documentation, major banks are rallying around the XML Internet technology standard.

The product of several years of development, XML, or eXtensible Markup Language, has crept into many of the industry's data-sharing initiatives, ranging from the Open Financial Exchange home banking specification to innovations in the derivatives market.

At the same time XML efforts have diversified and gotten complicated, prompting the Financial Services Technology Consortium, which is led by Citigroup Inc. and other top banking companies, to propose a research project to improve its relevance to bankers.

It seems to be generally agreed that XML is here to stay, even if it must be wrestled with, because of inherent advantages.

"There are huge benefits from a development standpoint," said Ron Turner, team leader in the Internet component and interfaces division at First Union Corp. "XML tags offer easy, readable forms for passing data, and from a maintenance standpoint (the tagging) makes it easy to discern where a problem is."

"If you represent data in XML, it is far quicker to integrate that back into the existing systems across companies because people can understand the structure," said Charles Allen, co-founder and vice president of product marketing at Fairfax, Va.-based webMethods, one of the first technology vendors to apply XML in electronic data interchange.

Most of what can be viewed on World Wide Web pages was programmed in HTML, or Hypertext Markup Language. It is ideal for the presentation of data in attractive formats but falls short on some of the more complex tasks that Internet businesses require.

XML contributes a tagging mechanism that can define what the information is and does rather than what it looks like.

Two initiatives directed to financial institutions under the XML framework are known as Finxml and FPML, for Financial Products Markup Language.

Mr. Allen said industries must use language-specific coding to do calculations needed, for example, for interest rates and yields. Derivatives data can be tagged with specifically relevant information.

"XML is the mother of (a range of) new languages," said Mr. Allen.

And Joshua Walker, an analyst at Forrester Research in Cambridge, Mass., said, "XML language is going to help financial companies describe the information that they move back and forth to each other and within their own companies."

Because information tends to be stored in proprietary data formats, systems can vary between companies, and there are even compatibility issues within a single corporation. XML promises to open up those bottlenecks and let companies and broader communities speak a standardized language.

"Humans and computers have a dialogue, and XML allows you to complete the dialogue successfully," Mr. Walker said.

A sign that XML is gaining acceptance with financial companies was the FPML announcement in June by J.P Morgan & Co. and PricewaterhouseCoopers.

FPML is a protocol for Internet derivatives dealing and information-sharing, initially on interest rate and foreign exchange products.

This article previously appeared in American Banker Online.

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