This ontology defines the fundamental concepts relevant to financial instruments in general, with the intent of providing the high-level hooks for build-out in more detail in the relevant domain areas. These include, but are not limited to, equities, options, debt instruments, and so forth, some of which may be negotiable. Financial Instruments Ontology relates an instrument to the party that issued it has issuer relates an organization, specifically the issuer of a financial instrument, to its principal executive address, as required for issuance of that instrument has principal executive office address relates an instrument to the currency its value is typically expressed in has value expressed in jurisdiction (country, county, state, province, city) in which the financial instrument is legally recorded for regulatory and/or tax purposes is legally recorded in optionally identifies one or more markets in which the security may be traded may be traded in specifies whether a particular financial instrument is or is not transferable is transferable a financial instrument whose value is ascertained directly by markets and that can be converted into cash quickly with minimal impact on the price received cash instrument a financial instrument representing an ownership interest in a commodity such as coal, oil, precious metal, livestock, an agricultural product, etc. commodity instrument a financial instrument used for the purposes of currency trading currency instrument a financial instrument evidencing monies owed by the issuer to the holder on terms as specified debt instrument a financial instrument that confers on its owners certain rights or obligations, whose value is derived from one or more underlying assets derivative instrument a financial instrument that provides the holder the privilege to subscribe to or to receive specific assets on terms specified entitlement a financial instrument representing an ownership interest in an entity or pool of assets equity instrument a written contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity financial instrument an identifier for a financial instrument financial instrument identifier a contract that obligates the buyer to receive and the seller to deliver, in the future, the assets specified at an agreed price future any party who issues (or proposes to issue, in a formal filing) any financial instrument, where a party can be a natural person, company, government, or political subdivision, agency, or instrumentality of a government issuer a contract that grants to the holder either the privilege to purchase or the privilege to sell the assets specified at a predetermined price or formula at or within a time in the future option a transaction event that represents the execution of an order to buy or sell a security securities transaction a transferable financial instrument that can be bought or sold security a set of standardized terms, published by some body, and capable of being incorporated into a contract by agreement standardized terms set 1 0 1 true 1 Copyright (c) 2015-2016 EDM Council, Inc. Copyright (c) 2015-2016 Object Management Group, Inc. http://www.omg.org/techprocess/ab/SpecificationMetadata/MITLicense FinancialInstruments.rdf fibo-fbc-fi-fi This ontology defines the fundamental concepts relevant to financial instruments in general, with the intent of providing the high-level hooks for build-out in more detail in the relevant domain areas. These include, but are not limited to, equities, options, debt instruments, and so forth, some of which may be negotiable. The http://www.omg.org/spec/EDMC-FIBO/FBC/20150801/FinancialInstruments/FinancialInstruments/ version of this ontology was modified to reflect issue resolutions detailed in the FIBO FBC 1.0 FTF report. http://www.omg.org/spec/EDMC-FIBO/FND/ http://www.omg.org/spec/EDMC-FIBO/BE/ http://www.omg.org/spec/EDMC-FIBO/FBC/FunctionalEntities/BusinessRegistries/ http://www.omg.org/spec/EDMC-FIBO/FBC/FunctionalEntities/Markets/ http://www.omg.org/spec/ODM/ http://www.w3.org/standards/techs/owl#w3c_all relates an instrument to the party that issued it relates an organization, specifically the issuer of a financial instrument, to its principal executive address, as required for issuance of that instrument relates an instrument to the currency its value is typically expressed in This should be the same currency that was declared at the time of issuance. jurisdiction (country, county, state, province, city) in which the financial instrument is legally recorded for regulatory and/or tax purposes optionally identifies one or more markets in which the security may be traded specifies whether a particular financial instrument is or is not transferable a financial instrument whose value is ascertained directly by markets and that can be converted into cash quickly with minimal impact on the price received Cash instruments can be classified into two subgroups, as securities and other cash instruments such as loans and deposits. From a modeling perspective in FIBO, these are independent entities; the corresponding relative entity would be liquid asset. Cash instruments are therefore disjoint with derivative instruments, per IASB international accounting guidance. http://definitions.uslegal.com/ http://www.investopedia.com/terms/l/liquidasset.asp a financial instrument representing an ownership interest in a commodity such as coal, oil, precious metal, livestock, an agricultural product, etc. Citigroup Inc. a financial instrument used for the purposes of currency trading Example currencies include UK pounds, US dollars, Euro. An example currency instrument is spot currency instrument. Each instance of a currency instrument has a one to one relationship with its associated currency. Parameswaran, Sunil. Fundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives. John Wiley and Sons (Asia) Pte. Lte., Singapore, 2011. a financial instrument evidencing monies owed by the issuer to the holder on terms as specified ISO 10962, Securities and related financial instruments - Classification of Financial Instruments (CFI code), Second edition, 2001-05-01. Not all debt instruments are tradable, therefore this class is modeled as a child of financial instrument rather than security. Further refinement will be done in the debt instruments module. derivative contract a financial instrument that confers on its owners certain rights or obligations, whose value is derived from one or more underlying assets Derivative contracts owe their availability to the existence of markets for an underlying asset or a portfolio of assets on which such agreements are written. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. Most derivatives are characterized by high leverage. The three major categories of derivatives are (1) forward and future contracts, (2) options contracts, and (3) swaps. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Derivatives can be characterized by whether they are exchange-traded or traded over-the-counter (OTC). http://www.investopedia.com/ Parameswaran, Sunil. Fundamentals of Financial Instruments: An Introduction to Stocks, Bonds, Foreign Exchange, and Derivatives. John Wiley and Sons (Asia) Pte. Lte., Singapore, 2011. right a financial instrument that provides the holder the privilege to subscribe to or to receive specific assets on terms specified ISO 10962, Securities and related financial instruments - Classification of Financial Instruments (CFI code), Second edition, 2001-05-01. a financial instrument representing an ownership interest in an entity or pool of assets ISO 10962, Securities and related financial instruments - Classification of Financial Instruments (CFI code), Second edition, 2001-05-01. a written contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument of another entity Examples of financial instruments include: cash, evidence of an ownership interest in an entity, or a contractual right to receive (or deliver) cash, or another financial instrument. A financial instrument can be thought of as a template that defines an arrangement structure that remains to be fleshed out with terms and parameters in order to establish a specific instance of the contract. http://ec.europa.eu/internal_market/accounting/docs/consolidated/ias32_en.pdf an identifier for a financial instrument Identifiers for financial instruments may include an ISIN, Sedol, CUSIP, BBGID, FIGI, or other identifier issued approximately when the instrument itself is issued, and based on the kind of instrument and jurisdiction in which it is issued. OMG Financial Instrument Global Identifier (FIGI) Specification, available at http://www.omg.org/spec/FIGI/. a contract that obligates the buyer to receive and the seller to deliver, in the future, the assets specified at an agreed price ISO 10962, Securities and related financial instruments - Classification of Financial Instruments (CFI code), Second edition, 2001-05-01. any party who issues (or proposes to issue, in a formal filing) any financial instrument, where a party can be a natural person, company, government, or political subdivision, agency, or instrumentality of a government With respect to certificates of deposit for securities, voting-trust certificates, or collateral- trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors or of the fixed, restricted management, or unit type, the term issuer means the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued; and except that with respect to equipment-trust certificates or like securities, the term issuer means the person by whom the equipment or property is, or is to be, used. Securities Exchange Act of 1934, as amended 12 August 2012 a contract that grants to the holder either the privilege to purchase or the privilege to sell the assets specified at a predetermined price or formula at or within a time in the future ISO 10962, Securities and related financial instruments - Classification of Financial Instruments (CFI code), Second edition, 2001-05-01. a transaction event that represents the execution of an order to buy or sell a security Barron's Dictionary of Finance and Investment Terms, Ninth Edition, 2014 negotiable security a transferable financial instrument that can be bought or sold A security can be any note, stock, treasury stock, security future, security-based swap, bond, debenture,certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a security, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or bankers' acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited. Securities Exchange Act of 1934, as amended 12 August 2012 A security may be traded over the counter, or through an exchange, or via some other trading venue such as an electronic trading platform. This is a publicly traded security (corresponding to the scope of Security in ISO 20022) and therefore does not include privately held equity or equity in companies that are not publicly traded. a set of standardized terms, published by some body, and capable of being incorporated into a contract by agreement The things that are standardized: The strike price Contract size Expiry Date These three are standardized regardless of what exchange they are on. Each exchange has a standard for these specific terms, for contracts that are traded on that exchange. Expiry: there is a standard date that the exchange will have, for example in the US it is the Saturday following the third Friday of every month. So there is a set expiration date for all exchange traded optons Strike: there are set increments for strike for exchange traded options. Contract sizes are also stipulated, for example in the US these are standardized by the OPRA Convention (Options Pricing Reporting Authority). Ajay: Exchange traded is tri party contract with central counterparty for the setelemtn fo the options. Market place (usually electronic), hence standard to process data. Not necessarily a legal difference? So for instance you would not be able to trade different lot sizes. So they enter in the contract which is guaranteed by the exchange. Members of the exchange trade with each other. The Exchange then being a third party. OTC: Bilateral Exchange traded: Still bilateral, using standardized terms. Lookalikes: for examples, where there are usually ones with monthly margin calls (exchange traded), there are 'lookalike' ones which look like an ET but are traded outside the market. Common in commodities market. What else can be standardised? What must be standardidsed? Date Convention: Standardized by juridction US: All single-Equity Options are American; all European exercise for Indices. This is not a convention for say London, where various conventions may exist on different contracts.