XBRL in the investment funds market:The role of private institutions

Rubén Lara

rlara@afi.es

Grupo Analistas

Context1) Grupo Analistas is a leading group in the provision of

analytical information in the Spanish investment funds market

2) Provision of analytical information requires:- Availability of homogeneous information (from the market)

- Descriptive aspects of funds subject of analysis- Other market information

- Generation of added-value information (to the market)- Rentability, performance measures, rating…

Grupo Analistas

Context – from the market- Different sources of information

- Supervisor: Regulatory information- Fund management firms: NAV, unit holders- Stock markets: NAV, other market information

- Different information models and exchange formats- Ad-hoc validation and integration procedures- Costly and error-prone maintenance

Grupo Analistas

Context – from the market

Grupo Analistas

Mgmt. firmMgmt. firm

Mgmt. firm

Aggregatedinformation

NAV

Validationand

conversion

Regulatory information

Aggregation

NAV

Heterogeneity!

Context – to the market- Analytical information

- More than 5000 investment funds (Spanish market + major foreign funds)

- Information such as:- Rentability/risk relation- Performance measures- Ranking- …

- Different customer profiles- Search, comparison and personalization capabilities- Recommendations

Grupo Analistas

Context – to the market

Context – to the market

Aggregatedinformation Analysis

Added-valueinformation

Mgmt. firms

Sellers

PotentialInvestors

Unitholders

The problem- Lack of agreed, explicit models that cover the compete information

life-cycle- Lack of automated validation- Ad-hoc processing- Costly and error-prone maintenance

- Ingredients for a solution- Common language

- Appropriate expressivity- Mechanization support- Platform-independent

- Common information model- Consensus required!

Grupo Analistas

Ingredient 1: XBRL

Grupo Analistas

Mgmt. firmMgmt. firm

Mgmt. firm

Aggregatedinformation

NAV

Validationand

conversion

Regulatory information

Aggregation

Ingredient 1: XBRL

Aggregatedinformation Analysis

Added-valueinformation

Mgmt. firms

Sellers

…

Unitholders

Ingredient 1: XBRL1) Uniform processing and validation

2) Cost and error reduction

3) Gain in information quality

4) Improved market transparency

5) Increase in investor confidence

Grupo Analistas

Ingredient 1: XBRL- XBRL gaining momentum in Spain

- Backed by regulators and supervisors e.g. Bank of Spain and CNMV

- Increasing attention from financial institutions- Results in 2005:

- DGI taxonomy- IPP taxonomy- ES-BE-FS taxonomy- PGC-90 taxonomy- COREP taxonomy (international)

Grupo Analistas

Ingredient 1: XBRL- The role of regulators in the Spanish market

- XBRL early adopters- Taxonomy definition- Information reception

- XBRL promotion

- XBRL prescriptors

- Provision of solid bases for the definition of taxonomies in the private sector

- Compulsory use of regulators’ and supervisors’ taxonomies. High-quality information base.

- Initial public information

Grupo Analistas

Ingredient 2: Common info model- Grupo analistas is working on an initial model

- In cooperation with Universidad Autónoma de Madrid and Gestifonsa

- Dependent on the (possible) future information model from CNMV- Extension to include analytical information- Full coverage of funds information life-cycle

- Beyond supervisor and regulators competency!

- Proof-of-concept model- Evolving- Simulation of usage in progress

Grupo Analistas

Ingredient 2: Common info model- DGI taxonomy reused

- Description of institutions e.g. funds management firms

Grupo Analistas

Ingredient 2: Common info model- Four main information groups

1) Funds descriptive information2) Relevant facts3) Periodic descriptive values4) Analytical information

- Different nature, sources, and periodicity

Grupo Analistas

Ingredient 2: Common info model

- Partial example: analytical information

Grupo Analistas

Ingredient 2: Common info model- Challenges

- Consensus among market agents- Adoption

- Opportunities- Solid ground set by supervisors and regulators- Sufficient awareness (?)- Improved efficiency in information exchange

Grupo Analistas

XBRL: future directions- Increasing awareness- Increasing adoption

But

- Limitations in expressivity (calculation links)- Formal semantics?

- XBRL could be influenced by other languages e.g. OWL- Formalization of validation rules using e.g. RIF (to come)- Improved validation possibilities and new applications

Grupo Analistas

XBRL vs OWL- Ontologies: Formal, explicit, and shared

conceptualizations of a domain of application

- Automatic translation mechanism of XBRL taxonomies into OWL ontologies

- Comparison in progress- Possible application e.g. automatic funds

classificationGrupo Analistas

XBRL vs OWL- OWL has a formal basis (Description Logics)

- Allows for inferences e.g. characterization of funds a given investor is interested in

Grupo Analistas

</XBRL in the investment funds market:The role of private institutions>

Grupo Analistas