February 9, 2018

ISDA has published the results of the 2017 FpML Survey

ISDA today released the results of the 2017 FpML Survey. The survey was jointly conducted by ISDA and Ernst & Young.


33 firms representing buy and sell side firms, technology firms, funds and infrastructure providers (clearing houses, execution facilities and trade repositories) responded to the survey. The survey reports a large increase in FpML use, measured by daily message volume driven by the increased use for regulator reporting.


Link to the survey: http://bit.ly/FpML-survey



Executive Summary:


• The survey report contains responses from 33 firms representing dealers, technology firms, asset and fund managers, clearing houses, trade repositories and execution facilities. These firms use FpML across the five derivative asset classes (Rates, Credit, Equity, FX and Commodities); and Loans and Repos.


• Regulatory reporting is a major functional addition to FpML since the last FpML Survey. FpML is used for regulatory reporting in every major jurisdiction and every major reporting regime in Asia, Europe and the US. Survey respondents also indicated that, in the near future, regulatory reporting is one of the most important areas for FpML to expand and further develop. This validates the efforts and focus in recent versions on regulatory reporting, work that will continue in 2018.


• Regulatory reporting and confirmation are the two business areas where there is most FpML usage. Usage is strong both for internal purposes (e.g., communication between systems) and in external processes (e.g., regulatory reporting).


• Several parties report volumes of over 1 million FpML messages on a daily basis with a high of 10 million daily FpML messages. Even though not all firms responded to the volume questions, we see a large increase in message volumes compared to the last survey. An important part of the increased volume is related to regulatory reporting.


• Regulatory reporting and internal processing are the top 2 areas where firms are looking for further development in 2018. The FpML Standards Committee continues to work on improvements to the overall reporting framework to ensure it covers the reporting requirements in all jurisdictions and to address complexity concerns (an issue raised by survey participants as a barrier to usage). The LCWD for version 5.10a, published in December 2017, contains the reporting redesign work, which is addressing lessons learned from 5 years of regulatory reporting.


• Multiple versions of FpML are in use across the industry and also within firms. Differences exist along product lines (e.g., rates versus equity) or functional lines (e.g., reporting versus clearing). We see a decent uptake of the newest versions of FpML.


• Half of the respondents are actively involved in the development of the standard through participation in working groups or the Standards Committee. The fact that 50% are not actively engaged in the development but use the standard, speaks to its maturity.


• Distributed Ledger Technology (DLT) and smart contract are moving beyond the proof of concept phase. Of those firms involved in blockchain or DLT projects, some have used or are thinking about using FpML. The review of the FpML product models to facilitate DLT and smart contracts is a key priority of the FpML Standards Committee in 2018. It fits into the broader work ISDA is undertaking with the development of the Common Domain Model (CDM), a key priority for the organization.


• Version management and migration to newer versions has been flagged as a pain point throughout various parts of the survey. The FpML Standards Committee will consider these issues in 2018.