US SEC chairman says XBRL is vital to provide information for investors

 

30 May 2006

 

 

XBRL will serve a vital need in helping individual investors find the financial information they require, US Securities and Exchange Commission (SEC) Chairman Christopher Cox told a conference attended by leading figures in US business and technology. 

 

The growth in investment by individuals, with more than 50 pct of US citizens owning stocks, coupled with declining investment at leading Wall Street firms in research information for private investors, meant that new methods for providing easy access to company financial data were essential, Mr Cox told a conference organised by the American Enterprise Institute.

 

“What we need is something that will give individuals faster access to better information that they can easily use and understand. We need to make searches for information easier. It should be easy to call up information about any company you choose. You should be able to download it and use it in the personal software of your choice. And you then should be able to easily analyze and compare the data with the same information from other companies. We want to make the numbers derived from financial statements vastly more accurate. And we want to allow companies to communicate with investors on a constant basis,” he said.

 

The world of high technology and traditional world of investment had somehow been missing each other, he added.  “Technology has revolutionized almost every aspect of our lives - the way we communicate with one another, the way we listen to music, and even the way we play games. And yet, with one of the most important things we do in life - prepare for the future financially - what do we do? We are still, today, relying on the open-cry pit system of the 1700s and the printed page of the Guttenberg press of the 15th century.”

 

The answer was interactive data or XBRL, the Chairman told the conference on the SEC’s interactive data plans.  Interactive data would “help fill an informational gap that could be making markets less efficient.  In one case it is making the data more reliable; in the other it is making analysis more widespread.  And even beyond making the numbers more accurate and the research more readily available, interactive data will do one more thing: it will help investors get real-time information that today is simply unavailable.”

 

In explaining the benefits of XBRL, it was important to focus on simple concepts such as better access to financial data; more accurate and reliable information; and significant new capabilities, Mr Cox stated.  The details of XBRL technology might be hard to understand but the basic things it could deliver would “make investing easier and better for the individual and for the market as a whole”.

 

In response to questions after his speech, Mr Cox said the SEC voluntary filing programme to test the use of XBRL was moving ahead well.  He was pleased with the project’s progress and the breadth of companies involved.  The number of firms taking part had risen to 20 and he expected this to increase still further.

 

The full text of Mr Cox’s speech is available at http://www.sec.gov/news/speech/2006/spch053006cc.htm.   

 

Panel sessions at the conference, following Mr Cox’s opening speech, covered “XBRL, the New Computer Language: How It Creates Interactive Data” and “Enhanced Business Reporting: Why It Is Necessary and How It Works with XBRL”.

 

 

Announced by:

Peter Calvert

XBRL International

 

 

 

 

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