keeping the contract duration short, the
depository would remain under competitive pressure to keep prices low
and to remain innovative.
Advantages of Model III are: (1) It offers filers a new, and
possibly lower cost, option for having filings converted to ASCII; (2)
having an approved, commercial entity involved in document conversion
to ASCII might stimulate efforts to improve ASCII conversions
generally; (3) it achieves an efficiency in the dissemination structure
in that the point of document receipt is also the first point of
commercial dissemination for all documents except those received
directly from filers by the SEC; (4) adopting a privatized depository
structure would enable the SEC to respond more quickly and effectively
to changes in technology beneficial to the filers in meeting their
document preparation and submission needs; and (5) a final advantage
may lie with the fact that the depository could supplement the standard
ASCII dissemination stream with native word processing documents.
Disadvantages of this Model III are that: (1) It requires an
investment to construct a new (somewhat duplicative) system ``front
end'' to serve as the receipt point for the thousands of EDGAR filers.
(The SEC might experience some cost savings to the extent it could
reduce the size of its own front end requirements--although it would
still have to receive and accept every filing.) (2) During the contract
period, there would be no competition within this structure. This would
be mitigated by keeping the contract period as short as possible.
IV. Multiple Depositories Model
A. All aspects of this model are as described above in Model III,
with the exception that there would be multiple depositories which
would compete for document conversion and dissemination business.
B. The SEC would provide copies of the ASCII files it receives
directly from registrants to each of the depositories for their use in
providing dissemination services.
C. The multiple depositories would be directed to create an
acceptable dissemination strategy. This could possibly be achieved by
having the depositories create a single, physical database for
dissemination purposes. Alternatively, they could each disseminate
their separate inventories through a single point of interconnection
which would serve the wholesale subscriber community, but would not
maintain a separate dissemination database. Comment is sought on these
and other approaches.
The primary advantages of Model IV, in addition to those stated for
Model III, are: (1) It creates competition among the depositories to
the extent that depositories, under certain circumstances, would be
willing to pay issuers to file with them; and (2) the filing community
would have not only a new document conversion alternative, it would
also benefit from the competition which will take place among the
depositories for possible value-added services unrelated to SEC filing.
The disadvantage is the dissemination structure is complicated by
the fact that documents are held by several recipients.
Respondents are asked to examine all aspects of each model and any
internal variants and provide the SEC with their views of the perceived
``advantages'' and ``disadvantages'' stated for each model. The
Commission requests comment on whether it should provide EDGAR filings
on a real-time basis or continue its current dissemination activities
on a day-delayed basis. Comment should address policy and technical
issues. Should the operators of the depositories described in Models
III and IV be required to offer at no charge via the Internet the raw
filings they receive for conversion? Issues of liability with respect
to document conversions are another area where respondents are asked to
focus their comments. Rating each model from 1 through 5, with 5
signifying the highest rating, would also assist the agency in its
deliberations. Finally, the SEC again asks for alternatives to ASCII
which: (1) Facilitate filer document preparation and submission; (2)
assist the SEC with storing and word searching filings; and (3) are
easily handled and displayed by the dissemination and document viewing
communities.
Comments should be received by the SEC by January 22, 1996. All
responses will be reviewed, and the submitter will be added to the
bidders' list. Comments will be placed in the SEC's Public Reference
Room at the SEC headquarters building located at 450 5th Street, NW. in
Washington, DC. No telephone inquiries will be accepted. In addition to
the mailing address provided above, the SEC will accept electronic
comments directed via Internet e-mail to: webtech@sec.gov.
Dated: January 5, 1996.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-370 Filed 1-9-96; 8:45 am]
BILLING CODE 8010-01-P
