The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Virginie’s Blog – Does CGS and EC’s Agreement Cut the Mustard?

Subscribe to our newsletter

After last week’s heated industry discussions on the subject of data vendor licenses and IP rights (see commentary on which here), the announcement this week that the final Is have been dotted and Ts crossed on the agreement between Cusip Global Services (CGS) and the European Commission may come as something of a disappointment for some. The agreement regarding the licensing of US ISINs does not appear to go any further than that agreed back in May (see my commentary on which here), which was criticised at the time for not going far enough.

The agreement as it stands is that the data vendor will create and distribute a new data feed of US ISINs (in CGS’ words) “tailored specifically to the needs of certain market participants domiciled in the European Economic Area (EEA)”. What this essentially means is that it has set a limit of an annual charge of US$15,000 for European firms (a “cost recovery” pricing model) and other data vendors (for redistribution purposes) to receive US ISIN record masterfile data in a new standalone format (with no “additional data” included). The aptly named US ISIN Basic Service will be offered “within the next five months” and there will be “reasonable restrictions” around what the data can be used for.

The service will be offered over the next five years, dependent on the vendor continuing to operate as the US National Numbering Agency (NNA), of course. Within a month, CGS’ customers would also have the option to early termination of their customer agreements, which would come into effect the same date as the introduction of the new ISIN service. The new service will include the 12 character ISIN, issuer description, security description, maturity date, coupon rate and currency information and the feed will be updated daily via the internet file transfer protocol.

So, that’s the upshot of the deal that’s been three years in coming, but what will the industry make of it all? Given that a number of industry associations including the European Fund and Asset Management Association (EFAMA) and the UK-based Information Provider User Group (IPUG) raised concerns earlier this year about restrictions being imposed on the usage of this data, they are likely to be wary of this “reasonable restriction” criteria. The deal has also been limited to the EEA area, which is likely to be an issue for some hoping for it to be extended globally. I expect much more to be said on the issue by these associations and others including German asset management association BVI Bundesverband Investment und Asset Management, French Association Francaise de la Gestion Financiere (AFG) and Swiss Information Providers User Group (SIPUG), who have all previously weighed in on the subject, over the coming months.

It will also be interesting to see what impact this decision and the industry response will have on the ongoing EC investigation into Thomson Reuters’ RIC codes and Markit’s credit default swap (CDS) market operations. On the former, the EC is concerned about the vendor’s intellectual property rights with regards to RICs and whether the proprietary nature of these codes means clients are prevented from easily moving from one vendor to another. A common compliant amongst market data practitioners (see recent FIMA discussions for proof of that one).

Will all of this prove to be the last straw for the industry and force its hand to set up its own market data feed (as threatened last week)? I doubt it, but then again, stranger things have happened.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: How to optimise the business value of your data using agile data governance

Date: 10 March 2022 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Data governance is transforming from a risk management and compliance tool with limited and prescriptive controls, to a solution that can help you optimise the business value of your data. In this role, data governance must scale to manage...

BLOG

SETL Launches Verafide Digital Credentials Platform for KYC, Other Verification Challenges

Blockchain operator SETL’s Verafide subsidiary has launched its open-source platform for verifying digital credentials and identification on the SETL enterprise blockchain, allowing issuers, holders and verifiers to set up and maintain a digital credentials ecosystem. The Verafide platform is aimed at helping firms fulfill their KYC obligations, adopt more seamless and transparent customer onboarding processes...

EVENT

Data Management Summit Europe Virtual (Redirected)

The Data Management Summit Europe Virtual brings together the European data management community to explore the latest challenges, opportunities and data innovations facing sell side and buy side financial institutions.

GUIDE

Regulatory Data Handbook – Second Edition

Need to know all the essentials about the regulations impacting data management? A-Team’s Regulatory Data Handbook is a great way to see at-a-glance: All the regulations that are impacting data management today A description of each regulation The impact each will have from a data and data management perspective Messages from sponsors with products related to...