Tackling Data Standards for Derivatives

June 24, 2011 – What do the International Organization for Standardization, Goldman Sachs, the Society for Worldwide Interbank Financial Telecommunications and Google have in common?

They will be represented on a 22 member technology subcommittee on data standardization established by the Commodity Futures Trading Commission. Karla McKenna is representing the ISO while Pierre Lamy is with Goldman Sachs. Marlene McMahon represents SWIFT and Marc Donner represents Google.

The 22 members were picked out of 52 nominees. CFTC officials were unavailable for immediate comment on the selection criteria but they do represent some of the leading experts in data management who also belong to the Enterprise Data Management Council. Also represented on the group is Michael Atkin, managing director of the EDM Council which has been spearheading the securities industry’s efforts to standardize data definitions and create governance models. Karla McKenna chairs the technical committee of ISO which is responsible for implementing a new XML-based securities messaging protocol known as ISO 20022. McMahon serves as the senior business manager in the standards department at SWIFT, the La Hulpe-based operator of a financial network which transports ISO compliant messages. Yet another member Karen Engelen, policy director at the International Swaps and Derivatives Association heads up the FpML group responsible for promoting that message standard in the derivatives market.

The most interesting choice: Marc Donner, engineering director for Google Health who has also served as engineering site director for Google in New York in charge of DoubleClick’s integration into Google. DoubleClick providers Internet ad servicing services.

The CFTC set up the subcommittee earlier this year to help develop standardized language used to describe communicate and store data on derivatives. The CFTC hopes that more defined contracts will help financial firms track their transactions and improve risk management. Most derivatives traders will be subject to increased reporting under the Dodd-Frank Wall Street Reform Act.

Chaired by CFTC chief economist Andrei Kirilendo the group will meet three times this year and establish four working groups: product and entity identification, semantic representation of financial instruments, readable legal documents and storage and retrieval of financial data. The subcommittee will present its recommendations to the Technology Advisory Committee which will in turn report to the CFTC.

"There is a need and desire to go beyond legal entity identifiers and lay the foundation for universal data terms to describe transactions in an electronic format that are identifiable as financial instruments and recognizable as binding legal documents," said CFTC Commissioner Scottt O'Malia.

The following represents the remainder of the members of the CFTC’s data subcommittee and the firms they represent: