Competition looks set to hit the reference data industry bodies space, as former FISD chief Mike Atkin has found a backer to set up his own industry group – Financial Data Coalition (Findac) – which appears to be in direct competition with his former employer.
Findac, which has the tagline: “Promoting standards and efficiencies in market and reference data,” has just been set up as a registered non-profit trade association. The organization is currently defining its proposed scope as well as taking care of administrative issues. But the next, more challenging, phase will be to secure membership to support the association on an ongoing basis. Findac is being effectively bankrolled in the initial phase by consultancy Strauss International Group, whose principals are former Reuters managers Mel Strauss and Curt Brill.
Atkin, the managing director of Findac, says, “The industry is undergoing significant transition and we need a framework for improving the underlying infrastructure for efficiency and automation. Findac will become the mechanism to aggregate, prioritise, and inform on the issues we need to tackle to make this happen. We will be the aggregator of thought leadership by taking hypothesis on industry issues and verifying it on behalf of the industry.”
The proposed agenda looks similar to that of the Financial Information Services Division’s (FISD). Atkin, never shy to state an opinion, says that his experience at the FISD was that it can “get bogged down by the administrative details of being part of an association”. It was Atkin’s relationship with the parent Software & Information Industry Association (SIIA) that broke down and led to his departure of the FISD late last year. Atkin says that with no devoted resource to the industry issues due to the administrative burden of the association, “we would always be scrambling to make progress before the next meeting”. This is something he hopes to address with the full time resources of Findac.
While the FISD has been undergoing its own transition phase, appointing former Nasdaq data manager Tom Davin to fill Atkin’s role, and things have gone quiet recently, Davin says, “FISD has a full agenda focused on reference data, and we are taking a fresh look at this agenda.” There are plans to start up the working groups again over the next few weeks, which will effectively be kicked off with the meeting this week of the executive committee.
The FISD’s focus in reference data continues to be the three key areas of the securities data model (including continued work on the MDDL standard and its cooperation with ISO’s Working Group 11), business entity identifiers (BEIs), and the unique instrument identifiers (UIIs).
Says Davin, “We are a membership-driven organization and our members will show us the way they would like us to move forward.” He acknowledges that some members are looking at the new Findac activities but says that the “vast majority are committed to our organization”.
Atkin is hoping that some of those members will be supportive of his new venture, and Davin suggests that any membership additions to Findac may not necessarily come at the expense of the FISD. Atkin says he has already held encouraging discussions with interested parties. Indeed Findac’s launch event, held at Goldman Sachs during the FIMA event in New York two weeks ago, attracted around 65 attendees.
The critical mass of membership that Findac needs to achieve across its five target groups is: exchanges (3), buy-side institutions (3), sell-side institutions (3), custodians (2), and vendors (2). The newly-created membership fee structure ranges from $2,500 to $20,000 per year, depending on size. Findac is offering lower cost membership for start-ups and consultants.
Atkin insists Findac will not have just a U.S. domestic focus, as the association will be dealing with global issues. He highlights the fact that while he will continue to be based in Washington D.C., Brill, who is executive director and will be focused on strategy and project management, is based in London, and Strauss (although not active in the association outside of providing organizational infrastructure) is based in New York.
Regarding the reference data agenda, – or more specifically securities processing administration and automation – Atkin says, “There is no shift in my view of the world. We still need precise definitions of things and we need to drill down into how data management helps those issues that we are all now so aware of, such as regulation, cost management and operational efficiencies.”
Standards development will be a key area of focus. Similarly to the FISD, these efforts will focus on instrument identifiers, data content identifiers and entity identifiers.
While the FISD maintains the XML standard Market Data Definition Language (MDDL), which has gone some way to addressing many issues, the standard will over time be subsumed into ISO 15022 along with XBRL, FIX and other standards (through the Working Group 11 of TC68). But Atkin believes there is still a need for a mechanism to bridge the gap between the needs of the industry and the standards process, which can be long and heavily bureaucratic.
Given his recent experience, Atkin believes his new Findac group can fill the gap by facilitating the process of communicating the industry’s needs with the standards bodies. As such, Findac will be applying for liaison status with ISO – “ISO is not the enemy,” says Atkin, “as although bureaucratic, the process works” – as well as planning to work with the U.K.’s Reference Data User Group (RDUG), the Association of National Numbering Agencies (ANNA) and others. He hopes that devoting full time resources, Findac can progress reference data industry issues, where other industry organizations cannot, says Atkin.
“We obviously cannot provide or mandate a solution but we can help articulate the problem, raise awareness, and define what is needed to solve it by providing best practice recommendations, and service quality measures.” Atkin points to the Unique Instrument Identifier (UII) work he facilitated at the FISD, where the requirement was identified (including resolving differences in terminology), the components for uniqueness were identified, and these thoughts were validated through a review process. The goal for the industry can then be defined. In the case of UII’s, the goal, based on two years of investigation, is now to create a messaging standard to provide a structure or template for firms to assemble unique identifiers based on the criteria required by their various applications, he says.
“Some issues we can help solve, some we can’t, but once the customers have verified the need you will see commercial products following. Sedol is a perfect example where the London Stock Exchange realised it could build a commercial case for developing the product to address the uniqueness requirements of customers,” says Atkin.
Findac’s Methodology of Approach
Issue identification and awareness.
Members use the power of the forum to define and verify opinions about the internal and external pressures affecting the industry as well as the business implications associated with industry change. As a result, members are fully aware of industry changes and the impact of these changes on their business activities.
Analysis and translation.
As a neutral facilitator, Findac collates anonymous commentary or business challenges input to promote understanding and help focus discussion on the real underlying issues to be addressed.
Forum for business relationships.
Findac provides a forum for members to exchange ideas and build business relationships.
As a result, members are afforded a pre-existing foundation from which to form alliances, address and resolve conflicts and better understand each other.
Mechanism to exert collective influence.
Though is not a lobbying group, members can use the collective power of the forum to communicate group requirements to standards bodies and regulators. Findac’s ability to exert influence is directly related to its ability to build consensus among interested participants.
Vehicle to create and implement standards and best practice recommendations.
Standards and best practice recommendations are desirable outputs of the association facilitation process.