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XML Tames the Exchange of Investment Research

Investment research reports offer banks and investment houses valuable intelligence for decisions, as well as advice to their individual and corporate clients, often with high-stakes consequences. But just as financial markets can seem unpredictable, so can the content and format of financial research on companies,industries, countries, and regions. And with the increasing volume of the reports and the data they represent, investment professionals need help getting a better handle on this flood of information.

Enter the Research Information Exchange Markup Language or RIXML designed to help investment brokers and analysts search, sort, filter,and aggregate research reports. RIXML uses XML to apply metadata to the financial research using an industry standard vocabulary. This specification, says the RIXML organization, makes it possible to tag any piece of research content, in any form or media.

RIXML is written and managed by a consortium of financial services companies that started in 2000, and its specifications are now in version 2.3.1. The RIXML organization includes financial industry firms involved with the creation, promotion, analysis and sale of securities -- called the sell-side -- and investing organizations such as mutual funds, pension funds, and insurance companies that buy securities in large lots for money management, known as the buy-side. The RIXML group also has software and network vendors serving the industry.

Using RIXML’s tagging functions alone adds value to financial research reports, according to the RIXML organization. Before RIXML, investment reports, including those sent in electronic form, had to be opened and read to get even a basic understanding of their contents and relevance to the recipient. By adding the RIXML tags, recipients can use simple filtering tools to weed out irrelevant reports, and an XSL stylesheet to display key report metadata, such as author, abstract,and industry sector.

Structure and flexibility

Investment decisions are often made from information provided by a variety of sources. Thus RIXML is designed with a firm structure, yet also a flexible object model to enable decision-makers to aggregate multiple research reports for different types of investment scenarios.

For example, an analyst may want to pull together research on a company planning an expansion into Brazil. That analyst would want reports on that company’s finances, but also reports on other companies in that industry that opened subsidiaries or started joint ventures in Brazil. The analyst would likely want as well macroeconomic reports on Brazil as they affect that company’s industry.

In a related scenario, an investment bank considering formation of a mutual or index fund for that industry would likely call up many of those same reports, as well as others. And an analyst examining the impact of Brazil’s government debt on business expansion from abroad may also call on some of those same financial reports. In all of these scenarios, the purpose and focus of the decision are different, but RIXML makes it possible to zero in on the data needed for those decisions in what otherwise are an unwieldy and opaque mass of data.

The RIXML schema has four main sections:

  • Source content, describing the company, individuals, or team that prepared the report
  • Context description, which gives information about the content, such as research discipline, product focus, industry sectors, regions, and investment securities
  • Content description, that provides metadata about the report publication, including title, abstract, and file names
  • Legal information, covering the report’s copyright and regulatory disclaimers (e.g. Sarbanes-Oxley in the U.S.)

A key concept in RIXML is the research product, which describes in RIXML parlance a “research idea,” not necessarily an individual report. Thus a product, represented by a unique productID tag, could include an original report, language translations of that report, an alert to investor prospects about the report, and an audio file with a conference call based on the report. This identifier makes it possible for research creators to track different incarnations of their reports, as well as research consumers to find those various items as they aggregate information for investment decisions.

RIXML is both an early XML industry vocabulary and a survivor from that early era, something not many industry XML efforts can claim. Its steering committee includes investment banking giants from the U.S. and Europe, such as Goldman Sachs and Credit Suisse, as well as household names like Fidelity Investments and Citibank. RIXML may not guarantee a good investment decision, but it can make it possible to better understand the choices involved.

Alan Kotok is editor and publisher of the Science Business news blog, and author, with David Webber, of ebXML: The New Global Standard for Doing Business on TheInternet(New Riders, 2001).

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