I had the privilege today to participate in the first ever SEC conference call for bloggers. The topic of today’s call was interactive data using the XBRL standard. XBRL stands for eXtensible Business Reporting Language, and it is basically a way to make financial statements machine readable using tags. This meeting was held today in part to prep the online community for the upcoming
April 21stMay 14th Securities and Exchange Commission proposed rule announcement requiring companies to make their financial reports using XBRL.
The conference call was organized by Mark Story of the SEC Office of Investor Education. Opening comments were given by David Blaszkowsky, Director of the Office of Interactive Disclosure and Kristin Kaepplein, Director of the Office of Investor Education and Advocacy. The opening statements were very brief and left much room for questions. Thankfully, both David and Kristin responded to one question and follow-up question from each of the invited bloggers.
Bill Cara started off the questions with a passionate plea for data interoperability. He noted how expensive financial data can be for individual investors. Some have tried to use “bots” to gather data from financial sites only to find themselves “blacklisted”. Bill Cara’s question was whether the SEC would blacklist heavy users of XBRL data hosted on the SEC’s site. Unsurprisingly, he didn’t get a direct response, but it also doesn’t appear the SEC will restrict “bot” activity. I thought this was an excellent question, since I hope to build some sort of XBRL data viewer into Value Investing News without having to store a massive amount of financial data on my server.
My questions were along the same lines of thought as Bill Cara’s. I wanted to know if the recent addition of XML feeds on EDGAR would also include information about XBRL data. Apparently, the EDGAR feeds were done independently of the XBRL feeds. You can see this lack of coordination by noting that the EDGAR feeds are Atom feeds while the XBRL feeds are RSS feeds. The least they could have done was pick one standard for web feeds at the SEC website. I really shouldn’t complain, since I love the new EDGAR feeds regardless of what format they are in. I was hoping the new EDGAR feeds would include the XBRL data because the EDGAR feeds are relatively easy to retrieve by ticker.
For my second question, I wanted to know if the SEC would provide an API or some standardized url format so that one could bring up an annual income statement of say Microsoft for 2007 without having to do a search at the SEC website. This is critical for making it easy to add XBRL data to mashups and widgets. I didn’t get a response to my question but I believe Ms. Kaepplein thought this was a good idea. Let’s hope this gets worked into the final XBRL storage and retrievel system at the SEC if it isn’t already part of it.
Doug McIntyre of 24/7 Wall St. asked how many companies are reporting in XBRL now. I didn’t quite catch the exact number but I believe it was about fifty participating in the SEC pilot program. In addition, many other companies are already using XBRL interally.
Christian Gross of InvestorGeeks asked a trader oriented question regarding the impact of XBRL on news scalping, which is a technique for being the first to trade on news. The concern would be that for popular stock releases that not everyone would be able to access the XBRL data when it is first released. The SEC representatives thought the data would be available in XBRL within a few minutes of filing. My thought is that XBRL will give individual investors a better chance of getting financial news as it breaks as long as the SEC servers are capable of handling the traffic.
Ray Pellechia of the NYSE/Euronext blog asked about the level of interest so far with XBRL. Apparently, there are various levels of interest in XBRL. Some companies are waiting, getting ready for it, and seeing what will happen. The SEC sadly reports that there is hardly any level of interest from the retail investor side. As a retail investor myself, I sure am interested in seeing XBRL expanded to cover all company financial filings. It would substantially lower my investment research costs.
Thinking about what other filings might be covered by XBRL, Dominic Jones of IRWebReport.com asked the SEC whether we might see footnotes, insider trades, etc. reported using XBRL. He didn’t really get a direct answer to his question, but we might learn more at the next SEC Open Meeting on May 14th. Dominic just wrote up his own observations from the conference call that you might also want to read.
A few other bloggers asked questions about how the data will be stored, the potential for increased corporate liability associated with potentially miss tagged financial data, and even the potential that XBRL could lead to real time reporting.
The end of the conference call concluded with some statements by SEC Chairman Chris Cox. He mentioned that he was at a luncheon where folks were talking about accessing XBRL data from thousands of companies at a time. I sure hope that will be a real possibility in the future.
I am very excited by the fusion of information technology and financial data that XBRL will allow in the future. I encourage the SEC to promote free accessibility, ease of use, open standards, and the creation of third party apps (widgets, mashups, etc.). If you have any questions or comments about the SEC XBRL initiative, please feel free to share them with me and I’ll pass them along to my contact at the SEC.