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A-Team Insight Blogs

CFTC Announces the 22 Members of Kirilenko’s Data Standardisation Subcommittee, Google Bags a Slot

Following the announcement last month that it would be establishing a data standardisation focused subcommittee, the Commodity Futures Trading Commission (CFTC) has announced the selection of the 22 members of the team (out of the 52 that applied), which includes (interestingly) Google engineering research director Marc Donner. The other members, who will be led in their efforts by chair and CFTC chief economist Andrei Kirilenko, include the usual suspects from the data standards crowd such as ISO’s chair of the ISO TC68 working group Karla McKenna, EDM Council’s managing director Mike Atkin and the International Swaps and Derivatives Association’s (ISDA) head of FpML Karel Engelen.

It is interesting to see the participation of Google in this endeavour, given that there has been a lot of discussion circulating around the industry of late about the potential of the technology provider to establish a reference data cloud (on the basis of its success in other sectors). There has also been some discussion about whether the vendor might buy Thomson Reuters’ Markets business. Donner’s participation in the group could therefore be a portent for the future of Google in the financial services space: first convince the regulators and the markets will follow…

The new subcommittee has been established under the auspices of the CFTC’s Technology Advisory Committee (TAC), which is chaired by commissioner Scott O’Malia. The group has therefore been tasked with developing recommendations regarding a standardised reference data depository that would represent the universe of legal and financial terms used in describing, defining, and valuing various derivatives and other financial instruments. It will, no doubt, work in concert with the Treasury’s Office of Financial Research (OFR) in developing and mandating universal entity, product and instrument identifiers.

To this end, OFR team member (and ex-FISD programme director) Bill Nichols has also been appointed to the subcommittee. He joins two other “federal agency observers” (as described by the CFTC): the Securities and Exchange Commission’s (SEC) key XBRL proponent Walter Hamscher and the Federal Energy Regulatory Commission (FERC) division of Energy Market Oversight’s acting director Steven Reich. The Financial Industry Regulatory Authority (Finra) is also represented on the team by chief information officer and executive vice president for business services Samuel Gaer, but is not listed under the “observer” category (so presumably he’ll have an active role).

As for the rest, five industry associations are represented including (as previously mentioned) ISO, the EDM Council and ISDA, as well as James Woods, chief technology officer of the Futures Industry Association (FIA) and Tim McHenry, director of forex reporting at the National Futures Association (NFA). There are also four individuals from financial institutions that have been appointed to the team: Eric Chacon, global head of data standards at Citigroup; Neil Chinai, managing director and global head of fixed income rates and OTC clearing technology at Barclays Capital; Pierre Lamy, vice president in the Global Derivatives Technology group of Goldman Sachs; and Paulo Rodela, senior developer at Blackrock.

The group also features nine members from the vendor and market infrastructure operator universe: RJ Cummings, vice president and head of product development at Intercontinental Exchange (ICE); the aforementioned Marc Donner of Google; Bob Green, the Depository Trust & Clearing Corporation’s (DTCC) derivatives specialist and vice president of its Warehouse Trust Company; Adam Litke, chief risk strategist at Bloomberg; Peter Marney, senior vice president and global head of Enterprise Content at Thomson Reuters; Malene McMahon, senior business manager and market and standards specialist on the Securities Initiatives team of Swift; James Moran, global director of regulatory technology and strategic initiatives at CME Group; Brian Okupski, director of reference data at Markit’s MarkitSERV; Michael Will, founder and chief technology officer of docGenix.

In addition to Google, it is also interesting to note that a number of the contenders for the OFR legal entity ID operator role are present on the new subcommittee. Swift and the DTCC in particular have been tipped as the frontrunners in the race and their involvement in this standards work could be read as a sign of things to come.

The goal of all of this work is to provide greater consistency in the collection, reporting, and management of individual transactions, underlying legal documents (including master agreements and credit support agreements), and risk exposures. O’Malia elaborated when announcing the establishment of the subcommittee last month: “The data and reporting mandates of the Dodd Frank Act place the CFTC in the centre of the complex intersection of data, finance and the law. There is a need and desire to go beyond legal entity identifiers and lay the foundation for universal data terms to describe transactions in an electronic format that are identifiable as financial instruments and recognisable as binding legal documents. I think the TAC, through the advice and guidance this new subcommittee on data standardisation, represents the most effective means of achieving universally acceptable data standards.”

On the subject of these appointments this week, O’Malia stated that he “was pleased by the large number of extremely well-qualified nominees for participation in the work of this important subcommittee.” With regard to the subcommittee’s charter, he also said: “Data is the foundation of our market oversight activities and it is essential for the Commission and the market to agree on well accepted standards for describing complex financial products.”

The CFTC has indicated that the new subcommittee will conduct at least three sessions, which are planned for the summer, autumn and winter of 2011 and will be open to the public. In terms of internal structure, the subcommittee will consist of the following four working groups: product and entity identification; semantic representation of financial instruments; machine readable legal documents, and storage and retrieval of financial data.

The group will eventually present a report with its recommendations to the TAC, which the CFTC says will then consider the findings and make recommendations to the regulator as to what further actions warrant consideration.

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