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

counterparty A counterparty (sometimes contraparty) is a Juristic person, 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 ...

and

security Security is protection from, or resilience against, potential harm (or other unwanted coercion). Beneficiaries (technically referents) of security may be persons and social groups, objects and institutions, ecosystems, or any other entity or ...

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. Traders generally negotiate through a medium of cr ...

. As opposed to

market data 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 investors to know the latest price and see historical trends for instruments ...

the reference data is used to complete financial transactions and settle 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 Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...

in exchange for

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

on a highly

liquid Liquid is a state of matter with a definite volume but no fixed shape. Liquids adapt to the shape of their container and are nearly incompressible, maintaining their volume even under pressure. The density of a liquid is usually close to th ...

stock exchange A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for ...

that involves a standard label for the underlying security (e.g., its

ISIN Isin (, modern Arabic language, Arabic: Ishan al-Bahriyat) is an archaeological site in Al-Qādisiyyah Governorate, Iraq which was the location of the Ancient Near East city of Isin, occupied from the late 4th millennium Uruk period up until at ...

), the identity of the seller, the buyer, the

broker-dealer In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...

(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 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 (ISO 10962) (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