Symbology - mastering the art of trade symbol interpretation

This week marked the 16th anniversary of the FIA IDX in London - Walt Lukken, President and CEO of FIA opened the event with a keynote address that touched on the developments and challenges facing the global derivatives market, and particularly the potential impacts of a ‘historic election year’ for Europe, the UK and North America.

The fast-approaching Eid al-Adha holiday, the second of the two main holidays celebrated in Islam that this year begins on June 14, is a timely opportunity to look at another essential element of financial markets reference data - exchange holiday dates.

The global Futures and Options market continues to grow exponentially, year on year, in terms of the absolute number and volumes of F&O instruments issued and traded, and especially the explosive growth in trading activity in newer markets. In the APAC region, for example, futures and options (and other derivatives) trading is gaining huge momentum and represents an increasingly large share of the ‘global derivatives wallet’. It is estimated that this region’s trading volumes doubled in 2023, with particularly significant activity in India and China. In India alone, activity on major exchanges including the National Stock Exchange leapt around 80% in equity-related derivative transactions (and around 30% for energy, agriculture and precious metals).

Data normalisation - standardising the presentation of data to ensure it is consistent across required fields and records - is an essential component of effective financial data management, enabling reference data in particular to be recognised, interrogated and incorporated into required data workflows much more easily, and minimising the risk of reconciliation and compliance ‘fails’.

Not only is there a requirement to report additional information, EMIR Refit also places enormous emphasis on enhancing and harmonising the quality of the data itself to support end to end validation and data reconciliation obligations, and to mitigate the risk of misreporting - and having to report associated reporting failures.

Big isn’t necessarily always best when it comes to financial data services delivery and it’s important for firms to weigh up the relative pros and cons when considering what makes the most sense for them to support their data management needs.

While perhaps regarded as being at the less glamorous end of the transaction data spectrum, reference data in fact accounts for some 70% of all of the data required to be captured in every financial market transaction.

Wrongly ‘labelled’ products and the wrong information in the wrong reporting fields will cause EMIR Refit reporting failures, with associated tedious and costly remediation and re-reporting and potential for regulatory penalties and sanctions.

More than half of tier 2 & 3 banks have an inefficient derivatives reference data management workflow, a study by FOW and Acuiti.io has found.