FpML: Financial Products Markup Language
Focus: Financial derivatives
DTD or Schema: Available here.
Website: www.fpml.org
Contact: info@fpml.org
Founding & Key Members:
- Bank of America
- BNP Paribas
- Chase Manhattan Bank
- Citigroup
- Concordia Net
- Credit Suisse First Boston
- Deutsche Bank
- Extensibility
- Fuji Capital Markets Corp.
- Goldman Sachs
- IBM
- JP Morgan
- Morgan Stanley
- PricewaterhouseCoopers
- Reuters
- SunGard Trading and Risk Systems
- SwapsWire
- Swift
- UBS Warburg
Organization: The FpML standard is controlled by three groups: The Board of Directors; Standards Committee; and Technical Committee.
The Board of Directors, made up of senior derivatives business leaders, is responsible for establishing the strategy, direction and priorities for the standard. It also defines the governance structure of FpML.org and its relationship with other industry bodies.
The Standards Committee, whose members are appointed by the board, implement the strategy set out by the board by defining, maintaining and evolving the standard. Working groups are established to accomplish the ongoing development of FpML. The Standards Committee is then responsible for accepting or rejecting changes proposed by the working groups.
FpML’s Technical Committee is not a formal group but rather discusses technical aspects of the FpML standard via a discussion group mailing list.
Current working groups involved in developing FpML v.2.0 specifications include the Interest Rate Derivatives Products, and the Business Message & Architecture.
Background: The Financial products Markup Language (FpML) is an information exchange standard for electronic dealing and processing of financial derivatives instruments. It was first formed by JP Morgan and PricewaterhouseCoopers.
The area of OTC derivatives has traditionally been very difficult to introduce standards into, due to the wide variety and rapid change in the products that are traded. The result is that communication and confirmation of details of transactions between counterparties is heavily manual, and therefore more liable to errors and delays. This is costly and comes with a high operational risk.
FpML.org sees an opportunity to introduce XML to the OTC derivatives market to develop a cost effective and less operationally risky method of communicating, while offering the flexibility required to keep up with the fast pace of the market.
The FpML organization has initially focused on the area of interest rate swaps, forward rate agreements (FRAs) and foreign exchange. It does, however, envisage expanding the standard to all categories of over-the-counter (OTC) derivatives.
As well as being used for communicating details of OTC derivative financial transactions, FpML will enable standardization of various business processes including:
- Structuring and negotiating terms of a transaction
- Executing and confirming the transaction
- Communicating settlement details about the transaction
- Pricing and risk managing transaction
- Performing collateral reporting and matching
The standard is being used by Chase Manhattan Bank in its OTC Interest Rate Derivatives Applications; Fuji Capital Markets for their development of an XML-based FRA confirmation prototype; UBS Warburg with their front-office pricing tools; and JP Morgan for an Interest Rate Swap prototype application.
On the vendor side, Infinity, which developed its own Network Trade Model (NTM) XML variant, used in its Panorama cross-asset risk solution, is now working on methods of conversion between NTM and FpML. Cygnifi is also using FPML to integrate a number of diverse applications.