Original interview here.
Hi, this is Chip Griffin. Today my guest is Mark Story. He is the
Investor Communications Manager with the Securities and Exchange
Commission in Washington, D.C. and he is joining us to talk about their
new proposed rule regarding interactive data, something that promises
to provide more information more easily for individual investors. So
Mark, what exactly is interactive data?
Well, interactive data is pretty simple when you sit down and you think
about it. Interactive data is very very similar to barcodes. If you are
old enough like I am to remember before they scanned things at the
supermarket, there was a certain way where the cashier would kind type
in numbers and things like that. And what interactive data really is,
is just a barcode.
lot of people know it as XBRL, which is extensible business reporting
language, but it is simple. It is really just a set of rules for
attaching code to items of financial information. And in the jargon of
interactive data, these codes are called tags. And again the tags are
pretty much just like barcodes for financial information that say this
particular line is net profit, that this particular tag or line are
assets, but if you think about it in a simpler sense, it is really just
tags that are in essence barcodes.
So in the context of the SEC, what does interactive data mean? I guess
this is how companies, if this proposed rule moves forward, would be
required to report their information to the SEC, is that correct?
Correct, there is a proposed rule which is under consideration and we
are in the comment period now about that rule. But interactive data is
currently in full or partial use in about 13 different countries right
now. And what the SEC is proposing is that all of what are called large
accelerated filers, which are essentially the largest 500 companies in
the United States, beginning on December 15, would do their financial
reporting both in the old way in the EDGAR System as well as using
there is a lot of advantages for that for people like me who are just
Joe average kind of the retail investors, is the way that it works now
is when companies submit data to EDGAR, it usually goes to the large
kind of data processing services like — I will not say names — but it
goes through some of the large people who normalize the data.
what is neat about this is when companies file in interactive data or
XBRL beginning on December 15 is that retail investors, analysts,
institutions the like, will have some immediate access to the
information that once it is filed, it goes both in the company website
and it becomes available on the SEC site through a variety of uses,
which allow you to kind of slice and dice the data.
essentially what is currently static text-based information, if you
think of it as just like a big block of text, using this tag data, that
says this line means assets or this line means net profit, what you can
get is through a viewer all of which are available for free if I can
plug this at sec.gov/xbrl.
have a few interactive data viewers listed there. What you can do is
you can really have fun with it and you can create charts and graphs
and you can do comparisons across companies that can really make you a
better informed investor. So we are very excited about the ability to
kind of know that any investor with a computer can download the
financial data that had been generally available only to large
So, this is basically making information sort of more accessible to the
individual investor and allow them to make frankly smarter investment
Well, we certainly hope that they make smarter investment decisions. We
think that also to the extent that investors currently are required to
pay for access, for information that has been extracted or reformatted
by third party sources, number one that it is free but number two,
using some of these viewers, you can make better informed decisions
kind of in your own way or in your own time.
many of the viewers, you can download something into an Excel
spreadsheet and you can kind of crunch the numbers yourself if you want
to or if you so choose, you can take stock xyz and stock abc and
compare the side by side elements. And having kind of the visual
representation in order to do that I think will make it easier for
people to make more informed investment decisions.
Now the way it is setup, I know you said that there is a certain group
of companies that would be, if this were to go forward, be required to
file in both forms, is this something where other companies could
choose to provide the XBRL data as well or is it something where you
are right now setup for only a few people to do it?
No, absolutely. And in fact there was the SEC and XBRL US had what was
called the voluntary filer program, which has been in place for about
three years. And there were 74 companies that participated in this and
basically helped us build it, saying how do you large company do your
financial reporting, how would you do your tagging and the SEC spent
about three years with this group, really honing the tags,
understanding how it is companies want to use the data.
the meantime, companies are more than welcome and encouraged to file
using XBRL before it is officially mandated to get practice in it, so
that they know how to do it, so that we receive the information to kind
of get good at it before it becomes a requirement.
Now, I mean how are you involved in the interactive data process at the SEC, what is your role there?
It is an interesting role. I do not have a background in finance. I
have a little bit of background in technology, but my official title
here is Investor Communications Manager at the Securities and Exchange
Commission. And really what my job is, is to take what is complex or
what are complex kind of hard to understand topics and really translate
them into terms that make sense for people, kind of average Joes out
there, that the Securities and Exchange Commission is not just about
writing rules or enforcing rules, but we do a lot of things that
benefit retail investors as well. So my role here is that of helping
develop online and offline materials that are truly understandable and
beneficial for retail investors. So it is fun.
So basically communicating the agency’s message beyond Wall Street
effectively and more to the grassroots Americas as it were?
Yeah and we try and believe me, I do not take credit for the
interactive data movement. That was long conceived of before I got
here, but with the proposed rule which was released a couple of weeks
ago, this has really taken on ahead at steam and what was absolutely
fascinating, just yesterday at the SEC there was an interactive data
roundtable and we had representatives from nine other countries, one of
which or all of which except for one are further down the road in
mandating the use of interactive data or XBRL.
I get to hear some of their experiences too where they had success,
where they had failure. Japan for example has mandated this I think for
the last two years. And the way that the SEC is going it and the
proposed rule is that we are saying that we are going to start with the
largest companies first and then work backwards to smaller companies.
And in Japan they started with the small companies and then gone to the
large companies. So it was kind of interesting to hear the different
approaches from people from other countries.
Now did they explain why they started with the smaller companies first as opposed to the other way around, was it…?
The presumption was or what I heard yesterday and I am paraphrasing,
but the presumption was that smaller companies have simpler financial
statements and when you are required to tag an element in the financial
statement, if you have less items to tag and you have a pretty simple
financial statement, it is going to be easier than let’s say General
Motors, which is going to have a much more complex financial statement.
Now, the interactive data format, is it a fixed format or do you
anticipate that it will evolve over time or how is that all working?
It is interesting. The interactive data format is made up of, as I
mentioned, these tags or as some people call them taxonomy, which has
been worked out in great great detail. These also involve something
called extensions and an extension is something that people can write
themselves in XBRL code.
I just want to mention to kind of demystify it a little bit that XBRL
is based upon XML, which many people may recognize, which is based upon
HTML, which is every single web page that you look at. This just has a
bracket that identifies what it is and it makes it display in a certain
place in a certain way. So from a technology perspective, it is not
really that complex.
And ultimately, investors will use these viewers, right? I mean they
are not going to have to deal with the XBRL themselves; there are these
tools that will make it much easier?
Precisely and the beauty of it is, this particular initiative and what
we have seen in other countries too is it is spurring the markets. I
think it is encouraging capitalism in its purest sense because software
manufacturers have a true incentive to produce viewers, produce ways to
kind of slice and dice the data.
XBRL is open source, so many products exist that kind of enable users
to compare financial data. Some of the viewers that are on the page are
charts and graphs that are designed for more of the nonsophisticated
retail investor. There are viewers on there which are probably
appropriate for financial analysts and have a much higher degree of
understanding of what goes in a financial statement.
So all the
data is the same, everything in the backend is the same, the way that
it is displayed through the viewers is different and that is what’s
cool about it as well.
Got you. Well Mark, I appreciate you taking the time to talk with me
today. I know that this is part of an ongoing rule-making process, so
the rules are kind of strict about what you can talk about and I do
appreciate you taking the time.
Well, this is an absolute pleasure Chip. I am happy to talk to anyone
about interactive data, but especially happy to talk to you.
Great and people can get more information, again what was the web address you gave?
It is www.sec.gov/xbrl.
Great, thanks again Mark.