11 Apr 03: ISDA Unveils Draft of Version 4.0 Of FpML Schema for OTC Derivatives

The International Swaps and Derivatives Association (ISDA) has released the first working draft for Financial Products Markup Language (FpML) Version 4.0. FpML is an XML-based, freely licensed, e-commerce standard supporting OTC trading of financial derivatives.

"With the addition of credit derivatives and equity derivatives, the main asset classes are now covered in FpML," said Robert Pickel, executive director and chief executive officer of ISDA. "A key area of focus going forward will be to facilitate the use and the implementation of the standard."

In addition to interest-rate derivatives and FX derivatives, which have been defined in earlier versions of the standard, FpML Version 4.0 covers equity derivatives, including equity swaps, and credit derivatives. The work on credit derivatives is very closely linked with the ISDA 2003 Credit Derivatives Definitions, which define the credit default swap.

On a technical level, version 4.0 is the first schema-based version. It is also the first version that puts a messaging framework around the product descriptions to specify their context and use. Future work on FpML will include the specifications for energy derivatives and the results of the validation working group.

The working draft is a work in progress with a commitment from ISDA to pursue work in this direction. The full text of the working draft is available at: http://www.fpml.org.

At its annual general meeting last week, ISDA also demonstrated a beta version of the FpML editor/viewer. The tool, which allows users to view an FpML trade, edit and change elements of the trade, or create a new trade in FpML format, was built using FpML. ISDA decided to develop the tool to make FpML more accessible. The FpML editor/viewer is expected to be made available to ISDA members and non-members in June.