Just as the World Wide Web is maturing and the capabilities of Web Services are evolving, so are the data and application standards that use these tools. The Market Data Definition Language (MDDL) is the emerging eXtensible Markup Language (XML)-based standard for reference data.
The financial services industry finds itself grappling with the fiscal need for increased Securities Processing Automation (SPA), while still using outdated data management and communication infrastructures that have been independently developed and deployed. By standardizing on methods to describe content and facilitate its exchange, all organizations in the information chain will see reduced overhead, increased throughput and better utilization of resources.
Web Services provide an excellent mechanism for market data consumers to acquire reference data as needed, because of its ‘request-response’ nature. Coupled with a standardized format for the data exchanged, an industry standard reference data web service may revolutionize, or at least streamline, the way in which reference data is distributed.
One organization interested in useful standards is the Reference Data Coalition (Redac) organized and facilitated by the Financial Information Services Division (FISD) of the Software & Information Industry Association (SIIA). Redac, along with its U.K.-based cousin, Reference Data User Group (RDUG), have set about finding solutions to industry issues associated with the clear and precise communication of reference data.
Principal tenets of these problems are Unique Instrument Identification, Legal Entity Identifiers, and Business Entity Identifiers – all standards for the identification of reference data and the foundational underpinnings of SPA.
Similarly, the ISO standard 15022 Data Field Dictionary and Catalogue of Messages are being redefined in terms of XML as directed by ISO Technical Committee 68 (Banking, Securities, and Related Financial Services), Sub Committee 4 (Securities and Related Financial Instruments). TC68/SC4’s Working Group 10 has set the guidelines for modeling content in the new ISO 15022 XML Edition while the relatively new Working Group 11 is chartered with expanding the repository for financial instrument attributes and corporate actions. MDDL is working with WG 11 to develop a common model that will incorporate these reference data terms in a fashion all applications can use.
Standards help everyone in the information supply chain – providers can use a generally accepted and understood nomenclature to describe their data while consumers can normalize processing around the standard. Producers need expend less effort in supporting data systems or describing the data to consumers, thus increasing their profit margin. Consumers reduce their incremental spend for acquiring the additional data that can be used to improve decision-making.
The ultimate goal in the all the financial industry standards efforts is Securities Processing Automation. SPA is nothing more than the effective application of computers to process the ever-increasing volume of transactions with minimal handling by human hands. Without standards that can be implemented by computers, SPA can never be achieved. As more applications are developed using these standards, the content is more readily understood by a broader audience and processing times (and delay!) between provider and consumer are minimized. More importantly, accurate data is exchanged ensuring quality processing.
MDDL is the way to describe market data distributed from a provider to a consumer – the ‘response’ to an implied ‘request.’ To complete the picture, the MDDL organization is developing the mddlQuery language for requesting market data. A web service (mddlService) provides the mechanism by which the mddlQuery ‘request’ is sent to a provider and the corresponding mddl ‘response’ is returned. The proposed MDDL web service is intended for obtaining reference data on an as-needed basis. Web services will be useful for manipulating XML documents or providing value-added capabilities. As an example, Foliage Software Systems is developing a reference toolkit for the MDDL organization. The toolkit transforms MDDL documents to facilitate understanding (as an instructional aid) and streamline processing of the documents – a web service is used to submit an MDDL document for manipulation.
With a common vocabulary for describing reference data, an industry-wide format for requesting and receiving market data, and a universal standards-based vehicle for communicating the request and response, the function of exchanging market data is decoupled from the business of creating it and using it. Thus, providers may focus on generating or acquiring data of breadth, depth, and quality while consumers may concentrate on making better decisions with the improved datasets available to them.