The SEC has announced a new filing system and database called IDEA (Interactive Data Electronic Applications) that will eventually replace the EDGAR system originally begun in the 1980s. IDEA will be a major shift in the way the SEC maintains its extensive and valuable data contained in SEC filings.
IDEA depends on interactive data for data comparison applications that go far beyond a traditional, searchable database. Within the coming years, U.S. companies will be required to provide financial information using interactive data. IDEA uses the interactive data to compare and analyze company information as directed by the needs of an individual user. This is a major shift from the current EDGAR system, which is essentially just a searchable, reverse-chronological listing of each registrant’s filings.
The SEC has posted a video presentation introducing how IDEA will work to its website. The presentation uses IDEA to easily compare, for example, (i) executive compensation among two companies, (ii) quarterly financial information for the same company, and (iii) investment returns among two mutual funds. The SEC has only created a few applications to make use of the data that will be available in IDEA, but the presentation hints that software development by private companies to use IDEA data could be limitless.
One goal of IDEA, according to the presentation, is to empower investors to engage in comparison shopping for where to put their money. The presentation mentions that most people are comfortable with how to use internet databases to comparison shop for hotels, flights, cars, and homes, but not securities investments. The SEC wants IDEA to change that.