Markets are down, and major investment banks have merged, yet investors continue to be inundated with analyst reports. The deluge is not letting up, but thanks to an industrywide technology initiative, the pile of studies may soon become tidier.
By Jeffrey Kutler
July 2001
Institutional Investor Magazine
Markets are down, and major investment banks have merged, yet investors continue to be inundated with analyst reports. The deluge is not letting up, but thanks to an industrywide technology initiative, the pile of studies may soon become tidier.
Fifteen buy-side and sell-side firms - including Credit Suisse First Boston, Fidelity Investments, Goldman, Sachs & Co. and Morgan Stanley - have written a technical standard to govern online research delivery. As producers and users of equity research adopt the specification - called RIXML, for research information exchange markup language - they will share a powerful sorting tool that is much more precise than today’s search engines.
To participants in the 15-month-long project, officially known by the Internet address RIXML.org, it marks a historic turning point: Financial institutions are cutting through their own noise and clutter to serve investors better.
But standardization on this scale is a major challenge, not least because competitors are trying to make common cause. The research initiative tailored a generic technology, the XML (extensible markup language) Internet programming protocol, to investment research. By labeling specific data elements with so-called tags, RIXML lets investors pinpoint their searches. Explains Joseph Sommer, director of U.S. electronic trading and connectivity services at CSFB and co-chairman of the RIXML.org steering committee: “Today a Web search might get you 80 pages. But can you get to the three you really want right off the bat? RIXML has the promise of getting exactly what you want when you need it.”
As if this one project were not complicated enough, RIXML is one of many XML programs that financial technologists are juggling and prioritizing and that will require work to be made compatible with one another. These include MDDL (market data definition language, a standard for real-time market feeds), backed by Bloomberg, Fidelity, Merrill Lynch & Co. and Reuters Group, among others; and XBRL (extensible business reporting language, for earnings and other disclosures), championed by Edgar Online, PricewaterhouseCoopers and others.
Wall Street being Wall Street, there is even a competing research standard. Multex.com proposed it - IRML (investment research markup language) - and the two are expected to converge. Standardized efforts can be messy; FIX, the pre-Internet financial information exchange protocol for electronic securities transactions, though a landmark, took years to get established in the 1990s. “RIXML is a leader,” says George Kledaras, CEO of New York-based trading systems vendor Javelin Technologies. “The people involved learned from FIX that the best standards are broad industry initiatives, not single-vendor.”
RIXML grew out of a broad consensus that the potential rewards outweigh execution risks and that a common method of classifying and filtering content is in everyone’s best interest. “We get what we need faster, and it frees up time for idea generation,” says Ellen Callahan, Fidelity’s director of equity market data.
Version 1.0 of the specification was published in June. Having reached this milestone, RIXML.org has opened an associate membership category for technology vendors. There’s talk of a version 2.0 later this year to cover fixed-income securities, economic data and other types of research.
Preparations are under way to post XML-enhanced reports on Web sites this summer, but individual firms are keeping mum while they iron out the wrinkles. “We can say that all participants are committed, and timetables are varied,” says Sommer.
John Thorne, who has built a research portal using RIXML, is enthusiastic but impatient. “Having the standard pushed our development forward by seven months,” says Thorne, CEO of London-based Researchsummary.com. “We’re just waiting for content. Now that there is demand for it, people should deliver it.”
