SEC’s Blaszkowsky on the Data Transformation

When he started his career as a McKinsey consultant almost 30 years ago, he would go through boxes of copied annual reports, manually extract relevant information and input the data into a computer. Today, the Securities & Exchange Commission’s (SEC) David Blaszkowsky is leading the efforts that are set to transform how people work.

In 2007, the SEC named Blaszkowsky director, Office of Interactive Disclosure, US SEC, to promote the use of interactive data in the reporting of company financial statements. Three years on, and close to 2,000 companies and mutual funds will soon have started filing in XBRL format, a data tagging standard that will make the information easy to extract and analyze. “It’s so exciting to be part of changing this. It’s a real transformation,” he says.

The transformation could also potentially go beyond financial statements. There is “absolutely potential” to build on the work the SEC is doing at the moment, according to Blaszkowsky. The SEC has received several proposals for additional areas that would benefit from tagging, including corporate actions and proxies. “These are all signs the technology is mature and ready to be used,” he says.

Yet, the decision on a potential expansion to corporate actions is yet to be made. “We’re certainly aware of the corporate actions proposal,” he says. Blaszkowsky has even spoken on several panels at industry events about the topic from early last year. “What will be important here is to identify where the benefits are and how they are distributed between the different participants in the investment market value chain, especially for retail investors, but also including issuers and the many kinds of intermediaries,” he says.

The idea behind all the tagging efforts is to improve the quality, availability and accuracy of information. These benefits are expected to become more apparent in the coming years, and that is also when it will make sense to really be expanding the use of XBRL. “If you have a good standard, you can move other information to that standard too,” says Blaszkowsky. The use of one standard would help users link data sets, and result in better analysis. “There are opportunities for many users of financial information to streamline operations,” he says.

But so far, his main goal is to make the existing investment work. “We’re still most strongly committed to making sure our current program is completely successful,” he says. The interactive data reporting program, the move to XBRL for financial statements, is now in its second phase, where an additional 1,200 companies will start filing in XBRL, and the first companies that started last year will provide detailed tagging of footnotes. Next year, another 10,000 companies and 8,000 more funds will make the move.

Still, it is not only about standardizing data. To ensure this program is successful, there is also a need to prove how standardization can benefit users, and especially SEC staff. In July, the SEC selected an off-the-shelf platform from Fujitsu for analyzing interactive content, a decision made following an extensive RFP process. “This is going to improve the SEC’s understanding of financial findings,” he says, adding that the SEC has also issued a follow-up RFP process to find web-based examination tools.

It is clear that the ongoing efforts to standardize and improve data analysis represent the beginning of a change in how people work with data. Blaszkowsky’s data transformation can potentially put an end to a significant proportion of manual data entry. It is a transformation that brings new opportunities not only for vendors and institutions, but for everyone using the information.