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Coming Uptick in XBRL Use

October 3, 2009

XBRL will improve transparent reporting and processing as companies begin to tag corporate actions such as mergers, reorganizations, and similar transactions. The additional tagging is being sought by XBRL US, the Depository Trust and Clearing Corporation and the Society for Worldwide Interbank Financial Telecommunication. The groups suggest that standardizing corporate action reporting using XBRL would reduce the risk of errors, and improve transparency and speed the reporting these transactions.

XBRL US, DTCC and SWIFT are collaborating to develop a taxonomy of terms based on the ISO 20022 elements that companies can use to “tag” those transactions so important pieces of information can be identified to enable communication interoperability between financial institutions, their market infrastructures and their end-user communities. XBRL US is expected to release the new taxonomy in 2010 for public review prior to use.

Currently, issuers distribute information on corporate actions to numerous intermediaries, such as investment managers, broker-dealers, financial custodians and others. The intermdiaries then re-enter the information to interpret it, a process prone to errors that can drive up costs for investors and intermediaries and can result in erroneous reporting. Those involved in cooperating to develop the new corporate action taxonomy will work in three groups – Issuers, Intermediaries, and Investors. They will provide input and make recommendations to help develop a standardized format for announcing corporate actions.

XBRL US is also seeking to advance open XML standards through the launched of XBRL US Labs. According to XBRL US President and Chief Executive Mark Bolgiano, the aim of XBRL US Labs is to “move industry and government toward a future that has significantly higher levels of information quality, consistency, and transparency in the United States.”

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