The European Fund and Asset Management Association (Efama) has joined forces with a number of leading investment fund and information user associations to call upon the EU Antitrust Commission to step up its protection of European ISIN data users believing Standard and Poors (S&P) to have fallen short of meeting EU obligations around International Securities Identification Numbers (ISINs).
While Efama, AFG, BVI, Cossiom, Ipug, and Sipug have all welcomed Standard & Poor’s CUSIP Global Service announcement to waive the $15,000 annual ISP fee on its US ISIN Basic Service, they believe Standard & Poor’s offer – based on a royalty deal with the American Bankers Association – falls short of settling the case.
The associations now call on all ISPs to swiftly implement the service with their customers.
The announcement follows complaints by Efama and the five fund and information user associations to the European Commission that S&P had not implemented in full the EU competition authorities 2011 Commitments Decision on ISIN use. The European Commission decision allows European data customers to exercise their unconditional right to early termination of their existing S&P licensing agreements and to receive US ISIN records via a market data vendor free of charge.
However, Efama maintains that the use of the global securities identifier ISIN should be not only be free but also license (contract) free around the world as the applicable ISO 6166 standard does not require ISIN end-user agreements. The S&P model agreements limit ISIN usage considerably by creating unnecessary legal risks and liabilities as well as administrative burden. The EC expressly states in its decision that the model agreements can be changed at any time by the parties:
“Financial institutions should not, as a result of the Commitments, be required to accept contractual terms that are less favorable than those which they could have achieved, in the absence of the Commitments, through negotiations with S&P” and
“The parties remain free to negotiate different terms, and conditions, including the applicable law and jurisdictional clause, should they so choose”.
Efama has also called on S&P as the US National Numbering Agency (US NNA) for the ISIN to offer an equitable solution to the market in line with other National Numbering Agencies worldwide, which would meet the following minimum requirements:
- Acknowledgement that S&P will allow the free usage of all S&P issued US-ISINs in the normal course of business, without any contractual commitment of the end user independent of the dissemination channel of the data and without any reference to the US CUSIP identification code.
- Assurance that S&P will not pursue end users based on any proclaimed IP, copyrights and data basing rights, in order to establish legal certainty on free ISIN usage in the entire financial market including that CGS/S&P will respect their customers rights conferred under local data laws.
- Limitations on the definition of Information Service Providers in order to insure that financial services firm reporting activities in the normal course of their business are not considered a licensable “ISP” activity.
- The free use of US ISIN needs to be a global solution and must cover at a minimum all European financial services companies activities outside the EEA territory in order to deal with “follow the trade around the clock situations” and in line with the efforts of the Financial Stability Board and the G 20 to overall reduce risk in the global financial market place.