X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

The US Securities and Exchange Commission attracted attention last week when it announced the launch of a “futuristic information disclosure system for investors and markets”–an interactive Internet platform to replace its existing EDGAR database. The new public disclosure system is called IDEA–short for Interactive Data Electronic Applications.

Based on a completely new architecture being built from the ground up, it will at first supplement and eventually replace the EDGAR system. With technologies such as XBRL (eXtensible Business Reporting Language), investors and analysts will be able to search not only forms, but also the information within them. That could save considerable time and effort for commercial real estate investors, who routinely scour public company disclosures as part of the due diligence process, as well as simplify research by other CRE professionals.

Technology experts describe the development of the interactive database as both “significant” and “profound.” However, they also note that the database has been under development for nearly two years–and caution that it is misleading to attribute much news value to the most recent SEC announcement about it.

The only thing the SEC did last week was name the database, explained Dominic Jones, senior consultant for IRWebReport.com. IRWebReport.com was created in 2001 to publish independent research and information about online investor relations practices worldwide and advise public companies on best practices.

CPA Charles Hoffman, the so-called “father of XBRL,” agreed. Hoffman, a member of the American Institute of Certified Public Accountants, brought the idea of what was to become XBRL to the AICPA, authored multiple books on XBRL and played a major role in creating the taxonomy for financial reporting standards.

Jones calls the SEC press conference to announce the name of the database “little more than a publicity stunt, a way to get the word out that the SEC is serious about moving ahead with XBRL.”

In Sept. 2006, SEC awarded three separate contracts totaling $54 million to transform the agency’s 1980s-vintage public company disclosure system from a form-based electronic filing cabinet to a dynamic real-time search tool with interactive capabilities. The major investment in an interactive data system signals the agency’s commitment to move away from the model of its current EDGAR database, SEC Chairman Christopher Cox explained.

By moving to interactive data using XBRL, the SEC will be joining the FDIC, the Federal Reserve and the Comptroller of the Currency, which already requires banks to use it. Rather than treating financial information as a block of text–as in a standard internet page or a printed document–XBRL provides a unique identifying tag for each individual item of data, such as company net profit. That enables users to extract specific information more easily from SEC filings, run calculations and aggregate data without having to open and review multiple filings.

Hoffman says that would have “huge ramifications,” noting, “that is a pretty profound thing if you ask me. The primary difference will be that the information will not reside in the form of what amounts to an electronic file cabinet (as the SEC calls it) like the current EDGAR system; but rather the data will exist in what amounts to a database which applications can do things with.”

Companies’ interactive data filings through IDEA are expected to begin being available late this year during the transition to the new system, the SEC said. Cox says the new IDEA database will be “fully mature” in five years.

“In plain English,” Jones explains, “it means that in about five years, investors will no longer receive information as a document like an annual report or a prospectus. Instead of receiving pages of information, they will receive snippets of information that they self-select. The data they receive, which will be in a new format called XBRL will be viewed in a spreadsheet program or other software that has yet to be developed. ”

There will be advantages, to be sure. But there will also be potential concerns, Jones points out. “A big concern for small individual investors should be what types of software will they have access to, or be able to afford, to be able to read the snippets of data,” he continues. “You can bet that those with more money will be able to buy better software. This uneven playing field is something individual investors need to be aware of and think about.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.