The U.S. Securities and Exchange Commission has approved a plan to require public companies to file financial information electronically in an effort to give investors faster and better access to information about stocks and mutual funds.
The SEC on Thursday approved a plan to require public companies to use interactive data to file their financial reports. The SEC has been moving toward requiring public companies to use eXtensible Business Reporting Language (XBRL), a programming language related to XML, since 2005, and Thursday's vote is the final step.
Currently, investors must depend on documents that require them to print out or scroll through large amounts of financial information, then manually transcribe the information they want. With interactive data, all information in a financial statement is labeled with unique computer-readable "tags," which function like bar codes to make financial information more searchable on the Internet and more readable by spreadsheets and other software.
Investors should be able to quickly find the facts they want and compare one company's data to another's, the SEC said.
Interactive data financial requirements will be phased in beginning next year. Five hundred large companies will be required to provide interactive data reports starting after June 15. Other companies using GAAP will be required to file with interactive data over the next two years. Companies reporting in International Financial Reporting Standards as issued by the International Accounting Standards Board will be required to provide their interactive data reports starting with fiscal years after June 15, 2011.
Mutual fund investors see the benefits of interactive data starting in 2011, the SEC said. Mutual funds will be required to begin including data tags in their public filings that supply investors with such information as objectives and strategies, risks, performance and costs. This will allow investors to compare more than 8,000 mutual funds at the click of a mouse, the agency said. A mutual fund also would be required to post the interactive data on its Web site, if it maintains one.
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