The TSX Group has become an early adopter of a Web-based specification that could improve the sharing of financial information in stock exchanges around the world.
This week the Toronto-based TSX said it had published its year-end
results in extensible business reporting language (XBRL), a framework for handling data based on extensible markup language, or XML. The TSX is one of more than 40 Canadian organizations, which also include Export Development Canada, the Royal Bank of Canada and Public Works and Government Services Canada, to join an international consortium working to bring the language to market.
Groups like the Canadian Institution of Chartered Accounts, which is backing XBRL, saw the language could reduce the time it takes to extract important data from financial statements or annual reports through the use of metadata tags.
The TSX engaged PricewaterhouseCoopers to assist with its initial use of XBRL. Suzanne Hubbard, a PwC partner and Canadian XBRL practice leader, said the development of Canadian-specific XBRL classifications, or a taxonomy, has accelerated the development of the standard since the consortium took shape about five years ago.
“”You’re going to see quite a bit more in the next three months as well,”” she said.
TSX Group CFO Michael Ptasznik said the company wanted to bolster is reputation as an IT pioneer. The Toronto Stock Exchange was the first to introduce electronic trading, for example.
“”That was far enough along that we were comfortable with being able to produce our results in that format,”” he said. “”We know that this is early stages and there will be limited use, but we think that we’ll be able to grow as the tools grow with it.””
Hubbard said the project involved going through the TSX results and tagging things that are very common. If something unique to the TSX or an exchange came up, the taxonomy had to be modified. In the United States, Hubbard said, XBRL working groups are creating industry-specific taxonomies for the financial services, forestry, oil and gas and other sectors. “”The TSX project is really the first step to create an exchange taxonomy,”” she said.
Ptasznik said the business case for XBRL lies in its potential to help reduce the information overload often prevalent in financial reporting.
“”It’s the simplicity with which, eventually, analysts and investors will be able to take down our data, compare with others and then use it in their models,”” he said. “”It goes along with our philosophy of better disclosure, and the easier it is for people to access and utilize your information, that’s another means of increasing the disclosure capability.””
The Canadian taxonomy, which is still in draft form, was based on version 2.0 of the XBRL architecture, Hubbard said. It will likely be improved by the introduction of version 2.1, which she said solves a lot of the problems its predecessor had with calculation analysis. “”The one thing that we’ve noticed is that the tools haven’t caught up yet,”” she said. “”A lot of tool providers, now that there’s more instance documents being created, they’re creating tools so we can do this analysis.””
Hubbard said a project by the Federal Deposit Insurance Corp. will mandate banks to submit call reports in XBRL, which should also speed adoption.