(Reuters) - The U.S. Securities and Exchange Commission said it would require 500 largest U.S. companies to file their financial statements using an interactive format by April 13 in a move aimed at bringing more transparency to U.S. capital markets.
The new format is called XBRL, or extensible business reporting language, an interactive technology which will allow investors to download financial statements directly into spreadsheets and analyze data.
Interactive data has the potential to increase the speed, accuracy and usability of financial disclosure, and eventually reduce costs, said the U.S. Securities and Exchange Commission (SEC) in a final ruling released on Tuesday.
The 500 companies, both U.S.-based and foreign, are those that have more than $5 billion in worldwide public equity float, said the SEC.
Companies are required to use a list of electronic tags, which will contain labels that provide information necessary for interactive data to be processed.
The SEC said companies may choose to tag their own financial statements using commercially available software, or can opt to outsource the tagging process.
The XBRL rule will apply to the next lot of companies, about 1,800 of them, in 2010, and in the following year to another 12,000 public companies.
Under the new rule, companies will not only be required to use interactive data for quarterly and annual reports, but also on forms 8-K and 6-K which contain revised or updated financial statements.
Companies will also have to provide the same interactive data on their corporate Web site to "encourage its widespread dissemination, thereby contributing to lower access costs for users," the SEC said.
(Reporting by Kavita Chandran in Bangalore; Editing by Andrew Callus)
