The SEC recently approved the final rule of the Investment Company Reporting Modernization package that aims to enhance data reporting for mutual funds, ETFs and other registered investment companies. The new rules require, among others, data points that might not have been collected in the past to be submitted to the SEC with greater frequency. The information will be reported in a structured data format, which will allow the SEC and the public to better analyze the information. The rules also will require enhanced and standardized disclosures in financial statements and will add new disclosures in fund registration statements relating to a fund’s securities lending activities. “Perhaps one of the most important elements of today’s rule is how we ask registered funds to provide the reporting,” said SEC Commissioner Kara M. Stein following the adoption of the rule. “Funds will submit the new forms in a structured, XML format. This means that, while the information can be read by a person, it can also be easily processed by computers for analysis.” The rule also embraces the use of the legal entity identifier, or LEI. The LEI is a way to uniquely identify financial market participants across reports and across markets. “With thousands of registered funds and trillions of dollars in assets, LEI will help enhance both fund identification and analysis. Wider use of structured data and LEIs will enable market participants, the Commission, and other regulators to make the most of limited resources and better understand the data being reported, ” Stein added. Moving to structured data should, in addition, lower the barriers of entry to the commercial data business, thus lowering prices for investors and spurring innovation, explained XBRL US, a nonprofit national consortium for the business reporting standard, in comments before the rules were approved. Though the initial cost of reporting will be borne by the reporting funds, the overall reduction of costs to all participants should end up saving money over time. Market players generally welcomed the new requirements but bemoaned the burden of data collection. The new reporting format will not significantly change the compliance work, as regulatory forms are submitted electronically under the current regime. Data gaps and silos, and a more frequent reporting schedule are the main challenges. Many vendors, like Assetlogic or Cube, offer regulatory reporting solutions, in an attempt at lowering the costs and pain of developing such solutions in house. These cloud-based solutions collect and aggregate data from a company's systems and enable easy data management for regulatory purposes. Moving a firm's data to one central repository also has benefits for marketing and customer services applications. Other vendors, like Agile Reporter, offer automated reporting, in addition to data management, saving fund managers more pain when dealing with regulators. The regtech market, as these companies are referred to collectively, is a growing category, fueled by the harsh post-crisis regulatory environment. According to a Medici report, the global demand for regulatory, compliance, and governance software is expected to reach $118.7 billion by 2020.