Buy- and Sell-Side Firms Come Together Around RIXML

Representatives from buy- and sell-side firms have formed RIXML.org (research information exchange markup language) in order to establish that protocol-in-the-making as the standard for describing all types of financial research and analysis. By agreeing on one protocol to describe such information, which comes in many different forms including Word, Excel and PowerPoint documents and audio and video files, financial institutions are trying to create stores of research data described by a uniform protocol. Once that is achieved, research from all sources--whether internal or from various financial institutions--can be aggregated, co-mingled, filtered and searched.

"Ultimately, this will make the investment banks' research more valuable because right now a great piece we put out may get lost in the clutter--the noise and confusion that our customers are cluttered with," says Joseph Sommer, director of U.S. electronic trading and connectivity services with Credit Suisse First Boston and sell-side co-chair of the RIXML.org steering committee. "If we can help sort out that clutter and we have quality content, it should stand out, so it's worth the effort."

Currently, buy-side institutions are bombarded with thousands of pieces of information from sell-side firms, communicated in dozens of different protocols. That means searches through such a body of data are highly inefficient and often fruitless. David Seibert, vice president of investment systems with T. Rowe Price and buy-side steering committee co-chair of RIXML.org, says that the formation of the group, which will be limited to 10 buy- and 10 sell-side institutions, was initiated by T. Rowe Price because of frustration it felt when attempting to co-mingle research from various sources.

"When we got to the second broker, they said, "Here is your choice,' and they handed us a different format and we started looking internally and saying this isn't really going to work because if we are dealing with 80 brokers, we are going to be spending a whole lot of money taking in multiple formats," says Seibert.

As a result, starting in January efforts were made to attain buy- and sell-side participation in a group that hoped to embrace a common protocol. RIXML, says Sommer, offers the opportunity to describe pieces of financial research with more specific headers, giving investment managers the ability to electronically sift through reams of information by criteria such as industry, country, sector or analyst, just to name a few.

To really become involved, firms interested in participating in RIXML.org can contact the group using information provided on their Web site. Sommer says firms can join RIXML.org to become more involved and help fund the effort. Dues for a buy-side firm are $20,000, a sell-side firm $110,000. "We didn't want to have buy-side firms that were able to devote people and could contribute to the protocol but decided not to because of the up-front costs," he says, "so the sell-side is in a sense subsidizing the work." He further explains the dues by noting that it took a while for FIX to get off the ground because it was not a funded effort.

The group will be working to develop a beta version of RIXML in January, which will be released to the public. A 30-day comment period will follow when the group will look at submitted concerns and suggestions, acting on those they deem legitimate. After the comment period, a recommendation will be released that will essentially constitute version 1.0 of the specification, according to Chris Betz, vice president of the institutional equity division at Morgan Stanley Dean Witter and sell-side co-chair of RIXML.org.

"Research is only good if we get it to the right person at the right time. Today the research analyst and the portfolio manager have to go through reams of information whether it's coming in on paper or via e-mail," adds Seibert. "What the protocol allows us to do is be able to put in parameters saying that I want to see this specific type of research, in this specific area, from one of these specific firms. So if you have faster access to the information you actually want, it will enable you to make better investment decisions."