Vendors To Fight For Right Of Access To ISIN Database

The stage is set for a showdown at a meeting this month of an International Standards Organization committee to discuss the creation of a central database for a securities numbering system.

Data vendors will be seeking to ensure their interests are protected in the project, which is aimed at creating a central database for the International Securities Identification Number (ISIN) system. The proposed database would be hosted by the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

A group of information providers met last month in London to discuss how to promote their interests at the upcoming ISIN committee meeting, to be held in Amsterdam. The vendors, promised access to the proposed database at the previous ISIN gathering in April, expressed fears that if the project is discontinued, access to an ISIN database would be limited to one or two firms that are both data vendors and numbering agencies.

Meanwhile, Telekurs AG, the Swiss data vendor and numbering agency, will question the logic of spending an estimated $1 million on the project when a database that contains the ISIN numbers is already in existence. Telekurs is joint developer with Standard & Poor's Corp. of the alternative International Securities Identification Directory (ISID) system (MTR, June 26, 1989). Because Telekurs considers ISIN to be the international standard of the future, the company cross-referenced the ISID system with the ISIN numbers, creating an ISIN database for more than 250,000 international financial products.

At its April meeting in Brussels, the ISIN committee proposed establishing a legal entity with the responsibility for creating and managing a central ISIN database to be hosted by SWIFT. The committee also set up two working groups: one to develop the technical aspects of the database and the other to establish its format.

The committee also broadened its original proposal, which limited access to the ISIN system to numbering agencies only, to give "approved financial vendors" access as well. Participants at last month's vendor meeting, called by Extel Financial Ltd., represented Reuters Holdings PLC, Bridge Information Systems Inc., Automatic Data Processing Inc., Interactive Data Corp., Datastream International Ltd., Telerate Inc. and Pont Data Ltd.

Vendors' concerns about the possible failure of the ISIN project have been fanned by its expected cost, estimated at $1 million. At this month's meeting, the ISIN committee will discuss how to raise the necessary funds. The vendors worry that numbering agencies and information vendors may be asked to pay an upfront fee or that end users will be charged a royalty fee, or both. But they also fear that if the committee decides a SWIFT-based database isn't justified, an existing database supplier such as Telekurs may be given the task of hosting the ISIN database.

The information vendors are wary of letting one or two firms, such as Telekurs and S&P, gain control of an identification system. Clearly, such a situation would give those firms a commercial advantage. The vendors' fears appear to be justified. "We don't see a need to share this with competitors," says Telekurs vice president for database management, George Eisel, referring to the company's existing ISIN database.

At their meeting in London, the vendors appointed Mark Hynes, divisional director at Extel Financial, to represent them at the ISIN committee meeting. The group asked Hynes to stress two basic points. The vendors are seeking to use the ISIN code "without being unduly restricted on proprietary or redistribution rights." The group also wants the ISIN database to be available to them "in as timely a manner as any other potential user," such as Telekurs or S&P.

Hynes says he aims to get equal treatment for all vendors and numbering agencies and to make sure that "whatever is available to some information vendors is available to all." He stresses that the vendors' technical expertise would be invaluable to the project.

At its meeting, the vendor group agreed to invite Japanese information provider Quick Corp. to future discussions. The London meeting had received apologies for the absence of officials from Quotron Systems Inc. and ICV Ltd.