In this paper, we study a novel parametrization for state-space systems, namely data driven local coordinates (DDLC) which have recently been introduced and applied. Even though DDLC has meanwhile become the default parametrization used in the system identification toolbox of the software package MATLAB, an analysis of properties of DDLC, which are relevant to identification, has not been performed up to now. In this paper, we provide insights into the geometry and topology of the DDLC construction and show a number of results which are important for actual identification such as maximum likelihood-type estimation. (C) 2004 Elsevier Ltd. All rights reserved.