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Talking Reference Data With Andrew Delaney: If It Ain’t STP, It Ain’t Worth a F*%£!

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Elvis Costello is playing Southend Cliffs Pavilion next June and I’m getting tickets. Last time I saw him at the Cliffs was probably 1980 or thereabouts. (Last time I saw Chelsea lose 3-1 to West Ham [Yes, we were there Saturday] was 1973; Bobby Moore scored. But that’s a different matter….) Needless to say, he was excellent. This was before he started thinking he was Bob Dylan, and it looks like he’s dropped that delusion so it should be a good gig next summer.

Elvis was on Stiff Records (start-up capital funded by a £400 loan from Lee Brilleaux to Jake Riviera) back in the day. Home to the likes of Dave Edmunds (Girls’ Talk), Nick Lowe (‘I Love the Sound of Breaking Glass’) and the wonderful Lena Lovich. (‘Lucky Number’). The good and the great of the Southend Sound were in attendance at the Cliffs. I remember chatting to Alison ‘Alf’ Moyet in the foyer; she had just left the Screaming Abdabs and was hooking up with a bloke from Depeche Mode….

Stiff Records’ brilliant slogan was, of course: If it ain’t Stiff, it ain’t worth a f*%£. I used to have to hide this from my mother at breakfast when I got my weekly NME. It was shocking then, and clearly highly memorable.

So when I was reminiscing with an industry friend this week – about the late ‘70s Southend Scene, Westcliff High School for Boys, Dr. Feelgood, Eddie & The Hotrods and all the madness of the Grand, the Carlton and the Smack in Leigh-on-Sea (no wonder I found college at Southampton so dull) – he deftly reminded me of the raison d’etre of much of what we do in reference data: If it ain’t STP, then what’s the point?

At A-Team, we’re watching developments in the global OTC markets very closely. Dodd Frank and other regulations are pushing these somewhat haphazard markets to a more structured environment. Swaps will be traded on ‘exchanges’ known as Swap Execution Facilities (SEFs). There will be central counterparty clearing. And all the while, individual instruments will continue to be priced using evaluated pricing models.

In short, we are about to enter a phase of great change in markets that heretofore have been truly over the counter, as regulators seek to impose structure on a loose arrangement of pricing, execution and clearing processes. For this structure to take effect – and for these OTC markets (swaps first, but later FX options, structured products, loans and the rest of the derivatives world) to start to resemble listed ones – the industry needs to be sure of what it’s trading and with whom.

To achieve this level of trust – for this is what it is – everyone needs to be singing from the same hymn sheet. We get our proverbial knickers in a twist over LEIs, SMFs and conflicting symbology sets. In a sense, rightly so. But anyone who has sat in on the endless stream of industry initiatives to agree on a common set of identifiers (for securities, entities, venues, and on) knows that the ragbag of vested interests particular to our market makes this quite a challenge.

The global LEI initiative is painful, but it’s worthy cause. What aspect of the business should we address next?

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