02 October 2014

Gary Wright

Gary Wright - BISS Research

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XBRL Discussion Group

As XBRL becomes more recognised as a vitally important tool to reduce data costs and streamline communication in the financial services industry, the full opportunities need to be explored. To ensure a full and clear understanding by the financial services industry globally rather than just those countries where is has already been adopted, especially in light of the DTCC and SWIFT initiative.

XBRL is coming in a very big way

22 October 2009  |  4769 views  |  7

Let's be clear about XBRL and start by saying it's been around for more than a decade. Having had a very slow birth, after a prolonged gestation period but now the time is here when XBRL will be recognised for the genuine benefits it can bring to business communication and data processing.

I recently chaired a Corporate Actions conference in New York that had the usual agenda around inefficiencies, costs and risks in corporate actions processing. With presentations from Custodians, Investment Bankers and of course SWIFT taking their usual path, trying to hold SWIFT connectivity as the ultimate solution; despite in excess of 80% of the attending financial services firms being American buy side, who do not use SWIFT.

The whole day took a definite upturn once XBRL was introduced into the debate and the DTCC project with SWIFT and XBRL USA was put on the table. For the first time there appeared to be a corporate actions data solution that was beginning to make sense, making a connection to the buy side firms and aligning the needs and wishes of the custodian with the needs and wishes of their clients. The DTCC was brilliantly forcing the debate down an XBRL avenue, like a parade of excited bandsman the tune being played was becoming infectious.

The DTCC and SWIFT may have different business objectives with their XBRL project but at this stage this is neither here or there. The fact is that the DTCC and SWIFT are committed to introducing Corporate Data Standards at source: The Issuer!

This alone would drive billions of dollars of data costs, out of the financial services industry data chain and greatly reduce the costs and risks involved in finding the "Golden Copy". It should be noted that several audience members announced their irritation with the ‘Golden Copy' phrase and like me feel this has been overhyped and done to death. For corporate actions professionals know that finding the Golden Copy is in fact accepting the problems of data rather than solving the source and standard issues that now XBRL is here to tackle.

XBRL is not the panacea of all data problems but is a vitally important step in the right direction. I hope that through this new XBRL discussion group we will explore all the issues and no doubt pitfalls along the way. But I am confident about the final outcome and excited that finally the financial services industry has found a path to its utopian land for data efficiency and I look forward to an extensive debate.  

Comments: (13)

Elizabeth Lumley - Finextra - London | 22 October, 2009, 16:03

You are right Gary, XBRL has been around for a while, and it is now having its moment. Mostly because it is being touted as a good method for standardising financial reporting and in turn monitoring possible clues to predicting systemic risk. And we all know today is all about systemic risk (is there any other kind?)

However, there are some stumbling blocks to XBRL acceptance. Global regulatory authorities, while supporting XBRL have not gone as far as to require its use, although the SEC is adding an XBRL requirement soon.

The other issue is, of course, XML. While most buy side firms don't use Swift, smaller firms and buy-side firms may have trouble with the investment needed and system integration required to implement the XML-based XBRL. There is also the lack of widespread knowledge concerning XBRL and XML outside of the US.

The SEC has gone a long way to promote XBRL in the US. The thinking behind this requirement is that it will allow central banks to monitor possible causes of systemic risk more effectively.

I agree with you, XBRL is not a cure-all for the problems inherent in disparate financial reporting and corporate actions. What XBRL will do is allow financial filings to be tagged and organised in a more structured and standardised way.

Good luck with the new group!

A Finextra member | 22 October, 2009, 16:16

Thanks Liz

I hope that its possible to divorce XBRL from SWIFT so that FS firms that are never become SWIFT connected can take part. XBRL is network nuetral and should be easy for virtually all firms to take part in some degree.

Your right the regulatory reporting has captured most attention in FS but i think the US is now going down a path that legally enforces Issuers. This is the nub of the DTCC realistic aim of creating CA standards from source or very near. The DTCC will make XBRL mandatory in due course as explained at my conference in NYC last week. This elevates XBRL as a very serious proposition for all FS firms in the US but sets a template for the worlds markets to folow 

I hope this group will extend to tackle issues and increase awareness and knowladge for all

 

Gary

Peter J Cooper - Cooper Sydney - Sydney | 24 October, 2009, 12:46

Agreed. Check out ySage.com too, only provides US coverage for now, working on a few more countries apparently. Investor insight via XBRL regulatory filings.

Andrew Chilcott - stpsolutions - London | 28 October, 2009, 18:00

Liz

You state that 'There is also the lack of widespread knowledge concerning XBRL and XML outside of the US.' I would like to inform you that one of the most respected XBRL technology companies that is heavily involved with all of many of the XBRL activities in the US is actually based in Oxford, once called DecisionSoft they have recently changed their name to CoreFiling.

HMRC were very early adopters of XBRL and lead the world in their electronic filing for Corporation Tax Returns (XBRL), also developed in collaboration with CoreFiling. Companies House also have adopted XBRL for the filing of company accounts. The lack of awareness of XBRL within the UK Financial Services sector is mainly due to the ill-fated and lamentable decision by the FSA some years ago to overturn a published policy decision and ditch XBRL for regulatory reporting. This was for short-sighted and internal political reasons - they now find themselves out on a limb. XBRL has become the reporting technology of choice for the vast majority of European securities and banking regulators.

As the FSA are now also the UK Listing Authority they would be responsible for introducing any mandate for UK Issuers to publish their corporate actions in XBRL. Is there anyone in the FSA with the foresight and balls to admit that they took a wrong turn on XBRL and now adopt it so that UK corporate action data can be distributed alongside that of the DTCC.

A Finextra member | 28 October, 2009, 18:07

Wow thats putting the case Andrew

I totally agree that the FSA blundered badly but its never too late to reverse a bad decision.

I hope through this forum to continue to raise awareness of XBRL and how its a very key tool to get the FS industry up to scratch in many different forme of reporting. Your contribution is terriffic and thanks so much

Andrew Chilcott - stpsolutions - London | 28 October, 2009, 19:27

There may yet be a very simple solution for the smaller buy-side firms that want to consume Corporate Action Events published in XBRL. The whole idea of splitting the message data away from the network supplier has always scared the life out of SWIFT and other data vendors that aggregate and distribute data. The value that they add currently is that they clean the data, or produce the 'golden copy', removing ambiguities and finding errors. Then they distribute it in a format that can be imported directly into user's systems.

If the data is published by the Issuer, it is the 'golden copy' so no data cleansing is required. If the Issuer has to publish Corporate Action Events in XBRL format then why could they not also publish the XBRL file on their Investor Relations website and enable RSS feed subscription. Buy-side firms could then subscribe to the RSS feeds they require. Simple converter tools would then pump the RSS feed into a back-end portfolio system.

That would have the effect of disintermediating the middle-man that is adding no value. Isn't that what the internet has been promising to deliver all this time?

In fact Gary, having read your latest post, this is directly related. The value added service would be the discovery of all the RSS feeds from all the Issuers by way of some form of international registry.

I think that such a registry should be held by the competent authority to whom the Issuers are reporting and then be made freely available for lookup by the general public (well maybe a small subscription to cover costs!). In the US this would be the DTCC or SEC and in the UK, the FSA as UK Listing Authority. The registries held by each competent authority should be created in an agreed common format and be federated between each of them so each hold a copy of the full registry.

The technology for this already exists as an international standard ebXML Registry.

 

A Finextra member | 28 October, 2009, 20:39

Spot on Andrew

Its only vested interests that prevent the obvious solution. Its really heartening that the DTCC are taking up the baton. If their project succeeds the rest of the world will surely follow.

Where will this leave Data vendors? I think they would increase their value added services and the data element would become a by-product

A Finextra member | 29 October, 2009, 09:28

It is good to see the question of how to get the corporate actions data correct from the start is finally at the top of the agenda. However, this is not without fear of dilution.

 

XBRL seems to be on course as the mandatory reporting methodology in the US issuer space. US based organisations are obviously keen on this for two simple reasons. As Gary Wright notes in his recent blog “XBRL is coming in a very big way,” take-up of SWIFT has been slow within the US market and XBRL is already an understood 'science' for most US organisations.

 

For the rest of the world we will need to see.

 

Again we may be in danger of multiple global standards - the pursuit of XBRL by the issuers in the US, combined with  the pursuit of ISO 20022 with the issuers in Europe. And the important factor is that whatever form this takes from the issuers, the many hands it will have to pass through down to the buy-side community will still involve translation and enrichment processes, and indeed maybe even a change of format.

 

Perhaps the "Golden Record" point has been over exaggerated and businesses need to make up their own mind as to what their understanding is of the actual corporate actions data they are presented with.

 

With the forthcoming introduction of ISO 20022, as well as the existing ISO 15022 standard, combined with XBRL, the word "interoperability" must strike fear into every IT developer world-wide.

 

We must remember standards take years to develop. Current technology must be able to address today's risks and business needs. Even if the SEC makes XBRL mandatory, there’s plenty of work to be done. What’s available today is ISO 15022 and we need to make that work for corporate actions until 'the upgrades' become a reality.

 

As history has shown, once standards come into effect, uptake will also be slow. We are probably 2-3 years away from seeing any impact that is widely adopted, particularly within the buy-side community.  It’s better to take advantage of technology available now to capitalise on the business benefits than wait on the promises of future returns on investment.

 

The positive message though is that a group has been formed to address these issues. Let us hope this provides valuable traction in moving the standards subject forward in the corporate action world so that business users gain some material benefit from the status quo we all seem to accept today.

 

 

A Finextra member | 29 October, 2009, 12:24

Thanks Alan

But i disagree with you on many points. XBRL has ISO20022 imbedded and does not produce a conflict between USA Corporate or European. Getting the Data right first time and with a security layer preventing change or enrichment as you put will create the Golden Copy at source. The Custodians buys the data once. The buyside can buy the data once in total confidence

The security layer arround XBRL is already being tackled with solutions already out there.

This bussiness and Data problems are finally being tackled and change is on the way. The USA is leading the way and the DTCC are totally committed to implementation.

I recomend any firm that is involved with Corporate Data to get behind the DTCC and be prepared to implement solutions. XBRL bypases the laborious Standard committees that have slowed to a crawl at best development. The solution is simple and cheap and easy to understand and implement. Times are a changing! 

Elizabeth Lumley - Finextra - London | 30 October, 2009, 07:27

Yes, the lack of awareness, in the UK especially, surronding XBRL sits squarely with the regulators. I did a survey of UK and European banks earlier this year just looking at XBRL awareness - the lack of knowledge was staggering - and this was from interviewing people who worked directly with financial reporting.

The DTCC has a slight advantage in promoting XBRL because it is a utility. Seems so silly that there is no much mucking about over what is essentially a 'tag'.

A Finextra member | 30 October, 2009, 09:22

Yes Elizebeth, hopefully through these Blogs awareness will be raised as this is a real deal. I spoke with the DTCC yesterday and they are steeming ahead. They are beggining to find solutions to the identity and security questions and dead on time to implementation. Be sure that the rest of the world will follow if the DTCC acheive their goals. The legacy ludites that still talk about standards and ISO will have a shock as this will be open and have more a FIX quality. Although version control will be managed better with a organisation managing the despository. We dont know yet who but could it be DTCC as Andrew mentioned in earlier comment?

David Wynter - Yambina Ltd. - Finchley | 01 November, 2010, 16:03

I am going to jump in on the origin of the term "Golden Copy". From my understanding it was a term used in academic papers in the late 90's for Records Management within the Library systems. Then in 2005 Asset Control quietly trademarked it so their competitors could no long use it, well done the trademark office concerned, something in the public domain can be trademarked.

I think that the term is not "accepting the problems of data", it merely defines the endpoint for the data and the fact it is 'golden' and can be trusted. The current reality is that this requires cross checking multiple source, but I do not believe that this is a part of the definition of the term.

While XBRL could deliver a technology solution that would make this endpoint much easier to achieve, without that incentive to capture at source we will always come up against the problem of capturing it and translating it.

I worked closely with the corporate actions team at Reuters when I built and hosted their ISO15022 beta message service a few years ago. One thing that struck me was that they had a lot of multi-lingual analysts who translated the reports into English for their primary market. Andrew said they cleanse the data, I do not believe this to be the case apart from the obvious data typing issue that might crop up. To determine the accuracy of the content would be too big a task even for the couple of hundred analysts they had, so the only solution that we currently have even close to practical is XBRL captured at source.

I am hopeful it can become universal and combined with other standards like Market Data DataBase schema ( A FISD and FIX Protocol Limited working group, no slow ISO process here ) where organisations can store the data, making the path to better data quality much easier to achieve. It has the added benefit of allowing consumers of products using these standards to move more easily from technology vendor or aggregator, easing the problem of vendor lock-in with their proprietary models and message formats.

A Finextra member | 01 November, 2010, 17:41

Thanks David

XBRL will not solve all the problems at once but it will start a logical starting point by cementing Issuer data at the point of creation. This will remove the Golden Copy hunt and in one swoop eliminate the need for such technology.

It also allows ISO20022 to become a path to allow the retail market web access to reliable Issuer data. By tackling the retail market and investors it should bubble up through to Brokers and the Custodians. It is the apalling Custody service that is creating many of the industry problems.

XBRL will link the Issuer (Company Secretary Department) with the market and will be of huge value to the Issuer who can ensure the market gets accurate and fast Corporate Data and not put their share price at risk. The Issuer will also service their investors by reducing the costs and risks that they currently pay (All though they dont know it)

Welcome to the Group and i look forward to your input as we create a XBRL push in the UK and Europe from Issuers down and investor up 

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