SEC Proposes Rule Changes to Modernize EDGAR Reporting System

Washington, DC, March 18, 1999 - The Securities and Exchange Commission is modernizing its Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system by which companies submit required filings in electronic form. When the programming for the new system is completed, EDGAR will be able to accept filings submitted in HyperText Markup Language (HTML), as well as the current ASCII format. Also, filers will have the option of accompanying their required filings with unofficial copies in Portable Document Format (PDF). Proposed rule changes required to accommodate the new system are summarized below.

Comments on the proposed rule changes must be filed by April 15.

Under the current EDGAR system, filers must submit electronic filings in a text-based ASCII format which precludes the use of graphics, varied fonts, and other visual displays. The SEC plans to change EDGAR to an HTML/PDF environment so that it will be able to accept and display filings that use graphic and other visual presentations. Filers will be able to submit documents to the EDGAR system that can appear in substantially the same graphic format as those prepared by the issuer for delivery to investors.

The release notes that the HTML/PDF environment will greatly expand the amount and kinds of information that the SEC can make available to investors through the EDGAR system. At the same time, modernization should ease burdens on filers, by enabling the submission of documents to the EDGAR system in a format similar to that in which issuers present documents to the public and investors.

Use of HTML and PDF
Filers will be required to submit most filings in HTML or ASCII. The SEC expects that eventually, HTML will replace ASCII for most filings. Filers may also submit unofficial copies of filings in PDF. However, PDF filings may not be used to satisfy filing requirements. The EDGAR system will begin accepting HTML/PDF documents on May 24, 1999. During the initial implementation period for HTML filings, extending to year 2000, the SEC will impose certain limitations on HTML filings: graphics and images will not be accepted in HTML documents and only certain tags (commands and identifying information) will be accepted. Appendix A to the release includes a list of HTML tags that can be used during the implementation period. The permissible tags provide formatting capability while eliminating active content and hypertext links. During the implementation period, neither HTML nor PDF documents may contain animated graphics. However, the SEC not only intends to permit graphics and images in HTML documents after the implementation period, but may require them wherever SEC rules specify information in graphic form (e.g., the bar chart and performance graph required by Items 2 and 5 of Form N-1A).

File Transmission and Security
After the HTML implementation period, filers will be able to make EDGAR filings through Internet-based technology via an internet service provider of their choice. The SEC plans to revise its EDGARLink filing transmission software to support Internet-based filing through "Secure Socket Layer" (i.e., encrypted transmissions) and server-side certificates. In addition, the release indicates that the SEC is considering whether filers should be allowed or required to acquire and present client-side certificates from one or more Commission-designated vendors. To protect the integrity of the EDGAR system and database, the proposed rules would prohibit "executable" or "disruptive" code in an official submission or an unofficial PDF copy.

Document Appearance and Layout
Different Internet browsers used by filers or investors may display the information presented in an HTML document in a different fashion. The release indicates that this problem would be especially evident when a filing printed in hard copy from one browser appears significantly different from the same filing printed out from another browser. To maximize the likelihood of consistent document appearance across different browsers, the SEC intends to specify HTML 3.2 as the required standard for HTML documents. The Commission is also considering specifying a standard screen size (e.g., 800 by 600 pixels) for HTML document preparers to use to assure documents will fit viewers' browser screens.