Recent financial crises laid bare serious shortcomings in risk management and financial regulation. In retrospect, the lack of timely granular data reported in a data standard capable of supporting financial analysis contributed much to the crises. The ACTUS project aims to remedy this weakness by creating a global standard for the consistent representation of financial instruments.
The centrality of expected cash flows for financial analysis is obvious and undisputed. Less obvious is the role of the financial contracts. Financial contracts are mutual agreements between counterparts to exchange cash flows. The agreements are written by lawyers in different languages, legal terminology, and jurisdictions. This leaves us with a plethora of terms and different contracts.
However, if one abstracts from the legal terms and focuses on the cash flow obligations, the diversity of financial contracts or agreements shrinks drastically. The vast majority of the relevant financial contracts are built on a manageable number of underlying mechanisms. Financial contracts follow a limited number of patterns.