Golden Copy: Desperately Seeking Standards

This month, Joanna Wright brings Inside Reference Data readers a deep dive into the impacts of a couple different actions by the European Securities and Markets Authority (ESMA).

Within ESMA's Markets in Financial Instruments Regulation (MiFIR) rules, currently expected to take effect at the start of next year, a wrinkle has emerged, as reported here. The possibility that ESMA could publish transaction data that it requires firms to report could undermine data vendors' offerings, according to consultant and FIX Trading Community subcommittee chair Chris Pickles. Some of those vendors and providers don't see this as a real possibility, as they say in this story. Their take is that any new availability of transaction data reported to National Competent Authorities under MiFIR would create another need for the interpretation-deriving market color and unearthing transparency from the data-that they provide.

The regulator may have waded into a more complex set of issues with another recent action, backing the International Securities Identification Number (ISIN), as reported here. ESMA's endorsement occurred back in September, but its own MiFIR rules have inspired some to propose what they say are better identifiers for reporting OTC derivatives.

The Financial Instrument Global Identifier (FIGI) developed by Bloomberg's Open Symbology working group is one such offering; the International Swaps and Derivatives Association (ISDA) has its own candidates-the Unique Trade Identifier and Unique Product Identifier; and the Association of National Numbering Agencies (ANNA), which backs ISIN, points to a corollary, the Classification of Financial Instruments code developed by ISIN's architect, the International Organization for Standardization, as a useful element that could be linked to the ISIN itself.

As the London Stock Exchange's Alan Dean suggests, ISIN could be adapted to address more instrument types such as derivatives. Yet, Dean adds, ISDA's UPI could be needed as a blueprint for how to adapt ISIN in this manner. A question remains: whether FIGI can be fitted to ISIN or override it completely. Either way, it should now be apparent that for a venerable standard such as ISIN, long seen as the base around which all other identification efforts-including the legal entity identifier-revolve, an evolution or an update is in order.

A different type of standardization problem has surfaced with APIs. Application programming interfaces have been used for reference data management as a matter of course for many years, but have usually been proprietary in nature. The need to get standardized data (for purposes such as MiFIR compliance, as covered the previously mentioned story about the ISIN designation) has circled around to the need to get APIs on the same page as a means to accomplish that. As reported here, the API portions of SmartStream's Reference Data Utility may turn out to be a good start on the road to achieving that.