Comparisons of how three international bodies provide metadata for five commonly used asset classes will be available for financial analysts and other users from a third data source added by the Treasury Department’s financial research arm, the agency said Monday.
According to the Treasury’s Office of Financial Research (OFR), the five asset classes included in the new data source – the Financial Information eXchange (FIX) Protocol – are equities, debt, options, warrants, and futures. The FIX Protocol was added to the agency’s Financial Instrument Reference Database (FIRD), which previously contained two other data sets.
According to the OFR, expanding FIRD with the additional data source will help researchers understand where financial industry participants speak the same language and where they don’t. “A common language for financial instruments used across the financial markets will improve data quality and, as a result, financial stability monitoring,” OFR Deputy Director of Operations James Martin said in a release. Martin has performed the duties of OFR director since February, replacing Dino Falaschetti, who left the agency that month.
According to the OFR, FIRD helps to identify where reference data is standardized and where there are inconsistencies. The database was required under the 2010 Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
“Financial instrument reference data describes the terms and conditions of these contracts,” the OFR said. “Some contracts have standard terms, definitions, and formats, while others do not. These inconsistencies can hamper regulatory oversight of firms, markets, and the financial system as a whole. These inconsistencies also impede companies and investors in managing their risk.”
According to the OFR, the FIRD now shows how three data standards – ISO 20022 (an international data standard for financial messages adopted in 2020), ACTUS (the Financial Research Foundation’s data dictionary), and FIX – provide metadata definitions for each of the five asset classes. “This allows users to compare definitions used in the financial sector and identify where there are inconsistencies. The format, design, and functionality make the text searchable, and the definitional relationships and properties clear,” the agency said.