Interactive Data: Moving the XBRL Pipeline Forward April 3, 2006
We first thank our colleagues at London-based Global Risk Regulator for their
comments regarding IRA�s Bank Monitor analytics benchmarking algorithms for
Basel II. GRR observes that the numbers illustrated in IRA�s latest report,
�Basel II by the Numbers 2005,� stand in sharp contrast to the results of QIS-4
-- results that were so skewed in favor of the banks as to send the U.S.
regulatory system into a year-long tailspin.
Click here to read a copy of the Global Risk
Regulator article. IRA�s core mission is to develop and field benchmarking analytics. As a developer of computer enabled data mining tools, we strongly support the advent of publicly available, well-structured or �interactive� data. In the past we have lauded the FDIC�s modernization effort, which now has all FDIC-insured depository institutions submitting quarterly financial reports using eXtensible Business Reporting Language or XBRL. The transparency, completeness, consistency and quality of the FDIC�s bank information pipeline, which is used in our analysis engines to produce uniform benchmarks for Basel II, enables IRA�s �Basel II by the Numbers� report series to serve as a canvas upon which to demonstrate the power of �distilling� structured data. As Spring of 2006 arrives, the SEC is intensifying its focus on interactive data. The Congress, as we report in this week�s issue of our Washington & Wall Street business intelligence service, has just held hearings on promoting enhanced financial reporting. There are a variety of initiatives in the public and private sectors involving structured, machine readable data, all of which lay claim to the powerful label of �interactive data� and all of which employ different types of technology for gathering and disseminating financial information. We start from our opinion that XBRL now stands as a best of breed option for organizing the gathering and submission of financial reports. It is not the only solution, but it is the one where significant community investment has been made. The FDIC has pioneered solutions worthy of analysis and emulation in this regard. Their use of XBRL to control not only content but the selection of what to collect based on embedding the rules is brilliant. Being systems engineers at heart, this leads to the recognition that pipeline challenges further downstream have now moved up the priority list for treatment. We posit the following questions for the �interactive data� community to consider in 2006. We rub our worry beads pondering the anthropology of innovation, each component developed piecemeal and each maturing to serve the interactive data space. Not unexpectedly, we see evidence of classic early adoption myopia -- competing solutions ignoring each other�s value, while pushing, at times aimlessly, in the hope of owning as much of the interactive data real estate as possible. We know from experience that the �one wrench does it all� approach hurts rather than helps the adoption of interactive data as a resource to the financial community. We believe there needs to be more context as to what functional purpose a technology has to each step in the value pipeline � collection, validation, storage, distillation & dissemination � over which data travels from source to user. Consider
that financial reports submitted to regulatory agencies are legal documents. They
have evidentiary standing based on the notion that they are fully
encapsulated and independent point-in-time permanent records which satisfy a disclosure duty.
But a document that references a controlling element defined externally,
an element that may change meaning, could cause the validity of this paramount
regulatory assumption to fail, making enforcement even more complicated and costly than it is
today. We have seen in this past week�s
Congressional hearings on enhancing financial reporting that "8 of 13
speakers mentioned XBRL," according to one of our colleagues in the consortium. Will regulators take the lead in marshalling resources so that the United States' National Interest need for a comprehensive and inclusive financial reporting pipeline solution will be realized?
Our assumption is that taking an inclusive approach to existing downstream technologies will ultimately
benefit the cause of wide adoption of interactive data and best serve the disparate
constituencies that consume financial information. The Institutional Risk Analyst is published by Lord, Whalen LLC (LW) and may not be reproduced, disseminated, or distributed, in part or in whole, by any means, outside of the recipient's organization without express written authorization from LW. It is a violation of federal copyright law to reproduce all or part of this publication or its contents by any means. This material does not constitute a solicitation for the purchase or sale of any securities or investments. The opinions expressed herein are based on publicly available information and are considered reliable. However, LW makes NO WARRANTIES OR REPRESENTATIONS OF ANY SORT with respect to this report. Any person using this material does so solely at their own risk and LW and/or its employees shall be under no liability whatsoever in any respect thereof. |
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