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Created: May 14, 2002.
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European Service Providers Develop Securities Financing Extensible Markup Language (SFXL).

Several service providers in the securities finance industry have announced support for development of an XML-based Securities Financing Extensible Markup Language (SFXL), currently in draft from SecFinex. SFXL is being developed as an industry standard for "information transfer in the highly fragmented securities finance market." The ten companies represent reconciliation service providers, risk management service providers, electronic marketplace providers, and transaction processing service providers. The initial draft specification governs the transfer of information on securities finance transactions; planned enhancements "will encompass securities inventories and the post-trade servicing of securities finance actions such as trade matching, billing, and marking to market." The SFXL format is being designed as an "open standard, freely available to all service providers and participants in the securities financing arena" and will be offered in its initial draft to Financial Products Markup Language (FpML) working groups. The ten initial company sponsors of the Securities Financing Extensible Markup Language have agreed to incorporate SFXL and FpML into their software systems. Securities financing is said to be a trillion-dollar industry, "with the size of the market estimated at between $1.5 trillion and $2 trillion worldwide."

Web Services under development: " is currently developing a number of web services aimed at the securities financing marketplace. Examples of upcoming web services include: (1) GetAvailability -- finds availability in the marketplace for a particular instrument; (2) GetTradeTicket -- retrieves an XML document containing trade ticket information for processing by back-office applications; (3) GetStockName -- returns the full stock name for a given sedol code; (4) UploadPositions -- uploads a spreadsheet on a user's local hard disk full of stock positions to a trading site..." [from the FAQ document]

From the announcement:

Ten (10) leading providers of services to the securities finance industry announced today that they are planning to embrace a common standard for securities financing industry data exchange. These include: [1] Reconciliation Service Providers: Pirum Systems Limited and Syntegra; [2] Risk Management Service Providers: Reech Capital and Securities Finance Systems Limited; [3] Electronic Marketplace Providers: SecFinex Ltd; and [4] Transaction Processing Service Providers: Anvil Software ARTS, Grips, OM OneWorld, Real Time Financial Management, and SunGard Securities Finance GLOBAL ONE.

XML (Extensible Markup Language) is a flexible way to create common information formats and share both the format and the data on the World Wide Web, intranets, and elsewhere. For example, computer makers might agree on a standard or common way to describe the information about a computer product (processor speed, memory size, and so forth) and then describe the product information format with XML. Such a standard way of describing data enables a user to send an intelligent agent (a program) to each computer maker's Web site, gather data, and then make a valid comparison. XML can be used by any individual or group of individuals or companies that wants to share information in a consistent way.

Carol Kemm, Director of SunGard Securities Finance (SSF) GLOBAL ONE, commented "in our position as software provider to a client base of over 250 firms using SSF products as their core securities finance solution, we are extremely aware of the size of the problem faced by market participants seeking more efficient STP. We believe that the development of this standard will provide a positive step forward in facilitating greater efficiency, and associated cost savings, for many of the system integration issues faced today."

Malcolm Clark, from Anvil Software, remarked, "Electronic market trading such as offered by SecFinex is the way of the future. Advanced industry players are connecting their front office trading and position management systems to electronic markets. This gives them the full power of the markets at their fingertips. The SFXL standard will ultimately make market-to-front office and front-to-back office integration so much easier." Rupert Perry, chief executive of Pirum Systems said: "Pirum are pleased to be supporting the SFXL initiative to develop open, freely available message standards for the securities finance industry. We believe these message standards will substantially reduce the cost of systems integration, enabling industry participants to quickly and easily link their systems to other customers and service providers."

Principal references:

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