Dear Commissioner Kara M Stein of the SEC,
Recently you spoke about the need to bring financial disclosure into the digital age. idaciti couldn’t agree more.
Commissioner Stein, to us, your speech delivered during the 48th annual Rocky Mountain Securities Conference in Denver was a call-to-action. You spoke of a revolution in financial disclosure, where the timeworn technologies of a 30-year old EDGAR platform were replaced with a new concept, new platform and new data designed to provide the investors with what they need to make better decisions. You spoke of a future with several innovations, and many that idaciti is already working on.
In the next few blogs, we’ll address those innovations and how idaciti not only agrees wholeheartedly with your vision, but has taken steps to make that a reality.
A new view on EDGAR.
The first is your call for a new, reimagined platform to replace our current understanding of EDGAR.
EDGAR remains the backbone of the SEC’s electronic disclosure, even as the landscape of corporate reporting and investor education has changed. Yet, information in EDGAR hasn’t, as 10-K, 10-Q, 8-K and proxy statements make up the bulk of its library. Are these documents enough?
There’s more data today than at any other time in history. So why should we force reliance on a legacy data set? Is EDGAR delivering the information the best way possible, and with all the advantages of the digital age, for today’s finance professional or investor? No. And here’s why:
First, the standard 10-K/10-Q/Proxy no longer provides the whole story behind the success (or failure) of a company. Now, sustainability, patents and trademarks, and corporate governance play a role in the narrative of a corporation, and the public deserves access to this information. EDGAR needs to expand and incorporate this data to both maintain the health of our capital markets and (in your words) “[b]reathe new life into the critical matchmaking process between companies and investors.” It takes a rich dataset to make financial decisions.
"I’m talking about how we can breathe new life into the critical matchmaking process between companies and investors; I’m talking about a new way of communicating; I’m talking about Disclosure in the Digital Age. " Commissioner Stein
What has idaciti done? We’ve combined drug patent expiration data from FDA, consumer complaints data from CFPB with other non-financial datasets like data breach reports with standard financial disclosure to provide a deeper story on any public company. It’s simpler to cross-reference public financial data with other data and learn how, for example, a security breach changes revenue, or how consumer sentiment impacts EBITDA.
Second, the way in which EDGAR delivers this information needs to be updated as well. EDGAR arrived in a paper-based world, with analog reports. Today, users expect data visualization and the ability to chart data for comparison and benchmarking. And adoption of mobile technology demands that any new digital platform should deliver information across devices.
idaciti is among the first to use technology to truly simplify the usability of financial data across platforms. As a SaaS-based application, it’s accessible from any browser or mobile device.
But even more importantly, it automatically turns financial data into visualizations including charts, graphs or other reporting tools. Users can combine these visualizations with multimedia and create presentation-ready storyboards that can be dropped into any presentation. It brings financial data to life for even the least sophisticated user.
Third, it’s time to bring digital structure to financial data design. When EDGAR was introduced, it was little more than a library of analog information, available anywhere. Today’s datasets can be structured into formats for easier comparison, reporting and cross-analysis. Structured data follows a template across all companies, regardless of disclosure content, and allows for easier snapshots and investor education. It adds more value to reporting since the data becomes usable and not just merely available.
Idaciti applies this structure to financial data across industries, segments and business sizes, so now it’s easy to compare the big and small, national and global, old and young companies using standard reporting metrics in seconds.
Commissioner Stein, thank you for exposing an ongoing, years-long concern of investors and financial professionals everywhere. We’ve spent hundreds, even thousands of hours digging through public data the old-fashioned way, or through the use of expensive, time-consuming terminal devices that require special training. Now, with a movement to refresh EDGAR and bring disclosure into the digital age, it’s a chance for financial data to become more useful than ever.
"I am making an important call to action: We need to create a Digital Disclosure Task Force. The Digital Disclosure Task Force should include investors, analysts, academics, companies, and technology experts. Together, we can envision what disclosure should look like in the Digital Age so that we can continue to have the premier capital markets in the world." Commissioner Stein
Stay tuned for future updates from idaciti as it continues the work of bringing disclosure into the digital age for users everywhere.