The U.S. Securities and Exchange Commission has unveiled its new electronic filing system, saying the new technology will allow investors to better compare information between companies or investment funds.
The SEC on Tuesday announced the rollout of its IDEA, or Interactive Data Electronic Applications, filing system, a replacement for the EDGAR system the agency launched in the 1980s. The SEC has been moving toward requiring electronic filing since 2005, and Tuesday's announcement served as an official launch to the IDEA platform.
The SEC will roll out IDEA over the next one to three years, said SEC Chairman Christopher Cox.
Under EDGAR, investors searching for comparative data had to go through a "cumbersome" process, Cox said. Investors had to shift through multiple online forms, and then paste the data into separate forms, but IDEA allows investors to compare information for organizations such as mutual funds with a few clicks, he said.
To compare information under EDGAR, "somebody has to go through all this work, and somebody has to pay for it," Cox said.
In addition, when companies filed reports for EDGAR, many reports had to be re-entered by hand to appear on the SEC Web site, Cox said.
"EDGAR dates back to the time of mainframe computing," Cox said during a press conference. "It's time for the SEC to take the next step."
IDEA will allow investors to analyze financial data "faster, better and cheaper," he added.
Some companies and SEC commissioners have raised concerns about the cost of switching over to data that's tagged for use over the Internet. IDEA would require companies to file reports in eXtensible Business Reporting Language, or XBRL, a programming language related to XML that's being developed by a nonprofit consortium of about 450 companies.
More than 75 companies have signed up to deliver data using XBRL since the SEC rolled out a pilot program in 2005, and the average cost to file the first report in XBRL was about US$30,000, although costs fell significantly after that. Software that tags financial data costs between $1,000 and $2,000, Cox said.
Under a proposal the SEC unveiled in May, a transition from text and HTML reports to XBRL would take three years, with about 500 of the largest U.S. and foreign companies required to start filing XBRL reports after Dec. 15.
The smallest public companies and foreign companies not using U.S. generally accepted accounting principles (GAAP) could wait until the third year to file reports in XBRL, according to the SEC proposal.
The IDEA filing system will allow investors to more easily search for information and to get information delivered through RSS, Cox said.
Most investors use the Internet to easily comparison-shop for cars, hotel rooms and other goods and services, he added. "Most people have just as much or more at risk when they make investment decisions as they do when they buy a car, buy a house, stay at a hotel when they take a vacation," Cox said. "They ought to have the tools, they ought to have the ability to get [investment] information."