Date

23 Aug 2022

Attendees

Agenda

1) Use Case reminder

2) Where we are on our road map.

3) Open Action Items

4) JIRA Issues Review - https://jira.edmcouncil.org/projects/DER/issues/DER-10?filter=allopenissues

5) Todays content discussion.

6) For next week.

Proceedings:

Today we continued working on option trading strategies. We received a response from Bloomberg to our question about whether some of them are considered financial instruments, and the response is as follows:

We used an example that Bruce's bank would enter into an agreement to purchase both a call and put on the prime rate to ask the question.

So, it's first a question on if that agreement is an instrument (as a structured product) or not.

Technically, you could call it a financial instrument. But being a bespoke on-off creation, the question is if it will ever exist again, be resold or duplicated.

So, philosophically, the question is if something is singular, should it be considered a financial instrument or be managed as a one off bespoke contract? (which, just by saying it is a contract starts to make it kind of a financial instrument).

And if it is a financial instrument, should it get a FIGI? Because on one hand, the pricing and management isn't going to shared broadly, since it's just between Bruce's bank and Piper. So, there aren't any externalities that would know about it or need to reference it. The only function a FIGI would provide, if any, would be as a record locator in a position statement.

Same goes for the underlyings.. If the options are "real" options, then they would each have a FIGI. If they're just mechanisms to create a bespoke product and aren't "living" outside of that combined bespoke product, doesn't make sense they would be unique objects on their own, since they don't exist for any reason except for the combination.

"Trading strategies" have been discussed before. CBOE FLEX options are an example that we don't cover, and some Indexes fall into that space.

But again, if it is a "Recognizable" "thing" that is going to be used, propagated, and more broadly exposed, having a FIGI provides utility, especially if that "thing" is pricing and being positioned in and of itself, as opposed to just being a base foundation that is modified in multiple ways to generate different investments.

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We agreed to reach out to John Nowlin with the same question we sent to Bloomberg to see if we could get a bit more clarity. We decided that a covered call and protective put were subclasses of the relevant options, but so far everything else goes under option trading strategy but not option per se based on this response and other analysis.

We completed the work on DER-123 for the moment and agreed that the next step is to release the exotic options ontology once this revision is merged.

Decisions:

Action items