Speech by SEC Chairman:
Videotaped Remarks at the 17th XBRL International Conference
Chairman Christopher Cox
U.S. Securities and Exchange Commission
Evoluon World Class Conference and Exhibition Center
May 7, 2008
Good afternoon. It's a pleasure to be with you for another gathering of the XBRL community — this time in Eindhoven. I notice we have registrations from 37 different countries. That's the most diverse group ever for one of these conferences. In fact, it's 10 more than the previous recor. With over 300 participants, I have no doubt that this gathering will be a great success. And for that, much of the credit goes to our hosts.
I'd like to acknowledge the several senior officials of the Dutch government who are in attendance, including the State Secretaries of Justice and Finance. To each of these distinguished leaders, thank you very much for your hospitality. It has been my privilege to attend several of these recent conferences, and I've always enjoyed the opportunity to talk to many of you, to see the state of the art, and to tap into the excitement that all of you are bringing to the important task of making business reporting easy, transportable, and transparent.
It is particularly appropriate that this conference is taking place right here in the Netherlands. In many ways, our highest aspirations for interactive data are being achieved in the Netherlands, because of the pioneering work by Harm Yon von Berg and the many members of the Dutch National Taxonomy Project. You've done a wonderful job in beginning to knit together the many different filings and submissions to the Dutch government. And your effort is no longer unique. That's precisely because your inspirational work has stimulated other national efforts. So congratulations on this continuing initiative, and thank you for playing such an important role in pushing interactive data further and faster.
Thank you also to Yon Possmoy, the chairman of this event, for your hard work to make this possible. Thanks also to Tony Fragnito, the CEO of XBRL International; Michael Ohata, the chairman of XBRL International; and the entire board of XBRL Internationa,l for your continued leadership in growing interactive data into its preeminent role as the computer language of business and financial reporting for the world.
"Growing into its role" is really an accurate statement of how XBRL is progressing worldwide. And it is reflected in part of the title of this conference — "The Evolution of Business Reporting: XBRL in Action."
As cutting edge as XBRL seems, it is turning 10 years old this year. Thanks to the original brilliant insights of Charlie Hoffman and a handful of other pioneers who conceived of and developed XBRL's core concepts in 1998, all of us are here today. And yet, even though 10 years is a lifetime in technology, there are still many issues to resolve, and challenges to face.
The evolution of this technology is ongoing. But at this conference, we are properly focused on using it now. We want to get it rolled out, not just talked about, in financial markets across the globe. This conference is very much about "going live" with interactive data.
For inspiration, we need look no further than right here in the Netherlands, and even right here in Eindhoven. This nation has long been an incubator for interoperability (even though, half a millennium ago, no one called it that). The people and traditions of the Netherlands long ago created one of the world's most hospitable environments for the free exchange of information. Some of the greatest technological innovations in commerce and banking, including the innovation of the corporation, trace their origins to this place.
When the Philips Brothers built their first light bulb factory here in Eindhoven in 1891, they may not have imagined the worldwide electronics empire it would become. And today, just as light bulbs from Eindhoven swept the world, we can take pride in knowing that interactive data is beginning to sweep the world from the brilliant example of its implementation right here through the Dutch National Taxonomy Project.
XBRL is indeed going global. That's especially true when it comes to financial reporting. China, which was the first country to require it for public company regulatory filings, has since been joined by Singapore, South Korea, Israel, and Japan as countries that mandate public financial disclosures to be submitted in interactive data. Since XBRL has gone live in all of these nations, thousands of companies have been submitting their financial statements in interactive data. And investors are already gaining the benefits.
Perhaps you don't know Chinese, or Korean, or Hebrew. That's no problem for interactive data. Just hit the toggle on the Israeli "Magna" system, for example, and you'll see what you need in English. Since this is so obviously what computers were made for, it's hard to believe investors could never do this before.
And in dozens of other markets — in your countries and on your exchanges — regulators and companies are considering similar steps, initially through voluntary filing programs and taxonomy development projects, and then through standard filing requirements. Just this morning you've heard from Paul Madden about the progress in the Australian Standard Business Reporting initiative. And we've heard from Eddy Wymersch about how the Committee of European Securities Regulators is using XBRL. These are exciting developments on the way to using interactive data to improve the way both businesses and governments get their work done.
As most of you already know, the SEC will be discussing a rule later this month that would set a firm schedule for using interactive data in public company filings in the United States. The fact that we are taking this step reflects the confidence we've gained from our own voluntary filing program, and also the significant learning we've gained from many of you who are attending this conference. Of course, we're hoping that we'll soon be able to share our own success story with you at a future conference.
As we look forward to interactive data becoming standard for U.S.-listed companies, we can thank XBRL-US, the U.S. jurisdiction of XBRL International, for their outstanding work in developing the complete set of data tags that public company filers will use with the SEC. This is a real landmark for investors. I want to congratulate XBRL-US, our national XBRL standard setter, which is represented here by its chairman, Al Berkley. I also want to thank their CEO, Mark Bolgiano, who is in the United States this week.
With a complete set of data tags for U.S. generally accepted accounting principles now in hand, we in the United States are ready to "go live" with interactive data. The preparer's guide is there, the software and vendor communities are there, and even the viewers and investor tools are there. Everything is in place.
What I'd like to discuss in the few minutes that I have remaining is where we go from here. Interactive data has reached an inflection point. The technology is mature — it's a decade old. Many of the most profound features, such as toggling between languages as I described, aren't cutting edge. Today, the most difficult challenges we face are no longer technological, but behavioral.
Our main focus now must be on getting investors and other users to be aware of XBRL and what it can do for them. It's time to get beyond seeing interactive data as "technology," and instead to see it as a tool, as help, that can make easier the work that companies and investors do every day.
The last 10 years were about developing a concept, and perfecting a set of technologies. The next years — starting now — are about using the technology, and making it friendly and simple and understandable.
This is the phase when "features" and "functionality" morph into benefits and better returns. When the tech talk gives way to clear and compelling language that every company and every investor understands, we'll know we've arrived.
In the world of business and investing, financial reporting and disclosure aren't ends in themselves. People care about them because they're important aids to decision-making. If interactive data is going to enter the mainstream, we've got to be able to explain its benefits in the clearest and most fundamental terms.
I'll be the first to acknowledge that for the technology specialist, there is a semantic precision about terms such as "taxonomy" and acronyms such as "XBRL." But a "list of tags" — which is the layman's version of an XBRL taxonomy — will mean more to most people in the workaday world of business and government.
Interactive data is now all about the rest of the world outside these walls. What awaits us on the other side of the inflection point is the difficult but rewarding job of getting companies and people in large numbers to care about and use interactive data.
It only stands to reason that investors aren't quite yet chanting, "I want my interactive data" — because they've had no way to know that it was coming, and they still don't have the information to appreciate its value. Thus far, the promise of interactive data has been an unrealized need. It's not yet a "want."
But through the efforts of so many of you at this conference and many others around the world, the word is rapidly getting out. The news articles and feature stories declaring the new era of interactive data are numerous, well researched, and enthusiastic. My favorite headline of recent days comes from The Motley Fool, one of the most influential web-based independent financial advice sites in the United States. The banner headline for its story about XBRL called it "the most important shareholder initiative in a decade."
A few weeks ago, I participated in the SEC's first-ever blogger conference. As you know, folks out in the blogosphere can be quite demanding. And in fact, we got tough questions — and maybe even more "interactivity" than we thought we bargained for. But we also opened up a new channel for communication with a smart, connected segment of the market. And we're getting as many great ideas from them as we are sharing with them.
This is where you come in.
All of us here individually, as well as the organizations we represent, have crucial roles in moving interactive data from being an exclusive, "insider" activity to a global capital markets phenomenon. Our tools in this quest are communications and education. Our champions will be the people among us whose skills as evangelists and educators are every bit as good as their technological expertise.
We certainly have a lot of good news to communicate. At this conference, there is a building excitement about the future. For example, the newest list of tags for use with International Financial Reporting Standards has just been released, as I'm sure Gerrit Zalm of the International Accounting Standards Committee Foundation described to you this morning. That's exciting because of the vast swath of the world that is now using or adopting International Financial Reporting Standards. And just as IFRS and U.S. Generally Accepted Accounting Principles are moving toward convergence, so too is the XBRL community working to align the structures of the data tags for both IFRS and U.S. GAAP. There's also a good deal of excitement in the software development community, where smart men and women are developing tools that will allow investors to mash up and creatively analyze all of this newly liberated financial data.
Here is one thing I know for certain: once we unleash interactive data for thousands of public companies on the world, millions of users will find new ways to look at it that even the people who are writing the software can't yet imagine. That's why we're so excited to "go live": the opportunities to evaluate financial information in new ways and to derive even greater insights into its meaning will change the face of investing forever.
As each of us looks at what's ahead for XBRL, it's tempting to think of it as exotic and high tech — maybe something just as avant-garde as the flying saucer shape of the Evoluon building that's hosting this conference. But above all, interactive data is about the people who will use it, and what it will let them do. Interactive data will help men and women in all walks of life to make better decisions for themselves, for their families, for their companies, and for the world.
I look forward to working with you to make this vision a reality. So thank you to each and every one of you for the extraordinarily important work that you do every day. Every one of us at the SEC is excited that, in the United States, we'll soon be "going live" with interactive data, too. And in the global effort to adopt XBRL as the computer language of financial reporting, the SEC is proud to be your partner.