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June 18, 2012
Building Transparency into your data

Last week we were pleased to announce an exclusive partnership with OTC Markets where we are, for the first time, making data available for over 800 of their listed companies. While we have already received some great coverage of this announcement from publications like Pensions and Investments, Forbes and the Washington Post, I thought I would use post as a way to provide some additional color behind the importance of this release.

With financial markets still in a period of great uncertainty, both retail and professional investors are hypersensitive about making the most informed investment decisions. Now more than ever, they are looking to minimize risk by demanding extensive insight into a company’s operations before sinking money into it.

It is easier to conduct due diligence and benchmarking on companies trading on the NASDAQ and NYSE due their SEC filings requirements and the use of the XBRL format (which, incidentally, is increasingly being handled by EDGR). As you may know, XBRL makes it possible for investors to dive deeply into a company’s operations and access fundamental data in granular ways. However, it has been a completely different story when it comes to companies trading on the OTC, which include much smaller companies that often do not meet the listing requirements of the larger exchanges and ADRs. Since these companies are not required to report to the SEC, their fundamental data is much harder to uncover let alone analyze.

Interestingly, one could compare finding this data to how miners dug for gold in the Wild West. Back then, the process of discovering gold was manual, time consuming and quite laborious, and only the lucky succeeded in finding valuable nuggets. Similarly, up until this point, investors have inexplicably been using highly manual processes to scrape details on smaller companies from a variety of websites and unconfirmed sources of information. So the need in the marketplace has been there, but investors have largely bypassed considering these companies for their portfolios because the information has not been easy to discover. By making their financials more readily available, companies on the OTC are now essentially leading the miners to where the nuggets are located. This increased transparency is a huge win for the market: the OTC listed company can now be discovered, screened and analyzed by more investors (particularly quantitative analysts), emerging areas of interest and investment growth can be better understood, and there is a reduction of risk for those making trades in this specialized universe.

The importance of data transparency is not going away. From our position as a leading service provider to both producers and consumers of financial information, we understand better than most firms that the markets and regulators are going to demand it even more, especially during these times of economic uncertainty. This is a primary reason that the OTC Markets exclusively partnered with EDGR on this endeavor, and why we are excited about working with them to benefit their listed companies and the investment community with this release.

We've got many more great solutions planned for release in the coming months that will continue this focus on promoting transparency for listed companies and investors — so stay tuned!