The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Reuters’ Restrictions on RIC Codes Relaxed in Bid for Widespread Standards Adoption

Share article

The decision by Reuters to license the use of its proprietary Reuters Instrument Codes (RICs) has drawn cautious welcomes from most involved in the reference data industry. But some question whether the contractual restrictions that Reuters hopes to enforce on the use of the codes will can be reconciled with their general adoption.

The vendor, however, says that it is “in the process of finalizing the paperwork” on a series of deals with international customers that will be announced in the coming month.

Reuters says that it is licensing the use of the codes in “an effort to establish a global standard for managing and tracking securities data across the lifecycle of a trade”. The licensing service forms part of Reuters Enterprise Information Products, including the Datascope business, which provides end-of-day and historical pricing data, cross reference data, terms and conditions, and corporate action information across all global asset classes.

Essentially, organizations already using RICs through their real-time market datafeeds will be allowed to build a database using them to track trade through to settlement and to cross-reference them. “If they are already using RICs for price discovery, then they can use them to follow data,” says Roland Dickens, director, enterprise information products, at Reuters. “But customers who have built master reference databases can only use the RIC to navigate to Reuters-sourced data.”

Some third-party developers and rival data vendors say that this is going to be difficult to police. “A lot of the smaller banks use data-mapping to source data from cheaper vendors, and it is hard to see how Reuters could practically stop them,” said one real-time software vendor.

Dickens says that the impetus to loosen its policy on RIC usage came from customers. “They were asking us why, if they could use RICs for price discovery, why couldn’t they use it for other purposes?” In fact, the vendor has been mulling over its RIC license policy since the mid-1990s when user groups and large customers began talking about using them for internal processing. But a series of skirmishes with rival data vendors, who tried to map RIC codes to their datafeeds in an attempt to provide low-cost alternatives, was one factor that led to it keeping the codes for use on Reuters systems only.

“There was a feeling that RICs were some sort of crown jewels and that to give them away would cripple the datafeed side of the business,” says one former Reuters executive who was involved in looking at the issue.

Dickens acknowledges that the company has taken some time to accede to users’ requests. “One factor was simply that reference data was not well understood back then,” he says. “Everyone told us that they wanted to use RICs, but they couldn’t articulate what they wanted to actually use them for.” Since the publishing of the Tower Group/Capco report at the end of 2001, however, things have become much clearer.

Other observers say that RICs cannot become a global standard because there isn’t the full instrument coverage. Reuters says the license will initially cover the use of the RICs for all global exchange-listed equities, “as this is the area that financial institutions have highlighted to be the most problematic”.

There are further issues relating to the structure of the data, but Reuters claims that the RIC structure is “one of the few established global codes that enable an instrument to be identified at exchange level, thus providing a one-to-one match for all financial instruments”. Dickens says that this gives an advantage over proposals such as the London Stock Exchange’s extension to Sedol, which requires an additional Market Identifier Code (MIC) to create a unique code.

Of the vendor codes that could be considered for widespread adoption, RICs do have the advantage that they do not need the addition of a further identifier. But this does not overcome the prime objection that bodies such as RDUG and Redac have to the adoption of a vendor symbology, which is that it would be proprietary and commercial interests would get in the way of widespread adoption. The restriction preventing the use of RICs to navigate to non-Reuter data, in particular, will be a stumbling block in many implementations.

Of the various proposals for a unique instrument identifier that are currently on the table, the use of RICs is probably the only front-office vendor option that could challenge the LSE proposal, but while it meets the criteria of uniqueness and timeliness that standards developers are looking for, it fails though its lack of commonality, despite having 500,000 users internationally.

Related content

WEBINAR

Recorded Webinar: How to leverage the LIBOR transition to improve your data management game

The transition away from LIBOR (London Interbank Offered Rate) is well underway, but there remains considerable ambiguity around how the final stages will be executed – especially with regards to benchmark replacements in markets outside the UK. What are the options, where are the uncertainties and what stage have firms reached in their preparations? The...

BLOG

FeedStock Joins Red Hat Container Ecosystem

AI-driven data analytics platform Feedstock has completed Red Hat Container certification for its FeedStock Connector and has been published in the Red Hat Ecosystem Catalog. The certification enables FeedStock to use Red Hat’s container registry and deploy Red Hat certified containers in FeedStock’s client environments, enabling frictionless deployment at scale of its automated data management solutions....

EVENT

RegTech Summit Virtual

Regtech Summit Virtual will explore how business and operating models have adapted post COVID and how RegTech can provide agile and enhanced compliance for managing an evolving risk and compliance landscape. As the dust settles, we will look at the outlook for the global RegTech industry, where Regulators are focusing as they get back to business, and deep dive into global regulatory priorities for the rest of the year and into 2021.

GUIDE

Enterprise Data Management

The current financial crisis has highlighted that financial institutions do not have a sufficient handle on their data and has prompted many of these institutions to re-evaluate their approaches to data management. Moreover, the increased regulatory scrutiny of the financial services community during the past year has meant that data management has become a key...