UPDATE 1-US SEC aims to add mutual funds to XBRL project
(Adds Cox, credit rating agency rules in paras 11-16)
WASHINGTON, Jan 31 (Reuters) - Data on the risks and returns of individual mutual funds would be available in a new, interactive electronic format with the potential to help investors make better decisions, under a proposal made on Wednesday by the U.S. Securities and Exchange Commission.
In a 5-0 vote, the SEC proposed to add mutual fund risk-return data to an ambitious project to transform the agency's mountain of paper and static electronic filings into a sleek database that is more accessible, manageable and useful.
Based on a machine-readable computer language known as XBRL, or extensible business reporting language, the project is being spearheaded by SEC Chairman Christopher Cox.
"Today's proposal is about making the promise of interactive data available to mutual fund investors," Cox said at an open meeting of the investor protection agency.
Ninety million Americans own shares in mutual funds, which are capital pools managed by for-profit fund companies, such as Fidelity Investments, American Funds and Vanguard Group. Mutual fund assets topped $10.4 trillion at the end of 2006.
Funds keep investors and the SEC informed about their activities via periodic filings called prospectuses. Some of the financial data in these documents is already available in XBRL, but the all-important risk-return data is not.
The SEC's proposal would begin to change that by allowing mutual funds to volunteer to provide risk-return information in XBRL format, which tags numeric or textual data with code so the data can be analyzed more easily and uniformly.
If approved, the SEC's proposal would represent "a major step forward in ... expanding the use of interactive data," said SEC Commissioner Roel Campos.
Investors trying to select a fund typically look at risk-return data to compare past performance and relative risk. By creating a single, central risk-return database, the SEC's proposal would make these comparisons more accurate, more complete and less costly, SEC staffers said.
The SEC launched the XBRL project last year by letting corporations start submitting financial results in the format.
The SEC is looking at possibly also putting corporate executive pay data in XBRL, as well as data for securities such as variable annuities and exchange-traded funds, Cox said.
The SEC separately voted 5-0 at the meeting to propose new rules for the credit rating agency industry, which is dominated by three firms -- Moody's Corp. (MCO.N) unit Moody's Investors Service, McGraw-Hill Cos. (MHP.N) unit Standard & Poor's, and the Fitch Ratings unit of France's Fimalac SA (LBCP.PA).
The U.S. Congress last year approved new regulations for credit raters and told the SEC to implement them.
The new rules give clearer authority over credit raters to the SEC. They also spell out how the rating agencies can register with the SEC and what they must do to become "nationally recognized." Continued...
