SEC begins three-phase upgrade of its financial data filing system

The Securities and Exchange Commission has moved its electronic filing database and
filing capabilities in-house, the first phase in a two-year modernization project.

The Electronic Data Gathering, Analysis and Retrieval system manages and stores
financial data that publicly traded corporations must file with SEC.

EDGAR data is stored on a server at Lexis-Nexis Corp. in Arlington, Va.

As the first step in its modernization program, SEC is moving the Sybase Inc. database
to servers at SEC headquarters in Washington, said Rick Heroux, EDGAR program manager.

SEC has two Sun Microsystems Sparc 2000 servers with three CPUs and 144G of RAID
storage each. The servers have 192M of RAM and 128M of RAM respectively; both run on Unix.

Now that the database is moved, accessing EDGAR data will be less expensive for
companies filing with SEC. EDGAR subscribers each have paid Lexis-Nexis $278,000 a year
for near real-time access to the data; the move reduces that cost to $79,686.

SEC posts the same information online 24 hours after companies file the documents with
SEC. But many companies and investment houses want quicker access to the data, and so pay
for the near real-time subscription service. The wait for EDGAR to accept the filing and
resend it to subscribers is 78 seconds, Heroux said.

The EDGAR files on the SEC Web site are copies; companies cannot access the data
directly from EDGAR over the Internet, Heroux said.

SEC receives 1,500 filings a day on average and processes about 8,000 files daily
during peak times, Heroux said. The filings are processed by two Continuum 1220 front-end
servers from Stratus Computer Inc. of Marlborough, Mass. The servers time-stamp the
filings, which are received over a modem, and, if everything is in order, send them on for
storage in the Lexis-Nexis database.

The servers delay filing if the information is incorrect or the filer fails to pay the
filing fee, Heroux said. The 256M RAM Stratus servers have two CPUs each; one has a 32G
hard drive, the other a 16G hard drive.

BDM International Inc., which built EDGAR for SEC, heads up the EDGAR modernization
under a three-year contract. The McLean, Va., company will operate and maintain the old
EDGAR system during the transition, Heroux said.

EDGAR’s data dissemination recently switched from GE Information Services of
Rockville, Md., to BDM after GE’s contract expired, he said.

Modernizing EDGAR will cost $22.5 million and will likely be complete in two years,
Heroux said.

SEC will modernize EDGAR in three phases. Ten months after the EDGAR database is moved,
BDM will change EDGAR data from ASCII to Hypertext Markup Language. “The ASCII is a
pain in the neck,” Heroux said, because companies have to convert a document to ASCII
before sending it to SEC. “With HTML they will be able to send us their pretty
WordPerfect documents,” he said.

HTML will be the master language, but as a courtesy SEC will let companies send Adobe
Portable Document Format or ASCII files, Heroux said.

SEC officials will begin replacing software and other hardware in the second phase of
modernization, Heroux said.

The third phase, to be launched 18 months after the second phase, will see the
replacement of the rest of the hardware and software, Heroux said. Details of that phase
have not been decided, he said.  

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