SR Labs makes the case for a common symbology: ideal and practical.
The case for a common symbology: ideal and practical
Market participants are demanding consistency in symbology (naming convention) to minimise investor confusion, promote stability and mitigate operational risks. Internally they need to reduce the costs that stem from duplication of support for multiple vendor symbologies. Currently each exchange has its own data format and symbology, which means that each data feed must be normalised, renamed and consolidated before the data can actually be used. Through the use of symbology users navigate the data available on a specific instrument. Market data vendors provide their own conventions which allow users to cut across individual exchange symbologies but nevertheless are not compatible.
Nirvana for trading firms has been a common symbology to ease navigation between market centres and data vendors, providing a better experience for investors whilst reducing back-office complexities. The market has for some time been crying out for a solution which allows them to integrate data from a myriad of sources seamlessly with trading applications, allowing new content to be added quickly whilst eliminating the difficulty in managing symbology changes and feed updates.
There have been attempts by market centres to create a standardised symbology. In Europe in 2008/2009 some challenger trading venues and exchanges formed an industry group – the uniform symbology committee – to develop and maintain a standardised symbology framework for European equities, however a consensus has not formed around a single solution.
The Thomson Reuters RICs have since their inception been viewed as being by and large intuitive (for most asset classes) and logical, and these characteristics been the acid test for symbology.
Nevertheless there is a long way to go before the financial markets become truly ‘plug-and-play’ with regard to market data. In the near future we will see a financial marketplace adopting an open architecture market where any innovator can plug in a new system component and that surely must be good for the entire marketplace.
- The case for a common symbology: ideal and practical.
- Background to Reuters' Symbology
- What regulators want
- Competitive pressure to reform
- How Europe opened up identification codes
- SR Labs: Making the switch simple
- The window of opportunity