FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

March 28, 2013 • 12:51 am 0

Thomson Reuters Outlines Plans to Lighten the Burden of Symbology

Thomson Reuters has set out its store on symbology saying it does not support the promotion of new identifiers as a means of improving data management, but is keen to support industry standards and has plans to offer services such as symbology cross-referencing to ease the burden on data managers.

The company documents the development of symbology, its use and complexity in a white paper authored by Jason du Preez, head of symbology services at Thomson Reuters, and entitled ‘Solving for Symbology Discord, the Identity Challenge’.

Thomson Reuters set up a symbology business last year and published the white paper to acknowledge the importance of symbology and recognise its challenges. Du Preez says: “We don’t believe there is a silver bullet that will answer the problems of symbology. Innovative new products continue to exacerbate the problem and that is not going to change. We can, using our core competencies, create linkages, invest to take on the burden of linking data sets, and maintain code mapping. And we can allow the market to make more use of our intellectual property.”

Du Preez cites licences introduced last summer to extend the use of the company’s proprietary Reuters Instrument Codes (RICs) in non real-time content, as well as its agreement in response to a European Commission antitrust investigation to extend the use of RICs in real-time consolidated data feeds, as moves to open up how RICs are licensed and make them more accessible across all asset classes.

Integration of RICs with Proprietary Identifiers

He says: “As there is no silver bullet, we will invest more in cross-referencing services and tie in quality of information. We will have interesting things to offer over the next 18 months.” Among these he lists the integration of RICs and proprietary identifiers, with firms submitting their codes to Thomson Reuters and the company playing them back as part of its own codes. Other broad cross-referencing services will be tailored to allow clients to access only required cross references and linkages.

“Thomson Reuters doesn’t promote a new code, there are enough out there already. We will continue to use existing codes and extract value from them; the key is linkages between market vendor codes and proprietary structures. While clients face regulatory and cost drivers, we will take care of linkages and cross referencing to improve the breadth and quality of client content.”

Thomson Reuters’ white paper details the development of symbology and notes the company’s intent, as described by du Preez. It starts by mentioning irregular incidents in the market that remind the industry of the challenges involved when an aggregated or consolidated view across positions is needed, including the incompatibility of core data symbols. The paper states: “The core elements: security identification, counterparty identification and price discovery, were never developed to work efficiently and effectively on an enterprise/global scale.”

Looking at the current state of symbology, the paper flags the fragmented identification methods resulting form the market’s approach to symbology, including data providers’ and data aggregators’ different means of identifying the various parts of securities or counterparties, as well as firms’ creation of proprietary identifiers to fill gaps in vendor provision. The paper reports: “[Symbology] is still a ‘cottage industry’ where the identification schemes put in place by one group are locally focused and usually limited to a specific slice of the securities market. This consumes resources: in many cases the task of mapping multiple sets of disjointed or partially overlapping symbols can consume as much (or more) development time and computing resource as programming the business logic itself.”

The paper reviews changes in the financial industry since 1993 that have complicated symbology and notes the increasing difficulty, yet increasing need, to integrate information across a firm’s complete range of trading businesses to achieve effective risk management. On the flip side, it points to the parallel need to analyse rapidly growing stores of information and connect increasingly diverse datasets to find relevant information in the quest for alpha. It states: “The sophistication of the methods we employ to aggregate, rationalise and navigate information bears a direct relationship to the size of the lead a firm can have in the financial marketplace.”

How to Unambiguously Identify Information

While the outcome of linking and navigating information can be positive, it presents significant challenges as a lack of consistent and comprehensive global industry standards means firms must maintain symbology cross references, a difficult and often flawed task, particularly in banks with many different trade and compliance-related systems. Du Preez writes: “A popular approach is ‘we can build an adaptor’. Adaptors have become some of the most complex processes in banking technology. That is not data management. It is trying not to get eaten by the alligators.” He goes on to surmise: “Data managers do not want to deal with these problems – they ultimately want services they can reliably use to unambiguously identify information.”

Enter Thomson Reuters with its vision of how to resolve these problems. “We believe that these linkages are the key to enormous untapped value. Being able to enter the data model through any entity identifier (quote, security or legal entity) and easily navigate and explore all the linkages between related entities not only puts a firm in control of its risk position, but also creates a window into opportunities. Industry standards have a significant part to play as they provide a universal start and end point; Thomson Reuters is a strong supporter of symbology standards in the data industry and we will be first in line to adopt and link industry standard identifiers to our content sets.”

The report discusses the challenges propagated by the use of multiple symbologies and the workload associated with the maintenance of cross reference tables in local security master databases. It touches on Thomson Reuters’ plans to provide cross reference services centrally and leverage its core competencies and infrastructure to ease the burden on institutions that have traditionally solved the problems themselves.

It states: “Cross referencing is a reality that cannot be avoided – we aim to make this as accurate and cost-effective as possible for our customers. We also understand that while symbology is an important part of the picture, translation and synchronisation services will also play a critical part. The need for these services is evidenced by the burgeoning desire of the market to offload these onerous data management functions to specialist providers.” The report concludes: “Thomson Reuters is investing now to continue to expose the growing capabilities of its data management infrastructure and ensure that structured and unstructured data come together in a rich tapestry of knowledge with the aim of maximizing utility to trading algorithms, research, analysis and information discovery.”

Source: A-Team Reference Data Review, 26.03.2013

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March 19, 2013 • 12:24 am 0

Outsourcing Reference Data Management: Cost Reduction and New Revenue Opportunities

The past 12 months has seen the emergence of new players offering Business Process Outsourcing (BPO) services for Reference Data Management. These new arrivals expand the range of options available to financial institutions for addressing the challenges of regulatory compliance, operational cost reduction and scalability.

But BPO has other benefits, and innovative adopters have benefited from using the model to create new value-added services. By catering to clients’ data management needs, these players have been able to transform what’s traditionally been considered a cost centre into a new and significant source of revenue.

This paper – from AIM Software – explores this exciting new trend, and describes how an established financial institution took advantage of BPO to turn its enterprise data management initiative into a new source of revenue and business growth.

Download the White Paper Now to Find Out More

Source: A-Team, March 2013

Filed under: Corporate Action, Data Management, Data Vendor, Library, Market Data, Reference Data, Standards, , , , , , , , , , , , , ,

November 7, 2012 • 10:43 pm 0

Capco Proposes the Creation of a Data Culture to Advance Data Management RDR

Financial firms are falling short on data management issues such as calculating the true cost of data, identifying the operational cost savings of improved data management and embracing social media data, but according to research by consultancy Capco, these issues can be resolved with a cross-organisational and practical approach to data management and the development of a data culture.

The business and technology consultancy’s report – ‘Why and how should you stop being an organisation that manages data and become a data management organisation’ – is based on interviews with towards 100 senior executives at European financial institutions. It considers the many approaches to data management across the industry and within individual enterprises, as well as the need to rethink data management. It states: “There is one certainty: data and its effective management can no longer be ignored.”

The report suggests an effective data management culture will include agreed best practices that are known to a whole organisation and leadership provided by a chief data officer (CDO) with a voice at board level and control of data management strategy and operational implementation.

For details on the report click here

Turning the situation around and attaching practical solutions to the data management vision of an all-encompassing data culture, Capco lists regulatory compliance, risk management, revenue increase, innovation and cost reduction as operational areas where good data management can have a measurable and positive effect on profit and loss.

Setting out how an organisation can create an effective data culture, Capco notes the need to change from being an organisation that is obliged to do a certain amount of data management, to a mandated and empowered data management organisation in which data has ongoing recognition as a key primary source. The report concludes: “Every organisation has the potential, as well as the need, to become a true data management organisation. However, the journey needs to begin now.”

Source: Reference Data Review, 24.10.2012

Filed under: Corporate Action, Data Management, Data Vendor, Market Data, Reference Data, Standards, , , , , , , , , , ,

November 6, 2012 • 8:02 am 0

LEI Development Embraces Change and Picks up Speed Ahead of G20 Meeting

The Financial Stability Board’s (FSB) third progress note on the legal entity identifier (LEI) initiative, released last week, has met with a positive response from those involved in shaping the system, potential infrastructure providers and market data vendors, despite changes to some proposals and the collapse of perceptions that have built up during debate on how the final system could shape up.

But while progress is positive, there are still fundamental concerns around corporate hierarchies, as without agreed reference data on legal entity parent and relationship information, the LEI will not fulfil the effective risk aggregation function at the heart of the global system development.

The decisions and to-do lists outlined in the FSB progress note are significant steps forward in developing a global LEI system and come ahead of another major milestone this week when G20 finance ministers and central bank governors meet in Mexico City and will be asked to endorse a draft charter for the system’s Regulatory Oversight Committee (ROC). The charter has been drawn up by the FSB Implementation Group (IG) and is expected to be approved by the G20 meeting, setting in motion the creation of the ROC and the global LEI foundation that will underpin the Central Operating Unit (COU) and secure a governance framework designed to sustain the public good of the system.

One of the late changes identified in the progress note is a shift away from perceptions that entity identifier codes would be 20-character random numbers. Instead, the note describes a part-structured, part-random character string resulting from an ‘urgent’ request made by the FSB IG in September for the FSB LEI Private Sector Preparatory Group (PSPG) to consider how identifiers could best be issued for the purposes of a federated, global LEI system. The PSPG’s views were considered at meetings of the PSPG and IG in Basel earlier this month and a technical specification has been endorsed by the FSB plenary.

The FSB states in the progress note: “The FSB decision is provided now to deliver clarity and certainty to the private sector on the approach to be taken by potential pre-LEI systems that will facilitate the integration of such local precursor solutions in to the global LEI system.”

On the basis of the arguments presented and discussed by the PSPG, the FSB has selected a structured number as the best approach for the global LEI system, although it acknowledges that the 20-character code, which complies with the existing ISO 17442 standard, will have no permanent embedded meaning. Instead it is aimed to avoid any overlap of random numbers in a federated issuing system by adding a code for each local operating unit (LOU) assigning LEIs in front of the numbers.

The breakdown then looks like this:

· Characters 1-4: a four character prefix allocated uniquely to each LOU

· Characters 5-6: two reserved characters set to zero

· Characters 7-18: entity-specific part of the code generated and assigned by LOUs

· Characters 19-20: two check digits as described in ISO 17442.

If this information has been a long time coming, the time to organise behind it is short with pre-LEI solutions wanting to transition into the global LEI system required to adopt the numbering scheme no later than November 30, just a month away. The LEI will be portable within the global LEI system, implying that the LEI code can be transferred from one LOU to another and that each LOU must have capacity to take responsibility for LEIs issued by other LOUs.

Following recommendations on data quality achieved through self-registration of legal entities in the FSB’s June 2012 report, the FSB goes on to decree that pre LEI-services should be based on self-registration, although this can include third-party registration made with the permission of the entity to be registered, and that from November 9 all pre-LEI systems must allow self-registration only.

No specific recommendations are made on how the Commodity Futures Trading Commission’s (CFTC) CFTC Interim Compliant Identifiers, or CICIs, which are entirely random numbers, will integrate with the LEI system, although the 27,000 or so already issued are expected to be grandfathered and accepted into the system without being restated.

Commenting on the LEI number structure, Peter Warms, global head of ID and symbology development at Bloomberg, says: “But for the prefix that identifies where the number was assigned from, the number is still random. This is good for data management practices as the number has no other data dependencies. I would question, however, whether the prefix of an identifier would be changed if it is moved to another LOU as this is not clear.”

Tim Lind, head of legal entity and corporate actions at Thomson Reuters, says: “We must put the debate on intelligent versus dumb numbers behind us and leave it as a milestone. Either solution could work and ongoing argument is not productive. The LEI principles are in place and we need to get on and get the work done.”

Both Warms and Lind applaud the advances made by the FSB and its working groups, but the need for speed remains if deadlines are to be met. And as the complex tasks of developing a legal foundation, ROC and governance framework for the LEI continue, Lind proposes a balance of perfection and pragmatism as the only way forward.

Another outcome of the Basel meetings that deflates earlier perceptions, is a clear indication that the COU will not be located in one central place, but will instead be distributed across several locations. This is likely to emanate from the FSB’s hard fought for and well held desire to ensure the LEI system is a collective development for the public good including a governance and operational framework that will encourage all jurisdictions to join in.

On the same basis, it has also become apparent that any suggestion that an LEI system could initially be based on a replica of the DTCC and Swift utility set up for the CFTC’s CICIs has been quashed. Instead, LOUs are expected to make their own technology choices to support the LEI – indeed they may already have systems in place – although they will, necessarily, have to conform with standards set by the COU.

If these are some of the recent gains in the LEI development, there is still much to be done ahead of having an ROC, COU and some LOUs in place by March 2013. Again sustaining a level playing field for the public good on a global basis, the FSB has asked the PSPG to build on initial work and consider the next phase of operational work that will focus on how the system can best address key issues in areas such as data quality, supporting local languages and characters, and drawing effectively on local infrastructure to deliver a truly global federated LEI system. The PSPG’s deadline to make proposals on these issues is the end of the year, generating the need for extremely swift action if the LEI system is to be up and running to any extent in March.

The final issue raised in the FSB’s progress note and one which has yet to be openly debated and resolved is ownership and hierarchy data associated with LEIs. The note states: “Addition of information on ownership and corporate hierarchies is essential to support effective risk aggregation, which is a key objective for the global LEI system. The IG is developing proposals for additional reference data on the direct and ultimate parents(s) of legal entities and on relationship (including ownership) data more generally and will prepare initial recommendations by the end of 2012. The IG is working closely with the PSPG to develop the proposals.”

This might be the FSB’s final note, but the issue has to be a top priority. As one observer puts it: “The next big thing is hierarchies. They need to be nailed down and there needs to be transparency. Work is being done on this, but without a good solution there will be no meaning in the LEI.”

Source: Reference Data Review, 29.10.2012

Filed under: Data Management, Reference Data, Standards, , , , , , , ,

October 27, 2012 • 1:11 am 0

News and updates on LEI standard progress and development

As a follow up on G20 acceptance in Los Cabos in July 2012 and the Financial Stability Board guidelines and recommendations of the Legal Entity Identifier  LEI, we will regularly update this post with news and article to provide an overview of  LEI standard progress and development.

 
First Published  13.07.2012 , Last Update 27.09.2012

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September 24, 2012 • 11:54 pm 0

Symbology: EDI’s Corporate Actions Service Adopts Bloomberg Open Symbology

Free-use Data Tagging System Reduces Costs and Risks in Trading

Exchange Data International (EDI), a premier back office financial data provider, today announced it adopted Bloomberg’s Global Securities Identifiers (‘BBGID’) to name and track all equities securities in its Worldwide Corporate Actions service.

EDI is the latest financial data provider to adopt Bloomberg’s Open Symbology (BSYM), an open and free-use system for naming global securities across all asset classes with a BBGID, a 12 digit alpha-numeric identifier for financial instruments. EDI has implemented BBGID numbers in its equities reference, pricing and corporate actions data feeds. Its Worldwide Corporate Actions service provides detailed information on 50 corporate action event types affecting equities listed on 160 exchanges.

“EDI decided to integrate Bloomberg’s Open Symbology, as it is easily accessible and has no license fee or restrictions on usage,” said Jonathan Bloch, the Chief Executive Officer of EDI. “Bloomberg’s Symbology also advances straight-through processing of equity orders, which aids reporting and compliance management.”

Peter Warms, Global Head of Bloomberg Open Symbology, said, “Existing identifiers that change due to underlying corporate actions introduce inefficiencies, increase costs and add complexity to the data management process. Bloomberg and EDI recognise the importance of comprehensive, open and unchanging identifiers, like the BBGID, in enabling customers to track unique securities consistently and to process corporate action data seamlessly. As BSYM grows in adoption, interoperability across market systems and software using BSYM will improve steadily and reduce operational costs.”

Source: Bobsguide, 24.09.2012

Filed under: Corporate Action, Data Management, Data Vendor, Market Data, Reference Data, Standards, , , , , , , , , , ,

June 29, 2012 • 12:53 am 0

Whitepaper: Bloomberg to embrace emerging LEI

The industry initiative to develop and promote a standard global legal entity identifier (LEI) is expected to significantly reduce the opacity associated with complex financial instruments, widely acknowledged to be a major contributing factor in the 2008 credit crisis.

In this white paper, Bloomberg explains the implications of the emerging LEI for financial institutions, and outlines how it is embracing the new standard to help clients better understand the entities whose instruments they trade and hold (like mapping of LEI to Blombergs numeric BUID, etc.)

Download the White Paper Now

Source: A-TEAM 28.06.2012

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June 28, 2012 • 6:28 am 0

Thomson Reuters Opens RICs to all with Non-Realtime License

Thomson Reuters is taking a step toward answering client calls for more open access to its Reuters Instrument Code (RIC) symbology. The company is making RICs available for use with non-real-time information in client and non-client financial institutions’ trade processing systems.

Enterprise content chief Gerry Buggy, who has spearheaded Thomson Reuters’ response to the EC anti-competition complaint, the new facility is the “first step in supporting the financial community’s symbology needs across all parts of the trading life cycle through our evolving symbology services.”

The move comes in the wake of the EC investigation and subsequent complaint into the use of RICs in real-time consolidated data feeds. In response to that complaint, many financial services practitioners have called for more open access to the RIC, which is entrenched in many firms front-, middle- and back-office trading and trade processing systems.

According to Jason du Preez, Global Business Manager, Enterprise Platform, at Thomson Reuters, the latest initiative “has nothing to do with the EC investigation. The EC is focused on use of RICs for accessing real-time information, while the new licences are focused at firms looking to trade with the RIC or use the RIC to access non-real-time information.”

Du Preez says that latest move means that “any market participant can buy a license that will allow them to trade using the RIC. This will allow the use of the RIC for pre- and post-trade activities, and the right to redistribute RICS in this regard.”

The new RICs arrangement will allow market participants to use and cross-reference the RIC symbol for trade activities. As such, it can be used to facilitate the advertisement of liquidity, acceptance of trade flow and execution of post trade activities with the RIC symbol as a consistent identifier throughout the process.

Additionally, the service will allow Thomson Reuters pricing and reference data customers to use RICs to reference and retrieve securities data from their securities master databases and navigate to connected content such as legal entity identifier (LEI) information.

Du Preez says that “Firms that purchase reference data from Thomson Reuters will also be granted the right to use the RIC to access any non-real-time information, essentially allowing them to use the RIC to access any content, including third-party party content, held in their securities master databases.”

Thomson Reuters believes the new service will encourage more efficient and reliable capital markets by giving market participants the freedom to use RICs symbols irrespective of whether they use Thomson Reuters enterprise data products.

As part of the latest initiative, the Bats Chi-X Europe exchange has signed up for the service, which will allow it to deploy RICs in the post-trade services it offers.

According to Paul O’Donnell, COO at BATS Chi-X Europe, “Cross-referencing the BATS Chi-X Europe instrument codes with the Thomson Reuters RIC symbols will enable us to reach new market participants as well as improve efficiency and data transparency by facilitating accurate identification of securities on our platform.”

Du Preez says obvious candidates for adopting the new arrangement include “trade hubs, third-party trade/post-trade processing firms or anyone that wants to send, receive or cross reference messages that contain securities identified with a RIC.”

Source: A-Team Reference Data Review 27.06.2012

Filed under: Data Management, Data Vendor, Reference Data, Standards, , , , , , , , , ,

June 24, 2012 • 9:39 pm 1

Reference Data: LEI system Real and Ready for Use…or maybe not?

The morning after the G-20 leaders endorsed the Financial Stability Board’s recommendations for a global system of precisely identifying legal entities, the co-chairwoman of the LEI Trade Association Group said, “I think we have something that is real and ready for use.’’

Robin Doyle, a senior vice president at JPMorgan Chase, noted that 20,000 ready-to-use “legal entity identifiers” have already been generated by a prototype jointly developed by the Depository Trust and Clearing Corporation and the Society for Worldwide Interbank Financial Telecommunication. A copy of that file can be downloaded here.

The online portal that would allow financial market participants to register and receive 20-character ID codes and to search for the codes of counterparties or other entities was demonstrated Wednesday morning at the 2012 Technology Leaders Forum of the Securities Industry and Financial Markets Association.

That portal can be turned live “within 24 hours” of its need, said Mark Davies, 
Vice President, Business Development
 at The Depository Trust & Clearing Corporation, during the demonstration.

The LEI Trade Association Group represents a group of firms and financial industry trade associations trying to develop a global and uniform legal entity identifier. The group is supported by the Global Financial Markets Association, which includes SIFMA.

SIFMA and a variety of other trade groups have recommended that DTCC and SWIFT operate a central authority for registering and issuing the codes that the leaders of the G-20 industrial nations Tuesday endorsed.

The G-20 endorsed the 35 recommendations of an international coordinator known as the Financial Stability Board.

The board’s recommendations differed in one significant aspect from the SIFMA and trade association recommendation. Where the trade groups recommended a centralized system for registering and issuing ID codes – a point reinforced Tuesdya in opening remarks at SIFMA Tech by SIFMA president T. Timothy Ryan Jr. – the FSB recommended a “federated” registration model. Under that approach, local authorities, aka nations, could and theoretically would act as the agencies for registration, issuing and storing the codes.

The central authority would maintain a database that would be logically managed, but whose contents might be spread around the world, as on servers spread across the Internet.

“We think it can work,” but it has to be set up and maintained properly, Doyle said.

The federated model will only be as good as it adheres to the global standards set by the FSB and the International Organization for Standardization, which defined the 20-character code.

Doyle said a central authority under the FSB approach likely will need to conduct audits of local operating units, to ensure compliance with the overall standards. The challenge will be to make sure the codes are kept correctly and not, in some fashion, duplicated.

The local authorities will need to take on the expense of maintaining high standards. “It is an expensive, difficult process to validate data,” Doyle said.

“A public-facing system like this needs a huge amount of control,” Davies said.

The next shoe to drop on the development of the system will come within the next couple weeks. That’s when Commodity Futures Trading Commission member Scott O’Malia said a decision will be announced on what organization or organizations will handle the registration and issuance of ID codes for the swaps markets it will oversee. O’Malia said at SIFMA Tech Tuesday that the decision among what industry executives say are four competing proposals will come “very soon.”

Srinivas Bangarbale, the CFTC’s Chief Data Officer, said Wednesday that the regulator’s “interim compliant identifier” will support the ISO 17442 standard set out by the FSB and ISO. r

It’s decision to move ahead “presupposed the standard” and that the chosen implementing group would “adopt the standards as published.” The CFTC will not directly or indirectly create another set of reference data for the industry to keep track of

“It’s important to use the standard as soon as possible,” he said, however.

O’Malia said the CFTC is likely to begin issuing IDs as early as September. That is so the commission can fulfill its mandate to oversee interest-rate and credit-default swap markets, as mandated by the 2010 Dodd-Frank Wall Street Reform Act.

The FSB’s implementation schedule calls for a functional system to be ready to use by March 2013.

Source: Securities Technology Monitor, 20.06.2012 by Tom Steinert-Threlkeld

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June 9, 2012 • 11:28 pm 0

LEI : FSB recommends 3-Tier System for Issuing Global Identifiers

The Financial Stability Board will recommend to the G-20 industrial nations that a three-tier structure involving local registration authorities be established for registering and issuing 20-character codes that will identify participants in financial transactions, worldwide.

In a report released Friday morning, the FSB said it will recommend that national financial authorities set up a system that gives overall responsibility to a Regulatory Oversight Committee, creation, integration and maintenance of a unified databased of the codes to a Central Operating Unit, and registration of legal entities to receive the codes to Local Operating Units .

A central database of the identifiers is seen as fundamental to helping regulators watch for risks to the global financial system. A 20-character code has been set out as the basis for the code, known as a Legal Entity Identifier, by the International Organization for Standardization; and, backed by the FSB, which has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies.

Legal Entity Identification and Code

A number of different technology and communications organizations are expected to vie to operate the Central Operating Unit.

The Securities Industry and Financial Markets Association and 16 other trade associations have put their weight behind the Depository Trust and Clearing Corporation and the Society for Worldwide Interbank Telecommunications as the “dream team” assembled for creating the technology and operations that would act as the “linchpin” as SIFMA executive vice president Randy Snook puts it for managing and regulating financial system risk, globally.

Also in the hunt is a New York financial industry consultancy, Financial InterGroup, which has proposed a “federated” approach to the issuance of the codes. That would involve allowing nations to set up their own registration authorities, that would feed the codes into the centralized database.

The three-tiered structure, which includes both centralized and localized operations, will be proposed 10 days from now to leaders of the G-20 industrial nations. They are holding a summit in Los Cabos, Mexico, from June 18 to 20.

“This system would be a ‘building block’ for many financial stability and regulatory objectives, and it would deliver substantial benefits to financial firms,” FSB Chairman Mark Carney said.

The Central Operating Unit will create “ global operational standards and protocols that deliver: global uniqueness of the LEI; seamless, open access to the global LEI and to high quality reference data for users (with the depth of access controlled by appropriate access rights1); as well as protocols and methods for how local systems can connect” to the central unit.

Local Operating Units would be handle local registration, validation, and maintenance of reference data and protect information that must be stored locally.

The FSB plan calls for the system to start operating by the end of this year and operate on a self-standing basis by March 2013.

See detailed FSB Recommendations

The self-standing part will come from two proposed sources of ongoing funding: a local discretionary charge; and a common fee for support of central functions of the COU and ROC.

Early “seed-corn” funding could come from charitable foundations, loans from interested financial institutions and private companies.

that are interested in the area about funding a global LEI foundation which will form the COU12 – other options, which could be complementary, include loans from IFIs or from the private sector).

The 20-digit alphanumeric code, covered by ISO standard 17442:2012, would be linked to reference data about each market participant that would include:

  • The official name of the legal entity
  • The address of the headquarters of the legal entity
  • The address of legal formation

Among other pieces of information. Those core pieces of information can then be tracked using the code across all financial transactions, worldwide.

The G-20 may either assign the FSB the task of preparing and endorsing the Charter, or could decide to undertake the final endorsement itself at the Finance Ministers and Central Bank Governors meeting in November. Endorsement of the Charter will establish the ROC11.

A technology stream, the FSB said:

“will undertake preparatory work with a wide range of private industry representatives interested in joining a global industry LEI foundation consultative group13 to develop a central platform that will facilitate the integration of a local identification schemes (whether currently existing or emerging) into a logically centralised database of unique LEIs based on consistent standards, protocols, procedures etc that appears seamless to users.”

FSB Implementation Timeline.

Source: Securities Technologies Monitor, 08.06.2012

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April 10, 2012 • 10:37 am 0

China Insight: QDII updates, Disparated Financial Standards and new Market Reforms – KapronAsia

Overview of the QDII Program in China

The QDII (Qualified Domestic Institutional Investor) program was first launched in 2004 initially for insurance companies to invest their foreign exchange funds in the Chinese companies traded in overseas markets, with PingAn insurance company being the first institutional investor to receive a QDII quota of US$8.89 billion. Since then, the program has expanded and now allows institutional investors, including commercial banks, security companies, fund companies, insurance companies and trust funds to raise funds in mainland China and invest in offshore capital markets under the control of China’s foreign exchange regulator.

China’s Disparate Financial Standards

China’s financial standardization lags behind the relatively rapid development of the financial industry globally and has yet to meet the demands of technology innovation and business expansion. This can slow the pace of technology advancement as competing standards add layers of complexity and make it more difficult to come up with straightforward technology solutions to clients’ problems. The PBOC has realized that financial standardization does and will continue to play a pivotal role in financial informationization and regards standardization work as an important strategic measure to promote China’s financial industry.

Further Reform of China’s Stock Markets in 2012
After being stuck in a bear market for the past few years, China’s stock market hasn’t kept up with the country that has become the world’s second largest economy following the U.S.. Facing this bear stock market, Guo Shuqing, the new chairman of the China Securities Regulatory Commission (CSRC), seems confident in China’s stock market, saying that the blue chips in China’s stock market are of real value, although overhaul and reform are necessary now to move the market forward. He has raised several new ideas that may contribute to this needed reform.

Source: KapronAsia, 10.04.2012

Filed under: China, Exchanges, Standards, , , , , , , , , ,

March 8, 2012 • 10:26 am 0

White Paper: LEI Readiness – Instant Integration

White Paper: LEI Readiness – Instant Integration with Alacra Concordance

The idea of an LEI pre-dates the 2008 financial crisis by several decades. The ISO (International Organization for Standardization) had advocated an LEI (at one time called the IBEI – International Business Entity Identifier) for many years, but was unable to pinpoint an organization ready to build and maintain such a directory. For many securities industry participants, existing identifiers, such as the Bank Identifier Code (BIC), met most of the market’s needs.

The collapse of Lehman Brothers revealed the problems firms faced in readily identifying their counterparty exposure. With critical data residing in multiple, unconnected silos, many firms had no way to calculate their counterparty risk across front, middle, and back office systems. This damaged reputations, led to tremendous financial losses, unleashed law suits, and brought into focus the dire need for a system to uniquely identify entities.

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Source: A-TEAM, 08.03.2012

Filed under: Data Management, Data Vendor, Library, Market Data, Reference Data, Standards, , , , , , , , , , , , , ,

November 19, 2011 • 12:50 am 0

LEI (Legal Entity Identifier) set to arrive in waves

A new system giving financial institutions standardized Legal Entity Identifiers (LEIs) will start to be phased in next year after an international organization finalizes new standards in January 2012.

LEI requirements for a Global Legal Entity Identifier (LEI) Solution May 2011
LEI industry progress and  recommendation July 2011

The Geneva-based International Organization for Standardization (ISO) is expected to approve a plan for LEIs at the beginning of next year, calling for them to consist of 20 alphanumeric characters. After that happens, the infrastructure is already in place to start issuing the IDs early in 2012, according to officials with the Securities Industry and Financial Markets Association.

“Assuming the standard is approved by early January, our expectations are that legal entities will be able to register in short order for an LEI,” said Tom Price, managing director and head of SIFMA’s technology, operations and business continuity planning group.

During the financial crisis, both regulators and institutions realized they did not have the information available to quickly address issues of counterparty risk. LEIs aim to change that by using a universal code that would allow counterparties to be easily identified.

The United States has provided much of the leadership behind the push for LEIs, but the concept enjoys broad support around the globe. The registering authority for LEIs will not come from any government, but rather from the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

After the ISO finalizes the standard, the next step will be rule writing, which is already underway at the Commodity Futures Trading Commission with respect to swaps. Price said LEIs will be used first for swaps participants and then gradually adopted for transactions involving other types of assets until they are required for all trades.

David Strongin, who is also a managing director at SIFMA, said the U.S. will be the first country to require LEIs, but Hong Kong and Canada will likely follow fairly quickly. The European Union has committed to adopting LEIs as well, though it is unclear whether Europe will adopt the system all at once or phase it in country by country.

Strongin stressed, however, that there is a global consensus to move forward, even if not every nation and region mandates LEIs at the same time.

“The G20, both the finance ministers and leaders, have all endorsed this,” Strongin said. “From a very high level, you don’t see disagreement that an LEI is needed. I think everyone agrees that it’s an important tool to build the foundation for risk management.”

Strongin said that while many traders might not see it right now, most firms are currently working hard to prepare for LEIs. Eventually, however, the changes will touch every facet of the industry. ”There’s a lot of work going on, though there’s only so much you can do until you see the final rules,” Price added.

Source: Traders Magazine, 18.11.2011

Filed under: Data Management, Reference Data, Risk Management, Standards, , , , , , , , , , , , ,

October 31, 2011 • 11:26 pm 1

NYSE Technologies Open Sources MAMA API to create vendor neutral OpenMAMA platform

Broadens Access and Increases Flexibility for All Users and Vendors  through New Standard for Global Capital Markets, Hosted at Linux Foundation

NYSE Technologies, the commercial technology unit of NYSE Euronext (NYX), today announced that it has open sourced its Middleware Agnostic Messaging Application Programming Interface (MAMASM), now called OpenMAMA. As a vendor neutral platform driven by the financial services technology community, OpenMAMA enables companies to protect their technology investments and help remove the friction in implementing new trading technology solutions across their technology operations utilizing a simple, consistent API.

Hosted by The Linux Foundation, OpenMAMA is supported by a steering committee of some of the most recognized names in financial services, including J.P. Morgan, Bank of America Merrill Lynch, EMC, Exegy and Fixnetix, among others. This newly open-sourced code establishes a new industry standard delivering greater flexibility and reduced development times with an underlying goal of lowering costs and building broader support for a range of interconnected programs. OpenMAMA offers a robust set of features with unmatched reliability and performance that ensure a uniform, future-proof middleware messaging solution for financial services firms. It is available through the Linux Foundation project today and the steering committee will announce new members and participants to the OpenMAMA initiative in the coming months.

“NYSE Technologies’ vision has always been to create a new breed of capital markets community that benefits from our extensive global network and utilizes the best, most innovative technologies from a range of service providers, not just ourselves,” said Stanley Young, CEO, NYSE Technologies. “Launching OpenMAMA through the Linux Foundation is another step toward achieving that goal. Through the industry steering committee, we are positioning ourselves alongside our peers and customers to become expert consultants for open sourced capital markets technology. We have created a vibrant customer community of over 150 market participants using MAMATM, and now with OpenMAMA, customers and firms everywhere will benefit from third-party contributors creating an even richer and more compelling API.”

Additionally, NYSE Technologies has worked with a diverse range of vendors and financial institutions at the forefront of technological innovation to create a steering group comprised of industry leaders building and utilizing financial technology applications. Collectively, the committee will determine OpenMAMA’s development roadmap, funding, strategy and product direction. As the OpenMAMA community grows, the steering committee composition could change to incorporate new members that join through the Linux Foundation.

Scott Parsons, CTO, Exegy added, “OpenMAMA is a very exciting chance for the industry to collaborate and architect the functionality and direction of a key piece of infrastructure. Using the MAMA API, we can now design a platform that strikes a unique balance of performance, interoperability and future proofing that has never been done before.”

“Fixnetix is pleased to join leading members of the global banking, hedge fund and proprietary trading community for the Linux Foundation steering committee on OpenMAMA,” says Anthony Kingsnorth, Director of Operations, Fixnetix. “We believe industry collaboration will only yield the best results and outcome for our universal trading, market data and risk control customer base.”

NYSE Technologies decision to open the MAMA platform creates an easily accessible architecture and proves its commitment to true strategic partnership with its customers. The benefits of the OpenMAMA platform are further strengthened by NYSE Technologies’ innovative plan to publish an industry-wide standardized data model. Furthermore, the OpenMAMA project will release the Middleware Agnostic Market Data API (MAMDA Aerly next year. MAMDA will provide users with the ability to publish and consume market data from multiple sources and vendors in a standardized format onto the open platform to help market participants better leverage technology assets and innovate more rapidly.

As market activity evolves and customer needs change, OpenMAMA will continue to be an open, flexible and efficient means of developing and deploying new, event-driven applications. The first release of OpenMAMA is available now with substantial updates expected through March 2012.

Source: Bobsguide, 31.10.2011

Filed under: Data Management, Data Vendor, Market Data, News, Standards, , , , , , ,

October 26, 2011 • 11:40 pm 0

Special Report: Evaluated Pricing Oct 2011 – A-TEAM

Valuations and pricing teams are facing a much higher degree of scrutiny from both the regulatory community and the investor community in the glare of the post-crisis data transparency spotlight. Fair value price transparency requirements and the gradual move towards a more harmonised accounting standards environment is set within the context of the whole debate about data quality across the financial services business, in light of incoming regulations such as Basel III and the Alternative Investment Fund Managers Directive (AIFMD). Whether it is related to risk management, pricing, trading or reporting, firms need to be able to stand behind their numbers.

The goal of the AIFMD is to create a level playing field and set basic standards for the operation of alternative investment funds in Europe via new reporting and governance requirements. On the pricing and valuations side of things, firms must establish what the directive calls “appropriate and consistent” procedures to allow for the independent valuation of a fund’s assets. In order to achieve this, the valuation must either be performed by an independent third party or by the asset manager, as long as there is functional separation between the pricing and portfolio management functions.

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Source: A-Team, 12.10.2011

Filed under: Data Management, Data Vendor, Market Data, Reference Data, Standards, , , , , , , , , , ,

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