Earlier this week, Securities and Exchange Commission (SEC) chairman Christopher Cox announced the upgrade to its reporting and disclosure system, the Edgar database. According to Cox, the new XBRL-based platform will give investors faster and easier access to key financial information about public companies and mutual funds, when it is introduced over the next three years.
The new Interactive Data Electronic Applications (Idea) system, which will first supplement and then replace Edgar, is based on a completely new architecture being built from the ground up, says Cox. The decision to replace Edgar is part of the SEC’s transition from collecting forms and documents to providing the information it collects to investors for more up to date financial disclosure.
Cox explains: “Idea will ensure that the SEC continues to stay ahead of the needs of investors. This new SEC resource powered by interactive data will give investors far faster, more accurate, and more meaningful information about the companies and mutual funds they own. Idea’s launch represents a fundamental change in the way the SEC collects and publishes company and fund information – and in the way that investors will be able to use it.”
Currently, most SEC filings are available only in government prescribed forms through Edgar. Investors looking for information must sift through one form at a time, and then re-key the information into their systems. With Idea, the SEC says that investors will be able to instantly collate information from thousands of companies and forms, and create reports and analysis in any way they choose.
The SEC has also formally proposed requiring US companies to provide financial information using interactive data or XBRL beginning as early as next year, and separately has proposed requiring mutual funds to submit their public filings using XBRL. The SEC hopes that the ease with which XBRL tagging will make financial information available will generate many new web-based services and products for investors.
According to Cox, the Idea logo will now appear on the SEC’s website as the agency transitions to making Idea the new primary source for all SEC filings. Companies’ interactive data filings are expected to be available through Idea beginning late this year.
Investors and others who currently use Edgar will be able to continue doing so for the indefinite future. During the transition to the new system, investors will be able to take advantage of new interactive, Idea-like features that will be grafted onto Edgar in the short run, says the SEC. This will make it possible for investors to use Idea’s search capabilities, and to use the information from Edgar within spreadsheets and analytical software. The Edgar database also will continue to be available as an archive of company filings for past years.
William Lutz, who is leading the SEC’s 21st Century Disclosure Initiative, says: “When Congress created the SEC, and even when Edgar was launched, the markets worked on paper and by mail. Today, the marketplace works online and by email. Companies and investors alike compile, analyse, and produce information and reports electronically. With the move to an electronic data-based filing system, the SEC will not only keep pace with the markets, but will provide investors with a dynamic system they can use to get the information they need, rather than having to wade through an avalanche of paper forms, legalese, and doublespeak.”
David Blaszkowsky, director of the SEC’s Office of Interactive Disclosure, adds: “After 75 years of document-based static financial reporting, whether in paper documents or in electronic equivalents, it is exciting to see the SEC poised to cross the ‘data threshold’ and help investors receive financial information that is dynamic, usable and ready to go as they make their investment decisions. And when the investor wins, so does the public company, fund, or other filer who simultaneously benefits from greater transparency and trust in our markets. By tapping the power of interactive data to tear down barriers to quick and meaningful investment information, markets can become fairer and more efficient while investors can possess far better quality data than was ever possible before.”