Reference data is a catch all term used in the finance industry to describe

counterparty A counterparty (sometimes contraparty) is a legal entity, unincorporated entity, or collection of entities to which an exposure of financial risk may exist. The word became widely used in the 1980s, particularly at the time of the Basel I deliberat ...

and

security" \n\n\nsecurity.txt is a proposed standard for websites' security information that is meant to allow security researchers to easily report security vulnerabilities. The standard prescribes a text file called \"security.txt\" in the well known locat ...

identifiers used when making a

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

. As opposed to

market data ''For market data as used in marketing, see marketing information system'' In finance, market data is price and other related data for a financial instrument reported by a trading venue such as a stock exchange. Market data allows traders and ...

the reference data is used to complete financial transactions and

settle Settle or SETTLE may refer to: Places * Settle, Kentucky, United States * Settle, North Yorkshire, a town in England ** Settle Rural District, a historical administrative district Music * Settle (band), an indie rock band from Pennsylvania * ''S ...

those transactions. The financial service industry and regulatory agencies have pursued a policy of standardizing the reference data that define and describe such transactions. At its most basic level, reference data for a simple sale of a stock in exchange for

cash In economics, cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-im ...

on a highly liquid stock exchange that involves a standard label for the underlying security (e.g., its ISIN), the identity of the seller, the buyer, the broker-dealer(s), the price, etc. At its most complex, reference data covers all relevant particulars for highly complex transactions with multiple dependencies, entities, and contingencies.

History

Standardisation efforts

The background for this policy is the risk that transactions fail and are reversed because contractual terms were misunderstood or ambiguous. In addition, the lag between the trade and ultimate

settlement Settlement may refer to: *Human settlement, a community where people live *Settlement (structural), the distortion or disruption of parts of a building * Closing (real estate), the final step in executing a real estate transaction *Settlement (fin ...

of the transaction may include various events that affect various elements of the transaction. Efforts to standardize reference data are complicated by a number of factors, including: * Semantic differences in common terminology * The sheer number of data elements that make up transactions * Rapidly changing markets, products, and underlying events * Static Data * Dynamic Data * Bounded Data As a result, work to standardize reference data is broadly considered to be an ongoing effort rather than a series of discrete programs.

Types of Data

There are many fields included in reference data. Some of the most common include: * Instrument classification (e.g., large vs small, tenor, region, sector) * Sale information (e.g., ISIN, seller identity, buyer, price) * Market Identifier Codes (ISO 10383 MIC)

References

{{DEFAULTSORT:Reference Data (Financial Markets) Financial markets Financial metadata Settlement (finance)

History

Standardisation efforts

Types of Data

See also

References