SEC Deputy Chief Economist Debunks Myths about Machine Readability

SEC Deputy Chief Economist Scott W. Bauguess acknowledged that, despite advances within the technology and developments in the SEC, investors and market observers still hold misconceptions concerning machine-readable reporting. Mr. Bauguess explained that the SEC uses regulatory information and artificial intelligence to draw "incredibly valuable insights" from metadata.

Mr. Bauguess clarified that:

• a document is not necessarily machine-readable even if it is electronically accessible;
• the SEC does not develop reporting formats alone but follows standards required across federal agencies;
• machine-readable data is, in fact, crucial for retail investors because it lowers the cost and increases accessibility of fund information;
• algorithms cannot fix errors or poorly reported data; and
• feedback from market participants is necessary for the SEC's decisionmaking.