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A Lack of Choice

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A dominant theme from this week’s A-Team Group and SmartStream roundtable on data management challenges for the buy side in 2011 was the lack of viable alternatives in the market when it comes to both standards and data management industry groups or associations to join. A case in point was raised by a member of the audience (under Chatham House rules) that there is only one option for classification codes for financial instruments in the market: the Association of National Numbering Agencies’ (ANNA) ISO 18773, otherwise known as the six character Classification of Financial Instrument (CFI) code, which is in draft format at the moment.

The audience member challenged the panel to think of another standard that is already in use that could be used for the purposes of classification, but one didn’t spring to anyone’s mind (myself included). The impetus behind the question was the assertion that the CFI currently falls far short of achieving what it sets out to do: provide a unique classification standard that all parties in the financial markets can use in order to ensure they are all talking about the same class of instrument.

For background purposes: ANNA is working on two new standards in conjunction with each other: ISO 18773 (which is related to abbreviations for financial instruments) and ISO 18774 (otherwise known as the Financial Instrument Short Name, or FISN). The abbreviation standard is aimed at doing what it says on the tin: standardising the industry’s use of instrument abbreviations, which will then be used in the FISN standard. The FISN standard is therefore aimed at uniquely naming a financial instrument by combining an abbreviated issuer name plus some descriptive information about the instrument, such as instrument type, maturity date and interest rate, whereas the CFI code is aimed at identifying the classification of an instrument.

This work has progressed to the final draft stage, although it is uncertain as yet whether ANNA will be the registration authority for these new codes. As for the debate, a number of audience members noted that the CFI in its current form is not doing a good enough job. One elaborated: “Vendors are using different classification codes for the same instrument, so they do not match up when we are processing these instruments.” This indicates that there may be further technical guidance needed in order to ensure reconciliation work is not required to this end. In the meantime and bearing in mind the slow pace of the ISO process, audience members were keen to ascertain whether another option was available. However, the answer, unfortunately, seems to be no. There was also some discussion about the need for a European focused, not for profit lobby group to work on data management standardisation issues, outside of the current limited number of groups and single association (in the form of the EDM Council) in the space.

One attendee noted: “If we don’t want to join the EDM Council, what else is out there to choose from?” Given the desire of a number of industry participants to form a group that is potentially focused on buy side data management concerns, perhaps we’ll see some movement soon to this end? It will certainly give the industry one more option. Look out for our full coverage of the panel discussion at the event soon too…

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