XBRL in the investment funds market: The role of private institutions Rubén Lara rlara@afi.es

2. XBRL in the investment funds market: The role of private institutions Rubén Lara rlara@afi.es Grupo Analistas

3. Context • 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

4. 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

5. Context – from the market Aggregation Validation and conversion Regulatory information Heterogeneity! NAV NAV Aggregated information Mgmt. firm Mgmt. firm Mgmt. firm Grupo Analistas

6. 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

7. Context – to the market

8. Context – to the market Unit holders Mgmt. firms Sellers Aggregated information Analysis Added-value information Potential Investors

9. 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

10. Ingredient 1: XBRL Aggregation Validation and conversion Regulatory information NAV Aggregated information Mgmt. firm Mgmt. firm Mgmt. firm Grupo Analistas

11. Ingredient 1: XBRL Unit holders Mgmt. firms Sellers Aggregated information Analysis Added-value information …

12. Ingredient 1: XBRL • Uniform processing and validation • Cost and error reduction • Gain in information quality • Improved market transparency • Increase in investor confidence Grupo Analistas

13. 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

14. 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

15. 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

16. Ingredient 2: Common info model • DGI taxonomy reused • Description of institutions e.g. funds management firms Grupo Analistas

17. Ingredient 2: Common info model • Four main information groups • Funds descriptive information • Relevant facts • Periodic descriptive values • Analytical information - Different nature, sources, and periodicity Grupo Analistas

18. Ingredient 2: Common info model • Partial example: analytical information Grupo Analistas

19. 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

20. 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

21. 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 classification Grupo Analistas

22. 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

23. </XBRL in the investment funds market: The role of private institutions> Grupo Analistas