June 9, 1999
J.P. Morgan, PricewaterhouseCoopers propose FpML, a new e-commerce standard
=46inancial products markup language handles FX and fixed income derivatives
J.P. Morgan & Co. Incorporated and PricewaterhouseCoopers LLP today=20
announced the release of FpML=81 (financial products markup language),=20
a new protocol for Internet-based electronic dealing and information=20
sharing of financial derivatives, initially handling interest rate=20
and foreign exchange products.
The specification, which will be freely licensed, is expected to set=20
the standard within these industries for the rapidly growing field of=20
business-to-business electronic commerce. Based on XML, the emerging=20
Internet standard for data-sharing between applications, FpML enables=20
Internet-based integration of a range of services, from electronic=20
trading and confirmations to portfolio specification for risk=20
Thorkild Juncker, head of e-commerce for J.P. Morgan's Global Markets=20
business, commented: "We believe the wide adoption of this robust=20
standard is the most efficient way to bring the benefits of=20
electronic commerce to our clients. As an innovator in the wholesale=20
financial services industry, we view FpML as a cornerstone of our=20
Edward Hoofnagle, director of technology and e-business of the=20
=46inancial Risk Management Group at PricewaterhouseCoopers, noted:=20
"Until now, the benefits of this type of connectivity have been=20
reserved for the retail financial services world. This markup=20
language will allow the wholesale financial services market to take=20
advantage of interactive technology to reduce operational risks."
Morgan is actively working on a suite of client services that employ=20
=46pML, including trade execution, confirmation, valuation, risk=20
analysis, and the exchange of market data. PricewaterhouseCoopers=20
will use FpML to address financial and operational risk management=20
issues for its clients and will also support the industry's adoption=20
of FpML and related solutions.
J.P. Morgan and PricewaterhouseCoopers are both working with market=20
participants to achieve the benefit of this proposed standard. A=20
series of workshops and seminars, the first of which is to be held in=20
July, will help market participants, software vendors, consulting=20
firms, dealers, and industry trade groups to understand, adopt, and=20
use FpML. For more information on the workshops or on the FpML=20
language itself, visit www.fpml.org.
J.P. Morgan & Co. Incorporated is a leading global financial firm=20
that meets critical financial needs for business enterprises,=20
governments, and individuals. The firm advises on corporate strategy=20
and structure, raises capital, makes markets in financial=20
instruments, and manages investment assets. Morgan also commits its=20
own capital to promising enterprises and invests and trades to=20
capture market opportunities.
PricewaterhouseCoopers (www.pwcglobal.com) is the world's leading=20
professional services organization. Drawing on the knowledge and=20
skills of 155,000 people in 150 countries, we help our clients solve=20
complex business problems and measurably enhance their ability to=20
build value, manage risk, and improve performance.=20
PricewaterhouseCoopers refers to the U.S. firm of=20
PricewaterhouseCoopers LLP and other members of the worldwide=20
Christopher Molanphy, J.P. Morgan (1-212) 648-8213
Stacy Joyce, PricewaterhouseCoopers (1-212) 597-3378
Jeffrey Saltz, J.P. Morgan (1-212) 235-5095
Edward Hoofnagle, PricewaterhouseCoopers (1-212) 596-5491
How does FpML relate to other standardization efforts?
3. What is XML?
Today, web sites often provide information such as market rates and=20
tools as option pricing. However, these web pages contain only HTML=20
(unstructured text and images) and Java applets (applications=20
embedded into a web page) which are good at displaying data, but do=20
not allow direct access from within a business application. In other=20
words, to get the actual data displayed on the web into another=20
application is often extremely difficult.
XML (eXtensible Markup Language) enables applications to easily share=20
data (for example, between a dealer and their clients). One can think=20
of XML as a human and machine-readable file (in an industry standard=20
format) that will allow a dramatic improvement a firm's ability to do=20
4. How does FpML relate to XML?
While XML is a standard, only the syntax has been standardized. To be=20
useful, each industry is required to define a common set of=20
industry-specific definitions. Several organizations have been=20
working to define these market-segment-specific definitions. Examples=20
of languages in progress include FIX, for the equities market, and=20
OFX, for consumer financial activities. However, there has not yet=20
been an effort to standardize product and trade information for=20
foreign exchange and fixed income derivatives.
5. How does this standard relate to others (i.e., FIX/FIXML, OFX, etc.)?
There are many standards related to financial data processing for=20
retail and commercial banking. Some of these standards and governing=20
bodies, such as SWIFT and FIX, have an established history of=20
successfully standardizing certain classes of financial transactions.=20
Other standards, such as OFX, have recently been introduced, and are=20
still evolving. All of these protocols have enabled market=20
participants to lower transaction costs and reduce the operational=20
risks associated with transaction initiation, confirmation, and=20
There are currently no standards in active use to address the=20
financial derivative markets, such as FX options and interest-rate=20
derivatives (e.g., swaps). A standard for financial derivatives=20
(e.g., interest-rate products) has not evolved for a variety of=20
reasons, some of them technical and some of them related to the=20
proprietary nature of capital markets banking.
6. Where can I get a copy of the standard?
The standard is freely licensed, and will be made available soon.