Shapiro inherits 1) a completely modernized technology infrastructure for the exchange of enhanced business data 2) a new rule that companies must report in this new data format 3) a new department for leveraging the technology, and 4) people who know how to do just that. Specifically, she starts her chairmanship with:

• A new, $50 million technical infrastructure. Accessible and usable by all levels of investors, the IDEA system (Interactive Data Electronics Applications) replaces the EDGAR system, which will be phased into a valuable archive of historical company reports.

• A new XBRL reporting rule. All public companies and mutual funds must report their financial statements with interactive data. Starting in July 2009 the XBRL requirement rule phases in over three years until even small public companies report in this more accurate and transparent format.

• A new Office of Interactive Disclosure. The office was created just six months ago to lead a global transformation to interactive financial reporting, and is headed by XBRL pioneer Walter Hamscher. Hamscher is a member of the XBRL International Board of Directors, Past Chair of XBRL International, and consultant to XBRL US contributing to the XBRL US GAAP Taxonomies.

Although Cox put these tools in place to improve business reporting, XBRL has implications for an entire e-Gov approach. Shapiro may be in the perfect position to take over where Cox left off, extending the benefits of this data format to address Obama’s plans to reform healthcare reporting, and much more.

We hope she gets the “XBRL bug,” just like Cox did. If not her, then we wish the happy infection on Gary Gensler, who is President Obama’s pick to head the Commodity Futures Trade Commission. There are proposals for the CFTC to merge with the SEC, so they will be working together very closely. If the agencies do merge, then one of them may soon be looking for a new career challenge. Schapiro has already served as an SEC commissioner and as Chair of the CFTC, so maybe she’d be interested in taking the tools she’s inheriting from Christopher Cox to build an even larger solution for sharing data across government silos—both federal and state.

“The Internet is the ideal medium for reaching out to a large number of private investors and better understand their issues and concerns,” says Kaepplein. The office exists to help retail investors with education, fraud protection, and advocacy, she explains. “Social networking applications are a great way to learn what investors are thinking, what matters to them, what information they need, and what their hot buttons are.”

Facebook users shouldn’t expect a one-on-one “write on my wall” type of dialog with SEC representatives, but the SEC’s Facebook page will contain headlines, alerts, and short blurbs to capture viewers’ interest and link them to information and resources. “This is also a way for us to reach out to those people who might be impacted by an SEC rule change, to let them know it’s coming, and let them have a chance to comment,” says Kaepplein.

The SEC has produced a lot of unbiased consumer education materials on investing and securities markets, and Facebook can be used to help more people find it. Right now, says Kaepplein, investors have a lot of questions about the credit market and how to monitor it. “We could alert the people on Facebook to both the issues and solid information. For example, they might like to know about the SEC’s new publication that describes what a spread is, and explains what the VIX is and why they should care.”

Facebook may also cut down on phone calls to the SEC by providing 24-hour access to FAQs and topical issues. “We get tens of thousands of calls each year from individual investors,” says Kaepplein. The questions are often based on what’s happening in the day’s market, so Kaepplein follows the news to prepare. “We’re getting a lot calls now for information about the Treasury’s money market insurance program or what happens in a bankruptcy proceeding,” she said. (Calls can often be expected on whatever topic Jim Kramer of CNBC is talking about that day).

Facebook is just one piece of the SEC’s online strategy, which is about reaching not just Facebook’s retail investors, but reaching millions more. “The Internet is the only efficient channel to do this,” says Kaepplein, “so the big goal of the Office of Investor Education and Advocacy is to exploit our potential to reach investors online.”

The SEC announced its IDEA in a recent webcast during which Chairman Christopher Cox demonstrated the system’s speed and user-friendly tools. “People should have the same easy tools for comparing financial data”, said Cox, “as they have for comparing cars or airline tickets or vacation packages”.

IDEA is expected to be fully operational within three years. As it is being built, it will function in tandem with EDGAR. Users will seamlessly transition to the new system as the old system is eventually relegated to an archive database. IDEA will offer enhanced XBRL-formatted data that which software applications can automatically search, download, and crunch-without the need of a third party data provider.

What a minute! Isn’t EDGAR Online a third party data provider? So why we are as excited about this IDEA as the SEC is?

Yes, IDEA delivers XBRL data for free, but SEC data has always been free – EDGAR Online has used it to become the world’s premier online source of value-added business information. The SEC’s commitment to XBRL simply increases our ability to offer even more valuable information, while increasing the value of I•Metrix, which is already one of the best selling XBRL analysis tools in the world and which can help people make sense of the data coming into IDEA.

We’ve been backing XBRL for years:

• EDGAR Online has already translated (tagged) over 10 years of SEC’s data, created the largest historical database in the world of XBRL data on US companies. That means we can provide context that no one else can for the XBRL data that will be coming directly from companies reporting into the IDEA database starting next year.
• We have components that can make it easy for web sites and applications to display this data.
• We have expertise to help investors compare the 12,000 XBRL elements in IDEA to the 3,500 elements in China’s version of IDEA and 2,500 elements in the Korean version of IDEA and the Indian, Japanese XBRL repositories.
• We have the ability to create private repositories of XBRL data – -and help the financial community analyze their own XBRL data vs the XBRL data that will be in the IDEA system.
• Last but not least we have automated software that makes it easy and low cost for companies to create the XBRL-formatted filings that they will be required to submit to IDEA. EDGAR Online understands the EDGAR system and the IDEA system possibly better than any other company.

Simply said we add value across the entire XBRL food chain.  We have been waiting for the day that XBRL is a required data format.

For those who don’t like new ideas, the SEC has no technical specification or regulatory mandate on the horizon that makes XBRL the only filing format.  This means companies will be filing documents with EDGAR for many years-and investors will need access to these historical documents for many, many, many years.

In addition, there are nearly 200 form types that are filed as EDGAR documents. The SEC has only required supplemental XBRL data for 3 of these 200 or so forms (10-K, 10-Q, and the Mutual Fund Risk Return Statement).  We expect the need for EDGAR documents and IDEA data will coexist for more than a decade as all these forms and the associated regulations and industry players need to be converted to IDEA’s data specifications.

The full webcast of the SEC’s presentation of IDEA can be seen at the SEC’s Web site.

As of September 22, 2008, Institutional Investors reporting their (long) holdings on Form 13F will be required to submit a weekly form reporting their short sales of certain publicly traded securities.  The first submission will be filed on September 29, 2008.

These forms will be filed on a non-public basis until two weeks after the due date.

The Commission believes that the non-public submission of these forms may help prevent artificial volatility in securities as well as further downward swings that are caused by short selling, while at the same time, providing the Commission with useful information to combat market manipulation that threatens investors and capital markets.

A list of companies that Institutional Investors are required to report holdings on is available to download in spreadsheet (.CSV) format 13F List or in PDF format 13F List in PDF Format

Not only is the sky not falling, you can file before sundown.

Here’s the expected SEC schedule for mandating the use of XBRL. Each completed item links to the official SEC’s or XBRL Organization’s websites. Don’t take it from the crying boy, take it from the horses’ mouths.

In his address on to the AICPA conference in Washington last month, Cox reported on the progress over 100 nations are making on the development of International Financial Reporting Standards and the adoption of eXtensible Business Reporting Language (XBRL). “There is a large risk, he says, in the rapid increase in global trading and investment that is getting ahead of the ability of accounting standards and financial analysis to provide investors with comparable information in a form they can readily use and understand.” U.S. investors are not used to the “shark-infested seas” of international trade compared to the “relatively placid safe harbors at home,” he said, “while investors around the world are discovering, the hard way, the need for transparency and the rule of law.”

The best way to protect investors in a global economy, from the SEC’s perspective is to ensure that financial reporting information from different countries is comparable and reliable and that, in markets at least, the world speaks a common language.  Today the chairman spends nearly half his time in helping to make that happen.

From the SEC’s perspective, Cox declared, “IFRS is coming. XBRL is coming. And mutual recognition is coming.” The full text of his address is available on the SEC website, in which he details the progress that has been made in each of these areas.

Mutual recognition would in theory allow U.S. investors to have the benefit of direct access to foreign markets, or possibly foreign broker-dealers, provided those entities are supervised in a foreign jurisdiction with high standards under a securities regulatory regime that is substantially comparable (though not necessarily identical) to that in the United States.