Online derivatives operator Cygnifi has been selected to advance the specification of the FpML Version 2.0 standard for online financial document exchange.
This work, which will be handled by Cygnifi's solutions group, will involve constructing formal documentation as well as validating the specification through the construction of example trades.
FpML (Financial products Markup Language) is an XML-based standard for automating over-the-counter (OTC) trading of financial derivatives.
"The derivatives industry needs a standard language to transmit information about deals efficiently," says Phil Ellis, head of Cygnifi global solutions group. "We believe FpML 2.0 will be an important step in the development of this standard language. Once derivatives become standardised, they will become less mysterious, easier to understand and much more widely used."
The FpML Version 1.0 specification, which focuses on interest rate swaps and forward rate agreements (FRAs), was completed in May 2001. Cygnifi uses FpML 1.0 to transmit interest rate swap trade messages throughout its systems architecture, and uses extensions to the standard to cover other instruments and market data messages.
Cygnifi will be working directly with FpML.org's Interest Rate Derivatives Products Working Group, which is chaired by Guy Gurden of SwapsWire. The working group is focusing on enhancing instrument coverage for Version 2.0 of the specification to include interest rate caps/floors, interest rate swaptions, mandatory and optional early swap terminations, and extendible/cancellable swaps.