SEC finalizes data standards, KPMG faces new reporting shift

Nine federal regulators locked in a new data standard for financial reporting on June 8, setting up a change that reaches far beyond filing format. The final rule under the Financial Data Transparency Act of 2022 takes effect October 1, but it does not change reporting requirements on its own, which means banks, advisers and other financial firms have to start mapping current processes to a more standardized environment now.

The joint rule, issued by the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Consumer Financial Protection Bureau, the Federal Housing Finance Agency, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Department of the Treasury, establishes common identifiers for entities, geographic locations, dates and certain products and currencies. It also sets principles-based standards for data transmission, schema and taxonomy formats so firms can submit higher-quality, machine-readable data across agencies with fewer manual workarounds.

One notable change from the August 22, 2024 proposal is what the agencies did not adopt: the final rule does not use the Financial Instrument Global Identifier as a common identifier for financial instruments. Instead, it keeps the Legal Entity Identifier for legal entities and the Unique Product Identifier for swaps and security-based swaps, while using ISO 10962 classification for non-swap financial instruments. Regulators said they considered more than 150 distinct comments before finalizing the rule, and the Federal Reserve said the final version is generally similar to the proposal, with changes reflecting public feedback.

For KPMG professionals in financial services, regulatory reporting, controls and transformation, the practical work starts in data architecture, not in a filing deadline. Clients will need help with data lineage, metadata, taxonomy mapping, enterprise controls and system modernization, because the firms that are best prepared will be the ones that treat interoperability as a whole-enterprise issue rather than a compliance afterthought. That matters for audit teams trying to trace data back to source systems, and for advisory teams helping clients reduce manual reconciliation before busy season pressure hits.

The wider policy case is straightforward: the FDTA was signed into law on December 23, 2022, adding section 124 to the Financial Stability Act of 2010 to harmonize reporting, improve transparency and reduce burden on the financial industry. The Government Accountability Office said the law could improve data quality, efficiency, oversight and timeliness, but warned that agencies may need to modernize legacy systems and coordinate across agencies, while reporting entities may face adaptation, system testing and governance costs. The final phase-one standards are in place; the real scramble comes in phase two, when each agency decides how far to apply them.