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Central Instrument Model, Compliance with ISO 19312 Key in MDDL 3.0, But Does the Market Really Want it?

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Version 3.0 of MDDL (Market Data Definition Language) is now available, but the jury’s out on whether the latest iteration of the XML dialect for securities market data will be greeted with any greater degree of enthusiasm by the market than its predecessors. GoldenSource – historically a strong advocate of the standard – has not renewed its membership of MDDL developer FISD, saying pull on resources prevents it from giving the necessary level of commitment. And FISD recently released a new positioning statement on its role in standards development, which could speak volumes.

MDDL is designed to facilitate the interaction of information between exchanges and related sources, vendors and redistributors and consumers of market data – including pricing, descriptive and reference information, and statistics about financial instruments, exchanges and the organisations that trade through them, the economy in general and other related economic and business factors. MDDL also includes commodity, cash and foreign exchange components that fall outside the typical realm of pricing for securities. According to FISD (the Financial Information Services Division of the Software and Information Industry Association), release 3.0 is the culmination of “a major development cycle for MDDL”, based on contributions from the FISD membership of 140 plus firms.

It appears the main thrust of MDDL version 3.0 has been to complete the content and merge all assets into a single instrument domain. “The major structural change in this version is the implementation of a ‘central instrument’ model,” says Bill Nichols, program director for securities processing automation at FISD. This feature enables another key aspect of FISD’s intent with MDDL he says – allowing “for the XML schema of MDDL to maintain harmonisation and be in compliance with the ISO Securities Data Model”, currently in development and scheduled for release in Q3 this year. “MDDL already covers the scope of the ISO international standard and provides support for a significant number of other structural aspects of market data,” Nichols says. “Putting the two together is a very powerful combination for users.” MDDL also comes complete with an updated documentation suite supporting Unified Modeling Language (UML) logical representations which, FISD claims, makes it “the most comprehensive protocol for defining market reference data content in the industry today”.

Tom Davin, managing director of FISD, adds: “We are seeking feedback from our members on the completed standard and its ability to meet their needs.”

How forthcoming this industry feedback turns out to be will likely make or break MDDL, take-up of which since its inception five years ago has been disappointing to say the least. Some observers suggest the XML standard is a good idea, but ahead of its time, and that the concept behind it will eventually take hold, probably when ISO 20022, backed by standards heavyweight Swift, enters mainstream use for financial messaging. It is also worth noting that there is a degree of scepticism in the marketplace about the likely uptake of ISO 19312 (the Securities Data Model with which FISD is so keen MDDL remains in compliance), on the grounds that there is no obvious powerful industry driver for adoption (Reference Data Review, October 2006).

Another view has it that initiatives such as MDDL and ISO 19312 are struggling to gain traction because they don’t actually do what the industry wants them to do. As Mike Atkin, managing director of the EDM Council, told Reference Data Review recently, while efforts on MDDL and the Securities Data Model constitute good “raw materials” to work with, “… the industry is not looking for an XML schema or a UML data model. It is looking for a ‘data dictionary’ – of business terms, not tags, giving precision around data meaning – which can then be used as a common key internally, and from which XML schemas and data models and messaging can be generated” (Reference Data Review, May 2007).

There is no indication that FISD’s commitment to the ongoing development of MDDL is waning. Indeed the minutes of its March 2007 meeting note its intention to: “Communicate the completion of 3.0 to the broad community of industry participants; work with industry participants to encourage implementation and assess any gaps between their needs and MDDL’s capabilities; and identify opportunities for harmonisation and/or partnership with other industry standards.”

It should be noted though that in March, FISD issued a recommendation for its “Philosophy on Standards” going forward, in which it is suggested FISD should act as a standards body “if necessary and feasible”, but which also includes a number of caveats. “In general, FISD should not seek to be a standards body or a maintenance agency,” the document says, because its resources and competencies are not ideal for actively managing a standard and the activity drains resources away from other FISD activities. In addition, the paper states: “Prior to taking on any standards body responsibilities, FISD membership must have an explicit consensus… that it is necessary, appropriate and feasible for FISD to serve as a standards body. There should be member consensus that FISD has the long term resources to fully support the standard.” Interestingly, the document continues: “Consideration should be given to both expected costs and revenues that might be associated with management of the standard. Alternatively, there should be an explicit termination date after which support for the standard would be either 1) spun off as a standalone organisation, 2) discontinued, or 3) transferred to another organisation.”

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