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Virginie’s Blog – Standards Innovation: An Oxymoron?

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Given my often critical view of the world of financial data standards, it has been an interesting exercise to look at the positive aspects of standardisation as part of my prep work for a panel session at this year’s Sibos on “standards and innovation”. Rather than being viewed purely as a chore, can the C level ever be convinced that standards upgrades are a catalyst for innovative business improvements?

Obviously, given that I’m questioning the theory already, I’m yet to be convinced. But I’m certainly willing to listen to my panellists elaborate on their experiences of standards innovation and any that are forthcoming from Reference Data Review readers. Have an interesting tale to tell on the subject? Let me know.

I am also a fan of looking outside of the scope of the securities industry to see if lessons can be learnt from practices in areas such as wholesale and retail banking, so it should be interesting to hear from my panellist Bob Masina, who is head of technology and operations for the Australian Payments Clearing Association (APCA), about how his organisation has used a move to ISO 20022 to innovative ends. APCA has decided to adopt ISO 20022 in a bid to bring the country into line with standards developments in other parts of the world – namely the Single Euro Payments Area (SEPA – ostensibly a cousin to MiFID in that it is a European initiative aimed at creating a level playing field and an integrated retail payments market across the region).

On the securities side of things, Dan Retzer, CTO at corporate actions vendor XSP, will be talking about how the vendor community is using standardisation as an opportunity to leverage new technology and gain market share. The appeal of standardisation for the vendor community is mixed – there is less need to maintain proprietary data standards for individual clients, so costs are lower, but conversely, it is also easier for firms to switch vendors if they are less tied into the relationship.

I’m keen to hear from Dan about how his firm decides which standards to run with, given that vendors often need to be ahead of the curve. The danger of backing a lame horse in the standards race must be ever present, after all.

However, given that vendors need to be adding new technology bells and whistles to their services and solutions in order to gain market share, the standards and innovation equation is likely to be a significant factor in this decision making process. Can the same be said of large investment banks or asset management firms whose CEOs are fixated on bottom line costs? Is standards innovation ever a deciding factor?

Moreover, what will be the impact of regulatory enforced standardisation (a la the Office of Financial Research)? Will any firms (beyond the vendor community) decide that this is a jumping off point for innovation?

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