OFR unveils plans to establish common language for instruments

Research describes current reference data as often complex, incomplete and incompatible across firms.

The Office of Financial Research (OFR) has unveiled plans to develop a common language for financial instruments in the US to support reference data.

In a recently released report, OFR described current reference data as being complex, incomplete and incompatible, which is hindering interoperability across service providers and users.

“Aligning to standards will facilitate data interoperability between market participants, data providers, and analytics providers,” OFR said.

The report added firms spend considerable time and resources collecting, consolidating and harmonising poor quality reference data, but a common language could see a “balance of trading positions and operation risks from valuation errors.”

The plans include the adoption of an instrument reference data dictionary, conformity assessment procedures for a database and promotion of its use across the industry.

It also suggested for the common language to work, the initiative must identify and prioritise gaps in current financial instrument reference data that currently offer little to no data standardisation.

“The result will be a common language employed by all US public and private financial market participants, applying consensus standards and open source reference data, to establish a singular understanding of a financial instrument and its components,” OFR concluded.