Thomson Reuters has set out its store on symbology saying it does not support the promotion of new identifiers as a means of improving data management, but is keen to support industry standards and has plans to offer services such as symbology cross-referencing to ease the burden on data managers.
The company documents the development of symbology, its use and complexity in a white paper authored by Jason du Preez, head of symbology services at Thomson Reuters, and entitled ‘Solving for Symbology Discord, the Identity Challenge’.
Thomson Reuters set up a symbology business last year and published the white paper to acknowledge the importance of symbology and recognise its challenges. Du Preez says: “We don’t believe there is a silver bullet that will answer the problems of symbology. Innovative new products continue to exacerbate the problem and that is not going to change. We can, using our core competencies, create linkages, invest to take on the burden of linking data sets, and maintain code mapping. And we can allow the market to make more use of our intellectual property.”
Du Preez cites licences introduced last summer to extend the use of the company’s proprietary Reuters Instrument Codes (RICs) in non real-time content, as well as its agreement in response to a European Commission antitrust investigation to extend the use of RICs in real-time consolidated data feeds, as moves to open up how RICs are licensed and make them more accessible across all asset classes.
Integration of RICs with Proprietary Identifiers
He says: “As there is no silver bullet, we will invest more in cross-referencing services and tie in quality of information. We will have interesting things to offer over the next 18 months.” Among these he lists the integration of RICs and proprietary identifiers, with firms submitting their codes to Thomson Reuters and the company playing them back as part of its own codes. Other broad cross-referencing services will be tailored to allow clients to access only required cross references and linkages.
“Thomson Reuters doesn’t promote a new code, there are enough out there already. We will continue to use existing codes and extract value from them; the key is linkages between market vendor codes and proprietary structures. While clients face regulatory and cost drivers, we will take care of linkages and cross referencing to improve the breadth and quality of client content.”
Thomson Reuters’ white paper details the development of symbology and notes the company’s intent, as described by du Preez. It starts by mentioning irregular incidents in the market that remind the industry of the challenges involved when an aggregated or consolidated view across positions is needed, including the incompatibility of core data symbols. The paper states: “The core elements: security identification, counterparty identification and price discovery, were never developed to work efficiently and effectively on an enterprise/global scale.”
Looking at the current state of symbology, the paper flags the fragmented identification methods resulting form the market’s approach to symbology, including data providers’ and data aggregators’ different means of identifying the various parts of securities or counterparties, as well as firms’ creation of proprietary identifiers to fill gaps in vendor provision. The paper reports: “[Symbology] is still a ‘cottage industry’ where the identification schemes put in place by one group are locally focused and usually limited to a specific slice of the securities market. This consumes resources: in many cases the task of mapping multiple sets of disjointed or partially overlapping symbols can consume as much (or more) development time and computing resource as programming the business logic itself.”
The paper reviews changes in the financial industry since 1993 that have complicated symbology and notes the increasing difficulty, yet increasing need, to integrate information across a firm’s complete range of trading businesses to achieve effective risk management. On the flip side, it points to the parallel need to analyse rapidly growing stores of information and connect increasingly diverse datasets to find relevant information in the quest for alpha. It states: “The sophistication of the methods we employ to aggregate, rationalise and navigate information bears a direct relationship to the size of the lead a firm can have in the financial marketplace.”
How to Unambiguously Identify Information
While the outcome of linking and navigating information can be positive, it presents significant challenges as a lack of consistent and comprehensive global industry standards means firms must maintain symbology cross references, a difficult and often flawed task, particularly in banks with many different trade and compliance-related systems. Du Preez writes: “A popular approach is ‘we can build an adaptor’. Adaptors have become some of the most complex processes in banking technology. That is not data management. It is trying not to get eaten by the alligators.” He goes on to surmise: “Data managers do not want to deal with these problems – they ultimately want services they can reliably use to unambiguously identify information.”
Enter Thomson Reuters with its vision of how to resolve these problems. “We believe that these linkages are the key to enormous untapped value. Being able to enter the data model through any entity identifier (quote, security or legal entity) and easily navigate and explore all the linkages between related entities not only puts a firm in control of its risk position, but also creates a window into opportunities. Industry standards have a significant part to play as they provide a universal start and end point; Thomson Reuters is a strong supporter of symbology standards in the data industry and we will be first in line to adopt and link industry standard identifiers to our content sets.”
The report discusses the challenges propagated by the use of multiple symbologies and the workload associated with the maintenance of cross reference tables in local security master databases. It touches on Thomson Reuters’ plans to provide cross reference services centrally and leverage its core competencies and infrastructure to ease the burden on institutions that have traditionally solved the problems themselves.
It states: “Cross referencing is a reality that cannot be avoided – we aim to make this as accurate and cost-effective as possible for our customers. We also understand that while symbology is an important part of the picture, translation and synchronisation services will also play a critical part. The need for these services is evidenced by the burgeoning desire of the market to offload these onerous data management functions to specialist providers.” The report concludes: “Thomson Reuters is investing now to continue to expose the growing capabilities of its data management infrastructure and ensure that structured and unstructured data come together in a rich tapestry of knowledge with the aim of maximizing utility to trading algorithms, research, analysis and information discovery.”