Interesting take on XBRL for small caps and microcaps on the SEC's Government-Business Forum on Small Business Capital Formation being held today.

According to speakers including Malcolm C. Persen, CFO at Radyne Corporation, Chris Whalen from Institutional Risk Analytics and Greg Adams from EDGAR Online, Interactive Data will help new investment vehicles such as hedge funds, and the buy-side generally, to access small and micro-cap companies as a hitherto-ignored asset class. Fund managers are looking for a competitive edge, and the small-cap world is believed to offer that. Investors like the Virginia Retirement System would feel that they are better able to cover those types of stocks if a lot of the labour-intensive work can be avoided. XBRL offers a way for them to gain a better understanding of the business, without incurring a lot of the complexity and expense that they encounter today.

In fact, all the points from Assoc. Prof. Deborah Allen-Hewitt, who sits on the Investment Committee of the Virginia Retirement System, were well made. From her perspective (backed up by Chris Whalen) the problem is not too few analysts on the sell side. The sell side is likely to continue to focus on the big end of town. The entire investment world will become their own analysts, and Interactive Data will make the financials more pervasive, facilitating that analysis and investment. This is a new business model for financial analysis. According to Prof. Hewitt, XBRL could mark a watershed in the speed, accuracy and availability of information. That said, investors want something new. Broader, deeper data about companies is what investors really want to see, and XBRL provides a great way to provide it.

There are 15,000 odd companies that are outside of the Russell 3000. According to the panel, Interactive Data will help small companies make their story because the information will be better, more believable and more transparent. It will help investors sift this information, which is why there is a real advantage in being an early adopter. The first group of small companies to get involved will be the first to be identified.

Unsurprisingly, there was a uniform call for improvements to tools that the user community can take advantage of. We'll see if we can do our bit ;-)