ISIN.net Update: Regulators Wrangling over securities identification codes to be used to identify instruments and transactions for derivatives reporting has polarised regulators, buy-side participants, sell-side providers, proprietary vendors and trade associations
The European Securities and Markets Authority (ESMA) has endorsed International Securities Identification Numbers (ISINs) as trade reporting identifiers for all instruments under the scope of the Markets in Financial Instruments Regulation (Mifir), but the move has been questioned by some market participants who say ISINs are not the best solution.
Regulators have bemoaned the poor data quality from trade repositories, while those mandated to report have described the system as a mess.
Mifir takes effect from January 3, 2017. In its own cost-benefit analysis on the subject, Esma admits there will be costs for competent authorities that use other identifiers, for example in the case of derivatives; ongoing costs to keep up to date and process the complete list of instruments using ISINs; and costs for trading venues that do not currently use ISINs.
In addition, if a venue lists US instruments, there will be compliance costs related to fees charged by Standard & Poor’s in its issuance of Committee on Uniform Securities Identification Procedures (Cusip) numbers linked to US ISINs. Cusip Global Services (CGS), which is managed on behalf of the American Bankers Association (ABA) by S&P Capital IQ, responds that it has an obligation to protect ABA’s intellectual property