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Home News & Events BANKING LAW NEWS: Standard & Poor's agrees with Commission to Abolish Fees for use of US ISINs

BANKING LAW NEWS: Standard & Poor's agrees with Commission to Abolish Fees for use of US ISINs

Wednesday, 30 November 2011 21:29

On 15 November 2011, the EU Commission has announced that it has made legally binding commitments offered by Standard & Poor's (S&P) to abolish the licensing fees that banks pay for the use of the US International Securities Identification Numbers (ISINs) within the European Economic Area (EEA). Moreover, for direct users, Information Services Providers (ISPs) and Service Bureaus (i.e. outsourced data management service providers), S&P committed to distribute the US ISIN record separately from other added value information, on a daily basis for USD15.000 per year, to be adjusted each year in line with inflation.

ISINs are key identifiers for securities, allocated and distributed by national numbering agencies (NNAs) originally developed as a public service to the financial institutions industry based on the international standard ISO 6166. They are deemed essential for managing securities including interbank communications, clearing and settlement thereof, and reporting to authorities. The Commission had concerns that S&P, which is the only NNA for US ISINs, may have charged unfairly high prices for their use and distribution in Europe in breach of EU Competition Rules on the abuse of a dominant market position causing financial service providers in Europe undue costs. The Commission was satisfied that the commitments, revised in light of observations received in the course of a market test were deemed suitable to solve the competition concerns.

Commission Vice-President responsible for Competition Policy, Joaquín Almunia has been quoted to have stated: "The commitments offered by S&P will abolish licensing fees that banks had to pay for the mere use of US ISINs in Europe and significantly reduce their cost for other users such as information services providers. This will improve the efficiency of European financial markets".

S&P will eventually communicate the precise implementation date to the EU Commission and have obliged to submit an annual report thereon. The legal binding commitments announced by the EU Commission are applicable for five years.

CUSIP Global Services (CGS) has announced that the formal agreement entered with the EU Commission “brings a welcome conclusion to nearly three years of dialogue between CGS and the EC. CGS has offered to implement the new feed on a costrecovery basis for participants taking it directly from CGS. If a market data vendor chooses to integrate the new feed on behalf of its customers, the end customers of that vendor could use the ISIN data from the feed, with some reasonable restrictions, without incurring any additional fees from CGS.

The Commission decision does not conclude whether there has been an infringement of EU Competition Rules. It legally binds S&P to the commitments and consequently, ends the Commission's investigation in relation to S&P's pricing policy for the distribution and use of US ISINs as regards financial institutions and ISPs. If S&P were to break the commitments, the Commission could impose a fine of up to 10% of the company's total annual turnover without having to prove a violation of the EU competition rules.

A non-confidential version of the decision is available on:

http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=1_39592

Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1354&format=HTML&aged=0&language=EN&guiLanguage=en