Plugging Away: Embracing Open Standards

Arriving at my hotel in Geneva for Sibos last week—urgently needing to charge my phone, check my email and style my hair—I realized that I had brought the wrong electrical plug adapter with me. I called down to reception and they had just five minutes before they lent their last one to another guest. Thank goodness for the far-sighted vendor that put a universal adapter in its swag bag!

Perhaps I could have been better organized on this occasion, but I'm sure that anyone who has ever traveled has at one time or another thought, 'Why the hell isn't there a universal standard for plugs?'

I heard the same question asked at Sibos, except it was of securities markets standards. In the case of plugs, the answer is that standardization efforts started too late. By the time authorities could seriously address the issue, manufacturers of appliances in different countries had developed their own plugs and sockets to varying degrees of safety and soundness, and these had become standard in those countries. Which means vested interests have taken hold—and I had frizzy hair for the first day of Sibos.

In the case of financial services, the answer is more complicated. Electrical appliances are not securities, and while there is indisputably a need for better standards, universal standards are neither practical nor possible.

But the history of plugs does serve to illustrate how standardization efforts are difficult, messy and often compromised by uneven development across geographies and by vested vendor interests.

In Geneva, standards were very much on the agenda, if only as central topics of discussion at the Standards Forum—the "off-off-Broadway of Sibos," as I heard it described. ISO 20022 harmonization for messaging continues, driven by centralizing initiatives such as Target2-Securities, and the International Standards Organization continues its work with the International Securities Identification Number for derivatives reporting, driven by regulation.

Standards also underpinned discussions around sexier topics such as distributed ledgers, in which it is widely accepted that interoperability must be achieved in these early stages of the technology's adoption in order for ledgers to work together.

What seems important about these efforts is that financial services are embracing open standards. Banks, exchanges, consultants and vendors are involved in the Hyperledger Project, for instance, which had a stand at Sibos and is an initiative to build open standards for blockchain interoperability.

Open standards alone can't save a technology from vendor lock-in, but they are important. Standardization efforts bring together energetic and dedicated people who can share their expertise. It may be hard work, but the message to financial services standards projects could be expressed thus: it is necessary, so keep plugging away.