Report

The March 2003 meeting was held in the Boardroom of the London Market Systems facilities at 33 Throgmorton Street in London between 11:30 and 1:30 local. Approximately 20 individuals represented the full range of SIIA, FISD, and MDDL membership. Discussions centered around the current status of MDDL and immediate plans as outlined below. NOTE: The following report includes additional information that was not discussed or has been clarified since the meeting.

Enthusiasm in MDDL since the last European meeting in September 2002 (see Amsterdam - 26 September 2003) has risen dramatically - even more so in the last two months. As the level of attention rises, the pace of adding vocabulary to the specification quickens, resulting in more widespread acceptance. As the "core" components of MDDL mature, the specification is now being implemented by a number of significant organizations. This report details the current interest in MDDL and the status of the effort.

Progress & Analysis

Several events have occurred highlighting MDDL's rising prominence in the industry:

• The London Stock Exchange has stated that its new distribution for its SEDOL expansion project will use MDDL as the format for the delivered content.
• ISO Technical Committee 68, Sub Committee 4 has elected to start a new project team for to incorporate aspects of reference data and corporate actions into the new version of ISO 15022
. This is significant in that the previous version of ISO 15022 did not define common reference data information. FISD will likely play a prominant role in the execution of this task. It is hoped that MDDL can be used to "jump-start" this initiative.
• FISD has received a ten-fold increase in requests for clarification and coverage over the past 4 months indicating that more organizations (and individuals) are reviewing the specification.
• Since 01 Janury 2003, no fewer than nine organizations have provided their terms, definitions, and relationships (TDRs) to MDDL for incorporation into the specification. Five additional players have committed to providing their content. NOTE: Only LSE (above) and Access International Financial Services have publicized this information.

The reason for the increased interest in MDDL is, perhaps, best described by FISD's Reference Data project. The concern over current limitations to securities processing automation has focused attention on reference data and the foundational understanding that this data MUST be consistent throughout the trade lifecycle. The normalization of definitions and distribution mechanisms seems like the most expedient solution to this fragmentation.

Additional impetus for MDDL is derived from the basic "business case" realization of user firms that normalization of the data they receive internally has diverse benefits - from reduction in production costs to increased utilization of the data. While many firms have converted to XML internally, they are now beginning to request XML feeds from their suppliers to eliminate conversion utilities. In turn, suppliers are realizing that if they must generate an XML feed (and they do - as above) then it is in their best interest to generate an industry standard XML - a standard XML to simplify their production system and an industry standard to facilitate adoption by their customers.

Scope of MDDL

As noted above, increased interest in MDDL has resulted in requests for increased breadth, and depth, of coverage. While most needs are focused on particular asset classes, each specific requirement is generally associated with a primary application:

• Reference Data including setup of the Security Master File and instrument identification in front-office through back-office operations.
• Corporate Actions and events related to the reference data that affect pricing but also clearing and settlement.
• Pricing for end-of-day, historical, and (believe it or not) intra-day realtime applications.
• Indicators & Statistics of the other applications including throughput and volume.

MDDL was conceived as a market data specification for all applications of market data. Originally, pricing (of common equities, mutual funds, and indices) was incorporated but members have made it clear that the reference data and corporate actions are required for MDDL to be truly useful. As such, these applications have been "formally" added to the scope of MDDL. Indicators and Statistics are a natural by-product of the processing of securities information and complete the specification as regards to its primary objective - the interchange of information necessary to account, to analyze, and to trade financial instruments of the world's markets. Note that MDDL does not cover the transaction components of the trade cycle - just the market data necessary to facilitate such transactions. Other organizations such as FIX, FpML, and TWIST cover trade processing.

As detailed below, MDDL is expanding to cover the full breadth of market data asset classes and applications. Most of the foundation will be included in the specification by fourth quarter of 2003. Messaging standards for web services (useful in all applications) and wire protocols for intra-day real-time pricing applications with MDDL will be addressed.

Advancement Strategy

Work on MDDL through September 2002, although facilitated by FISD, was the primary effort of volunteers. Individuals from member companies provided staff and expertise to develop the specification - mostly as an academic exercise - with the expectation that the standard would eventually provide the capabilities required and address the needs of a "future" market place. Although the changing market place decreased the availability of volunteers, the members emphasized an increased interest in standards to help curtail development, maintenance, support, and customer interface requirements. As such, FISD hired James Hartley (formerly of Reuters/Bridge and one of the founders of MDDL) as full-time FISD staff to develop the specification consistent with industry needs.

Dedicated resources for MDDL, combined with real implementation desires by member firms, has necessitated a change in the development approach for the specification - to the benefit of all concerned. Additions to MDDL will be driven by member interest for real applications. While the enhancements to the specification will still be directed by the Steering Comittee, and modifications will still be approved by the larger member community, the vocabulary improvements will be scheduled and performed in conjunction with members with specific requirements and deadlines. A discussion of current inventory and interest is provided below.

In general, the expansion process works by involving James Hartley in the member's process in one of two ways. For those firms beginning new development - either coverage or formatting of a new asset class in XML - James is available to modify MDDL to specifically cover that content and can work with the implementation team on their schedule. Alternatively, the terms, definitions, and relationships currently used by a member can be provided to James, merged with other sources, and used to generated a "normalized" representation of that content with broad appeal.

Current Inventory of TDR (Updated 2003/05/27)

While proprietary interests and business rationale are still a factor as each company decides to participate, MDDL has the following terms, definitions, and relationships (TDRs) as outlined below (names are withheld where particpants have requested):

• MDDL 2.0 Beta (common equities, mutual funds, index pricing as well as some bond set-up)
• The Bond Market Association new issue required fields
• SWIFT Standards Dictionary (pre-trade setup and transactions; precursor to ISO 15022 next generation)
• Access International Financial Services (full setup)
• London Stock Exchange (listed instrument setup)
• Vendor A (corporate actions and events)
• Vendor B (setup and pricing for covered instruments)
• Vendor C (setup and pricing for covered instruments)
• Vendor D (setup and pricing for covered instruments)
• Vendor E (setup and pricing for bonds)
• Vendor H (listed instrument setup)
• User Firm A (setup and pricing for covered instruments)
• User Firm B (setup and pricing for covered instruments)
• Others who are interested in participating and providing TDRs:
  • Vendor F (corporate actions and events)
  • Vendor G (corporate actions and events)
  • Infrastructure/Technology A (full setup)

Member Interest

As alluded in the Advancement Strategy section above, much of the current interest with MDDL is directly related to a participant's immediate needs. Many of the TDRs given are provided with specific goals in mind. A map of the current interest in MDDL as it relates to these interests has been created and is viewable here. The Interest Map suggest a focus on setup (reference data) related applications across all asset-classes. Secondly, bond pricing and corporate actions (on equities) are popular.

Development Schedule

While the interest map is useful to show where member interests lie, these must be balanced against available resources and the announced Advancement Strategy. As a result, the Development Schedule (click here) has been created to show the current priorities for MDDL development cross-referenced with member interest. The development schedule will be maintained from the SCHEDULE link at the left.

Currently, three releases of MDDL, versions 2.0, 2.1, and 2.2, have been identified for availability in the April, June, and August timeframes respectively. These releases are targeted to satisfy the bulk of stated requests of MDDL, consistent with member time requirements, and should provide the solid foundation necessary for widespread MDDL adoption. While individual business and organizational structures will dictate exact adoption timelines, the specification should include the majority of asset classes and support for primary applications to facilitate integration of MDDL into any infrastructure.

Coincident with the extension of the vocabulary of MDDL, certain "technical" features must also be added. The documentation and representation of the specification and vocabulary need to be enhanced - not only to increase depth of understanding by implementors but to make the terms, definitions, and relationships more accessible to the "business" experts (those that know what the terms means and how they relate to one another). In addition, a Query and Response mechanism (MDDL currently only satisfies the "Response" portion) within the specification has been cited as a requirement for adoption by more than one major organization. Lastly, as more implementations of MDDL are developed, the concept of validation and conformance will be important for "customers" of such products. As such, it will be necessary to develop guidelines and procedures to verify that documents generated from these products match the letter and spirit of the specification.

Summary

MDDL is receving greater acceptance thus quickening the pace of development and adoption. As such, it is critical that market data creators, distributors, and users - as well as the technology firms that enable interchange - participate to ensure their interests and needs are addressed. MDDL is now structured to assist members with bringing real applications to production - either with hands-on assistance or by incorporating terms, definitions, and relationships into the specification.

For more information, or to discuss current activities or future participation, please contact James Hartley or any FISD Staff Member.