A new flexible framework is being adopted by ANNA which aims to appease market participants
Progress is being made on the identifier front with the Association of National Numbering Agencies (ANNA), the umbrella organisation for national numbering agencies, announcing an extension to the functionality of the automated allocation engine for international securities identification numbers (ISINs) for OTC derivatives. They will not only support the derivatives product taxonomy created by the FIX Trading Community but also other open-standard product taxonomies.
The engine, which has been developed by ANNA with technical partner Etrading, is built on a state-of-the-art, open-source architecture that will generate ISINs in real-time. The main benefits of the technology platform include the capacity for rapid enhancements to address emerging industry and regulatory requirements, as well as rapidly extending ISIN identifier coverage to new derivative types.
Part of the plan also includes ANNA changing its structure to accommodate the new landscape. It is spinning off the ANNA Service Bureau (ASB) into its own special purpose vehicle (SPV) while also creating another SPV unit to house the new Derivatives Service Bureau (DSB), which will host the service for the allocation of ISINs and data services for OTC derivatives.
As a result, the SPVs for the two service bureaus will each be governed by a separate board of directors and overseen by ANNA. The ASB will be operated by CUSIP Global Services (CGS), the US national numbering agency and SIX Financial Information, Switzerland’s national numbering agency. The search is on for the firm for the DSB although ANNA is already in late-stage negotiations with a global accounting and management consulting firm to support its formation and operations.
The chosen service provision partner will be responsible for the overall infrastructure of DSB including global communications, data storage and cloud technology as well as resiliency and advanced security. Its mandate will also cover the know-your-customer identification and authentication to accept any firms requesting ISINs or seeking ISIN data.
There are still a few kinks to be ironed out such as the pricing model for the DSB. One option being considered is an annual subscription or membership model based on volume versus charging a fee for each ISIN registration.
ISINs have been a hot topic of debate ever since the European Securities and Markets Authority’s (ESMA) 402-page Draft Regulatory and Implementing Technical Standards dictated that ISIN, a 12 character code, should be the universal code used for all financial instruments including OTC contracts under the MIFIR regime.
The hope is that the flexibility being built into the current framework should silence its critics. Market participants will be able to start their engines later this year when ANNA publishes the technical standards for integrating the DSB into their trading systems for fully-automated ISIN allocation. The organisation will also unveil a preview version for the industry feedback at the same time.
The hope is that the code will be on the production line by the fourth quarter of 2017 which should give market participants plenty of time to implement and test the system before the MiFID January 2018 deadline.
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