What is good for the US market, could also be good for the rest of the world, contended Max Mansur, global market manager for Asset Servicing at Swift, and David Hands, director of asset services product management at DTCC Solutions, when speaking about the benefits of XBRL for the corporate actions market. The work going on behind the scenes by Swift, DTCC and XBRL is aimed at enabling this very thing and Mansur and Hands are convinced that the rest of the world will therefore benefit from the mapping of XBRL to ISO 20022.
The US market has already established infrastructure in order to enable financial reporting using XBRL and is well on the way to enabling the tagging of corporate actions issuer documents in the same manner. The Securities and Exchange Commission (SEC) has played a key role in this endeavour and has been championing the extension of XBRL to other areas of the financial markets in the US.
The rest of the world is obviously viewing these developments with interest and Swift decided in May last year to begin the mapping initiative with DTCC and XBRL US in order to ensure that the standards are compatible in the future. The work is well underway, explained Mansur, so that the XBRL taxonomy will eventually be based on the ISO 20022 messaging standard. “It is a way for issuers to make corporate actions announcement data into an electronically consumable format. All of the meta data will be included in this taxonomy including mapping logic, the ISO 20022 schema and the issuer taxonomy,” he elaborated.
The taxonomy is “nearly finished”, he added, and Swift expects to be able to pilot the standards by the end of the year. The group is currently building templates for each type of event based on the standardisation work that has been done by groups such as the Securities Market Practice Group (SMPG) and the Corporate Actions Joint Working Group (CAJWG), more specifically around the Event Interpretation Grid (EIG). ”Issuers will be able to directly publish an event instance to the market or opt to produce a related 20022 message,” he explained.
The templates and taxonomy will be available for public comment in July, before the pilot phase launches later in the year. The group has already run a few samples so far on applications like the XBRL Cloud Developer in order to test formats, said Mansur, who predicts that a number of XBRL tools will be launched on the market to target the issuer community. These tools will be focused on enabling issuers to integrate their XBRL tagging systems with their other internal systems.
In terms of the rest of the world, Mansur reckons XBRL has great potential to remove some of the challenges in the corporate actions market, especially in countries where English is not spoken. “In Japan for example, everything needs to be converted from kanji into English before it can be inputted onto a system, thus adding risk around translation errors into the process. With XBRL tags this translation could be automatic with tagging tools in Japanese,” he said.
DTCC’s Hands seconded this notion and added that XBRL is not US specific and has already proved popular in some Asian countries such as India and China. “It is all about getting data from the source and this is resonant across the globe,” he said. “It is also in line with the tone and tenor of the regulatory objectives of improving transparency, accuracy and timeliness.”
The critical success factor for XBRL however, is that the US market does a “good job” of proving the business case for why XBRL should be introduced, noted Hands. To this end, the group is using a case study of the 2009 Pfizer acquisition of Wyeth as a corporate action against which to model the XBRL tagging process.
Of course, not everyone in the room was convinced that Europe needs to move to XBRL when ISO is already embedded in so many infrastructures. The European issuer community in particular is seemingly rather sceptical (but more on this tomorrow)…