Financial Data Transparency Act Joint Data Standards Extension Request

October 7, 2024

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Chief Counsel’s Office Attention: Comment Processing Office of the Comptroller of the Currency 400 7th Street SW, Suite 3E-218 Washington, DC 20219	Melane Conyers-Ausbrooks Secretary of the Board National Credit Union Administration 1775 Duke Street Alexandria, VA 22314-3428	Christopher Kirkpatrick Secretary of the Commission Commodity Futures Trading Commission Three Lafayette Centre 1155 21st Street NW Washington, DC 20581
Ann E. Misback Secretary Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue, NW Washington, DC 20551	FDTA-INTERAGENCY RULE c/o Legal Division Docket Manager Consumer Financial Protection Bureau 1700 G Street NW Washington, DC 20552	Vanessa A. Countryman Secretary U.S. Securities and Exchange Commission 100 F Street NE Washington, DC 20549-1090
James P. Sheesley Assistant Executive Secretary Attention: Comments/Legal OES (RIN 3064-AF96) Federal Deposit Insurance Corporation 550 17th Street NW Washington, DC 20429	Clinton Jones General Counsel Attention: Comments/RIN 2590-AB38 Federal Housing Finance Agency 400 Seventh Street SW Washington, DC 20219	Chief Counsel’s Office Attention: Comment Processing Office of Financial Research Department of the Treasury 717 14th Street NW Washington, DC 20220

 

Re: Financial Data Transparency Act Joint Data Standards 

OCC               Docket ID OCC-2024-0012; RIN 1557-AF22

FRB                Docket No. R-1837; RIN 7100 AG-79

FDIC              RIN 3064-AF96

NCUA            RIN 3133-AF57

CFPB              Docket No. CFPB-2024-0034; RIN 3170-AB20

FHFA             RIN 2590-AB38

CFTC             RIN 3038-AF43

SEC                Rel. No. 33-11295; 34-100647; IA-6644; IC-35290; File No. S7-2024-05; RIN 3235-AN32

Treasury        Docket No. TREAS-DO-2024-0008; RIN 1505-AC86

 

Dear Agencies:

The Investment Adviser Association (IAA)[1] respectfully requests a 60-day extension of the comment period for the joint proposal (Proposal) of the nine federal financial regulators (the Agencies) to implement the first phase of the Financial Data Transparency Act (FDTA).[2] The IAA’s members are all fiduciary investment advisers, ranging from global asset managers to the medium- and small-sized firms that make up the majority of the investment adviser industry. They manage more than $35 trillion in assets for a wide variety of individual and institutional clients, including pension plans, trusts, mutual funds, private funds, endowments, foundations, and corporations. The IAA has long called for greater attention to the interrelatedness of financial regulation and we strongly support the interoperability goals of the FDTA. However, we urge the Agencies to move forward cautiously and only after thoughtful analysis and deliberation, including obtaining thorough input from the many market participants that will be most impacted by the Agencies’ actions, including IAA members.

Financial instrument identifiers are critical for fiduciary investment advisers to do business, from managing a client’s account to fulfilling a variety of compliance, risk management, and investment responsibilities, to internal and regulatory reporting. Under Section 124(c)(1)(B) of the FDTA, the joint data standards must, “to the extent practicable,” be “nonproprietary or made available under an open license.”[3] Financial instrument identifiers act as an essential public utility and should be treated as such and we strongly agree with the statutory directive that, to the extent practicable, they must be made available to end users under an open license. It is crucial that any determination made by the Agencies as to a common financial instrument identifier in the first phase of the rulemaking be based on a thorough and sound analysis.

Moreover, separately from Section 124 of the FDTA, each Agency in a second phase of rulemaking will be required to adopt its own standards for its own collections of information that “incorporate and ensure compatibility with, to the extent feasible,” the applicable joint standards.[4] Each agency must also consider how its rulemaking will affect smaller entities. Regardless of the chosen data standard, each Agency should scale data reporting requirements to reduce any unnecessary burden on smaller entities and minimize disruptions to these businesses or individuals.[5]

We are concerned that by jointly selecting the Financial Instrument Global Identifier (FIGI) at this phase as the common identifier for financial instruments, the Agencies will have made it very difficult and/or costly for any individual Agency to later change course during its rulemaking. This is especially concerning because we do not believe that the joint Agency decision would be based on adequate analysis. For example, it appears that the Agencies are taking the view that FIGI is fully free, but we have serious concerns as to whether this is in fact the case.[6] It is thus critical that the Agencies get meaningful input at this first phase of the rulemaking process to enable them to conduct an adequate analysis of the costs, benefits, impacts, and implications of the potential alternatives.

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We are currently collecting feedback from our members to assist us in developing a constructive response to the Proposal, but this is extremely challenging within the provided deadline. We believe that the Agencies’ policy goals would be better served by allowing more time for key stakeholders, like the IAA and our members, to consider these important issues and prepare our response. Please contact the undersigned at (202) 293-4222 if you have any questions.

Respectfully,

Gail C. Bernstein
General Counsel and Head of Public Policy

Laura L. Grossman
Associate General Counsel

 

cc:
The Honorable Gary Gensler, Chair
The Honorable Hester M. Peirce, Commissioner
The Honorable Caroline A. Crenshaw, Commissioner
The Honorable Mark T. Uyeda, Commissioner
The Honorable Jaime Lizárraga, Commissioner
Natasha Vij Greiner, Director, Division of Investment Management

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[1] The IAA is the leading organization dedicated to advancing the interests of fiduciary investment advisers. For more than 85 years, the IAA has been advocating for advisers before Congress and U.S. and global regulators, promoting best practices, and providing education and resources to empower investment advisers to effectively serve their clients, the capital markets, and the U.S. economy. For more information, please visit www.investmentadviser.org.

[2] The Proposal would establish certain joint data standards in phase one across the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Consumer Financial Protection Bureau, Federal Housing Finance Agency, Commodity Futures Trading Commission, Securities and Exchange Commission (SEC), and Department of the Treasury. Financial Data Transparency Act Joint Data Standards, 89 Fed. Reg. 67890 (Aug. 22, 2024), available at https://www.govinfo.gov/content/pkg/FR-2024-08-22/pdf/2024-18415.pdf. The Proposal implements Section 124 of the Financial Stability Act of 2010 (12 U.S.C. 5334), as added by the FDTA.

[3] FDTA Section 124(c)(1)(B)(iv).

[4] 89 Fed. Reg. at 67895.

[5] Id.

[6] Unfortunately, the Agencies have failed to do their own analysis, or at least have not “shown their work,” as to this as well as other elements of the Proposal. For instance, the Proposal provides no basis for the conclusion that, and lacks any analysis of whether, FIGI in fact performs adequately across all asset classes as the Proposal asserts it does (see 89 Fed. Reg. at 67897). This shortcoming underscores the need to allow market participants more time to consider these complex issues.