Investment Roadmap at SIBOS
By Lisa Taikitsadaporn, Hanno Klein
Lisa Taikitsadaporn, FPL Global Fixed Income Technical Sub-committee Co-Chair; Managing Partner, Brook Path Partners, Inc. and Hanno Klein, FPL Global Technical Committee Co-Chair; Senior Project Manager, Deutsche Börse Group talk about the Securities Investment Roadmap and the Standards Coordination Group.
For the first time, there is actual proof of the long promised commitment from standards bodies and the industry to work together under the ISO 20022 umbrella. The Standards Coordination Group, the guardian of the recently updated Securities Investment Roadmap, is steering this collaboration. It is becoming the voice of open standards, promoting it up to law makers and regulators in Washington DC and Brussels.
Because the financial community is a vast one, encompassing institutions across the globe that deal with diverse asset classes at different points in the securities trading life cycle, different organizations have traditionally been responsible for developing their own messaging schemes. Today, financial firms often combine a great range of trading activities; therefore, the messaging standards from different organizations often intersect, but remain incompatible.
Within the financial services industry, there are multiple standards being used, hence the desire to ensure some level of interoperability. It is clear to many market participants that the FIX Protocol is the de facto standard for pre-trade and trade, that FpML is the de facto standard for OTC Derivatives, that ISO is the de facto standard for settlement and payments, and that XBRL is the de facto standard for business reporting. The Industry would benefit from an approach that leverages and includes these standards into a broader framework without reinventing and creating redundant messages that increase implementation costs and cause confusion for the industry.
The Standards Coordination Group began collaborating on the Securities Investment Roadmap in 2006, publishing the first version of the Roadmap in 2008 and the latest version in October 2010. The Investment Roadmap provides market participants with consistent direction when using financial services messaging standards by visually mapping the protocols to their appropriate business processes across asset classes and it also lays the groundwork for moving towards a common business model, ISO 20022, for the securities industry.
This continued collaboration within the Standard Coordination Group affirms the commitment of each organization to the ISO 20022 standard with each organization actively participating in defining the common underlying financial model. The model allows for ISO 20022 XML based messages to be created to support the business processes, while at the same time provides, in certain circumstances, for existing standard protocols, FIX, FpML and XBRL, to be maintained in order to protect the investments of market participants. The purpose of the collaboration between these organizations is to produce a consistent direction for financial services messaging standards and communicate that direction clearly. This will allow the industry to spend its money more wisely. FpML, FPL, SWIFT, ISITC and XBRL came together at this year’s SIBOS conference in Amsterdam at the Standard’s Forum, on October 25th, which was held on the first day of the week-long event. Mark Bolgiano, President and CEO XBRL US, moderated a panel session with Gary Probert, ISITC Chair, Hanno Klein, FPL Global Technical Committee Co-Chair, Marc Gratacos, ISDA Senior Technical Architect and Alexandre Kech, Head of Securities & Alternative Investments Standards at SWIFT.
Mark Bolgiano compared the idea of the ISO 20022 business model being a common framework to the infrastructure of a city like Amsterdam where there are different, co-existing means of transportation to travel from A to B such as walking, taking a bike or a car or also riding a bus or train. Hanno Klein added that the idea to maintain alternate syntaxes for the ISO 20022 business model is to be pragmatic and not expect people that are used to driving on one side of the road to suddenly use the other side. The Securities Investment Roadmap shows areas that are covered by more than one syntax where the actual usage will depend on existing investments of a community of end users intending to move into that space. A firm invested in FIX for pre-trade and trade is therefore able to continue to use FIX as it extends into the post-trade arena, whereas a back-office firm having invested in SWIFT infrastructure is able to also use MT or MX messages as it moves into middle-office services.
The panel presented the different initiatives to jointly develop ISO 20022 business and message models for pre-trade, trade and post-trade as well as collateral management and securities reference data. FPL is a co-submitter of business justifications in a number of the initiatives to enhance the ISO 20022 business model. The bulk of the work is about the definition and/or review of business requirements, message flows and message definitions. This includes an initiative related to securities reference data as part of TARGET 2 for Securities. Additionally, an initiative in the context of Trading to Clearing (T2C) is to compile an Implementation Guide on the usage of FIX messages for T2C message flows between trading and clearing venues. The work is still on-going and will take time to reach completion. However, the vision and objectives are clear and the different parties from the different standards bodies are working towards a common goal, moving away from the competitive situation they were in before. This will result in increasing benefits including cost reductions for the financial community over time as the decision for new implementations can be made on the basis of the Investment Roadmap.