Money managers contemplating the EXT generation of the web have found a new computer language, XML, to make it reality.
XML promises delivery of enhanced online searching capabilities, easier web document management ND speedier access to financial information and documents, according to e-commerce directors and chief information officers in the industry.
Some of the firms either using or contemplating using XML are: Morgan Stanley Dean ITTER Inc.; Credit Suisse Asset Management LLC; Grantham, Mayo, Van Otterloo & Co.; and Frank Russell Co.
The new language holds many capabilities for analysts, accountants, portfolio managers and clients in the financial industry.
XML's supporters say the current language of the web, HTML, tells the computer how data should be presented, but not what the data actually mean to the user.
XML author Charles F. Goldfarb describes the newer language as "smart data."
Before XML, one word meant the same thing as the next to a computer, but now, with the help of descriptions encapsulated in the language, the computer can comprehend nuances in data contained in documents.
XML also can be customized, allowing users to make up their own industry-specific labels for data.
For example, a money manager wanting to find a specific piece of financial data, such as a competitor's assets under management, now will be able to search for in assets under management for a specific firm and receive that exact information, rather than getting a bunch of websites that contain the words "assets under management."
"The reality is XML is really exploding on the scene in the financial services industry," said Elmer Huh, a global equity research analyst at Morgan Stanley Dean Witter, New York.
XML was introduced last year; and a modification to it specifically for financial data -- called XBRL -- is being created.
As an equity analyst, Mr. Huh expects XML will simplify his job of analyzing financial statements. The hours Mr. Huh and other analysts often spend reviewing pages of financial statements may become minutes with XBRL. If he wants to find a specific item on a financial statement, he will find it quicker doing a search for the actual piece of data and not a searching for keywords.
Analysts also may download the financial statement information to any type of format, which means they don't have to re-enter data from one form to another.
The use of XBRL would more quickly alert an analyst to problems detailed in a company's financial statement, Mr. Huh said.
For example, XBRL allows financial documents to be searched for a specific type of information such as a company's annual revenue for a specific year, eliminating a complicated key-word search.
Mr. Huh sits on a committee of the American Institute of Certified Public Accountants that endorsed the financial community's first attempt to standardize XML for financial reporting.
Mike Willis, chairman of that committee and a Tampa, Fla.-based partner at PricewaterhouseCoopers LLP, hopes the cooperation and collaboration of the industry in creating XBRL will be successful, especially since any new system in the future will be using XML.
Following a public comment period -- with comments posted at xbrl.org -- the AICPA predicts XBRL will be available for use by July.
But in the next 18 to 24 months, the group plans to create an international standard for XBRL, or an "electronic dictionary" of terms used in the process of labeling company financial statements in the XML format, Mr. Willis said.
Other uses for XML are in the works at investment management shops, mostly in client reporting and research.
Credit Suisse Asset Management, Boston, is using XML to convert portfolio account information to its extranet website for clients from its internal investment accounting system.
The firm started using the language about six months ago and has found it to work smoothly with clients' existing computer systems, said Jeremy Condie, spokesman for the firm.
Clients may download their specific portfolio information, market insight reports and commentary from the Credit Suisse web site.
In the future, the firm plans to post data weekly instead of quarterly.
XML "allows us to be very flexible in the information we send on the extranet," Mr. Condie said.
Boston-based Grantham, Mayo Van Otterloo is studying the use of XML for both its internal and external websites.
"We believe XML will be adopted throughout the industry," said Topher Callahan, director of e-business.
The next generation of web users likely will make the switch to XML from HTML, he said, pointing out the recent upgraded versions of web browsers integrating the new language.
The only problem the firm has heard of so far with XML is difficulties in transferring information from older computer systems to the new format.
But for Grantham Mayo, the positives outweigh the negatives, especially since a particular document created once in XML may be replicated many times in any number of formats, Mr. Callahan said. The writing, searching and linking functions are streamlined with XML, he added.
The firm also expects XML to have an impact on how investment research is done at their firm and elsewhere.
For example, on the company intranet, portfolio managers in the future would be able to search a group of portfolios and see the results based on more specific factors than they can now, such as searching by Sharpe ratios and seeing the portfolios listed from lowest to highest.
Tacoma, Wash.-based Frank Russell also is using XML in developing content for an intranet site.
Randy Kelley, publishing supervisor in Frank Russell's technology lab, is testing XML as a tool for creating and publishing client reports on a faster schedule on the retail side. The intranet site was chosen as a place where report writers in any of Russell's offices can post their commentary alongside client account information to be published in hard-copy form later on.
Once the retail side is completed, the firm hopes to do the same thing on the institutional side.
"We are trying to do it (publish client reports) with more automation, which should save us more time," Mr. Kelley said.
Officials also don't need to worry about losing data in the translation to XML and its predefined style sheets, something they do worry about with HTML. Frank Russell executives also are able to pull out any specific type of data from the intranet site easily and quickly.
"You can have it your way," is Mr. Kelley's sales pitch for XML.
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