EDM Enterprise Data Management Software

Financial Product Taxonomy Solution

Adopt a unifying product taxonomy strategy for STP, oversight, and accuracy

Assigning product codes to trades before they reach the trade store for transaction reporting starts with a financial product taxonomy solution. Begin by applying a standardized product classification code when any instrument is onboarded for trading – the nirvana

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Standardized Product Codes Across all Lines of Business

Of course it makes sense, but trading systems each have their own product codes, there are various in-house product classification and categorization schemes that have evolved over time, financial data vendors have proprietary product codes and ISDA, ESMA and ISO each provide industry standard classifications too. That’s the starting point for most banks when looking to improve transaction and risk reporting with the help of a financial product taxonomy solution.

The challenge of a workable product taxonomy across the bank is increasingly coming to the attention of Chief Data Officers. It’s critical, from the perspectives of regulatory reporting and management information, to be able to categorize everything that has been sold or traded by the bank in any given period. The challenges include myriad levels of granularity and hierarchies that exist among the many product classification and code schemes in use. The essential requirement is that the financial product taxonomy solution is able to identify and make visible the unique attribute by which it can be categorized.

Post-trade product stamping, i.e. assigning a product classification for straight through processing in transaction reporting and risk management, is a key use case and often the litmus test of a good financial product taxonomy solution. Doing business faster, because product onboarding is completed quicker, is the key commercial benefit from a practical product taxonomy.

Financial Product Stamping, Financial Product Taxonomy

GoldenSource Financial Product Taxonomy Solution

  • Puts in place a standard set of product codes, driven by a central standardized taxonomy, which is cross-referenced to all other classifications and hierarchies used in the normal course of business
  • Manages data relating to everything a bank sells to its customers, including investment banking and commercial banking clients
  • Can assign a product code anywhere along the trade lifecycle from execution to reporting
  • Handles any number of internal and external classifications, including ISDA and Classification of Financial Instruments (CFI) – ISO 10962, out of the box
  • Visualizes the completeness of product-related processes and monitors them against service level agreements to help ensure that CDO policies, internal customers and reporting deadlines are satisfied
  • Enables product codes to automatically change over time due to variables such as date: ‘long term’ instrument if days to maturity greater than 365; changes to ‘short term’ instrument when it becomes less than 365
  • Assigns related valuation models and limits & reserves to relevant products
  • Handles all levels of a hierarchy, e.g. ‘credit index tranche’ is a sub-product of the base product ‘index tranche’
  • Visualizes the universe of products, who owns them, who has requested a product to be approved for trading, upcoming re-certifications, status of onboarding and approvals processes
  • Practical approach that defines a set of enterprise product attributes, cross referenced to attributes and domain values in consuming systems, and used to create product lookup rules

All non-GoldenSource systems can access the standardized product codes via the product taxonomy and product stamping service made possible by GoldenSource Product Master, which means that accurate product information is always available across all business systems to support product-related processes.

Benefits

  • Chief Data Officers ensure full control and governance of product taxonomy, product data and all related hierarchies and classifications
  • Operations teams ensure greater straight through processing with consistent use of product codes across the bank
  • Regulatory and compliance teams can be confident all trades are assigned to the correct product codes and have access to the industry classification schemes used in regulatory and compliance reporting
  • Fast, dependable product stamping at any stage in the trade lifecycle from execution to reporting
  • Continuous visibility of the product universe, the owners and all upcoming and ongoing changes and re-certifications
  • Faster, smoother onboarding of new products to be traded and faster setup of products to be sold across the bank

 

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