This month saw the launch of Security to Entity CrossWalk, a cross-referencing system described by its sponsors as the ‘glue’ that links the ISIDPlus international securities identification directory co-produced by Standard & Poor’s and Telekurs Financial, and the WorldBase entity and corporate hierarchy database operated by Dun & Bradstreet.
The new service is aimed at allowing financial institutions assess and control their exposure to corporate families that may not otherwise be identified. By pulling together the securities identifiers from ISIDPlus with the corporate identifiers as embodied by the so-called D&B DUNS Number, users will be able to verify relationships between securities, their issuers and related subsidiaries and affiliates.
The new service was introduced through a so-called webinar hosted by executives from all three sponsoring companies: Lance Risi, senior product manager, securities classification, at Standard & Poor’s; Barry Raskin, president of Telekurs USA; and Sandy Stoker, leader of data quality, data and operations at Dun & Bradstreet. In the presentation – a mix of audio teleconference and web-based slideshow – each outlined their respective company’s credentials for bringing to market a product that aims to address the relatively new problem of counterparty identification.
Risi cited Standard & Poor’s operation of the CUSIP Service Bureau and its co-operation – along with Telekurs – of both the ANNA Service Bureau, manager of the ISIN securities identifier, and the ISIDPlus database. Aside from Telekurs’ involvement with Standard & Poor’s in the latter two ventures, Raskin pointed to the vendor’s role in facilitating communications – including data updates and corporate actions messages – between the various participants in the securities markets. Stokes, meanwhile, pointed out that the Dun & Bradstreet database contains around 82 million DUNS Numbers.
Security to Entity CrossWalk is a table of issuer-to-DUNS Number associations. The service will be included as a supplemental table within the ISIDPlus data feed, covered by an ISIDPlus service agreement add-on. As such, clients will require access to the ISIDPlus Master File Service, which is delivered via Internet FTP on either a daily or weekly basis. Customers will also require a license for the Dun & Bradstreet data, also delivered via FTP, on a monthly basis.
During his presentation, Risi outlined a number of myths and facts about securities identification, as viewed from the Standard & Poor’s perspective. The first myth was that “ISIN is plagued by significant gaps in asset-class coverage and assignment latency issues.” Risi dispelled that with the ‘fact’ that “Virtually every asset class is covered by the ISIN standard. Daily ISIN assignments are received from (more than) 40 markets and centralized by the ANNA Service Bureau. Most major market NNAs exceed local STP requirements.”
Risi went on to quash another myth, namely that “the ISIN system cannot adequately meet emerging global demand for an STP solution. Specifically, the ISIN structure does not provide for official place of listing and/or trade.” In fact, Risi said, “the ISIN system continues to fulfill its overarching goal as a unique identifier for fungible instruments. It should be used in conjunction with related ISO standards, including ISO 10383 (Market Identification Codes – ‘MIC’) to address industry requirements for additional linkages.”
Finally, Risi pointed to a third myth: “There is no single, effective unique global identification system for financial instruments.” In riposte, he pointed to the fact that “the International Securities Identification Number (ISIN) is an ISO-certified structure supported by a global coalition of (more than) 80 countries.” Clearly, the London Stock Exchange’s plans for its new SEDOL Master File service is raising hackles around the world.
Linking Telekurs’ and Standard & Poor’s ISIDPlus to the DUNS Number database will give users the ability to track the businesses whose issued securities they trade. DUNS Numbers are unique identifiers assigned by Dun & Bradstreet to corporate entities. DUNS Numbers are assigned only after confirmation of a business’s existence by multiple data sources. The standard is used for business identification by, among others, the U.S. government, which insists on its contractors’ having an available DUNS Number.
The DUNS Number is comprised of a number of elements:
- Global Ultimate – the highest ranking member of a corporate family globally.
- Domestic Ultimate – the highest-ranking member of a corporate family within a specific country.
- Parent Corporation – a company that owns more than 50% of another company.
- Subsidiary – a company that is more than 50% owned by a parent company.
- Headquarters – a company with reporting branches or divisions.
- Branch – a secondary location or operation that is not a separate entity.
During the webinar, the three companies outlined plans for future CrossWalk services. These will include CrossWalk for CUSIP, which will link U.S. municipal and corporate securities from the CUSIP Service Bureau with related Dun & Bradstreet corporate family tree information. Another planned service is the CrossWalk for ANNA Service Bureau, which will similarly link the Dun & Bradstreet data with locally traded global securities from the ANNA Service Bureau.