TAC SUB-COMMITTEE ON DATA 

STANDARDIZATION

UPI and LEI Working Group

Unique Product Identifier (UPI) Approach and Implement

December 13th, 2011
In response to the CFTC proposed rules that require unique product ide

(UPIs) to increase transparency in the OTC markets

• ISDA and an inclusive group of industry representatives have developed a 

underlying approach to implementing UPIs in the marketplace.

• Participants include: dealers, buy-side, CCPs, affirmation platforms, potential 

and other market facilities.

• The proposal is being vetted with each of the ISDA product steering commi

the overall approach is fully understood and supported by the industry, inclu

• Ensuring no impediments to product innovation or trading.• The costs are well understood.• The resulting UPI level of granularity meets regulatory needs without causing ma• The creation of a full product representation (as opposed to a ticker-only repr

product).

• The vetting process over the next couple of months is expected to re

industry consensus and approval driven via the ISDA framework.
UPI requirements derived from the proposed CFTC rules and ongoing d

with Regulators

• Price transparency and discovery.

• Cannot be achieved without identifying products that make sense for price compa• Requires both human recognizable and computer readable identifiers.

• Aggregation for systemic risk analysis.• R/T reporting for public dissemination to tape and PET reporting to the SDR 

Unique product ID

• The proposed solution should be extendable beyond vanilla products• All products will eventually need a UPI (with the exception of exotics)

• UPIs are best suited for Liquid products and least suited for Exotic products• Exotic products can be represented with the asset class taxonomy and a g

999999)
The UPI approach leverages existing industry global standards, is exte

asset classes and can be made freely available to all market participant

• It is expected that a full product representation will be needed, including:

• Asset Class and Taxonomy- relate to the ISDA OTC Taxonomy.• Product description- a human readable description of the product.• Ticker- For some but not all products where appropriate. Used for price dissemina

quoting (SEFs) for human understanding. Should be assumed that different ECNs tickers for same tradable OTC product.

• UPI Key- computer-friendly, singular, opaque, immutable, fixed length, always uniq

• The biggest hurdle in ‘defining’ products is determining the attributes that make up the 

normalizing that data for purposes of grouping the product or assigning an identifier.

• Product definitions from existing electronic trading venues and the work being done now 

terms may help speed this process up for the very liquid products.

• The Industry approach driven by ISDA :

• Develop a rulebook which serves as the brains of creating the UPI. This rulebook is g• Convert a standard trade representation (FpML) into a product info-set by determinin

attributes.

• Normalize the data by ensuring consistency in the values and sorting etc. in the produ• Generate the UPI key by inputting the product info-set into a hashing algorithm.• The resulting output would effectively yield a human readable product description, tho

tickers can be used for some standardized and liquid parts of the market.

• The generation of the ticker is an additional step after you generate the product descr
Generating UPI and full product representation: Example: Credit Defaul

(For Illustration Purposes Only) 

UPI

Generation

Process

Trade

Data

Rule

Book

UPI Keye23d223c4293e032421dc78ba32fc2ef

Product Description

TickerABC CO_CDS_1_Sept2016_MR_Sen_USD Asset Class/Taxonomy

Credit/ Single-name/CorporateAmerican Corporate

FieldName Valueid referenceEntityEntityName COMPANY ABCEntityId 8G836JEntityIdScheme http://www.fpml.org/spec/2003/entity-id-RInstrumentIdScheme http://www.fpml.org/spec/2003/instrumenMaturityDate 9/20/2016Currency USDPeriodMultiplier 3Period

M

RollConvention 20FixedRate 0.01Seniority SeniorRestructuring ModifiedMatrixType CreditDerivativesPhysicalSettlementMatrixMatrixTerm StandardNorthAmericanCorporate
• TAC members of the Sub-Committee on Data Standardization, UPI and LEI 

support the ISDA UPI proposal and underlying approach.

• While a ticker is a useful component of the product representation TAC mem

hashed UPI code will also be necessary to maintain the IT advantage of computin

• The TAC has recommended to the UPI Technology and Data Sub-committee, w

the technical aspects of UPI, to comeback with a full recommendation on this matt

• TAC believes significant work and progress has been made in defining the 

and would highlight the large change this will create for the industry.

• It is expected that UPIs for the most liquid, standardized parts of the mark

available for integration within the overall industry regulatory reporting frame2012.

• The TAC fully supports the implementation of UPIs into the overall industry reg

framework.

TAC Recommendations
Immediate next steps 

• Produce the next version of the UPI generation specifications.

• Details how to convert a standard trade representation into a product r

• Each asset class will deliver a product a ‘rulebook’ which will define the price 

attributes which make up the product info-set.

• The initial focus will be on the most standardized and liquid parts of the 

products will eventually need a UPI, though no UPI scheme can cover trades. 

• As products are defined in the rulebooks the industry can begin inter-operab

ensure participants generate the same product representation based of the 

• A whitepaper on UPI Generation and Dissemination is being produced that w

options for where UPIs will be generated and the resulting workflows as welhow UPIs could be disseminated (translate a UPI key to a product represen
Challenges to implementation and timeline

• The biggest challenge to implementing this approach to delivering UPIs to th

the ability to incorporate into the industry’s broader efforts to comply with the reporting mandates.

• Considerable efforts are underway for the industry to develop the reporting a

the rulemaking. 

• There is a phased and interlocked approach for each of the asset classes. 

implementation will need to be integrated and tested as a part of this wider iimplementation.

• It is expected that UPIs could be available for integration with the overall ind

implementation framework in Q3/Q4 2012.

• The initial focus would be on the highly liquid and standardized produc
Appendices
Why not a ticker-only approach?

Issues with ticker approach only• Need to identify, maintain and distribute the attributes that differentiate products- viewe

implement and maintain. 

• Will also require additional rulebook creation work (UPI can be created with little struct

tickers depend on specific sets of attributes being matched) and may require reference for suitable abbreviations.

• Costly for participants to store this data in their security masters globally.• Potential IP considerations- i.e. cost and licensing for use of RED IDs.• Potential for tickers to change over time leading to additional cost for market participan• Regulators have indicated that UPIs need to cover a full range of products (except exo

would need to account for every variation of products.

Current UPI Approach does not preclude the creation of tickers

• Tickers could be created as part of the current proposal in addition to the asset class/t

product description and UPI key.

• Only needed for standardized, liquid markets where it makes sense. • Ticker generation could be done via a computer generated transformation of the produ

potentially by 3rd parties who typically provide this type of service.