13 December 2010

Will XBRL consolidate the filings market?

Ironically, an unintended consequence of the introduction of XBRL may be a consolidation in the filing agent market. Already the market is dominated by a few key players, with a number of smaller filing agents supporting varying numbers of filers. The "Big-4" players of course are RR Donnelly (now including Bowne), PR Newswire (and their subsidiary Vintage) , Merrill and EDGARFiling.  [Okay, I'm human, and I bet I've missed someone very important... you, gentle reader, will no doubt correct me].  Yet there are also much smaller filing agents - almost the proverbial "mom and pop shops" that cater for the needs of small groups of non-accelerated filers, frequently 'local' to the filing agent.

Yet the introduction of XBRL is impacting those relationships. For a couple of years I have had occasional communication with a few smaller filing agents, each time they have come to me asking where they can access affordable XBRL software for their clients.

Recently I've been hearing that some of the large filers are adding additional conditions to the use of their software, in effect further reducing the options for the smaller filers and filing agents. As one small filing agent told me - "it is almost as if XBRL will help them take my clients from me".

The good news of course is that there are options, and exploration will uncover these, for both filing agents and for individual non-accelerated filers creating their own and filing their own XBRL.

Now, this discussion does not relate to those companies that self-file. These companies continue to have access to a wide (ish) range of software tools and processes to create their XBRL. And there are some very good tools out there.

There is a strange irony here.

XBRL threatens to disintermediate the data aggregators. Free, detailed tagged, accurate and timely information is a threat. This will force them, in order to remain relevant, to improve the range of data provided, and the range of value-added services that come with the data subscriptions. The IRA (Institutional Risk Analytics) is a great example. They are taking Call Report data from the FDIC and adding value through bank analysis (and multi-bank analysis), and selling subscriptions to that value-added data.

Unfortunately the filing agents might be using the mandatory provision of XBRL as a mechanism to actually contract the market for filers. The complexity and cost of XBRL creation actually serves to herd the filers into the arms of a smaller set of very large filing agents - the ones that can afford to provide XBRL services, either through self-developed XBRL software or through strategic alliances. The smaller filing agents find themselves with fewer options.

So disintermediation at one end, yet greater aggregation and fewer options at the other. And following the almost "natural order" of things, would it surprise me to see further aggregation?

04 December 2010

With Friends like These...

As we in the northern hemisphere enjoy the earliest days of (dare I say it) WINTER, a good friend in Wellington, New Zealand, sent this today. He noted that we are "enjoying" 3deg Celsius (37f) with clouds, rain, and yesterday a little snow. 

He just wanted to let me know that it was 24deg Celsius (75f) there, and to send along this photo that he took, minutes before.

Or as his e-mail said, "Wgtn was 24deg, calm, and sunny today. Rather nice. Since the internet insists it is miserable weather there, I though this would cheer you up!"

With friends like these...