The Securities and Exchange Commission has announced the launch of its replacement system for EDGAR, the data storage and SEC report filing system that has been in use at the SEC since the ’80s. The replacement system, called IDEA (Interactive Data Electronic Applications–hey, it’s not DC unless there’s an acronym), was designed to grant investors quicker access to information, better ease of use, and an overall more efficient system.
In what the Washington Post is calling “Financial data on steroids,” the system uses XBRL, or extensible business reporting language, which tags information in a method similar to bar-coding. IDEA will eventually require all publicly traded companies to ditch paper filing and disclose their data entirely online, a transition that will take place over the next couple years.
In a webcast press conference on Tuesday, SEC Chairman Christopher Cox outlined the benefits of IDEA. While there were reporters present at the conference to question Cox about the new system, in a web 2.0 twist viewers of the webcast were also able to submit questions via email and follow along on Twitter.
Cox acknowledged that the SEC plans to use new communication technologies more in the coming years as a way to communicate with investors, and that IDEA is a step towards “updating the operating system” of the government agency. And what an update it is.
Data tags support 40 languages, an acknowledgment of the global nature of markets. By linking information and providing a great deal of end-user flexibility to download and manipulate data, the SEC is taking a big step forward in providing individual investors information that previously only institutional investors had the time to research.
In an excellent analogy for the laymen, Cox compared IDEA to comparison shopping online. Consumers looking to buy anything from real estate to travel packages can access online resources to research the best possible deal. With EDGAR, investors looking to comparison shop mutual funds faced a challenging and complicating system. IDEA changes that process.
Among the many user-friendly features of IDEA is the opportunity to access advanced analytics, including a section on executive compensation. This hot-button issue isn’t likely to go away, and the SEC’s new system makes graphing the compensation of publicly-held companies’ CEOs–including stock options compensation–very easy. The ease of use of the system will thrill data-crunching types–it is easy to imagine a flood of new software and web applications that take advantage of the system’s data, making it possible for the casual investor to do some very sophisticated analysis on mutual funds and publicly-traded companies.
The SEC clearly is seeking to do more than simply modernize its systems. By making it easier to drill down into different layers of data, it will be easier to detect, as Chairman Cox put it “unusual correlations.” In other words, if someone’s doing something sneaky, like backdating options, it’s going to be a lot easier to detect with the new systems in place. In addition to the IDEA system, the SEC will also be launching HUB (an enforcement case tracking system), RADAR (a risk analysis system), and PHOENIX (a system tracking compensation to injured investors).
The SEC has been forward-moving in using new media and communications technologies, so Media Bullseye asked Cox what plans were on the table. Would the SEC continue its expansion of new communications methods to open the dialogue with investors? The short answer provided by the Chairman was “yes”–new technologies allow for participation of retail investors and the Commission has plans to not only continue to participate in this area, but to expand social media efforts.
Kristi Kaepplein, head of the Retail Investor Division, said that the SEC is very interested in mining social networking sites for opportunities for investor communication. For example, she points out that there are nearly a thousands groups set up in one (unnamed, but we suspect Facebook) social networking site about investing, and the Commission would like to get involved. Furthermore, the SEC continues to investigate the legal issues surrounding the participation of a government agency using these tools, a reminder that transparency is trickier when dealing with government and legal concerns.
It is encouraging to hear direct from the source that such an important government commission is looking to embrace new media in this way. Now, if only the SEC would allow its employees to access YouTube…
Link to SEC news release on IDEA: http://www.sec.gov/news/press/2008/2008-179.htm