November 3, 2014

EDGAR Dissemination: Still Favoring Subscribers?

Did you know that filings on the SEC’s EDGAR database used to be available to the general public only after a 24-48 hour delay (unless they paid a premium service to get them sooner)? Old-timers will remember that piece of trivia (the poll below asks you to guess when filings became available to the general public in real-time).

As crazy as that is, it appears that some remnants of favoring those that pay for EDGAR access might still be alive and well. According to this study by three professors, paying subscribers gain access to filings on EDGAR by an average of 10 seconds. Hints of the flap over high frequency trading! Here’s a Bloomberg article – and here’s the study summary from the authors:

We use a large recent sample of Form 4 insider trading filings to provide evidence on the process through which SEC filings are disseminated via EDGAR. We find that while the delay from a filing’s acceptance by EDGAR to its initial public availability on the SEC website is relatively short, with a mean (median) posting time of 40 (36) seconds, in the majority of cases the filing is available to Tier 1 subscribers before its availability on the public SEC site. We further show that prices, volumes, and spreads respond to the filing news beginning around 30 seconds before public posting, consistent with some market participants taking advantage of the posting delay. These results raise questions about whether the SEC dissemination process is really a level playing field for all investors.

Poll: When Did EDGAR Filings Become Available in Real-Time?

This poll asks you to guess when EDGAR filings became available to the general public in real-time:

customer surveys

Disclosure Effectiveness: SEC Awards Contract to Modernize EDGAR

Recently, the SEC acted on this RFP to modernize Edgar, a massive undertaking which is an important component of the disclosure effectiveness project. Fulcrum IT was awarded this contract, although I’m not certain if that is for the entire reform (as I can’t find any press release/article written about it – and this contract is worth $5 million; entire modernization estimated to cost $16 mil). The SEC is looking to effectively replace EDGAR by reducing its complexity and reduce costs both to the agency and filers – including a reduction in the number of form types and acceptable data formats.

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– Broc Romanek