I. Summary

• Billing Strategy and VRXML:  The FISD billing and administration improvement strategy has been defined and validated by the membership.  The outline of the basic strategy has been posted to the web.  VRXML is being adopted as a standard reporting format.  A VRXML change management process has been developed and is being implemented.  The preliminary VRXML glossary has been developed and is posted on the VRXML web site.  Discussions are underway on the creation of a standard VRXML invoice report providing inventory detail for automated reconciliation.
   
• Data Usage/Redistribution Project Initiated:  FISD members have initiated a project around the core issues associated with market data usage and redistribution.  The project focuses on the control of market data in datafeed environments and emphasizes the shared objectives of how to protect proprietary property and promote the widespread (legitimate) redistribution of the data. 
   
• Reference Data and ISO 15022:  There is a strong relationship between the MDDL vocabulary and the standards activities associated with ISO and 15022.  FISD has become a direct liaison to ISO TC68/SC4 and is an active participant on both Working Group 8 (business entities) and Working Group 11 (15022 data model).  Our liaison status gives FISD members a full voice in the standards development and implementation process.
   
• Business/Legal Entity Discussions Underway:  Significant progress has been made toward addressing the challenges of doing cross referencing between proprietary internal legal entity/funds identifiers among counterparties.  FISD/REDAC is working with SIA to develop a requirements statement.  Our findings will be presented at the next WG8 meeting in Frankfurt.
   
• MDDL 2.3 and Beyond:  FISD has released MDDL version 2.3 beta which incorporates basic setup and pricing for all asset classes where interest has been expressed.  Progress has been made on mddlQuery (how to ask for market data), mddlService (web service for exchanging documents) and fisdMessage (realtime distribution of quotes and trade reports).  A draft of 1.0-beta fisdMessage specification has been posted.  The results of the December 10 MDDL working meeting have also been posted.
   
• New FISD Governance Structure: The FISD Executive Committee (EC) adopted a new operational structure within FISD to ensure better oversight over all FISD activities and to provide better liaison between staff, members and the EC in managing the FISD agenda.  The result is the creation of four new Advisory Committees.
   
• 2004 Meeting Schedule:  FISD released an annual meetings calendar to help members schedule their participation in the various FISD events.  There are five types of meetings within FISD – general meetings, conferences/seminars, issue briefs, FISD weeks and steering committee meetings.  The new schedule is posted and will be maintained on the web.
   

 The FISD billing strategy focuses on two primary goals.  The first relates to the protection of proprietary property.  The second relates to reducing the costs associated with data management and administration.  The majority of our initial activity has been on the challenges related to payment processing and emphasizes three fundamental objectives:

1. Simplification of the formats and requirements associated with reporting.  Formats should be standardized and requirements should be as simple and consistent as possible.
   
   Ensure that the data that gets passed around the information chain is uniform, consistent and transparent.  Data consistency incorporates both vocabulary of the data (so there is no confusion about the data elements in our communications) and reporting cycles (so that there is no confusion about what data is represented by the invoice).
    
2. Simplification and rationalization of the business rules associated with market data management to promote electronic commerce and to reduce the burdens associated with administration.

After VRXML the next area of focus is on electronic invoices (from both exchanges and vendors) in VRXML as a common format for mapping into inventory systems.  Look for additional information related to electronic invoicing shortly.  During the Billing Working Meeting the membership created a VRXML management group to help address issues associated with change management, version control and glossary maintenance.  The chair of this initiative is Ron Jordan (NYSE).

The licensing of market data provides a critical revenue stream for information originators/distributors and represents a significant expense item for information consumers. As such, the policies, procedures and business models associated with the distribution and usage of market data are of essential interest to everyone involved in the information distribution chain. The lack of control over data redistribution (particularly in datafeed environments) is still one of the biggest challenges in the industry because datafeeds are still technically “uncontrolled” -- and if not properly managed can result in under-reporting, unauthorized redistribution and other forms of revenue leakage.

Because of this, a number of FISD members (with the authorization of the Executive Committee) have initiated a project around the core issues of market data usage and redistribution.  The overall goal is to put some additional context around the redistribution discussion by identifying the primary categories of revenue leakage, defining and prioritizing the full range of potential industry responses and recommending a series of activities designed to both protect proprietary property and promote widespread (legitimate) data redistribution.  The scope of this activity has not been fully defined – and all members are invited to participate in its design.  An outline of the redistribution issue is posted on the web and formed the basis of a roundtable discussion during the December meeting.

Reference data and standards continue to be hot because the efficiency hypothesis continues to receive validation by the industry.  In essence, the issue is being driven by the desire to reduce costs and improve operational efficiency.  The discussion is mainly about reference data and its role as the fuel of STP.  Settlement cycles continue to shrink, shorter cycles mean that more automation is needed and automation needs accurate and compatible data.  Because of its importance, FISD has become active in these discussions.  The overall objectives are: 

1. To provide a mechanism for coordination and a common global voice on the information infrastructure requirements for STP.  We want to make sure the various parties involved in transactions processing and securities operations are coordinated – and ultimately to be able to communicate STP requirements with a single voice.

2. To make sure FISD members have a strong and well coordinated voice in all relevant standard setting discussions – because standards are one of the key enabling factors related to the reference data and STP discussions.

3. To ensure that the MDDL specification and vocabulary are comprehensive for all asset classes and technical applications as well as to ensure MDDL compatibility with all other major XML initiatives (particularly the 15022 Data Field Dictionary)

• The first is the challenge of identifying all the legal entities that financial institutions do business with.  This limited universe (not to be confused with the identification of ALL LEGAL ENTITIES) includes many entities without official reference numbers –such as corporate treasuries, institutional money managers, securities depositories, custodians, sub-custodians, agents of all sorts, municipalities, charities and the like.  Many of these entities are unregulated and there is no common identification code for transactions communications.
   
• The second is the challenge of identifying all the pools of money that financial institutions manage on behalf of their clients.  Most are not public (i.e. hedge funds and private pension funds) and need to be identified as part of the post-trade allocation process.

Interest in MDDL continues to grow.  The general assessment from the Working Meeting was that MDDL has transitioned from a concept/idea into the early adoption phase for the specification.  The conclusion is that we are at a critical pivot point – and as MDDL becomes more pervasive, the requirements of the standard, the supporting documentation and the maintenance authority (FISD) become more important. 

• MDDL 2.2-beta is currently “locked down” on request by several data providers who are implementing MDDL products -- until they complete acceptance testing and validation.  FISD is currently developing version 2.3-beta to incorporate more areas (e.g. entity identification, corporate actions, expanded debt setup, risk analysis, expanded pricing for swaps, etc.)
   
• Enhancements to the specification are underway.  A white paper on mddlQuery (permitting consumers to ask for market data) is expected shortly.  A draft of mddlService (web service for exchanging documents) should be posted by the end of January.  The draft version of fisdMessage 1.0-beta (realtime distribution) has been posted for member evaluation.
   
• The relationship between MDDL vocabulary and ISO 15022 is strengthening.  MDDL is a participant on ISO TC68/SC4/Working Group 11 – and charged with defining a financial industry data model and adding missing data elements (mostly reference data and corporate actions) to the 15022 data field dictionary.  It is our goal that the MDDL vocabulary becomes synonymous for the common content needed to define all data elements throughout the financial information transactions cycle.
   
• Members strongly reiterated the need for more documentation related to MDDL implementation.  Two documents are on the immediate documentation horizon.  The first is an introduction to MDDL (MDDL for Dummies) to provide an overview of the specification.  The second will consist of narrated examples encompassing fragments and individual concepts.

VI. FISD Governance Structure

To accommodate the requirement, the Executive Committee has created four new Advisory Committees – one for each category of FISD activity.  These new Advisory Committees are responsible for creating official FISD projects and managing their progress against stated objectives.  The four Committees are:

FISD projects are to be managed by working groups as established by the relevant Advisory Committees.  Participation on the Advisory Committees is limited to Executive Committee members.  Participation on the working groups is open to all FISD members.  Members may sign up to participate on the FISD working groups online (log into FISD.net.  Click on “Contacts.”  Enter password and ID.  Click on “Update my Record.”  Scroll to bottom and click on the appropriate project boxes). 

 VII. Meeting Schedule

Members have asked us to prepare an annual calendar of events to help facilitate planning and better coordinate activity participation.  The annual schedule has been posted to the web.  Meeting dates subject to change.  For planning purposes, FISD holds the following types of meetings:

• General Meeting: All FISD members.  Held quarterly to update members on the status of FISD activities. Executive Committee, Advisory Committee & Working Group meetings are held coincidentally.
   
• Steering Committee Meetings: Committee members only.  Board meetings for FISD Executive Committee, MDDL Steering Committee, VRXML Steering Committee and the Reference Data Coalition (REDAC) Advisory Committee.
   
• Seminars and Conferences: Everyone.  Fee-based meetings held periodically to address specific issues.
   
• Issue Briefs: All FISD members.  Periodic 90 minute sessions on a specific topic (not necessarily on the FISD agenda) immediately followed by a networking reception.
   
• FISD Weeks: FISD members by appointment.  Each month FISD staff travel to financial centers and hold one-on-one meetings with members.  FISD weeks also provide an opportunity to schedule working meetings on active projects.

Finally, FISD extends its thanks and appreciation to Merrill Lynch and NYMEX for the use of their facilities for the December meetings.  We are also indebted to the following sponsors for helping to underwrite the 2003 Holiday Party – Chicago Mercantile Exchange, Comstock, Gemini Systems, FT Interactive Data, Jordan & Jordan, The London Stock Exchange, Moneyline Telerate, The NASDAQ Stock Market, Telekurs Financial and The Roberts Group.