Thinking about this past week’s Demystifying Financial Services Semantics conference in NYC, hosted by OMG and The EDM Council, and messages that kept coming across: Think about the business issues first, and be realistic in the way your particular organization can accommodate them – semantic technology may be a large, limited or perhaps even non-existent factor, depending on the challenge.

Some commentary on this point from the panelists:

• Citi chief data officer Eric Chacon discussed the challenges of not having a single source of master data that exists for businesses that grow  through acquisitions, as well as any organization highly decentralized in nature. Read more

Photo Courtesy: Flickr, epicharmus

Credit default swaps. Collateralized debt obligations. Moral hazards. The average person might find the financial services sector and its language as mystifying as some of those involved in the industry might find semantic technology. An event hosted by OMG and the EDM Council in New York City yesterday was aimed at demystifying the latter for Wall Street. But putting the technology to work there might help clarify the discourse around financial instruments for a wider audience, including the regulators who want to deal with concentration of risk issues that played a big role in the Wall Street meltdown.

One part of the picture is FIBO, the Financial Industry Business Ontology, which was the subject of two sessions at the event. An advance discussion of the topic with Thematix principals Elisa Kendall and Jim Rhyne, who was a panelist at the event, set the stage for us here at The Semantic Web Blog. “The primary practical use for an ontology like FIBO that is descriptive of various kinds of financial instruments, including so-called exotics, is that regulators and financial market participants get a common language to talk about things,” Rhyne explains. This is important, given that financial regulators try hard to be collaborative with the industry, pointing out the need, he says, for careful management of financial instruments, including recommendations about capital buffers to deal with downside risk and asking for timely reports of information that would allow them to assess the possibility that a systemic problem could occur rather than directly intervening by stopping trades.

Especially in the derivatives marketplace, there is a lot of “funky terminology,” he says, and not all of it is as well-understood as it should be. Different parties and different parts of the marketplace may call the same instrument by different terms, and one of FIBO’s aims is to provide a common vocabulary.

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What does the compliance lifecycle look like at your company? In globally-operating industries such as finance, there’s likely a herd of people charged with monitoring rules and regulations across countries, drafting policies and procedures for individual geographies or business units, and working to ensure controls are in place to prevent and detect violations. And that herd of individuals in some respects may be trying to herd cats, given how often aspects of compliance regulations change.

The situation presents the ideal use case for semantic technology, says Cambridge Semantics’ co-founder and VP of Technology and Client Services Lee Feigenbaum: There’s data to consider from a wealth of sources, from internal documents and control databases describing what is necessary to enforce policy at different areas and levels of the business and what reports are needed to ascertain compliance, to regulatory information published on governing bodies’ web sites or RSS feeds; people are working cross-organizationally within the company and in conjunction with the regulatory organizations; and the rules regularly change. At yesterday’s Demystifying Financial Services Semantics conference in New York City, it demonstrated its just-released Compliance Information Management Solution Accelerator, based on its Anzo semantic technology, to deliver information integration across multiple data sources, as well as an editor workplace where compliance officers or others managing these tasks can contribute and track content changes and workflow, and then seamlessly bring together the compliance content applicable to particular business units or geographies.

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