Bloomberg has won the award for Most Innovative Data Standards Initiative in A-Team Group’s Innovation Awards 2023. The awards celebrate innovative solutions, projects and teams across vendor and practitioner communities that make use of new and emerging technologies to deliver high-value solutions for financial institutions in capital markets.
Bloomberg’s data standards initiative, the Financial Instrument Global Identifier (FIGI), was selected as a winner by A-Team’s independent, highly experienced advisory board in collaboration with the company’s editorial team.
Richard Robinson, Chief Strategist of Open Data and Standards at Bloomberg, explains how the FIGI addresses data management challenges, the benefits it can deliver, and what makes the identifier particularly innovative.
A-Team: Please tell us about the data and data management challenges you see in capital markets?
Richard: The primary data management challenge in capital markets, and more broadly, is extracting value from an ever-growing amount of data in the form of actionable insights and analytics. Much has been accomplished in the past five years, with new thinking and methodologies for better organizing, curating, and understanding data across industries. However, there is still room to better understand data domains, communities, functions, and contexts, all of which are critical for getting more value out of data.
A-Team: What specific challenges does your award-winning solution address?
Richard: At a high-level, the goal of capital markets is exchanging some kind of financial instrument between two entities. It is when we look deeper at what happens behind the scenes that the data story becomes very complex, very quickly. Depending on the function, whether it be trading, issuance, pricing, corporate actions, regulatory reporting and so on, there are wildly different data requirements to ensure that financial instrument exchange happens seamlessly and compliantly.
Understandably with all the role types, data managers are forced into conflicting solutions. For example, the front office needs exchange level detailed data, while the settlements team needs central depository detailed data. To keep tabs on all the necessary data surrounding a financial instrument, there are identifiers, which are unique identification numbers for a given financial instrument like a stock, bond etc.
Over the years, data identifiers were created to be bespoke to the functions, like front office versus settlement, they needed to serve. Front office identifiers include data only about the exchange, while settlement related identifiers have no information about exchanges but do contain metadata about settlement location. As you can imagine, this becomes very tangled very quickly with a variety of identifiers floating around.
This is where the Financial Industry Global Identifier (FIGI) standard comes into play. Free to use, FIGI is an open data standard that provides guidelines for identifying and creating context-specific data models of financial instruments. The FIGI data model creates links between the different bespoke IDs that exist for different functions and connects them rationally, all without forcing end users to change what they are used to using.
A-Team: What does the solution offer to users and how does it work?
Richard: The FIGI data model standard provides a foundation for identifying financial instruments as well as context for that data by including relevant metadata. The standard covers financial instruments globally and across asset classes, including common stock, derivatives, corporate and government bonds, as well as those that previously lacked standard identifiers, such as crypto assets and loans.
Aside from FIGI, there is no open data solution that provides a transformation from an exchange level ticker to a code accepted by a local central securities depository, or can aggregate all exchanges an issue is traded across. Without FIGI, this remains a costly and error prone process that requires constant supervision.
Using a semantically meaningless primary key as the identifier, FIGI is supported by metadata that describes the financial instrument, including specific context such as an exchange or national jurisdiction. It is a globally recognized standard, which is owned by the Object Management Group and distributed by Bloomberg as the Registration Authority. The FIGI was also recently accredited in the US by the Accredited Standards Committee X9.
A-Team: What makes your proposition particularly innovative?
Richard: In today’s highly interconnected environment, identifiers for financial products have continued to multiply. Traditional identifiers exist in one-to-many or many-to-many relationships, and do not provide mechanisms to reference each other, requiring firms to create and maintain the relationships between these different perspectives. Furthermore, these identifiers change with corporate actions, which can impact data quality, lineage, and provenance.
FIGI is unique because it can link these systems together and utilizes metadata to provide further granularity for asset class management and identification. FIGI has been carefully designed to serve as a non-changing, unique identifier that provides broad coverage of global financial instruments without performance and cost restraints.
Combine being an open data standard, with the data model, OpenFIGI functionality, APIs for data access, and the collective data knowledge and quality of Bloomberg, and it’s apparent FIGI is something that uniquely solves data management challenges companies have been struggling with for decades.
A-Team: What are the benefits of using the FIGI?
Richard: FIGIs help firms to reduce cost, enhance data quality, and increase speed.
Through OpenFIGI.com, firms can use FIGIs to identify and track financial instruments as they move through the various stages of trading, settlement, risk, and regulatory reporting workflows. Firms which use FIGIs can link them to their proprietary content and share data with organizations that use alternative identifiers to ensure smooth collaboration across pre- and post-trade functions by helping to mitigate existing licensing and cost barriers.
The creation of cryptocurrency FIGIs further underscores the flexibility of the FIGI standard – and why it is so innovative. Earlier this year, Kaiko, an industry leading cryptocurrency data provider, and Bloomberg officially released the first batch of FIGIs for 1,981 cryptocurrency pairs (both crypto/crypto and crypto/fiat pairs), with 4,944 instruments listed on crypto exchanges. FIGIs for crypto assets enable interoperability between industry participants such as digital asset exchanges, data aggregators, custodians, service providers, and regulators. FIGIs for crypto assets also enable a coherent view of market data across multiple providers and applications, providing market players with greater transparency and a broader view across the sector.
A-Team: Please run through a brief user case study
Richard: Last year, AccessFintech, a leading fintech company evolving the financial operating model through data and workflow collaboration, made FIGIs available on its data collaboration network called Synergy. By deploying the FIGI standard across the entire Synergy Network, they added an important additional layer of data normalization for their clients. Since financial institutions may use different identifiers, AccessFintech was able to link these standards with the FIGI, helping to identify instruments globally and across assets in a standardized language.
A-Team: How will you develop and innovate FIGI over the next year?
Richard: FIGI is constantly accounting for input from the industry to improve and expand its data model. The main focus areas for growth are enhancing issuance and settlement processes, assisting regulatory reporting, and expanding the data model for different asset classes based on industry need.
A-Team: Finally, what does winning the award for most innovative standards initiative mean for the FIGI?
Richard: Everyone involved in creating FIGI has known that this string of semantically meaningless numbers and letters that never change was something quite transformative for data management and end-to-end trade processing. FIGI was originally developed by Bloomberg to help solve licensing challenges and shortcomings in data governance, but its metadata approach allows for extensibility of the core model, which helps the broader industry solve for a variety of different data reconciliation problems.
We truly appreciate getting recognition from this independent advisory board, which helps to highlight the quiet impact FIGI continues to have globally throughout the industry.
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