CUSIP Global Services Says Widely Accepted Standards for Processing Data Key To Smooth Operation of Financial Markets Whitepaper Emphasizes Role of Interoperability in Allowing Many Parties to Interact
NEW YORK, May 31, 2012 /PRNewswire/ -- CUSIP Global Services (CGS) today announced the publication of a new whitepaper which outlines the important role that standards for securities identifiers play in ensuring the smooth operation of markets around the world. The paper, Developing New Standards to Meet Market Needs also warns of potential traps associated with new open symbology proposals and traces the 44 year history of financial security and entity identifier development, enumerating lessons learned and suggesting critical considerations for future standards development.
"As the financial services industry continues to implement new standards to improve accuracy and streamline communication between global market participants, it is critical that they all speak the same language," said Matthew Bastian, author of the paper and director of market and business development for CGS. "Over the last four decades we've seen many new standards proposals come and go and we've learned a great deal about what works and what does not. The goal of this paper is to share some of that collective wisdom with the marketplace so we can continue to develop efficient solutions that improve the transparency and interoperability of financial markets."
Following are the key themes covered in the paper:
- The Need for a Common Language: A brief history of the creation of the CUSIP® system in 1964 to address the "paper crunch" of the early 1960s and the evolution of the construct to eliminate the patchwork system of proprietary identifiers that had crippled settlement and clearing.
- The Next Frontier – Legal Entity Identifiers (LEI): A summary of the latest development in the creation of a new standard to identify legal entities and a proposed workflow to facilitate the implementation of that standard.
- The False Promise of "Open Symbology": A warning that recent proposals to create alternative "open symbology" identification standards fall short on interoperability, potentially locking market participants into vendor-specific standards that do not communicate with outside market or reference data.
- Roadmap for the Future: A check list of key elements required to create sustainable financial standards, including: data quality, interoperability, sustained investment, industry input and collaboration.
"Standard protocols for trading, clearing and – most importantly – identifying financial instruments allow vast amounts of information to be conveyed across different institutions and different time zones in fractions of a second," said C. Diane Poole, senior vice president, data management and policy development at the American Bankers Association. "This paper gets us to think about what might happen if those standards didn't exist or were implemented carelessly. That's an enormously valuable perspective as we chart the course for the development of new standards to keep markets functioning smoothly for decades to come."
About CUSIP Global Services
For 40 years CUSIP Global Services has provided a unique common language for identifying financial instruments across institutions, exchanges and nations, enabling financial services firms to benefit from improved operating efficiencies and substantially reduced administrative costs. CUSIP Global Services is operated by the CUSIP Service Bureau (CSB). CSB is managed on behalf of the American Bankers Association by Standard & Poor's. For more information, visit www.cusip.com.
About The American Bankers Association
The American Bankers Association represents banks of all sizes and charters and is the voice for the nation's $13 trillion banking industry and its 2 million employees. Learn more at www.aba.com.
SOURCE CUSIP Global Services