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Open Letter: SEC Proposed Rule for BDCs
Wednesday, May 15, 2019

The Securities and Exchange Commission is proposing rules that would modify the registration, communications, and offering processes for business development companies (BDCs) and other closed-end investment companies under the Securities Act of 1933. As part of that proposal, the SEC has called for public comment on its amendments.

Calcbench recently posted its response, the text of which is below. Have you? The comment period ends on June 10. We encourage you to provide your feedback to the Commission. Here’s the link.

_____________________________

Dear Acting Secretary Countryman, U.S. Securities & Exchange Commission,

We, the founders of Calcbench, write this letter to express our support for S7-03-19, specifically the structured data reporting provisions that require Business Development Companies (BDCs) to tag their financial statements using Inline eXtensible Business Reporting Language (XBRL). Currently XBRL is mandated for corporate filings by the Commission. Yet BDCs traditionally have been exempt. The proposed changes to Securities Act 4 would close this loophole and move BDCs toward more modern, transparent, and accessible reporting.

Since 2009, when the Commission adopted rules requiring operating companies to submit information from the financial statements accompanying their registration statements and periodic and current reports in a structured, machine-readable format using XBRL format, use of XBRL by investors has grown exponentially. Much of this has to do with InLine XBRL, which has improved the quality and usability of XBRL data. Today, some of the largest asset managers, most influential researchers, and top public companies are using XBRL to gain critical insights. How do we know? Many of them are our clients.

Calcbench, our company, is powered by XBRL. With just a click of a button or a data feed, we provide investors, researchers, and corporations with an interactive database to access face financials and hard-to-find information hidden in the dark corners of the footnotes. Our customers use this XBRL data to get accurate, timely information to accelerate and refine their analysis.

While it behooves us to give our clients access to BDC-tagged information, and we believe in rule parity for public companies, the primary reason we believe BDCs (and frankly all investment companies) should have mandatory Inline XBRL tagging is that XBRL works. In a nutshell, investment firms can get what they want from the filings directly, from the source that filed it. They also get it FAST. There is no delay in obtaining the information once it is in the public domain. This makes capital markets more efficient.

While less publicized, one of the critical aspects to the XBRL mandate is investor protection. We believe the transparency that XBRL enables investors to do their own research quickly and conveniently to ensure that they are understanding the risk that they are taking purchasing BDCs.By our estimate, total stock market dollar volume in BDCs is roughly $165 million per day. These are neither small firms nor inadequate dollar volumes that are exchanged.

In conclusion, we believe that reporting in a structured data format makes financial information easier for investors to access and analyze. Given that XBRL is the standard by which all other public operating companies file, we believe there should be consistency in BDC reporting to ensure accuracy and timely results.

Sincerely,

Pranav R. Ghai and Alexander M. Rapp

Co-Founders, Calcbench Inc.


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