The Federal Deposit Insurance Agency board is set to vote on a notice of proposed rulemaking concerning the Financial Data Transparency Act. This act, signed into law on December 23, 2022, aims to convert municipal securities disclosures into a machine-readable format. The FDIC, along with six other federal agencies and the Securities and Exchange Commission, will be involved in the joint rulemaking process to establish final guidelines for this new data standard.
The FDIC’s upcoming meeting agenda includes the Notice of Proposed Rulemaking for the Financial Data Transparency Act. It is anticipated that this item will be resolved with a single vote without substantive discussion unless a member requests further examination. The open meeting is scheduled for 10 AM and will be accessible to the public online. Each agency participating in the rulemaking will have its approval process, some with open meetings and others with closed meetings.
Despite the FDTA rules being targeted for implementation by the end of 2024, delays may occur as agencies have not released the joint Notice for Comment as planned. There is uncertainty surrounding the sequence and timing of agency votes, and potential adjustments to the proposed rulemaking may prompt agencies to revisit the issue for a fresh vote if significant changes are made. The SEC is expected to finalize its rule for municipal market standards by the end of 2026, with effective dates likely to be set for 2027 or later.
In response to the delayed rulemaking process, a group of senior House and Senate lawmakers, including Rep. Patrick Henry, have urged the agencies and SEC to expedite their rulemaking activities in accordance with the FDTA’s schedule. The officials emphasized that the implementation of the FDTA is a bipartisan and bicameral priority, highlighting the importance of adhering to the established timeline for setting up the new data standards in the municipal securities market.
Overall, the Federal Deposit Insurance Agency board’s upcoming vote on the Notice of Proposed Rulemaking marks a significant development in the implementation of the Financial Data Transparency Act. As various federal agencies and the SEC collaborate on formulating final guidelines, the municipal securities market is poised for a transformative shift towards a standardized, machine-readable data format. However, challenges such as timeline delays and potential revisions to the proposed rulemaking may impact the timely adoption of these new data standards. The bipartisan support for the FDTA underscores its importance in enhancing transparency and efficiency in the municipal securities market, signaling a positive step towards modernizing data disclosures in the financial industry.