The Enterprise Data Management (EDM) Council is pushing on with the development of a Financial Industry Business Ontology (FIBO) and this week received final approval from the Object Management Group (OMG) for the Foundations element of the ontology.
FIBO is an open source, industry standard common language that describes the structure and contractual obligations of financial instruments, legal entities, market data and financial processes. It is being developed collaboratively by EDM Council members and is being released as a series of standards that are ratified by the OMG. The aim of developing a common language, otherwise known as a business conceptual ontology, for the financial industry is to harmonise data and provide a shared understanding of the meaning of data across data repositories. In turn, this is expected to increase business process automation, improve risk analysis and drive down operational costs.
The OMG finalised and publicised the Foundations standard this week, making it the first element of FIBO to ‘go green’ in a four stage process that moves ontologies from red – FIBOs waiting in a queue for development; to pink – FIBOs that have been selected by a FIBO content team and will be put through a validation and testing process; to yellow – FIBOs are in the OMG standards process; and finally to green – FIBOs that have exited the OMG process as ratified standards and are ready to become operational ontologies.
FIBO Foundations contains high level abstractions that describe how FIBO is constructed. Some firms are already using Foundations as scaffolding for their own ontologies, but wider adoption is expected as more elements of FIBO are developed and standardised.
The EDM Council described this process during a recent webinar, noting that all ontologies go through a four step process of build, test, deploy and maintain as well as the four colour process that takes them from conception to open source standards. All EDM Council members can collaborate in the development of FIBOs using GitHub as a repository for FIBO artefacts, Jenkins as an automated testing platform, and JIRA as a project management, tracking and reporting mechanism.
To date, FIBO Foundations has cleared the OMG standards process and FIBO business entities and FIBO indices and indicators are in the yellow stage of OMG scrutiny ahead of standardisation and publication. Two FIBO contract ontologies – covering equities and loans – are being developed by FIBO content teams led by Bloomberg and Wells Fargo Home Mortgage subject matter experts respectively. Four further contract ontologies – covering debt, derivatives, funds and rights and warrants – remain in the queue for development, along with FIBO pricing and analytics, which covers pricing, yields and analytics per instrument class, and FIBO Process, which covers corporate actions, securities issuance and securitisation. Not yet in the queue, but noted for development, are portfolios and positions.
Despite the amount of work still to be done to complete FIBO, the EDM Council remains confident that it will reach completion and ease the data management burden of banks and other financial institutions. Michael Atkin, managing director of the EDM Council, says: “FIBO is the real deal and there is a lot of activity going on. The first elements of FIBO are ready to use and more FIBO standards will be published by the OMG and be available for use over coming months. I expect rapid adoption of FIBO as it is an obvious pathway for our industry.”
Over 3,000 individuals have signed up to the FIBO development community and regulators are also interested in the potential of FIBO to identify what is happening in financial markets, but its deployment will not all be plain sailing. The implementation of FIBO requires banks and other financial institutions to map internal data repositories to the ontologies and work in an open RDF/OWL processing infrastructure. IT specialists who are largely invisible to bank executive also need to get buy-in for FIBO programmes.
As Atkin concludes: “It is not a simple proposition for banks to change their internal operating environments, but regulations such as BCBS 239 are forcing them to make changes. FIBO is the next generation of data knowledge management, it provides precisely defined content that is unhooked from technology for flexible analysis, and supports better, faster and cheaper operations.”