A proposed rule to establish uniform financial data standards across regulatory agencies is flawed because it failed to consider using CUSIP and ISIN as common identifiers for financial instruments despite their widespread use in the financial system, and because the agencies acted outside their statutory authority in setting a new standard, the American Bankers Association said this week in a letter to the agencies. ABA is the owner of CUSIP, which was created in the late 1960s to promote open, transparent and efficient markets.
The Securities and Exchange Commission, Federal Reserve, FDIC and six other agencies in August proposed common data standards that would form the basis of data collections by financial regulators. For an identifier of financial instruments, they chose to use Bloomberg’s Financial Instrument Global Identifier (FIGI) rather than the Committee on Uniform Security Identification Procedures (CUSIP) or the closely related International Securities Identification Number (ISIN).
ABA noted that for nearly 60 years, CUSIP has worked closely with market participants to cover a wide range of global financial instruments, including extensive equity issues, fixed income, derivatives and U.S./Canadian-listed equity options and single stock futures, as well as loans. “Importantly, CUSIPs are the required means of identifying financial instruments for nearly every financial reporting form collected by the agencies, as well as the underlying identifier for a myriad of agency operations including Treasury issuances,” the association said.
ABA also said that by designating FIGI as the sole identifier, the agencies operated outside the statutory boundaries set by the Financial Data Transparency Act and the Administrative Procedure Act, which sets the legal process for agency rulemaking. The agencies overlooked the essential services that CUSIP provides to the financial system, ignored the negative effects that designating FIGI would have on the connectivity and stability of global financial markets, and failed to engage in any cost-benefit analysis, the association said.
ABA added that if the agencies push forward with the rulemaking, they should extend the comment period by 60 days to provide the public with a reasonable and meaningful opportunity to comment on the proposal.
