The Association of National Numbering Agencies (ANNA) has confirmed agreement of plans to supplement the ISIN securities identifier data to address the recognized problem of the lack of market-level identification in the ISIN. The move appears to be in response to the London Stock Exchange’s recent initiative to establish its own SEDOL numbering system as the global standard.
The ANNA Service Bureau (ASB) – the central hub for consolidation and distribution of ISINs operated by Telekurs and Standard & Poor’s – plans to add access to official place of listing (OPOL) and Swift’s Market Identifier Code (MIC) data to its existing ISN numbering system. The addition of OPOL and MIC data will ostensibly solve the problem of identifying issues by location. Although ISIN is a unique issue identifier, it is not always a unique security identifier because one ISIN can be shared among offerings in multiple locations.
Industry groups have been calling for the addition of OPOL data to help rectify the problem. Iman Szeto, VP of worldwide data support at Northern Trust and also member of the Reference Data User Group (RDUG), says, “Although this may be a reaction to the London Stock Exchange’s plans, the user community welcomes the news and believes it is a good move forward for the industry.”
OPOL identifies primary and secondary markets where any given security is listed. As such, where a security is listed in multiple locations, OPOL allows users to differentiate and hence deal with the appropriate settlement, pricing, taxation and corporate event treatments.
The ASB did not return phone calls by press time but according to an unofficial statement issued by the ASB and seen by Reference Data Review, it is now “prepared to add the requested information to the ASB/ISIN files.” While the ASB move is being welcomed by industry protagonists, some believe there will be issues relating to member agencies’ ability to support the expanded data sets, transparency of pricing, timeliness of updates, and the ASB’s time to market for the proposed capability.
As the ASB acknowledges, not all of its numbering agency members are capable of providing OPOL data for all instruments: “Not all numbering agencies are able to provide nor (sic) maintain the additional data elements.” It points out, however, that “financial data providers do already have such data in their products. Therefore, the requested information can be obtained or otherwise provided by the ASB.”
Perhaps unsurprisingly – given its relationship with the Swiss market data vendor – the ASB identifies Telekurs as one such provider. “Specifically, Telekurs – as one of the operators of the ASB – is prepared to make such data elements available through the ASB, provided the requestors indicate their intended usage and subscription to the new service.”
Industry sources expect the expanded ASB feed to result in higher charges to recipients. These sources say the feed currently costs $50,000 per year, but is expected to rise to $150,000 next year, although this could not be confirmed by the ASB by press time. It is also believed that additional charges will be levied by suppliers of the additional information – such as Telekurs. And at least one of the National Numbering Agencies, Cusip (maintained by Standard & Poor’s), charges for the cost of the Cusip when used within the U.S. ISIN code.
Cusip’s pricing system is itself not renowned for its transparency. Pricing for Cusip-based products is determined by a combination of factors that includes the nature of the client’s usage, the number of users and the physical location of host databases and client access points. It also is dependent upon whether the Cusip data will remain within the client firm or be distributed externally.
Industry executives also point out that ANNA’s national numbering association members cannot provide data in real time or near real time for new listings, raising issues of timeliness.
Szeto says, “It is too early to form a view until a formal announcement is made by the ASB, but timeliness of the identifiers is vital. Even providing the OPOL first before the ISIN is distributed would help our data management processes.” Any delay in identifying a security correctly can have issues for achieving straight-through-processing as well as impacting operations such as risk management and compliance. According to the Reference Data User Group (RDUG)/Reference Data Coalition (Redac) white paper on unique instrument identifiers, ISIN won’t meet established industry timeliness requirements even with the addition of the new data.
The ASB’s decision to add OPOL and MIC data to the ISIN numbering system appears to have been driven by recent moves by the London Stock Exchange to expand its own SEDOL numbering system. The LSE declines to comment on the expanded ISIN system. It has put forward plans, however, to expand SEDOL in order to accommodate international securities.
The LSE’s move has been interpreted by some market observers as a bid to establish SEDOL as the global standard for securities identification. Such a bid clearly would encroach on the territory traditionally maintained by ASB in its role as administrator for the ISIN system.