FpML® (Financial products Markup Language) is the business information exchange standard for electronic dealing and processing of financial derivatives instruments. It establishes a new protocol for sharing information on, and dealing in swaps, derivatives and structured products. It is based on XML (Extensible Markup Language), the standard meta-language for describing data shared between applications. All categories of over-the-counter (OTC) derivatives will eventually be incorporated into the standard.

The standard, which is freely licensed, is intended to automate the flow of information across the entire derivatives partner and client network, independent of the underlying software or hardware infrastructure supporting the activities related to these transactions. FpML is of value when the direct communication of derivative trade descriptions and environment information between two firms is desired. Ultimately, it will allow for the electronic integration of a range of services, from Internet-based electronic dealing and confirmations to the risk analysis of client portfolios.

FpML has been designed to be modular, easy-to-use and in particular intelligible to practitioners in the financial industry. It is expected to become the standard for the derivatives industry in the rapidly growing field of electronic commerce. Some important benefits in using FpML include:

  • Financial instruments are specified in a format that is readable to both computers and humans. This enables system-to-system communication within business-to-business e-commerce applications
  • Financial information can be readily exchanged between diverse sets of applications, as applications and technology vendors provide both turn-key applications and core technology that support FpML-based information exchange
  • Processing costs will be reduced as a result of lower communication costs between applications and lower system implementation costs

The wholesale financial services market can take advantage of interactive technology to reduce operational risks while increasing business opportunities.

For more information on the FpML standard, visit  www.FpML.org.