Exclusive Online Only ContentFIF, Vendors Address Options Symbology Issues
June 12, 2008
An options subcommittee of the Financial Information Forum (FIF), a New York-based technology trade association, is working to help its members migrate to a new 21-character options symbology key in 2010.
“We are exploring the use of a nine-character industry options identifier for internal and counterparty communication,” said Manisha Kimmel, executive director of FIF, at the Securities Industry & Financial Market Association’s Technology Management Conference on Tuesday. “We are in discussions with the Cusip Service Bureau and Symbol Management Clearing Corp. [SMCC] to understand their offerings and to determine if there is value in establishing an industry options identifier.”
Kimmel, who moderated a panel discussion on symbology, said her organization also wants to promote industrywide practices for client communications, including paper-based and online confirmations and statements. “Subcommittee participants are discussing alternate symbol representations to replace the current 17-character code from the Options Price Reporting Authority that appears in many client communications,” said Kimmel. “The placement of the 21-character Options Symbology Initiative symbol has also been addressed.”
In March, a committee representing broker-dealers, exchanges and vendors and spearheaded by the Options Clearing Corp. (OCC) voted to move the deadline for U.S. listed options to adopt 21-character symbols. The extension, to February 12, 2010 from July 31, 2009, was intended to give firms more time to adapt trading, analytics, data storage and securities processing systems for the change. The Options Price Reporting Authority (Opra) will switch from five to 17 characters--a condensed version of the new symbols.
The Cusip Service Bureau, North America’s numbering agency, declined to comment on its talks with the FIF.
SMCC, a joint venture of Thorofare, N.J.-based SFB Market Systems (SFBMS) and Spooz Technologies in Chicago, said it will offer a free suite of algorithmic components to compress and decompress options data. “The algorithms implemented in these components compress the Opra and OCC-formatted 17- and 21-character fields into a nine-character field that can then be extracted back into their original formats,” said Lee Clifford, chief executive of SFBMS, which provides options exchanges with software to create and store symbols and to hit strike prices.
Volante Technologies, a New York-based market data integration company, says that its Composer software can also map new and old symbology formats. “Composer can also retrieve data from other sources to enrich the data, as well as spin off schemas for interim databases to manage data elements that may not fit into existing databases and applications,” explained Volante CEO Vijay Oddiraju in an interview.
Although the Options Symbology Initiative’s (OSI) goal is to keep exchanges from creating ad-hoc symbols, market data vendors, software providers and financial services firms say they will have to create proprietary codes to identify the listed contracts for client reporting and processing purposes. Many companies’ internal applications feed off of security master files, which were designed to accommodate only nine- or 12-digit alphanumeric codes.
The systems changes required to shift from a five-character designation have been compared to the Y2K efforts. Some firms have already set up centralized project management teams to ensure they are prepared.
“We have established a governance group consisting of an executive business sponsor and a technology sponsor to help Schwab support the new 21-character key,” said Ed Obuchowski, VP of technology for market data solutions at Charles Schwab & Co. in Austin, Texas, at the Sifma panel. “Setting up the correct governance structure is important to ensure the right decisions can be made about scope control.”
