SIFMA TECH 2010: Promoting XBRL Tagging for Corporate Actions Overseas
June 23, 2010
The Society for Worldwide Interbank Financial Telecommunications said it hopes to mirror the success of its initiative with XBRL and Depository Trust & Clearing Corp. to promote the use of XBRL-tagging for corporate action notifications in the U.S, overseas.
"This is a global problem that requires a global solution, which is why we got involved," said Chris Church from SWIFT speaking at the Securities Industry and Financial Market Association’s technology conference in New York on Wednesday afternoon. “If done correctly, and we're pretty confident we got this right in the U.S., we can replicate this model and take this approach using XBRL to other jurisdictions along with local depositories,” said Church. “So, if you are a regulatory, body, stock exchange or depository outside of the U.S. watch out. We're coming to find you.”
U.S. corporations and other entities along make 350,000 corporate action announcements on equities and bonds annually. But that’s only a fraction of the number of corporate action notifications issued globally.
There are several dozen types of corporate actions reflecting anything as simple as a dividend payment to as complex as a merger or tender offer. The goal of XBRL tagging –for financial intermediaries to avoid the errors and delays resulting from the reinterpretation of information provided by issuers in disparate formats.
After his presentation, Church told Securities Industry News that SWIFT is hoping XBRL tagging will be used for corporate action notifications in Japan, China, Europe, and South Africa.
“We anticipate forming stakeholder groups within the interested countries to adapt the business and verify the return on such a project,” he said.
SWIFT is a member of XBRL Europe as well as XBRL US and XBRL Japan. Jamie Shay, head of standards at SWIFT in La Hulpe. Belgium also sits on the board of XBRL International. XBRL US is the U.S. arm of XBRL International.
As the result of a study conducted last year by a stakeholder group of issuers, financial intermediaries and investors, SWIFT XBRL U.S. and DTCC on June 17 presented the merits of U.S. corporations using XBRL to tag their corporate action notifications to investors. Using Pfizer's acquisition of Wyeth in 2009 as a case study, the group estimates that the direct savings t o investors and their investment managers from XBRL tagging would come to $172 million per year. The total cost savings for the financial services industry would amount to $400 million per year.
While the three firms never explicitly said their goal was to ensure that the SEC requires issuers to adopt XBRL tagging for corporate actions, it is unclear how widespread XBRL tagging will become without a regulatory mandate. As the umbrella organization for the clearance and settlement of U.S. securities transactions, DTCC sends out thousands of corporate action notifications to its financial intermediary participants annually.
Under the XBRL initiative, a new XBRL taxonomy would classify and tag each piece of information in a corporate action notification. Financial firms would then extract the data necessary to create International Organization for Standardization-compliant 20022 message formats to their customers. These message formats would pass through the global network operated by Swift which is commonly used by financial intermediaries and fund managers. Last month, DTCC said that it has come up with its version of ISO-compliant 20022 messages for corporate actions and will stop using its proprietary messages by 2015 at the latest.
