I never thought I’d be saying this, given the glacial pace of change in this particular sector of the market, but it seems that corporate actions has been the talk of the town recently. Not only has the DTCC been forging ahead with its plans for XBRL and ISO, reported in last month’s issue, but Swift has also been busy promoting its self-testing service for corporate actions messaging, STaQS, as well as contemplating its possible future involvement in the tax processing and class actions areas.

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This month I received clarification from our readers that despite years of hearing its doom foretold, STP is not yet dead and buried. In fact, it’s a key driver for investment in reference data management solutions, according to more than half of the respondents to Reference Data Review’s recent online readers’ poll.

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Tough times lie ahead for the market, but technology and better management of data will continue to be valuable differentiators, delegates to this year’s Securities Industry and Financial Markets Association (Sifma) Technology Management Conference were told. Although the securities industry has recently experienced billion dollar write-downs, serious reductions in headcount and widespread cost cutting, firms’ technology spend has not been significantly affected, according to research by IBM and Sifma that was presented to the delegation in NYC.

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It has been all go on the standards front this month, what with the release of the “industry roadmap”, ongoing discussions on the future of the business entity identifier (BEI) and a veritable cartload of progress updates from the EDM Council.

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Although financial institutions have had teams of people managing and cleansing entity data for decades, when CounterpartyLink was founded in 2005 the practice of turning to external sources for cleansed entity data and verification of one’s own data was a relatively new concept. Identified by backers Investors Guaranty and data platform provider Cicada as a space that would see increasing investment, primarily due to the KYC and AML regulations, they formed CounterpartyLink to take advantage of that growing need.

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Well it had to happen eventually: the whinging by some of the financial institutions making significant write-downs that it’s the accounting standards that are to blame, not any shortcoming on their part in allowing themselves to become dangerously over-exposed to instruments they didn’t properly understand.

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News that Credit Suisse has been forced to suspend a group of traders in its structured credit trading division after “mis-markings and pricing errors” contributed towards another sizeable write-down serves as a further reminder – if one were needed – that ensuring accuracy and transparency in valuations of complex and hard to price instruments is absolutely paramount these days. For any financial institution having traders mark their own books is both hazardous and unacceptable from a transparency standpoint, and establishing valuations that are as accurate as possible is essential if clarity and stability are to return to the global financial picture.

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2008 will be the year when we see how serious firms are about reference data. This is a phrase I’ve borrowed from a leading industry observer because I think it aptly sums up the general thinking of those involved in reference data as the new year kicks off.

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The acquisition by Markit of Swapswire garnered considerable attention by virtue simply of being the latest in a seemingly never-ending stream of acquisitions by the data and valuations provider. True to form, with this venture Markit puts itself at the leading edge of the capital markets’ preoccupation – improving the automation of OTC derivatives.

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In preparing for our excellent and very well received Reference Data Review @ FIMA online daily news service for the FIMA 2007 event in London earlier this month, we interviewed some of the data management movers and shakers who were set to speak at the conference to find out how they were feeling about the progress that’s been made in their world since last year’s FIMA.

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Swift’s Sibos event in Boston in early October was the biggest ever (don’t they always say that?) and there was no shortage of involvement from the enterprise data management suppliers and some of the bigger reference data vendors. Even the delegates seemed pretty interested in all things data related, as the strong turnout for the panel discussion on implementing EDM demonstrated. The sessions on corporate actions also played to packed houses, with late-coming delegates spilling over to second rooms to watch the action on giant TV screens.

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Another month, another MiFID-related reference data issue for practitioners to get their knickers in a twist about. As Reference Data Review went to press, several of our moles within the marketplace came to us to express their horror at the proposed Alternative Instrument Identifier (AII) for use in identifying derivatives in transaction reports. One source described the initiative using terms that are unfortunately not printable, though I expect you can guess the gist. Suffice it to say that, with the clock ticking on MiFID’s introduction, the people who will be responsible for making the new identification scheme actually work in practice are not amused.

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As the “credit crunch” blame game plays itself out, some hefty criticism is being meted out to various quarters of the industry, not least the regulators and the ratings agencies for their alleged failure to act sooner to stem the tide of fall-out from the sub-prime crisis in the US. A lot of people are having a very bad time of it, vis the poor City and Wall Street traders whose bonuses could suffer, and – lest we forget – the individuals at the start of the chain who were the recipients of the sub-prime lending in the first place and whose lenders have now foreclosed.

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Remember when the acronym CDO referred to collateralized debt obligations, a fancy type of credit derivative?

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Hats off to analyst Aite Group this month for breathing new life into one of our favourite topics – STP. In its report on Capital Markets IT Spending Priorities in 2007, Aite identifies “a renewed emphasis on trade processing” and, while it does so with a degree of embarrassment, the message is clear. “While STP may create rolling eyes and visions of over-used acronyms, CIOs are absolutely focused on improving order flow,” it writes. “Settlement, trade processing and systems integration account for three of the four top systems priorities this year.”

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News that Telekurs Financial is entering into the evaluated pricing space under its own steam with a new Fair Value Pricing service for illiquid bonds prompts us to reflect on how busy the evaluated pricing arena is getting. If, as it has long been expected to do, Bloomberg finally unveils its evaluations offering this year, that busyness will be intensified further still. Reuters and Standard & Poor’s are making concerted efforts to emulate the success of market leader Interactive Data Corp in this business, and the darling of the credit derivatives pricing world Markit Group has CMA snapping at its heels.

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While I’m sure hard-core Reference Data Review readers would agree wholeheartedly with us that the world of enterprise data management is always an exciting place to be, it has to be said that recent weeks have been particularly exciting, with the flurry of corporate activity we’ve seen.

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The world of reference data does not typically get associated with the newest and sexiest innovations in technology, more’s the pity. But there are signs that this is changing, with a growing number of players active in the service oriented architecture (SOA) space rounding on reference data distribution as a target area for implementation of their wares.

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The great thing about standards is – as the old adage has it – there are so many of them to choose from. And yet, there never seem to be enough. Last month we charted the industry’s ongoing frustration at the lack of a standard international business entity identifier which, in the view of some, is an absolute necessity for efficient operation in a post-MiFID environment. In this issue, we look at DTCC’s efforts to create a new XML format for delivery of corporate actions announcements, efforts apparently borne out of frustration with the inadequacy of the existing ISO 15022 corporate actions messages to support automated delivery of information. It is not such a long time ago that the ISO 15022 standard was being heralded as the great white hope for corporate actions STP.

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The good news to kick off the year with is that reference data is getting more important. It is a major component of the recently announced wide-ranging HSBC enterprise data and technology deal we are told.

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