Expanding Global Identifiers in Complex Assets and Other Areas
In the post-credit crisis financial services industry, risk management, compliance and transparency have emerged as focus points for review with provision of accurate and timely data recognised as a critical element of success. Fundamental to data provision is the accurate identification of both financial instruments and counterparties – without which you cannot truly measure your performance or exposure.Rapid growth in derivatives and securitised debt instruments played a central role in the credit crisis. In the aftermath of the crisis, the use of alternative asset classes has continued to grow. In order to ensure that an individual firm’s exposure through such complex instruments can be accurately measured, and therefore, managed, that firm must be able to correctly identify the securities and the entities that they are investing in.
This can only be done through the use of unique identifiers. But it is a well known fact that there is no single identifier capable of uniquely identifying securities or entities globally. While there are countries with identifier schemas, or certain asset classes such as equities that are well covered, there are many regions, asset classes, and markets that do not have a robust mechanism for identifying securities and entities. Despite significant effort, the industry has not been able to progress a standardised approach to this problem.
Is there another way? Can commercial initiatives and innovation through partnerships succeed where standards bodies have so far failed?
We examine the industry requirements and complexities inherent in the application of unique identifiers in three key areas: Business Entity Identifiers, US Listed Options and Syndicated Loans and review the collaborative approach taken by Standard & Poor’s CUSIP Global Services to develop innovative and comprehensive industry solutions.