Digital rights group debuts ODRL, plans common tech framework

On December 1, a group of financial firms published the first draft of a finance-specific language model for coding usage expressions in market data contracts, as part of the group’s efforts to simplify data licensing activities and automate the entitlement process.

The Rights Automation for Market Data Community Group was originally scheduled to unveil the language model at the end of June but had to push back the release date to allow more time to meet the minimum criteria it had initially mapped out, says Ben Whittam Smith, managing director and founder of Deontic Data, and co-chair of the digital rights community group.

In the early stages of the initiative, the group agreed upon a basic spec, requiring the language to be rich enough to express 20 of the most common market data licenses and answer between 60 and 70 of the most frequently asked questions that market data professionals grapple with on a day-to-day basis.

The group has been working on the initiative for more than a year and a half in partnership with the World Wide Web Consortium (W3C), an international community that develops open standards aimed at driving the growth of the web.

Back in April 2020, over a dozen firms across the data supply chain—including suppliers, intermediaries, and users—set out to develop a finance-specific rights model using the Open Digital Rights Language (ODRL), an extensible markup language, an open source data model used for coding policy expressions, created by the W3C.

The ODRL is already used to standardize the policy rights of published content for sectors such as telecommunications, online publishing, and television broadcasting.

Today, the group is made up of 37 non-chair participants from 19 organizations, including the Chicago Mercantile Exchange (CME), JP Morgan, Google, Amazon, and Bloomberg.

Building upon its work on the rights language model, the community group is now also trying to develop what it calls a “referencing architecture,” in addition to a “pattern book” that will comprise common licensing patterns that have been translated into ODRL.

Members of the community group participating in the two spin-off projects had their first meeting last week and plan to meet monthly going forward.

The referencing architecture group will be tasked with testing the theory that different participants across the data supply chain—meaning creators, distributors, and consumers of data—could follow a common technical blueprint for building their technology.

Whittam Smith says the subgroup will explore if participants in the data supply chain share the same or similar functions or roles. For instance, consumers of exchange data—in this case, banks and buy-side firms—are also the originators of that data, and in turn, exchanges are providers by selling that data back to consumers or data vendors.

“The theory we’re testing is that, whether you’re a bank, vendor, or an exchange, the reference architecture remains the same way. That would be a great simplification, especially as everybody seems to be playing the role of an originator, provider, and consumer of data these days. So that’s the first thing we want to test,” Whittam Smith says.

A target of the subgroup is to design and build a common architecture that the different market participants can use to model their technology on, and then present some implementations to industry firms at the World Financial Information Conference in October of next year. Whittam Smith says they will develop the technology to be compliant with the EDM Council’s Cloud Data Management Capabilities framework, a set of best practices and standards for managing data in the cloud—recommendations he says he helped to write.

As a way of encouraging broader industry collaboration, the ODRL community group will also publish the code they produce.

“We will publish any code we create as part of the reference architecture under the umbrella of the Fintech Open Source Foundation (Finos),” Whittam Smith says. “We’re always looking to work in open environments where these various financial institutions can collaborate without fearing they will get into anti-trust problems.”

Widening the net

As the initial draft of the ODRL has been completed and launched, the community group has started casting the net beyond market data agreements. Whittam says they are now in the planning stages of applying the coded language model to commercially sensitive licenses, ones that are not available in the public domain.

Exchanges are required under the market data guidelines for the Markets and Financial Instruments Directive and the Markets in Financial Instruments Regulation (Mifid II and Mifir) to publish and make public their market data licenses but that rule doesn’t apply to specialist data providers or alternative data vendors that arrange bespoke contracts with their users.

“We’re looking at a process by which we can model commercially sensitive licenses—ones that aren’t in the public domain—and the community group has found a way of doing that without compromising that commercial agreement,” Whittam Smith says.

The community group will be testing the theory that the licensing patterns they have discovered in exchange contracts will be repeated in commercially sensitive licenses.

Whittam Smith explains that the key concepts of a market data contract are permissions, prohibitions and duties. From studying the licenses, the group has found that there are typically nine types of duties, including notifications, consent, payment, reporting, and agreements. While bespoke agreements might have some nuances, Whittam Smith says they expect them to broadly follow the same patterns as market data contracts.

“Maybe some of the values [in bespoke contracts] might be new and different but the actual structural patterns could be the same. We’re going to test that,” he adds.