Since its initial release in 2001, the FundsXML open standard has gained traction in a number of markets including Germany, Austria, the Netherlands and France for the electronic exchange of funds data. However, Thomas Koop, associate in research and market analysis for German investment fund and asset management industry association BVI, reckons it has the potential to become a truly pan-European data delivery standard and he discussed the standards group’s plans to develop a new data dictionary and ISO compatibility to this end to delegates to this year’s TSAM.
The FundsXML Standards Committee was formed back in 2001, when the standard was first launched and then developed as an open and free of charge sector standard for mutual fund information. The aim of the standards initiative at that point was to ease the exchange of funds data between the various parties in the German funds market such as market data vendors, investment firms, associations and depositories, explained Koop. “FundsXML was developed as a standardised data format for automatic data exchange and the focus was initially on supporting the sales and reporting processes,” he told TSAM delegates this week.
The communication of data within the German funds of funds market was particularly challenging due to a high level of manual processes prior to the introduction of FundsXML, he contended. “The dominance of fax, email and FTP for document transfer with non-standard formats was a problem when the European regulators began to ask for security by security data, which resulted in the requirement for the production of high volumes of data,” Koop explained.
The standard has therefore allowed firms to achieve a degree of cost reduction and increased efficiency by reducing these manual processes. It has also allowed for cost reduction by enabling firms to develop one single interface to their funds data rather than being forced to support multiple interfaces, said Koop. Moreover, the issue of data quality tracking is much easier due to the standardisation of data formats.
“BVI was enabled to provide its members with the ability to upload their own funds data via a web interface and the system is now able to highlight any inconsistencies in data formats,” said Koop.
FundsXML has gained the most traction in the German and Austrian markets, with the majority of the firms in the countries having adopted the standard. The initial firms to adopt the standard in 2001 included Allianz Global Investors, Credit Suisse Asset Management (Deutschland), DekaBank Deutsche Girozentrale, DWS Investment and Union Investment Privatfonds. BVI adopted the standard in 2003, followed three years later by Austrian-based firm Erste-Sparinvest Kapitalanlagegesellschaft and Austrian funds association VÖIG Vereinigung Österreichischer Investmentgesellschaften.
In April 2007, Netherlands-based firm Robeco Asset Management joined the group, followed by the establishment of FundsXML France a year later. In November 2009, more French firms joined, as well as Finesti from Luxembourg and Swiss firm Vontobel Fonds Services.
The standard is currently at version 3.0.3 and is officially recognised within Germany and Austria by the national regulator as a suitable reporting format for Basel II reporting. Around 80 firms in total across Europe are using the standard, said Koop.
The plan now is to be able to incorporate the ISO 20022 standard format into FundsXML and a couple of working groups have been set up to achieve this and a number of other goals including the establishment of a data dictionary. The FundsXML Standards Committee only meets around twice a year but these working groups meet more frequently in order to develop working drafts for amendments to the standard and to do the legwork for these new projects, said Koop.
The data dictionary is aimed at ensuring the standard is relevant to all European countries by describing the individual data fields and how they should be used. The standard format is divided into mandatory and optional data fields, including country specific fields for regulatory reporting purposes. To this end, the group is also working on integrating the Key Investor Document requirements under UCITS into the standard.
Compatibility with ISO is a key requirement for the future of the FundsXML standard in Europe, given the international regulatory focus on the data standards issue and the bent towards promoting ISO as the vehicle for reference data standardisation. Just look at the US Office of Financial Research’s proposals with regards to this for proof.
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