After 17 Months, IIA Outs Report On Symbology...And So?

After seventeen months of work, the Information Industry Association's (IIA) Financial Information Services Division (FISD) has released its report to the securities industry on symbology. The report tries to tackle the tangled problem of anomalous symbology--in all markets--by beginning to define a methodology for developing a standard symbology, as well as presenting a framework for moving the industry to a new standard--but not before five or ten years. It's not clear what kind of impact the proposals will have on the securities industry.

At the same time, the FISD is undergoing a reorganization-- creating a new structure for itself, designating a new chairman named Richard Carleton and expanding the executive committee which Carleton will chair. Carleton, the assistant general counsel and director of legal services for the Toronto Stock Exchange, replaces Leo McBlain, ex-FISD chairman and a vice president at ADP. McBlain has lately been active in the formation of the Financial Information Forum, a consortium being positioned as an alternative to the FISD (IMD, Jan. 29).

Michael Atkin, the FISD's director, says that the IIA's symbology report is a statement of the findings of the initial phase of the association's ongoing effort to identify and solve problems associated with symbol inconsistencies. Moving beyond the initial phase, the FISD plans to launch a publicity campaign, conduct presentations, help the industry decide on a set of symbol objects, select vendors to develop an industry-standard cross-reference table, and other related activities. Atkin says that, "the bottom line is that this will save a lot of money."

But reactions to the FISD's effort are somewhat less enthusiastic. One source says, "It's too early to see what the effect of this report is going to be on the industry." Another says the project has "pretty much become sort of an academic exercise at this point. It would be nice to have, and some people could benefit from it, but I'm not sure there's a commercial imperative for it. And for that reason I don't think things will change."

After releasing an RFP in 1994, the IIA retained two consultants who managed the information gathering for the project--R.T. Williams from R. Shriver Associates Inc. and Lee Greenhouse from Greenhouse Associates (IMD, Jan. 30, 1995). Brian McNelis, director of data quality at Reuters America, is the chairman of the FISD's so-called symbology task force. The FISD report is the result of focus groups, mailings and phone discussions with all the relevant parties, according to Atkin.

The report says that any solution to the symbol problem must satisfy six conditions: benefits without immediate conformity, because "mandating change in the securities industry will not work"; gradual system changes, buffering all players from one another so they will not need to change existing systems immediately; flexible conventions, which means leaving each market to determine the specific symbols, structure and naming conventions that are most appropriate for its products and users--as opposed to a "one size fits all" solution; dispersed and flexible symbol creation, giving individual exchanges "considerable latitude" to continue to create their own symbols; separation of symbol from access and display--divorcing the underlying symbol from how instruments are accessed and displayed; coordination of front and back office, tying together the needs of both the front office and back office in a comprehensive solution.

The FISD's proposed solution consists of three major components: objects, rules and a method for registering symbols. The FISD defines objects as the building blocks of a symbol, which may form a standard library of components that can be used to construct "unique" symbols. The report says that rules of construction would define the component objects--mandatory and optional--and the method by which objects are combined to describe a specific instrument's symbol structure. At a minimum, the report says, rules must define whether the symbol construction will be sequential and what type of so-called delimiters--punctuation, length, identifier, and/or sequence--will be used between objects. Finally, the report recommends that there be an independent organization set up to facilitate symbol management, serving as a registry for objects and rules and as the arbiter in the case of disputes. The question of what form that the registry should take will be discussed in the next phase of the FISD's study, says the report.

The report outlines a three-step migration path. The short-term solution is the development of a generic cross-reference table, maintained by an industry association or vendor and made available to the whole industry. The medium-term solution involves the adoption of a symbol translation system capable of translating old symbols into new symbols and vice versa. This gives users, vendors and exchanges the option of continuing with existing structures until change is convenient, such as when systems naturally need to get replaced. The long-term solution involves migrating to a method of building symbols using flexible components--symbol objects and rules of construction. This solution may require five to ten years for industry adoption, the report says.

Meanwhile, the FISD itself is going through a number of changes. A new FISD organizational structure has been approved by the IIA's board of directors. The FISD executive committee has been expanded to eighteen from an unfixed, smaller number in the past, and now has responsibility for "maintaining that FISD remains balanced and equitable to all members," says Atkin.

The FISD has grown "in an ad hoc way," says Atkin. "It used to be whomever would show up, but now we see that people are really wanting to come to meetings, and we're ensuring that the FISD remains balanced in terms of membership between exchanges, vendors and users."

FISD has also revised its meeting structure to include a mixture of membership-wide meetings, committee meetings, taskforce/working group meetings and cross-segment meetings as appropriate. Membership-wide meetings will be held four to six times yearly, committee meetings monthly and cross-industry segment meetings will take place as dictated by the programs and projects of the individual segments.

These developments come on the heels of the opening of a New York office by FISD--an effort to interact more consistently with its members (IMD, Jan. 29). More recently, the FISD approved the establishment of a European Forum for vendors, exchanges and users involved in the market data industry (IMD, Feb. 12). The formation of the forum followed talks between FISD and representatives of the European Information Providers Users Group last fall (Dealing With Technology, Oct. 20, 1995).

Atkins says that these recent changes are "not influenced in the least" by the formation of the competing FIF. "Our ex-chairman is working with the FIF now, so that gave us an opportunity to make some changes," he says, adding, "Would that have happened without the FIF? I don't know."

The IIA's symbology project began after the release of a proposal for a catalog of standard symbols delivered in January 1995 by both the Managed Futures Association's (MFA) standard committee and the Futures Industry Association's technology committee (IMD, Dec. 5, 1994).

Atkin says: "We are aware of others discussing this problem. The difference with us doing it--rather than a group focusing on symbology of a market niche--is that we take a wide view, rather than applying a Band-Aid to a hole in a dam." In Jan. 1995, when the IIA announced the start of its symbology project, St. Louis-based commodity trading advisor Trendstat Capital Management Inc.'s president Tom Basso--who headed the MFA's standard committee--said that the IIA's plans were more far-reaching than those proposed by his committee.