An Approach to Financial Instrument Reference Data

This viewpoint describes the OFR’s approach to preparing and publishing a set of standards for creating and describing financial instrument reference data through a private-sector solution with public-sector involvement. (Viewpoint Paper no. 17-03)

Summary

Data describing financial instruments are often complex, incomplete, and incompatible. These weaknesses impede companies and investors in managing their risks and regulators in overseeing financial firms, markets, and the financial system as a whole. Regulators and industry do not have either a comprehensive financial instrument data dictionary (documenting terms and definitions) or widely adopted data standards (documenting formats).

The Office of Financial Research (OFR) has a mandate to address these problems by preparing and publishing a financial instrument reference database — a set of standards for creating and describing financial instrument reference data. This viewpoint describes the OFR’s approach to that mandate: a private-sector solution with public-sector involvement. It specifies the foundational components needed to standardize financial instrument reference data. Among them are a common data dictionary and associated data standards. Finally, it outlines how we will develop those components, and allow for the addition of a taxonomy or ontology to establish how instruments relate to one another.

As with the OFR’s linchpin Legal Entity Identifier project, the success of the OFR’s financial instrument reference database initiative will depend on the adoption and implementation of data standards and stakeholder use of reference data conforming to those standards.