Using XML to Simplify Authoring: A Case Study for Customer Support Documentation at Ascend Communications   Table of contents   Indexes   Saturn Technical Publications: A Case Study with a Customer Focus
 Greissman, Adam 
 PricewaterhouseCoopers LLP 
 		 Adam Greissman
 Director, Financial Services
PricewaterhouseCoopers LLP
 
Email: Adam.Greissman @ us.pwcglobal.com
 Biography
 Greissman is a practice leader in middleware technology and XML. He is a member of the PwC executive committee for Financial Products Markup Language (FpML). He is currently managing the development of projects in Asia, North America and Europe.
   
Price, Andrew
 PricewaterhouseCoopers LLP 
 		 Andrew Price
 Principal Consultant, Financial Services
PricewaterhouseCoopers LLP
 
Email: Andrew.Price @ uk.pwcglobal.com
 Biography
 Price specializes in delivering performance improvement solutions to capital markets institutions. He is coordinating FpML working group sessions activity in Europe.
 

Abstract

 J.P. Morgan & Co. Incorporated and PricewaterhouseCoopers LLP have jointly proposed Financial Products Markup Language, or FpML(tm) , an XML based markup language for currency and interest rate derivatives. FpML is a standard that will allow financial institutions to exchange derivative transactions using the Internet.
 FpML.org is an industry led initiative. The steering committee is chaired by members of industry, while the technical and working committees are open to both financial institutions and software vendors. FpML will establish hardware and software independent data models for transmitting and describing transaction based events, such as trade capture and settlement, in combination with market data, such as interest rate curves and mark to market information, with reference data for products and counterparties.
FpML
 		 The FpML specification, which is freely licensed, will create a standard within capital markets for the rapidly growing field of business-to-business electronic commerce. Based on XML, the emerging standard for data-sharing between applications, FpML enables Internet-based integration of a range of services, from electronic trading and confirmations to portfolio specification for risk analysis.
 

Introduction to FpML

 
 

Business Case for FpML

financial services
 		 The financial services industries, including retail banking, capital markets and insurance, is undergoing a transformation. The Internet is enabling the delivery of information and products directly to the customer desktop. Previously, the distribution channels for products and services were owned and controlled by the institution. The institution would publish a report, and the availability of that information was a managed component of the customer relationship.
 While this scenario is given in retail product delivery terms, it is equally applicable to wholesale transactions and services. Capital markets have lagged behind retail process automation, because of the complexity of the information required to achieve an equivalent transformation.
 The introduction of XML based standards for exchanging data, and the development of software applications that exploit those standards, will significantly lower the operational risks associated with capital markets activity, as well as increase the relative efficiency of market making for derivative products.
 

Overcoming Implementation Challenges

 The adoption of the FpML standard will enable institutions to exchange information that was previously too difficult to capture using common middleware technology. Financial instruments, such as swaps, are far more complex than the types of statements and confirmations that have been successfully automated by existing protocols. Representing trade, product and counterparty information in a transparent data structure requires more semantic horsepower than is provided by fixed position or character delimited records.
 The introduction of eXtensible Markup Language (XML) has created a vehicle for representing complex information using techniques which are independent of the underlying operating system, application software or RDBMS.
 

Structure of FpML.org

 Although initially conceived and jointly proposed by JP Morgan and PwC, neither organization will control the standard. A committee structure has been developed, which is similar to the one adopted by FIX. JPM and PwC will manage an Executive Committee that coordinates the activity of the Steering and Technical Working Committees. The Steering Committee will be chaired by members of industry - financial institutions that have a business interest in capital markets activity for derivative products. The Technical and Working Committees are open to both financial institutions and software vendors.
 FpML.org will benefit from the global participation of key financial institutions, as well as input from software vendors in the capital markets. PwC and JPM have also solicited the input and review of software vendors outside the capital markets, in order to ensure that FpML conforms to XML best practice, especially with regard to emerging standards, such as schemas.
 

Benefits of Adopting the FpML Standard

 

Data Flow Using FpML

 
 

Potential Applications

 Wide adoption of the standard will allow direct electronic communication between counterparties, resulting in benefits to both the individual organization and to the industry as a whole. These benefits will include:
 
  •  Increased trade automation
  •  Faster trade confirmations and lower volumes of failing trades
  •  Simplifying the incorporation of new counterparties
  •  Lower operational risk throughout the trading lifecycle - through execution, confirmation, settlement, monitoring, accounting and reporting
  •  Reduced transactional and processing costs for organizations
 It is in the best interests of the industry to adopt a single standard for electronic dealing and processing of financial instruments. FpML will offer a standard that has been developed with the major market players to ensure the needs of the industry are met.
 

FpML - Key Design Benefits

 
 

Business Focussed (Understandable)

 FpML is recognizable to people that are familiar with currency and interest rate derivative products. FpML describes the business meaning of financial data in a simple and easy to recognize format. For example, a trader or operations person may not be familiar with the XML syntax, but the elements and the structure of those elements make business sense. The business meaning is evident from the names and the structure. FpML nomenclature has been developed using guidelines proposed by the International Swap Dealers Association (ISDA), with input from senior members of the FIX committee.
 

Component based (Flexibility)

 Financial instrument descriptions have been broken down into modular components or "building blocks" (e.g. reference data, market data, transaction data etc.). These can then be combined in various ways to yield the full description of both simple and extremely complex products for both global and regional capital markets activity. This approach also offers the scope of future extension of the product base as common information components can be reused and new instrument specific components can be added. The use of modular components will therefore reduce the costs of developing new applications.
 

Integration of systems

 
 FpML provides a low cost approach to integrating a number of disparate systems (e.g. back office systems with front office systems) by acting as a common language for data exchange. This will facilitate the implementation of straight through processing for complex financial instruments. The development of new applications that require access to financial information will also be simplified as developers will be able to utilize a common information exchange standard.
 

Separation of Data Description and Data Processing

 
 A key design goal has been to separate the description of a financial instrument from the processing that takes place on that instrument. The current version of FpML defines the common data elements that are needed to describe interest rate derivatives and foreign exchange products. It does not state how processing of these derivatives and products is to be done.
 A future version of FpML might describe processing requests e.g. "price this trade" rather than how the processing is to be done. This would allow FpML to plug into each organization's own processing methods, rather than imposing a specific approach.
 The "plug and play" concept described above will allow organizations to use standard FpML data elements within their proprietary software while maintaining the security of their proprietary methodologies or techniques.
 

FpML - Advantages of an XML Based Approach

 FpML is based on XML, the recommended Internet standard for data sharing between applications. XML is a language that describes information, providing both the content and the type of data being processed. Advantages of an XML-based approach to information exchange of financial products include:
 
  •  Ability to represent complex information using techniques that are operating system, application and database independent
  •  Financial instruments are specified in a format that is readable to both computers and humans, a key design criteria for FpML
  •  Financial information can be readily exchanged between applications currently being developed to support XML-based information exchange
  •  XML will benefit from the innovation and standardization work from the Internet community, as XML is continually advanced by the W3C and increasingly embraced by the technology vendors
  •  XML will support the globalization of financial markets and the cross-border flow of capital, as the Internet becomes an increasingly cost-effective and secure network for linking global business and financial centers
 

Key Dates

 Key dates in the development of FpML are:
 
7 July Full technical review of the standard by JPM and PwC.
16 July Agreement on which market players will be involved on the initial technical committee. A confidential working draft to be issued to the technical committee.
16 July - 2 August Refine working draft of standard (including fine tuning of wording and business scenarios) through technical committee feedback and one on one interviews.
2 August Public working draft issued.
Post 2 August Workshops, presentations, seminars etc. to increase awareness of standard.
Using XML to Simplify Authoring: A Case Study for Customer Support Documentation at Ascend Communications   Table of contents   Indexes   Saturn Technical Publications: A Case Study with a Customer Focus