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Dennis Wisnosky




20150914 FIBO-FBC FCT


Comments to date on FBC?  Apart from Michael U's comment on unreadability of diagrams, we haven't seen any new comments on the submitted document.


There are no slides today.


From the minimal feedback received, Elisa believes there are no show stoppers. MU has a few things we should discuss but none of these are show toppers.


Gareth has sent some comments on the PDF ­ Elisa is going through those now.  Some are already addressed in the current version.


There are also comments from Citi. Elisa walks through Ian Maung's comments for Citi.  Tracey is also on the call, with Gareth.  There is a 2nd set of Garth and Tracy's comments to be actioned. We will capture all the changes that are needed, as JIRA issues, and these would then be actioned by the FTF. If the spec does not go forward then these could be actioned between now and November instead. Otherwise they get actioned after December, by the FTF that would be chartered in December.


Discussion of Citi comments.  Definition of Monetary System as used in definition of Central Bank. The definition for Central Bank came from Investopedia. We think. If we want to revise it to use the word Country instead of Nation (to be consistent with FIBO's terminology for Country) we can do that. There is already a JIRA FBC­60 to cover this.  What about "group of nations" ?  No, change Nation to Country in both instances.  This is an ontology matter not terminology matter: we just wanted to make sure that the concept referred to in the definition is identifiable as the FIBO concept we have labeled as Country. We can add Nation as a synonym for Country that would be a JIRA issue for Foundations. There is a concept labeled SovereignState ­ this is intended to refer to the kind of Sovereign not to the kind of Geopolitical entity, and so is not synonymous. The label (IRI) can be revisited at tomorrow's BE as we thought this choice of label might cause exactly the kind of confusion we just saw.


Next comment: Regulatory Agency/ Fig 9 and Table 9­1450  (page 100).  This came from various dictionaries.  The question was whether human activity is different from activities that are conducted by organizations.  Elisa suggests no.  Elisa will raise an issue to clarify the definition. This is based on the fact that organizational activity arises from human activity ­ so the definition slightly mismatches what’s asserted in the ontology unless the above is considered as implied.  A better way of making the implied linkage is to remove the word "human".  We would not expect to make this change in the definition today, this will be dealt with in FTF.  There will be plenty of time to make these improvements in definitions in FTF.   


Next Citi comment: the list of regulators is incomplete. What we have in FBC does not include self­regulating organizations like INRA and the FINRA.    This omission could be considered as a significant shortfall­ to be discussed.  We have individuals for regulators and for registration authorities.  We know we have all the ones listed for banking regulations in the US, but we don't have all the ones or the securities markets.  Those would include the missing self­regulating orgs, like TCC, DTCC.  The question is do we need those now or can they be handed in the Securities specification?  Are there regulators missing from this list that are important for multiple specs i.e. more than specifically Securities?  Also concerned (Richard) about the absence of non US stuff.  We need at least 2 new ontologies, to cover the banking entities and FIs that are EU specific, and the regulators that are EU specific. Gareth questions? Assuming we can still add things in the review process. When we start talking about clearing, what level of granularity is appropriate for FIBO? There are a lot of these, and some of these are updated on a monthly basis and would not be suitable for maintaining information in the OMG. The aim is to have ones that are significant enough to the banking / securities etc. ecosystems as a whole,  e.g. for central counterparties.  They manage several repositories.  Isn't the matter of central counterparties, specific to OTC derivatives? No, there are also CCPs for MTFs.  We need better knowledge of which kinds of markets are what belongs in the Securities spec, the Derivatives spec versus the overall requirement for FBC. Every country has an exchange, a depository, clearing houses associated with futures and options, and various other things.  Some of these are specific to securities or to derivatives, some are broader.  For FBC we only need to have those things that cover multiple markets, such as ECB and ESMA.  There is a lot of  knowledge about this kind of thing in the broader EDM Council literature. 


Jeff: Central Clearing counterparties and Trade Repositories have been set up for ITTC Derivatives markets. There are other kinds of clearing houses etc. for securities markets and so on. The post­DF stuff means that stuff that is specifically set up for derivatives may not remain that way ­ and so should arguably be in FBC.  So those which could cover both derivatives and securities, such as unique trade identifiers, would eventually cover more than just the derivatives markets. So they are not specifically derivatives market related initiatives.  This is so that regulators can aggregate this information. So that kind of thing would need to be in FBC.  Instruments, regulators and registries that would cover multiple domains in FIBO , are what should be in FBC. 


We don't have a definition for a Trade.  We don't have the definition for a Trade Identifier.  If we need those, those are complex.  For Trade, there is a UTI (Unique Trade Identifier, Unique Transaction Identifier) where FSB is calling for harmonization of the UTI.  There are several swap and data repositories in EU and US which did not yet agree about how the UTIs would be minted and ditributed. There is a concept of an end to end trade between a buyer and seller in the food chain.  In the course of executing that trade, there are several paths.  Each hand­off in the tax supply chain is considered a transaction.  For STP, the end picture is becoming very complex.  The whole operational slide of trade has got more complex with the introduction of central  repositories, identifier etc.  They started to model that with Nordea internally.  This includes the notion of a trade and a trade Identifier.  This was just where the bank was either a counterparty or a broker.


Does the definition of Trade belong in FBC?  Clearly this is needed in the Derivatives ontology. MB notes that securities transactions is a whole other spec that would be done with reference to FIX.  We also have a more generic concept of Transaction, which is in Red Foundations, and is well developed.  In the current concepts, are we distinguishing trades from positions, inventory.  The notion of Trade cuts across all the different FIBO domains. So the goal of FBS is to provide a layer of horizontal concepts.  We need financial specific Transaction, in FBC.  The more abstract Transaction is in Foundations. The Transaction model in Foundations involves the mutual exchange of commitments, each of these involving some economy resource (also thought of as Assets). It also involves a contract.  Everything you need about this is already in Foundations (REA).  If you need in FBC the financial markets specific variants, e.g. UTI, regulatory stuff. There are also a couple of kinds of transactions, including ones where some commitment to a series of future cashflows.  So FBC needs the finance specific extensions of Transaction.  FBC also needs finance specific extensions of positions and holdings. 


Is there such a thing as Financial Instrument?  Yes, see FBC spec.24  What about Cash?  Cash Instrument and Cash are entirely different things (Cash Instrument here refers to an instrument that can be easily liquidated.  Cash is essentially a contract in which there is a "Commitment at Large".  Cash also embodies a unilateral commitment at large.  So it is also a written contract.  Contracts which include unilateral commitments, are also regarded as contract.  Canadian notes simply say they are legal tender for debt, but does not make explicit commitment by the central bank.  Raise an issue against Foundation relating to Transferable Contracts as some transferable contracts.  Transferable Contract still rises some issues for some people. This can be reviewed in Foundations and we can improve the labels between bilateral versus bipartite.


The question for today is, are some of these gaps too large?  We don't want to put this out by a meeting cycle.  Elisa concerned that some of what we need to do in FTF is considered too big to add in an FTF in the OMG process.  What we need from the bankers on this call is that we are ready to publish and that we would have changes later that would not be prohibitive to people using the spec.  Is it sufficiently well baked that it can get past the AB for publication.  So the question is whether, without the EU stuff, it is suitable to be used right now. 


Have we tried to model the IMF and the World Bank?  No.  Are these an omission?  The conference starts Monday. When must any further paperwork be in?  If we change anything, an Errata version would need to be in by Friday.  That would take 2 weeks.  If we don't change anything, we are on track for an FTF vote on Tuesday. 


The Question: Are we confident with what is posted per 28 August, that's on the wiki?  Answer?  Assuming we have the core concepts ­ question for the bankers is, is the spec as you have read it, sufficient for you to do something with the spec? Or not?  (there are seemingly no bankers on today's call)  On a previous meeting, bankers were asking that we move forward with this. Richard recalls that the same individuals also said that we care more that it is right, than when.  We base our Go / no go decision on whether the banks say that this represents something they can use now, or not.  Ian's comment was that the list of US regulators was not complete but that the remaining ones would be added in Securities, unless it turns out they also relate to Derivatives. In that event, anything that's not unique to Securities can be added to FBC via the Securities RFC. 


ACTION: Tabulate the votes from the banks about whether the spec is actionable as it stands.  Particularly, Garth and Tracy, State Street, and Citi.  Elisa will list the open issues when she presents this to FDTF next week. All the ones seen to date can be done in FTF. Separately, there is a challenge in the AB about the process.  We have not yet heard from the other AB review, Sridhar. Elisa will have a walk through with Mike U for his feedback and will raise any issues in JIRA. 


AoB:  Richard has drafted a thing.  Asking the banks to weigh in on the spec as it currently stands, to determine if they can use it as it stands. Add 1 thing: "is there something valuable here for you to start with" as distinct from "has to be complete"  Change to " in order to start using it"  Or, is there something that would cause you so stop; is there a show stopper. Richard will send this out as amended above, as kind for Go / No go response ASAP.  Response to be copied to FDTF Co­chair(s).


Action items