Inline XBRL PRA - Supporting Statement [2018 REVISED]

SUPPORTING STATEMENT
For the Paperwork Reduction Act Information Collection Submission for
INLINE XBRL FILING OF TAGGED DATA ADOPTING AMENDMENTS
A.

JUSTIFICATION
1.

Necessity for the Information Collection

Open-end management investment companies (“mutual funds” or “funds”) are currently
required to submit to the Commission information included in their registration statements, or
information included in or amended by post-effective amendments thereto, in response to Items
2, 3, and 4 (“risk/return summary information”) of Form N-1A (OMB Control No. 3235-0307) 1
in interactive data format and to post it on their websites, if any, in interactive data form. In
addition, funds are required to submit an interactive data file to the Commission for any form of
prospectus filed pursuant to rule 497(c) or (e) 2 under the Securities Act of 1933 (“Securities
Act”) 3 that includes risk/return summary information that varies from the registration statement
and to post the interactive data file on their websites, if any. The aforementioned risk/return
summary information is also required to be submitted to the Commission as part of the
registration statement, post-effective amendment, or form of prospectus filing itself.
In Release No. IC-33139, 4 the Commission adopted amendments to require use of the
“Inline XBRL” format for the submission of mutual fund risk/return summary information using
the machine-readable (i.e., interactive) eXtensible Business Reporting Language (XBRL) format

1

17 CFR 239.15A and 274.11A.

2

17 CFR 230.497.

3

15 U.S.C. 77a et seq.

4

Inline XBRL Filing of Tagged Data, Release No. IC-33139 (June 28, 2018) [83 FR 40846].

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in interactive data files. 5 These amendments require filers, on a phased in basis, to embed part of
the interactive data file within an HTML document using Inline XBRL and include the rest in an
exhibit to that document. The amendments also eliminate the requirement for filers to post
Interactive Data Files on their websites and change the timing of submission of risk/return
summary information in XBRL.
The amendments contain “collection of information” requirements within the meaning of
the Paperwork Reduction Act of 1995 (“PRA”). The title of the collection of information
impacted by the amendments relating to mutual funds is “Mutual Fund Interactive Data” (OMB
Control No. 3235-0642). 6 This collection of information relates to regulations and forms
adopted under the Securities Act, the Securities Exchange Act of 1934, 7 and the Investment
Company Act of 1940 (“Investment Company Act”) 8 that set forth disclosure requirements for
funds and other issuers. Form N-1A is used by funds to register under the Investment Company
Act and to offer their securities under the Securities Act. The information required by this
collection of information corresponds to the risk/return summary information required by Form
N-1A and is required to appear in exhibits to registration statements on Form N-1A and rule 497
submissions, and on fund websites. Although the mutual fund interactive data filing
requirements are included in Form N-1A, the Commission has separately reflected the burden for

5

The Commission also adopted, in the same release, amendments to require use of the Inline XBRL format
for the submission of operating company financial statement information in interactive data files. See id.

6

The title of the collection of information impacted by the amendments relating to operating
companies, addressed in a separate PRA submission, is “Interactive Data” (OMB Control No. 32350645).

7

15 U.S.C. 78a et seq.

8

15 U.S.C. 80a-1 et seq.

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these requirements in the burden estimate for the Mutual Fund Interactive Data collection of
information and not in the burden for Form N-1A.
Inline XBRL requirements for mutual funds would be phased in based on net asset size.
Larger entities (i.e., mutual funds that together with other investment companies in the same
“group of related investment companies” 9 have net assets of $1 billion or more as of the end of
the most recent fiscal year) have a compliance date of two years after the effective date to comply
with the new reporting requirements. Smaller entities (i.e., mutual funds that together with other
investment companies in the same “group of related investment companies” have net assets of
less than $1 billion as of the end of the most recent fiscal year) have an additional year to comply
with the new reporting requirements. Mutual funds will be permitted to file using Inline XBRL
prior to the compliance date for each category of filers; otherwise, prior to their applicable
compliance date, funds that do not file using Inline XBRL would continue to be required to
submit their interactive data file as an exhibit to their filing, as they do currently and under the
current timing requirements.

9

For these purposes, the threshold is based on the definition of a “group of related investment companies,” as
such term is defined in Rule 0-10 under the Investment Company Act. Rule 0-10 defines the term as applied
to management investment companies as two or more management companies (including series thereof)
that: (i) hold themselves out to investors as related companies for purposes of investment and investor
services; and (ii) either: (A) have a common investment adviser or have investment advisers that are
affiliated persons of each other; or (B) have a common administrator. 17 CFR 270.0-10(a)(1). We believe
that this broad definition would encompass most types of fund complexes and therefore is an appropriate
definition for compliance date purposes.

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2.

PUPOSE AND USE OF THE INFORMATION COLLECTION

The purpose of the Mutual Fund Interactive Data information collection is to make
risk/return summary information easier for investors to analyze and to assist in automating
regulatory filings and business information processing. The purpose of the Commission’s
amendments to require Inline XBRL are to improve the data’s usefulness, timeliness, and quality,
benefiting investors, other market participants, and other data users and to decrease, over time,
the cost of preparing the data for submission to the Commission..
3.

CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY

Responses under the interactive data file requirements are submitted to the Commission
electronically on its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system and
posted on the filer’s website, if any, in XBRL format. The public may access submissions on
EDGAR through the Commission’s Internet website (http://www.sec.gov).
4.

DUPLICATION

The Commission periodically evaluates rule-based reporting and recordkeeping
requirements for duplication, and reevaluates them whenever it proposes a rule or a change in a
rule. The Mutual Fund Interactive Data requirements generally are not duplicated elsewhere.
Mutual fund risk/return summary information already is, and will continue to be, required to be
submitted to the Commission as part of a registration statement, post-effective amendment, or
form of prospectus filing itself under existing requirements. When the information is in such a
format, however, it cannot be utilized as effectively as when in an interactive data format that a
variety of software applications can recognize and process. The interactive data format facilitates
making mutual fund risk/return summary information easier for investors to analyze and assisting
issuers in automating regulatory filings and business information processing.

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5.

EFFECTS ON SMALL ENTITIES

The amendments to require the use of the Inline XBRL format would affect all filers,
including small entities, currently subject to the requirement to submit Interactive Data Files in
exhibit-only format. The Commission performed a Final Regulatory Flexibility Act Analysis and
estimated that there are approximately 54 open-end investment companies, including ETFs, that
are small entities subject to these requirements.
The amendments include different compliance schedules based on filer size. Funds that
are small entities will not be subject to the requirements until year three of the phase-in. This
different compliance timetable would enable these filers to defer the burden of any additional
cost, learn from filers that comply earlier and take advantage of any increases in the quality or
decreases in the price of Inline XBRL preparation services or software that arise from expertise
or competition that develops prior to their phase-in. In addition, small entities, as all other filers,
would continue to have a 30-day grace period to make their initial interactive data file
submission. The elimination of the website posting requirement for all filers would consolidate
and simplify the compliance and reporting requirements for all filers with respect to their
interactive data files.
The Commission did not adopt other alternatives regarding small entities because it
believes that long-term uniformity in interactive data submissions facilitates automated analysis
across filers and that the use of Inline XBRL may reduce the time and effort required to prepare
XBRL filings, simplify the review process for filers, improve the quality of structured data and,
by improving data quality, increase the use of XBRL data by investors, other market participants,
and other data users.

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6.

CONSEQUENCES OF NOT CONDUCTING COLLECTION

If the specified information were not required in interactive data format, the information
would be available through the Commission only as part of a registration statement, posteffective amendment, or form of prospectus filing itself. The use of interactive data format
assists issuers in automating regulatory filings and business information processing. If
interactive data format information were required less frequently, less information would appear
in that format and, as a result, the interactive data file requirement would be less likely to
facilitate its intended purposes and achieve its expected benefits. Failure to conduct the
collection of information required by the amendments could frustrate the Commission’s intent to
improve the data’s quality (benefiting investors, other market participants, and other data users)
and to decrease, over time, the cost of preparing the data for submission to the Commission.
7.

INCONSISTENCIES WITH GUIDELINES IN 5 CFR 1320.5(d)(2)

None.
8.

CONSULTATIONS OUTSIDE THE AGENCY

The Commission issued a proposing release soliciting comment on the new “collection of
information” requirements and associated paperwork burdens. 10 Comments on the
Commission’s releases are generally received from filers, investors and other market participants.
In addition, the Commission and staff participate in an ongoing dialogue with representatives of
various market participants through public conferences, meetings and informal exchanges. The
Commission considered all comments received and addressed them in an adopting release. A
copy of the adopting release is attached.

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9.

PAYMENT OR GIFT

Not applicable.
10.

CONFIDENTIALITY

Not applicable.
11.

SENSITIVE QUESTIONS

No information of a sensitive nature, including social security numbers, will be required
under this collection of information. The information collection does not collect personally
identifiable information (PII). The agency has determined that a system of records notice (SORN)
and privacy impact assessment (PIA) are not required in connection with the collection of
information.
12.

BURDEN OF INFORMATION COLLECTION

The paperwork burden estimates associated with the amendments include the burdens
attributable to collecting, preparing, reviewing and retaining records.
The Commission has adopted amendments to require the use of the Inline XBRL format
for the currently required exhibit-only submission of mutual fund risk/return summary
information in interactive data files. These amendments affect the Mutual Fund Interactive Data
collection of information requirements by requiring mutual funds, on a phased in basis, to embed
part of the interactive data file within an HTML document using Inline XBRL and include the
rest in an exhibit to that document. The Commission also adopted amendments to eliminate
mutual fund risk/return summary information interactive data file website posting requirements.

10

Inline XBRL Filing of Tagged Data, Release No. 33-10323 (Mar. 1, 2017) [82 FR 21487] (“Inline XBRL
Proposing Release”).

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With respect to fund risk/return summaries, the Commission previously estimated that
each fund will submit one Interactive Data File as an exhibit to a registration statement or a posteffective amendment thereto, and that 36% of funds will submit an additional Interactive Data
File as an exhibit to a filing pursuant to Rule 485(b) or Rule 497. The Commission also
previously estimated that (1) tagging and submitting fund risk/return data in XBRL format
requires 11 hours per response, and (2) posting interactive data to the fund website requires one
additional hour per response. In the Inline XBRL Proposing Release, the Commission estimated
that there would be 15,104 responses per year by 11,106 funds. 11 Based on updated industry
figures on the number of funds, we now estimate that there will be 15,206 responses per year by
11,181 funds. 12
The Inline XBRL Proposing Release also estimated that the Inline XBRL requirement for
risk/return summary information would result in an initial increase in internal burden by two
hours to switch to Inline XBRL. Commenters did not provide quantitative estimates of the
impact of Inline XBRL on the burden of XBRL preparation for risk/return summaries. However,
after considering qualitative input from some commenters that indicated the Commission may
have underestimated the cost of transition to Inline XBRL for funds, we are revising the estimate
of the increase in internal burden for funds from two hours to four hours for the initial response.
We continue to estimate that this increase in burden will be borne only for the initial response
that uses Inline XBRL. Further, we continue to estimate that there will be a reduction in review
time that will result in a decrease in internal burden of approximately 0.5 hours per response,

11

See Inline XBRL Proposing Release, at 14302, n. 217

12

We continue to estimate that there will be 1.36 responses per fund per year. 11,181 funds x 1.36
responses = 15,206 responses.

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beginning with the initial response and continuing on an ongoing basis. 13 We are postponing the
phase-in for funds by one additional year after the effective date of the amendments. Based on
the above estimate of 11,181 funds, and accounting for the modifications to the phase-in of
different filer categories, we estimate that the aggregate average yearly internal burden of
risk/return summary information XBRL requirements will increase by 11,537 hours of in-house
personnel time. 14 The elimination of the website posting requirements is expected to reduce the
paperwork burden for funds by one hour per response. We therefore estimate that the elimination
of the website posting requirements will decrease the aggregate average yearly burden on funds
by 15,206 hours of in-house personnel time or 1.36 hours per fund. 15
The Commission previously estimated that the existing risk/return summary information
XBRL requirements require funds to expend 181,248 hours of in-house personnel time. 16 Based
on updated industry figures, the existing XBRL requirements for funds will require 182,472

13

Thus, for the initial response using Inline XBRL, we estimate that funds will experience a net increase
in hour burden of 3.5 hours (4.0 hours - 0.5 hours = 3.5 hours).

14

The calculation below considers the aggregate average yearly change in burden incurred by each of the two
categories of funds during the first three years under the amendments. Based on staff analysis of data
obtained from Morningstar Direct, as of May 2018, we estimate that a $1 billion asset threshold for groups
of related investment companies will provide an extended compliance period to approximately two-thirds,
or approximately 67%, of all mutual funds affected by the Inline XBRL requirements.
Funds that are phased in during year two are assumed to incur no change in burden in year one. Funds that
are phased in during year three are assumed to incur no change in burden in years one and two.
Funds phased in during year two: 33% x 11,181 funds = 3,690 funds. Aggregate average yearly change in
internal burden for funds phased in during year one: 3,690 funds x {[0 + 3.5 + (0.36 + 1.36) x (-0.5)] / 3}
hours per fund = 3,247 hours.
Funds phased in during year three: 67% x 11,181 funds = 7,491 funds. Aggregate average yearly change in
internal burden for funds phased in during year two: 7,491 funds x {[0 + 0+ 3.5 + (0.36) x (-0.5)] / 3} hours
per fund = 8,290 hours.
Aggregate average yearly change in burden: 3,247 + 8,290 = 11,537 hours.

15

15,206 responses x (-1) hour per response = -15,206 hours. 1.36 responses per fund x (-1) hour per
response = -1.36 hours per fund.

16

15,104 responses x (11 + 1) hours per response = 181,248 hours.

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hours of in-house personnel time. 17 We estimate that in the first three years under the
amendments, the aggregate average yearly burden of XBRL requirements for funds will decrease
to 178,803 hours of in-house personnel time, 18 which represents a decrease of 3,669 hours of inhouse personnel time, 19 or a decrease of 0.33 hours of in-house personnel time per filer. 20 Based
on the estimated wage rate, the total cost to the fund industry of the 178,803 hour burden for the
tagging of risk/return summary information is approximately $52.5 million per year. 21
13.

COST TO RESPONDENTS

In addition, the Commission previously estimated an external cost burden of $890 for the
cost of goods and services purchased to comply with the current Interactive Data requirements,
such as for software and/or the services of consultants and filing agents. We further previously
estimated an external aggregate cost burden of $9,884,340 for the cost of goods and services
purchased to comply with the current Mutual Fund Interactive Data requirements, such as for
software and/or the services of consultants and filing agents, based on an estimate of 11,106
funds. 22

17

15,206 responses x (11 + 1) hours per response = 182,472 hours.

18

182,472 - 15,206 + 11,537 = 178,803 hours.

19

-15,206 + 11,537 = -3,669 hours.

20

-3,669 hours / 11,181 filers = -0.33 hours per filer.

21

This cost is estimated using an estimated hourly wage rate of $293.50 (178,803 hours x $293.50 hourly
wage rate = $52,478,681). The estimated wage figure is based on published rates for compliance attorneys
and senior system analysts from the Securities Industry and Financial Markets Association’s Report on
Management & Professional Earnings in the Securities Industry 2013, modified by the Commission to
account for an 1800-hour work-year and inflation, and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead. The estimated wage rate was further based on the Commission’s previous
estimate that compliance attorneys account for one quarter of the hours worked and senior system analysts
account for the remaining three quarters, resulting in a weighted wage rate of $293.50 per hour (($352 x
0.25) + ($274 x 0.75)).

22

11,106 funds x $890 per fund = $9,884,340.

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We also continue to estimate that the average fund will incur an increase in software costs
of $10 per year on an ongoing basis, beginning in the first year of compliance for its phase-in
category with the Inline XBRL requirement. Based on the estimate of 11,181 funds, we estimate
that the Inline XBRL requirement will result in an increase of $49,557 in the aggregate average
yearly cost of services of outside professionals. 23
The Commission previously estimated that the existing risk/return summary information
XBRL requirements require funds to expend $9,884,340 in the cost of services of outside
professionals per year, based on an estimate of 11,106 funds. 24 Based on updated industry
figures, the existing XBRL requirements for funds will require $9,951,090 in the cost of services
of outside professionals. 25 We estimate that in the first three years under the amendments, the
aggregate average yearly cost of services of outside professionals will increase to $10,000,647, 26
which represents an increase of $49,557 in the cost of services of outside professionals, or an
increase of $4.43 in the cost of services of outside professionals per filer. 27
14.

COSTS TO FEDERAL GOVERNMENT

We estimate that the cost of preparing the amendments is approximately $100,000.

23

Funds are estimated to incur an additional $10 per year beginning with the first year of compliance for their
phase-in category. The calculation below considers the aggregate average yearly change in external cost
incurred by each of the two categories of funds during the first three years under the amendments.
Funds phased in during year two: 33% x 11,181 funds = 3,690 funds. Average yearly change in external
cost per fund: [$0 + $10 + $10] / 3 = $6.67 per fund. Aggregate average yearly change in external cost for
all funds phased in during year one: 3,690 funds x $6.67 per fund = $24,612.

24

11,106 funds x $890 per fund = $9,884,340.

25

The elimination of the website posting requirements is expected to reduce the paperwork burden for
funds by one hour per response. We therefore estimate that the elimination of the website posting
requirements will decrease the aggregate average yearly burden on funds by 15,206 hours of in-house
personnel time or 1.36 hours per fund.

26

$9,951,090 + $49,557 = $10,000,647.

27

$49,557 / 11,181 filers = $4.43 per filer.

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15.

CHANGE IN BURDEN

Currently, the approved annual hour burden for complying with the Mutual Fund
Interactive Data requirements is 172,323 hours. The new estimate for complying with the
Mutual Fund Interactive Data requirements after accounting for the Inline Tagging of XBRL
Data adoption is 178,803 hours, representing an increase of 6,480 hours. The increase in hourly
burden is due to the Commission’s increased estimate in the number of funds that would provide
risk/return summary information as interactive data in additional filings submitted pursuant to
rule 485(b) or rule 497 annually, along with an estimate that the Inline XBRL requirements
(including the elimination of website posting requirements) for mutual fund risk/return summary will
result in an overall decrease in burden hours per filing.

Currently, the approved total cost burden for software and/or consulting services for
complying with the Mutual Fund Interactive Data requirements is approximately $9,355,713.
The estimated new total cost burden is $10,000,647, representing an increase of $644,934. This
increase is due to an increase in the estimated number of funds and an increase in the estimated
software costs per fund.
16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL
PURPOSES

Not applicable.
17.

APPROVAL TO OMIT OMB EXPIRATION DATE

The Commission is not seeking approval to omit the expiration date.
18.

EXCEPTIONS TO CERTIFICATION STATEMENT FOR PAPERWORK
REDUCTION ACT SUBMISSIONS

Not applicable.

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B.

STATISTICAL METHODS
Not applicable.