The open source Financial Instrument Global Identifier (FIGI), formerly the Bloomberg Global Identifier (BBGID), is coming closer to being a primary security identifier following its inclusion in the ISO 20022 external code set for financial instrument identification and its formal approval as a standard by the Object Management Group (OMG). The identifier is also starting the process of becoming a potential ISO standard and could offer an alternative to International Securities Identification Numbers (ISINs) in MiFID II regulatory reporting.
The inclusion of the FIGI in the external code set of ISO 20022 allows firms that already use the open source identifier to use it for all messaging based on ISO 20022 and ISO 15022 standards both on and off the Swift network. The FIGI is already included in the FIX protocol for similar purposes.
The International Securities Association for Institutional Trade Communication (ISITC), many of whose members use the FIGI, co-sponsored the inclusion of the FIGI in the ISO messaging standards with Bloomberg, which acts as the registration authority for the identifier under the auspices of the OMG. The change request was evaluated by the ISO in April this year, the outcome published in a Swift update on November 27th and the FIGI became part of the ISO 20022 external code set on November 30th.
Richard Robinson, head of strategy and industry relations for Bloomberg’s open symbology group, says: “This is a breakthrough for the FIGI. Before, the FIGI couldn’t be used in ISO 20022 messaging and had to be mapped to another identifier or included in ISO 20022 additional text. This was imperfect and did not support straight through processing. With hundreds of firms using the FIGI and numbers of FIGIs growing daily, it is better than other identifiers for everything from transaction processing to reporting.”
ISO 20022, like the FIGI, is an open source specification and is becoming a global standard for regulatory reporting. It is mandated by European Central Bank money market regulation and MiFID II for reporting. In terms of MiFID II, the latest European Securities and Markets Authority (ESMA) regulatory technical standards (RTS) that were published in September propose the ISIN as the identifier to be used in reporting, a proposal that has not found universal favour across the industry.
Bloomberg is working with the International Swaps and Derivatives Association (ISDA) on a symbology initiative that is looking at how best to identify OTC derivatives within the scope of MiFID II and suggests the FIGI meets all the regulation’s requirements, including being open source and available at no cost. The ISIN, it says, is good for some purposes, but is not flexible and expansive enough to cover all the regulation’s requirements around OTC derivatives.
On this basis, and before the European Commission comments on ESMA’s RTS at the end of this year, Bloomberg is working with industry groups to ask ESMA to reconsider industry views on security identifiers and work with the industry to expand the RTS to include open source identifiers that support the goals of MiFID II. Robinson comments: “Optionality is important to satisfy the needs of transparency in regulations such as MiFID II.”
While the industry awaits the European Commission’s comments on ESMA’s RTS, the FIGI is making ground elsewhere. It was given the final seal of approval as an industry standard by the OMG on December 1st and is in the early stages of requesting to become an ISO standard. An ISO study looking at potentially overlapping standards and how they should be evaluated is due to be concluded ahead of an April 2016 ISO plenary meeting, after which the question of whether the FIGI could be a standard may begin to be considered.
Robinson concludes: “The FIGI isn’t a challenge to proprietary codes, but the unifying code that is missing. It can pull together different symbologies and is part of new theories about ontologies and hierarchies that require a new way to address instrument symbology.”