Speech by SEC Chairman:
‘How Technology Can Improve Life for Investors’
Introductory Remarks at the Gartner Symposium / IT Expo
Chairman Christopher Cox
U.S. Securities and Exchange Commission
Walt Disney World Resort
October 8, 2007
Thank you, Michael. It's great to be a part of this outstanding symposium in Orlando. Since this is a technology conference, it only makes sense that we're tapping the latest technology for me to join you in real time from Washington. Technology really does mean that distance no longer matters.
And of course the SEC's Director of Information Technology, Corey Booth, is there with you in Orlando. He got there using that antiquated technology known as the jet airplane. I'll be introducing Corey in a moment, but first I want to set the stage for our discussion of how technology can dramatically change the way that not just America but the entire world exchanges financial information. Since Orlando is the home of Disney's “imagineering,” and NASA's space exploration, our surroundings for this symposium have helped put us in the right frame of mind to think creatively about how technology can improve our lives when it comes to investing.
I dare say that every person in this audience is an investor. You probably own a mutual fund, or some stocks or bonds, and you probably have a 401(k) or an IRA. You might have a 529 plan to pay for your children's education. Perhaps you're looking after the finances of your aging parents, or another relative.
And because you're busy people, you probably find that the paperwork the SEC requires that companies send you in the mail can be frustrating. If you're like other retail investors, you might even have given up trying to read the proxy statements and prospectuses that come to your home. A big reason for this is that today's financial disclosure is hard to read, and the financial statements are painstakingly difficult to work with.
If you wanted to download the numbers into financial analysis software or even an Excel spreadsheet, you couldn't. The only way to work with the numbers would be for you to physically key in all the data yourself. And that's not just true for retail investors. The financial companies that work with this financial data on your behalf have to go through that same exercise, or at least pay someone else to do it. All of this means that if you ever do get financial information on the companies in which you invest in more manageable form, it's probably stale and might even have errors.
So let's imagine a better world, in which information the SEC helps you get as an investor is actually useful to you. Imagine that instead of clunky one-size-fits-all documents and impenetrable financial statements, you can get the financial ratios and industry comparisons you’re most interested in – sent straight to your desktop in real-time through an RSS feed. Imagine Internet bots and Google gadgets that put up real-time news alerts on your desktop whenever there's an SEC filing about a company or mutual fund you're following. Imagine that you could compare financial ratios across entire industries at the touch of a button or the click of a mouse. And imagine that if you opened up your Excel spreadsheet, a company's entire set of financial statements would instantly pop into the correct cells, with neatly labeled rows and columns awaiting your next command.
Well, all of this is much closer to reality than you might think. Thanks to a worldwide private sector initiative based on the familiar XML language, something called eXtensible Business Reporting Language is being used to accomplish these very things. Because XBRL is such a close cousin to XML, it can do all the things that XML can do. By providing data tags for every essential element of a financial statement or annual report, XBRL can move us from the world of paper-based forms to a new age of truly interactive disclosure, in which the investor is in charge.
Just last week in New York City, I announced that a private organization called XBRL US has finished work on a complete set of data tags for every element of U.S. Generally Accepted Accounting Principles. Already, over 40 companies with more than $2 trillion in market cap are filing their financial statements with the SEC using XBRL data tags. The mutual fund industry recently completed a full set of XBRL labels for reporting a mutual fund's key performance data. And in just a few weeks, the SEC will unveil on our website an interactive data tool that uses XBRL to let investors and analysts easily work with the new, richly detailed executive compensation information for 500 of the nation's largest companies.
In the months ahead, the SEC will continue to work to make interactive data reporting by public companies and mutual funds a reality for every investor. I want to take this opportunity to commend the remarkable efforts of the men and women at XBRL US, who showed such exceptional leadership in perfecting the XBRL labels for U.S. GAAP. I also want to commend every one of you for your leadership in technology, which is the wellspring of growth in our economy. Because of what you do every day, the world is a better place.
So I look forward to an excellent discussion on the upcoming panel, and to our continued partnership. And now I'll turn it over to Corey Booth, the SEC's CIO and Director of the Office of Information Technology. Corey has been leading the Commission's technology efforts for over three years, and brings to his job an exceptional background, including experience as a leader of McKinsey & Co.'s business technology office in Chicago, where he worked with a variety of large corporate IT organizations. Corey is a graduate of Washington University, and earned his MBA from Stanford University's Graduate School of Business. Corey, over to you.