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Financial Products Markup Language

Financial Products Markup Language. Introduction to FpML Brian Lynn, J.P. Morgan www.fpml.org 2000-01-14. Overview. FpML Vision Time Line Current Focus Next Steps. Overview. FpML Vision Time Line Current Focus Next Steps. The FpML Vision. Enable e-commerce for financial derivatives

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Financial Products Markup Language

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  1. Financial Products Markup Language Introduction to FpMLBrian Lynn, J.P. Morganwww.fpml.org2000-01-14

  2. Overview • FpML Vision • Time Line • Current Focus • Next Steps

  3. Overview • FpML Vision • Time Line • Current Focus • Next Steps

  4. The FpML Vision • Enable e-commerce for financial derivatives • Create a “lingua franca” for communicating in the derivatives domain • Driven by the financial industry • Build critical mass of financial institutions and vendors

  5. What is FpML? • Standard for Internet -based dealing and processing of financial instruments • Initially focuses on Interest Rate and Foreign Exchange derivatives • Open Standard based on the eXtensible Markup Language (XML) from the World Wide Web Consortium (W3C)

  6. Original Business Goals • Enable electronic communication between firms • Confirms, Trading, Pricing • Facilitate inter-system communication within an organization • Front office ›› Mid office ›› Back office • Facilitate STP for derivatives • Enable new internet-based business opportunities • Market and credit risk management • Automated trade confirmation

  7. Business Benefits • Reduces processing cost • Lower communication costs between apps • Lower system implementation costs • Decreases operational risk • Increases business opportunities • Enables end-to-end processing • Allows adding proprietary data for internal processing

  8. Trade Description Application Process FpML Document Pricing results • Contains Trade: • Trade ID • Product • Parties • ... Reference Data Live Data Feed Conventional Data Sources FpML currently describes the Trade

  9. One Potential Process Model Party A Party B FpML FpML Matching Service Confirmation Service FpML FpML Party C Party D

  10. Overview • FpML Vision • Time Line • Current Focus • Next Steps

  11. Time Line • 1998 - JPM starts prototyping with XML • Spring 1999 - JPM and PwC begin collaborating • June 1999 - JPM and PwC announce standard • Aug 1999 - Draft is released • July - Sept - Technical meetings, discussions • Oct. ‘99 - Steering Committee formed (met Nov ‘99) • Dec. ‘99 - Standards Committee starts meeting

  12. Steering Committee • Consists of senior derivatives business leaders (MDs) from major market participants • Sets overall priorities and direction • Currently consists of representatives from: • Bank of America, Chase, Deutsche Bank, Fuji Capital, J.P. Morgan, Morgan Stanley, Paribas, UBS / Warburg Dillon Read, PricewaterhouseCoopers (advisor)

  13. Standards Committee • Consists of derivatives technology and middle office leaders (MDs and VPs) from major market participants, and representatives from key vendors • Defines approach for developing the standard, monitors progress, and officially approves the result • Currently consists of representatives from: • All Steering Committee member firms • IBM, Infinity, ISDA, PricewaterhouseCoopers, Reuters, S.W.I.F.T

  14. Overview • FpML Vision • Time Line • Current Focus • Next Steps

  15. Current Focus • Steering Committee sets Q1 deliverable • Standards Committee in action • Working groups are being formed

  16. Current Focus - Q1 deliverable • Steering Committee set Q1 2000 goal for an approved version of FpML for a subset of the vision • Focus on confirmation of interest rate derivatives • Initial priority on basic products (FRAs, vanilla swaps, caps/floors, swaptions • Fixed Deadline, floating deliverable (cut scope as required to meet deadline). • Steering committee is considering related issues, including legal issues, FpML governance, etc.

  17. Current Focus - Standards Committee • Standards Committee meeting monthly • Scoping products based on SWIFT MT34x and MT36x messages (=> no swaptions in Q1 deliverable) • Defining approval process • Setting up two working groups (products, architecture) • Developing prototyping plans • a non-robust interchange of FpML soon after Q1 deliverable

  18. Current Focus - Product Working Group • Review feedback from early prototyping efforts • Compare FpML to SWIFT message formats • Identify issues/inconsistencies

  19. Current Focus - Architecture Working Group • Review/agree on XML conventions • Agree on which versions of XML standards to follow • Address versioning • Consider matching/equivalence

  20. Overview • FpML Vision • Time Line • Current Focus • Next Steps

  21. Next Steps • Begin inter-dealer prototyping • How to exchange the FpML? • Raise awareness in firms outside of the process • Newsletter • Convention? Other public meetings? • Consider impact on business processes, legalities, etc. • Other asset classes? (credit and equity derivatives?)

  22. Conclusion • FpML Vision • Time Line • Current Focus • Next Steps

  23. Overview • FpML Vision • Time Line • Current Focus • Next Steps

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