FISD Reports Progress on Alt Data Standards, Data Dictionary

Data industry association FISD is stepping up its work around creating standards that will lower the cost of using alternative data and contribute to broader use of alt data across the financial industry. The organization’s latest efforts include revising its vendor tear sheet and building a Data Dictionary to translate alternative data into machine-readable inputs for use in algorithmic trading applications.

FISD’s Alternative Data Council working group has recently released a new version of its vendor tear sheet—one of its original initiatives, which presents information about a vendor and its datasets, so potential clients can better understand the alternative content on offer before entering into any discussions—incorporating industry feedback to make it more user-friendly. The original version of the tear sheet was machine-readable and included drop-down menus for users to select their criteria, but the menus only allowed users to select one option, so FISD had disabled the machine-readability in the most recent iteration. The new version reintroduces machine-readability while allowing users to select more than one choice.

“The vendor tear sheet has been a big time-saver, instead of firms needing to have a number of conversations with providers just about what’s in the dataset. The due diligence questionnaire, and the pre-initial meeting checklist for vendors and buyers, too,” says Elizabeth Pritchard, founder and CEO of alternative data advisory firm White Rock Data Solutions, who acts as an advisor to FISD on alternative data. “This all … probably reduces the number of initial calls and emails to deliver significant gains.”

Although FISD’s efforts are still in the “early days,” Pritchard says the association is already seeing its membership grow to new types of members as the responsibility for alternative data within financial firms expands beyond the scope of data scientists and quants to “traditional” market data staff and others as they look to leverage the growing alternative data and Internet of Things data space, and to manage it alongside other data types.

Responding to the ever-changing alternative data landscape is something of a moving target, so FISD has not mapped out a formal roadmap yet for the Alternative Data Council, but is setting its initial direction based on the biggest challenges identified by members, says Tracey Shumpert, vice president of membership and programs at FISD.

“We’ve tackled the most important pain points first, but there is still much to do. I would guess we still have a good year of pure standards activity remaining. We haven’t finished the roadmap … but participants say the work so far has set us up well for creating other resources, such as a data dictionary,” Shumpert says.

The council has created a draft version of the Data Dictionary, which is available on FISD’s website, and is being used by members who are contributing feedback toward what will become the finished version. Shumpert says the council has made great progress on the Data Dictionary over the past two weeks, and expects the project to be complete early next year.

The purpose of the Data Dictionary is to establish standards for datasets that enable computers to understand the contents of a dataset and evaluate their usefulness to a firm or strategy.

“A Data Dictionary enables you to create a hub to connect different datasets so that you can arrive at a cohesive and comprehensive view … and machines can have a 360-degree view of a stock in the same way as humans,” says Michael Beal, co-founder and CEO of Data Capital Management, and co-head of the council’s tech stream.

One of the results of the Data Dictionary will be to expand the range of financial firms in a position to use—or increase their use of—alternative data, by making it easier to adopt.

“[Alternative data] is information that humans can understand from conversations or from reading the news … but computers can’t,” Beal says. “Traditionally, only hedge funds have had access to these resources, but part of the point of these standards is to make alternative data more widely used. And eventually, as this lowers the cost of adoption, it will allow a broader swath of the population to take advantage of information previously limited to those larger or more sophisticated firms.”