Why does Bloomberg volunteer and support ISITC?
Bloomberg has been a long-time supporter of ISITC. Unlike most other industry organizations, ISITC is completely volunteer driven, and is therefore particularly focused on the needs of all its members, and ensuring everyone can work together effectively and fairly. Interoperability and best practices is core to ISITC’s mission, and making sure things ‘just work’ versus expecting all these diverse firms to all do everything the same way.
Actively participating in ISITC’s conferences, working groups and forums provides significant value; educational, developmental, and also excellent networking. For senior level professionals, it’s a way for us to discuss the critical issues that need action, and actively create solutions with the industry in a neutral forum without sponsored influence. For those newer to the industry, it is a great career development opportunity to learn and work collaboratively with junior and senior level industry experts.
This aligns with what we do at Bloomberg, as well – being able to support clients across the variety of platforms and services they use. The need for collaboration, interoperable platforms and best practices is particularly highlighted by the current crisis. Being flexible continues to be key. There is no single answer that will work in every situation, and using best practices, focused on interoperability, is what enabled operations to continue to function across the industry. It is also how Bloomberg was able to respond to the many varied needs of clients across many different situations.
Bloomberg also believes that it is essential for the industry to be able to come together to discuss and solve common problems. ISITC facilitates such critical dialogue, which can serve to make the industry more efficient to the benefit of all. This is a key reason why Bloomberg supports ISITC both in the US and in Europe.
What is open data?
Simply, open data is data made available for anyone to use, in any way, without fees, licensing, or other restrictions on use, redistribution, or storage. Unfortunately, this is made less clear by many incorrect assumptions as well as vested interests wishing to capitalize on the theme, or fear some negative impact to their business model.
There is particular confusion surrounding standards in the context of open data. Just because something is called a standard, it does not make that standard “open.” Many “global standards” fail the open test, as restrictions on its use fail many of the tests described.
This results in hidden restrictions like limits on storage, access, and use, resulting in hidden fees and costs.
Access limits allow manual web searches, yet restrict automated or API ‘bulk’ access methods to those that pay for access. If you can only retrieve one piece of data at a time, the cost to acquire it quickly diminishes any value. Storage limits prevent any storage of data – or limiting it to some arbitrary number, be it 100 or 5,000 records. Use restrictions prevents commercial use of the data, or for certain applications.
Use limits can also apply to accessing data, or identifiers in a given time period – with significant penalty fees for nominal breaching of the ‘free’ limit, which can occur in times of volatility such as now. Restricting access to simple descriptive data creates inequity in the industry.
Where it gets complicated is that you can utilize open data to create value data – and then charge or otherwise have some licensing for that newly created value data. That is the purpose of open data – to provide a shared foundation for the creation of more valuable data and information.
The W3C, and the internet is a perfect example. The internet would not exist without open source, and in many cases open data. It enables redistribution, sharing, and the creation of countless businesses. A company creates value using the internet, but doesn’t end up being able to restrict or own the internet itself.
How does open data fit within a data vendor like Bloomberg?
Over 10 years ago, Bloomberg realized that the industry had many different ways to identify financial instruments, but all of them had licensing restrictions, and there was no way to enable them to interoperate easily.
FIGI (Financial Instrument Global Identifier) was born out of that realization.
Data is core to Bloomberg’s goal to provide robust and complete solutions with a common foundation to support the industry. To that end, FIGI is provided to the industry via OpenFIGI.com as open data. FIGI is not just an identifier, but includes base-level descriptive data, as well as a data model for relating what could be the same instrument in different forms or contexts. FIGI received early support from ISITC and its members, as it answered a long-standing Best Practice question in the Reference Data Working Group. Based on this, it was also adopted within the ISO 15022/ISO 20022 Data Dictionary as an accepted code in the external code set for use in ISO messaging.
After our experience in providing open data with FIGI, our support for the Legal Entity Identifier (LEI) was a natural extension when it was conceived a few years after FIGI. Once the GLEIF (which oversees the LEI scheme at the behest of global regulators) allowed firms to apply for accreditation, Bloomberg did so, and in just under three years became one of the top 10 LEI issuing Local Operating Units.
Open Data helps our clients, it helps the industry as a whole, and allows us to focus on creating more valuable data, better quality data, innovate, and help our partners and clients innovate.
How do these open data standards help prepare for the future and new things?
Open data, unfettered by licensing and restrictions, provides a common platform for innovation across the industry. There are no committees to convene, no lawyers to consult, no business models to construct, or need to spend more industry money to create a new utility.
One example right now is the Benchmark Regulation (BMR) in Europe requiring the identification of benchmarks. As part of our process in supporting FIGI, Bloomberg already issues FIGIs for benchmarks and a quick analysis found that FIGI covered near 100% of the required benchmarks impacted by the regulation.
This means that there should be no need to create some other industry supported entity, or to spend more industry money to create a new identifier (or expand an existing one) that would not be open and require industry participants to pay for and license something required for regulatory compliance.
As ESG and cryptoassets become more prevalent, identifying these types of assets in the many different contexts they will be used is critical. Out of necessity, there are many bespoke identifiers, and some standard identifiers that already exist. FIGI is built to be able to tie these together, and provide a foundation of open data to enable the industry. Even if firms have adopted another identifier, they do not have to change anything internally. Mapping to FIGI is simple, and carries no data costs, and does not impact a firm’s existing infrastructure. In the cryptoasset space, there are other identifier standards like ITSA, and the proposed DTI from ISO that could interoperate with FIGI as well. Even existing exchange ID’s and IDs from cryptocurrency and crypto asset providers could interoperate with FIGI.
In the ESG space unambiguous identification of compliant assets is crucial, and FIGI as an open data identifier can help the industry to achieve compliance.