The SEC voted in approval Thursday to require public companies and mutual funds to use interactive data for financial information in an effort to increase the speed, accuracy and usability of financial disclosure and eventually reduce costs for investors.
In an issued press statement, SEC Chairman Christopher Cox said: “Interactive data will help provide investors with the information they need, rather than just a warehouse of forms on which they can try to find it. Interactive data will enable new analysis tools to put key information at every investor’s fingertips within seconds, exactly as the investor wishes to see it.”
For public companies, interactive data compiling will begin on a phased-in schedule next year; mutual funds will compile data in 2011. With interactive data, according to the SEC, all of the facts in a financial statement are 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 will be able to instantly find specific facts disclosed by companies and mutual funds, and compare that information with details about other companies and mutual funds to help them make investment decisions.