First federal agency poised to take up FDTA rulemaking notice

Controversial new data standards for municipal issuers may advance Tuesday when the Federal Deposit Insurance Agency board is expected to vote on a notice of proposed rulemaking at an open meeting.

The FDIC is one of seven federal agencies that, with the Securities and Exchange Commission, will play a role in the complex, joint rulemaking process that will craft final guidelines for the Financial Data Transparency Act. Signed into law on Dec. 23, 2022, the FDTA requires that municipal securities disclosures be converted into a machine-readable format.  Since then, the market has been grappling with how that is going to happen. 

The FDIC's July 30 agenda includes as an item the "Notice of Proposed Rulemaking regarding the Financial Data Transparency Act." The agency is not expected to take up "any substantive discussion" of the item, resolving it with a single vote unless a member requests it be moved to the separate discussion agenda, according to the website. The meeting is set for 10 AM and is open to the public online.

Rep. Patrick Henry's office.

Each agency involved in the rulemaking will have its own approval process, some with open meetings and others with closed meetings, said a source familiar with the process. There is no clear sequence or calendar of agency votes. The notice may change as it moves through the process, with the slight chance that some agencies would have to return to the notice for a fresh vote if it is significantly altered.

FDTA rules are set to be in place by the end of 2024, though they may be delayed as the agencies have yet to release the joint Notice for Comment that under law was scheduled to be released by June 28.

In May, a group of senior House and Senate lawmakers, including Rep. Patrick Henry, R-N.C., chair of the House Financial Services Committee, sent a letter to the agencies and SEC urging them to finalize their rulemakings under the schedule set by the FDTA. "The inclusion of the FDTA on your respective rulemaking agendas is a positive step," the officials wrote. "Implementation of the FDTA is a bipartisan and bicameral priority. We appreciate your prompt attention to this important matter."

The timeline calls for final rulemaking to be released in December, with the SEC publishing proposed muni market-specific standards in 2026, followed by the Municipal Securities Rulemaking Board's proposal and call for comments. By the end of 2026, the SEC is expected to issue its final rule for municipal market standards with the effective dates coming in 2027 or after.