Financial Products Markup Language (FpML) is a business information exchange standard based on Extensible Markup Language ( XML ) that enables business-to-business over-the-counter (OTC) financial derivative transactions using the Internet . FpML is used between participating companies for communicating OTC transaction details, within a company for the purpose of sharing OTC transaction information, and between a participating company and an outside firm offering a service related to the OTC transaction. FpML is freely licensed and, because it is independent of the software or hardware used by participating companies, ensures interoperability . FpML focuses on interest rate swaps and Forward Rate Agreements (FRA) but will eventually be used for all aspects of OTC transactions.
OTC contracts shared between two companies are highly customized based on the needs of the parties involved. For this reason, prior to the arrival of the Internet and XML, it was not feasible to efficiently carry out the OTC contract process online. Today, companies can electronically structure and negotiate the terms of an OTC contract, execute and confirm the contract, communicate settlement details, and analyze risks using FpML.
Chase Manhattan Bank has reviewed and adopted FpML for their OTC Interest Rate Derivative applications. Fuji Capital Markets Corporation used the FpML definition to design their XML-based FRA confirmation prototype. And J.P. Morgan developed an FpML interest rate swap prototype application. Organizations participating in the development and application of FpML include Bank of America, Citigroup, Deutsche Bank, IBM, PricewaterhouseCoopers, J.P. Morgan, Reuters, and UBS Warburg.