The International Swaps and Derivatives Association is working with a consortium of 18 buy-side and sell-side institutions to create an open source standard derivatives product identification system.
The initiative comes in response to a variety of regulatory changes, including the European Union’s revised Markets in Financial Instruments Directive and US reporting rules, which require a standardised means of identifying derivatives instruments at a granular level.
Isda has contracted with London-based capital markets technology consultancy Etrading Software to oversee the project with the aim of developing a standard that can be applied consistently across all trading venues, clearing houses, repositories and other relevant market infrastructures.
Scott O’Malia, Isda CEO, says that alongside the regulatory imperative, a common methodology for classifying and identifying derivatives instruments across all platforms will help cut complexity and costs for market participants that need to connect to multiple trading venues, and simplify the distribution of liquidity.
“The Isda symbology project is a great example of the industry coming together to tackle an important challenge," he says. "With MiFID II and SEC regulatory requirements soon to be implemented, the drive for an industry wide, open-source standard with sufficient granularity to meet regulatory needs is now critical."
He says the consortium - whose prospective members include Barclays, Bloomberg, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Depository Trust and Clearing Corporation, Goldman Sachs, ICAP-Traiana, JPMorgan Chase & Co, Markit, Sifma's Asset Management Group, Société Générale, Thomson Reuters, Tradeweb and UBS - will initially work to produce globally standardised symbols for credit, rates and equity derivatives in 2015.