The timeliness, accuracy and integrity of global reference data is of fundamental importance to the risk management and cost mitigation objectives associated with straight through processing. Reference data has been described as the lifeblood of the trade process and is used in virtually every transactions processing system within the financial industry.

Because of its importance, a significant number of firms and industry groups have been defining the core issues and challenges associated with reference data on an independent basis. The purpose of the Reference Data Coalition (REDAC) is to ensure that the multi-dimensional and complex data requirements for STP automation are well defined and clearly articulated to all involved parties, facilitate coordination among the various reference data initiatives, and promote the development of practical solutions that are aligned with global industry objectives.

I. Primary Objectives

The overall goal is to define the data elements – and the essential industry standards - needed to precisely describe assets and account entries required for global trade cycle processing. The primary objectives of REDAC are:

1. To act in coalition with other industry bodies to ensure that data reference requirements for STP are well defined and clearly articulated to all involved parties, specifically related to multiple-listed and other “non-traditional” securities. The goal is to resolve the information needed for instrument, client/counterparty, trade specific and accounting identification - throughout the security lifecycle (creation, research, trade, confirmation, settlement, clearing, reporting) – as well as how it will be collected, disseminated and implemented by industry participants.
    
2. To evaluate and promote coordination among the standards activities affecting reference data. REDAC will help ensure that standards bodies are aligned with industry requirements and will help drive these standards toward implementation on a global basis.
    
   • Standards for identification - including numbering schemes, instrument symbology, sector codes and business entity relationships required for unique and precise identification
      
   • Standards for content - to ensure that there is a common understanding of all reference data attributes needed to describe assets and account entries (market data ontology) particularly within security master files
      
   • Standards for communication – focusing on trade messages and standing settlement instructions.
      
3. To act in coalition with other industry efforts to define the entities responsible for providing the information required (roles and responsibilities) throughout the information chain and help identify alternative sources of required information.
    
4. To ensure that the operational challenges associated with implementation of solutions are well defined and viable – and ensure that the commercial models are not an impediment to global electronic commerce.
    
5. To coordinate reference data activities and ensure broad participation by all segments, functions, groups and entities (i.e. asset managers, broker/dealers, custodians, vendors, exchanges, depositories, standards bodies, regulators and numbering agencies) involved in the transactions lifecycle.

II. Types of Data

Instrument symbology

• ISIN
• national numbers
• proprietary numbers
• cross-reference identifiers

Instrument descriptors

• coupon rates
• maturity
• restrictions
• ex dividend

Legal entity identifiers

• ownership structure and hierarchy
• parent, subsidiaries

Global sector code identification

Trade specific information

• Price
• Quantity
• Location – place of trade

Standing settlement instructions

• fund level
• market level
• instrument level

Client/Counter-party identifiers

Asset management information

Corporate action specific data

III. REDAC Operations and Governance

REDAC is an inclusive international forum being facilitated by the Financial Information Services Division (FISD) of the Software & Information Industry Association.

REDAC Organizational Structure

• REDAC Steering Committee
  
  Governs the overall operations of REDAC, directs its projects and activities, recommends issues and resource allocation priorities, votes on the acceptance of final projects and ensures that REDAC is conforming to the overall goals and objectives of its mission.
  
  Chair: Nominated by a majority vote of the Steering Committee for a one year term of office. No limit on the number of terms served
  
  Composition: Consists of no more than 12 members (no more than four and no fewer than three) representatives of each group – asset managers, custodians, broker/dealers
  
  Election Process: Appointed by the REDAC Steering Committee Chair
   
• REDAC Advisory Committee
  
  Serves in an advisory capacity to the REDAC Steering Committee and Secretariat, overseas the status of active projects, identifies core issues to be addressed, recommends steps to be taken to move projects forward, and ensures that communication processes are in place and operational.
  
  Composition: Consists of representatives from the following core industry segments - custody, broker/dealer, vendors, investment managers, exchanges, and industry utilities (i.e. numbering agencies, standards bodies, industry groups). Advisory Committee members are self selecting and are included by virtue of their active participation.
   
• REDAC General Members
  
  Any employee of all financial-related entities may participate in the projects, activities and discussions of REDAC by adding themselves to the REDAC database (via www.fisd.net). All participants in the REDAC database have the right to receive notices of REDAC meetings and related activities, receive information related to REDAC issues and activities, and participate in the development and implementation of REDAC initiatives.

REDAC Decision Making Procedures

REDAC is a coordinating body and strives to operate by consensus. If consensus cannot be achieved, projects, documents and decisions are considered final when they are approved by a 2/3 majority of the REDAC Steering Committee, plus ½ of each of the three primary constituency groups (broker/dealer, custodian, asset manager). All votes will be announced at least one week in advance. Voting may be conducted electronically.