I get a strong sense of deja vu reading about the elusiveness of data standards in the investment advisory industry. Industry insider David Fetter says: “The source-of-record data custodians have conventions they implemented many years ago, and their systems would have to be rewritten to comply with new standards”. The way around this is data exchanges – hubs that mediate between proprietary systems.
Data exchanges work by implementing standards on behalf of a community. An exchange basically uses a standard to translate between different languages. The transacting parties save time, money and disruption by continuing with their existing systems but gain trading access to the whole community.
It's interesting to see exchanges described as an alternative to standards when they are actually implementations of standards. An exchange is a community-based standardization effort. An exchange may be easier to fund and grow than a standardization initiative based on collaboration among leading players. This is a valid way for an industry to evolve.
Exchanges can also reduce some of the complexity of exchanging information with value added services. But we are keen to make it easier for developers to consume ACORD Standards into their systems as well. And by doing so, Exchanges will also need to evolve value propositions. All too often, intermediaries of all sorts do nothing more than capitalize on the inefficiency of a business or market that should not exist in the first place. Let's spend money on innovation. Data Standards Elusive