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06:43 AM

XML Offshoot Aims For Accuracy

Stock exchange gathers industry insight into VRXML initiative to simplify vendor reporting.

The New York Stock Exchange has said it will use the Vendor Reporting Extensible Markup Language in an effort to simplify its vendor-reporting requirements. The language was created to help improve the accuracy of reporting for stock exchanges, vendors that resell market data such as stock prices and volume, and financial-services companies. The NYSE is the first exchange to set forth an XML-based standard for reporting, and it envisions extending VRXML into other areas as well.

Under the current Vendor Automated Reporting System, market-data vendors send data files of their reporting requirements to TCB Data Systems, an NYSE spin-off, which processes and extracts the data, then passes the files along to the stock exchange. In general, vendor-reporting requirements include information such as customer location, product identification, and ZIP codes for state-tax calculations.

As a direct-bill exchange, the NYSE also invoices the customer--typically brokers, asset managers, or business publications--using the data provided by the vendor.

As the number of vendors has multiplied significantly over the years and the information business has grown, the process of reporting has become more complex. In turn, the biggest problem customers now face is vendor and exchange invoices that don't match up. Customers have also found that invoices aren't received in a timely manner and the process is inefficient, says Ron Jordan, VP of market-data products at the New York Stock Exchange.

"So we decided to try and improve the vendor-reporting system," Jordan says. "We went to customers and asked them what they would like to see and what their issues were." For the feedback process, the exchange teamed up with the financial information services division of the Software and Information Industry Association to reach out to financial-services companies. "We came up with a list of things the users wanted to see to make it more efficient and, based upon that, we've put forward VRXML," Jordan says.

The VRXML initiative looks to simplify the vendor-reporting process by letting vendors report directly to the exchange or continue to report through the Vendor Automated Reporting System, which would convert the files into the VRXML format and pass them along.

Mike Atkin

Exchanges around the world are interested in the initiative, Atkin says.
"The NYSE is saying you need to report to us in our format, and our format is VRXML," says Mike Atkin, VP of the software association's financial information services division. "The exchange doesn't really care how they do that, but that will be the obligation." He adds, though, that the stock exchange is being flexible in the transition to the VRXML format. Everybody wants accuracy to "make it easy to meet the obligations, so the NYSE is working with the industry to make sure they can adopt it and what the transition might be," he says.

Timely, accurate reporting is the main focus of the NYSE, Jordan says. "When a vendor provides services for the customer and the customer gets a bill from the vendor and then a bill from the exchange, those bills should match," he says. The exchange now has the interfaces in place to receive the VRXML reports and soon will begin beta testing with several companies, he says.

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