Osaka Securities

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Digital Disclosure System

Osaka Securities Exchange Company Limited (referred to as Osaka Securities hereafter) makes available information submitted for disclosure by listed companies to the information media and to investors in general.
Previously, at least part of the various processes of information submitted for disclosure by listed companies (from receipt to publication) involved some kind of paper-based manuallabor. With the application of XML, however, these processes can be carried out in a unified way, with such benefits as drastically reducing the workload and the time required to disclose information.

Background

Until recently, listed companies submitted information for disclosure (such as end-of- year financial statements) to Osaka Securities as paper documents. This was because each company had its own way of managing its information digitally, using different editing tools and so on, and paper was the only format common to all companies. At Osaka Securities, this information for disclosure would then have to be input into the system manually before other data-related tasks (such as storage, processing, and distribution) could be performed. In addition to this, the data would also have to be checked for mistakes manually. The following problems were identified in this method:

• The work involved in checking and inputting was labor-intensive, proving to be a heavy burden.
• For the above reason, and because the documents for release required processing, it was taking a long time to disclose information to the information media and to investors.

Deciding Factors in Applying XML - XML's capabilities can meet the requirements of the desired system -

Osaka Securities has been quick and positive in implementing IT technology. Our requirements for a Digital Disclosure System are detailed below. XML was the technology that satisfied our needs, and did so at low cost.

Speed, Data Flow, and Efficiency

• Automating data check and input A system that automates as far as possible the tasks of checking information for disclosure for errors and in inputting that information (previously, these tasks were manually done).
• Immediate processing and data provision A system that produces as quickly as possible finished digital documents from input info mation for disclosure, and provides those documents to the media and other interested parties promptly (previously, these procedures took too long). It is also important that the information we provide be in a format that is easy for the recipients to manipulate (i.e., search and edit).
• Disclosure to investors via the Internet A system that allows us to make disclosed information accessible to investors on the Internet (previously, such information could only be viewed in a reading room).

A System that Takes the Future into Account

At Osaka Securities, we are not interested in only solving problems as and when they arise. For this reason, we decided to construct a system with one eye on the future.

• Towards EDI In the future, it will be possible to set up Electronic Data Interchange (EDI) between our Digital Disclosure System and similar systems of other companies and securities exchanges. Because of this, we at Osaka Securities need to put into place a system that can smoothly and easily handle EDI. XML, being a worldwide standard that is freely available, is the obvious choice for such a system.
• Towards Electronic Government In 1999, the office of then Prime Minister Keizo Obuchi announced the establishment of the Millennium Project. The goals of the project were, through cooperation between government and industry, to innovate in existing industries and generate new industries to address three main challenges facing modern society. Those three challenges were identified as information technology, the aging of society, and the environment. Electronic (i.e. paperless) government was identified as a component of the information technology challenge. One of the challenges identified within that of electronic government was to implement an Internet-based administrative procedural system by fiscal 2003. If electronic government is realized, Osaka Securities will use XML to digitize its exchange of documents with the Ministry of Finance.

The Completed Digital Disclosure System

The diagram below illustrates the Digital Disclosure System that was set up at Osaka Securities using XML technology. The system has been operational since October, 1999.

Note

In the illustration, 'Media' refers to Osaka Securities' internal press club and 'Attributed Media' refers to external mass media to which Osaka Securities provides information.

• Automated Input, Checking, and Sending (Listed Companies) A tool to input and apply for information was created and distributed to about 1,300 listed companies. These listed companies us the tool to input information for disclosure. The tool automatically checks the input data and converts them into XML format. When the Send button in the tool is clicked, data are sent to Osaka Securities. The system is secure because data are encrypted before being sent. Note that, since an amendment to the law, items of information for disclosure submitted to Osaka Securities may be changed, but even in such cases, the tool can be modified to correspond to the changes.
• Management of Information for Disclosure (Osaka Securities) Information for disclosure in XML format is managed using the Meridio document processing system.

Note

Meridio is a document management system with XML capabilities.

• Prompt Distribution and Secondary Use of Information for Disclosure (the Media) Information for disclosure is quickly processed and distributed to the media. Because the distributed information is in XML format, the recipient media can edit and use it freely and easily. In addition to this, in the document processing system you can add search properties to information for disclosure based on XML tag information thus making searching for information easier and more efficient.
• Information disclosure via the Internet (Investors) Using XSLT, it is possible to convert the information to be disclosed from XML format to HTML format. Information transformed in this way is made available from the Osaka Securities homepage as "ED-NET Information for Disclosure". Accordingly, investors can search for and display the desired information using a Web browser.

Note

Note that information is not disclosed on this Web page until a fixed period of time after it has been distributed to the media.

Results

Applying XML brought the following benefits:

• We have established a forward-looking system that can be coordinated with new developments such as EDI and electronic government.
• Regarding the media, information that is amenable to secondary use can be distributed.
• Investors are able to search for and display disclosed information on the Internet using a Web browser.
• Problems with the old system that have been solved:
• - The manual workload (data checking and input) is reduced
• - Immediate distribution of information for disclosure

Reference Information:

Company Name : Osaka Securities Company Limited
Headquarters : Kitahama 1-6-10, Chuo-ku, Osaka
Established : April 1949
URL : http://www.ose.or.jp/e/main_n.html

Customer's Voice

Interviewee
Masakazu Fukuyama
Group Leader Planning Group Management Planning Headquarters
Osaka Securities Co. Ltd.

Q:What was the reaction of the listed companies?
A:Previously, disclosing information meant copying and distributing huge amounts of paperwork to companies on the exchange floor and to media representatives (usually about 40) in the press club. With the new system, we can distribute all of the information via the Internet and telephone lines, drastically reducing the amount of work required to carry out the disclosure procedure.
We also have the added advantage that, because we can choose between two functions (one whereby the numerical items on the first page of a financial statement can be directly input, and another whereby existing electronic documents in a variety of formats - such as Word, Excel, and PDF - can be attached), we can provide information in more flexible format, depending on the content.

Q:What has been the reaction of the Osaka Securities staff?
A:They have all noticed the reduction in the amount of work they have to do related to the disclosure of information (such as receiving and vetting requests for information).

Q:How have the media responded?
Q-1:With regard to the speed with which information is provided
A:The previous system was obviously a more time-consuming way of disclosing information, involving, amongst other things, the faxing of materials back and forth via the press club. With the introduction of the new system, information can be distributed as soon as it is disclosed, which constitutes a major step towards realizing a real time system of information disclosure.

Q-2:With regard to the introduction of XML
A:They have been very favorably impressed by how much simpler using XML has made the entire process of disclosing information.

Q:How have ordinary investors responded?
A:Whereas, before, it was necessary for investors to visit the exchange reading room to view disclosed materials, with the introduction of the new system, it is possible to access this material from any computer with an Internet connection. Many ordinary investors have told us how much they appreciate the way that this has simplified the process of viewing disclosed information.