Building a Framework for Innovation and Interoperability: Preparation Meets Opportunity

The financial services industry has aspired to attaining standard, unique financial securities instrument identification and it has been the cash cow of providers of market data for decades. Similar to a personal identification number (think social security or NHS number), it aims to uniquely identify individuals in certain parts of the world. Tradeable financial instruments are often assigned identification numbers by multiple entities to enable performing different functions across the transaction lifecycle. However, those numbers do not provide context around family relationships. The resulting confusion has long wreaked havoc on capital markets, as well as middle and back offices, resulting in inefficiencies caused by manual data exceptions processing and errors, which can be costly to a firm.

Recent outreach conducted by TABB Group found that they are challenged by the current state of having multiple security masters and often suffer real operational pain due to inaccurate or insufficient financial instrument identification. From an operations standpoint, resources that are devoted to cross referencing and maintaining numerous identifiers combined with those resolving trade failures and reconciliation mismatches are costly.