BOB: "Doesn’t capturing key data points from text-based documents like press releases and prospectuses present the same sort of difficulties that have slowed tagging of financial statement footnotes?"

MAX: I'm not sure I completely understand all the difficulties for footnotes, but yes, the entire problem in corporate actions is just that: "capturing the data points from text-based documents." I'm sure we'll have to be flexible and open in designing the solution. This is especially so because announcement of a corporate event is not a singularity, but a stream of updates from the first, early notification to the final terms. If you think of any big merger, you can imagine the complexities from the first news through anti-trust review, through shareholders' meeting (think of Oracle-Peoplesoft or Microsoft-Yahoo).

The really big point is that the very difficulty you describe -- i.e., teasing out the correct data from a 2 paragraph press release or a 257 page prospectus -- is currently being done redundantly by dozens of firms, thus introducing significant opportunity for differences. These differences emerge when the standard messages that flow downstream through financial servicers to the investment firms whose holdings are affected. A "fuzzy" announcement, with room for interpretation, guarantees significant effort to manually reconcile differences, at significant cost. So no matter if this approach is fraught with technical challenges, the benefits of the solution make it all worthwhile.

BOB: "And with an overhaul of financial regulation in view in the US and other jurisdictions, won’t corporate action taxonomy maintenance be unusually difficult for the next few years?"

MAX: The corporate action taxonomy is not going to be driven by financial regulation, but rather by the messaging standard for corporate actions, ISO 20022, which is already quite mature. We don't, at this point in time, see huge changes coming in content of disclosure and we actually hope for a rule to add XBRL to the existing disclosure requirements. We are taking the position that the corporate action information from issuers is generally adequate, but the method (pure text) is inadequate because it injects the opportunity for faulty data systemically into the notifications that reach the investors.

Another way of saying this is: "the data is there, it's just darn hard find." This obscurity is due to the legal wrapping that is required. Remember that this is all in order for a corporation to offer or announce actions that will affect their investors' holdings. The legal framing and conditions and terms and exclusions really cannot be mucked up. All that necessary verbiage is intended to deal with litigation risk. But buried therein is a lot of data that will operationally generate changes to millions of accounts multiplied by hundreds of servicing accounts multiplied by multiples of amendments per announcement multiplied by 400,000 unique events per year (in the US).

So this is a very fundamental problem and is not significantly confounded by regulatory changes. The standard is able to accommodate everything from a huge merger deal that lasts for many months to a simple dividend. Even then, XBRL will be a progressive step forward for the corporate actions community because if a regulatory change does impact an announcement, an extension can immediately capture the metadata of a change and serve to feed back into both the standard and the taxonomy. If we can close the loop in this system, then changes can be integrated much more efficiently.