Market participants are usually surprised to find that the governance of the ISIN system is not the responsibility of ISO (the International Organization for Standardization).  As the Association of National Numbering Agencies (ANNA) is the Registration Authority for the ISIN standard (ISO 6166), it is ANNA that decides which organisation is allowed to issue ISINs for any given country.  It then comes as much less of a surprise that ANNA and its members (the ISIN issuers) have decided that each ISIN issuer should have a national sole-supplier status for ISINs.

Taking the UK as an example, nobody in the UK - not the Financial Conduct Authority or the Bank of England or HM Treasury or anyone else - is responsible for the decision or the authorisation that London Stock Exchange Group should be the sole supplier of ISINs in the UK.  The same applies to WM Datenservice being the Substitute Numbering Agency for the UK.

Governance of the ISIN system is therefore drastically different from that of the Global LEI System, despite ESMA being led to believe that there are similarities, and the approach to pricing is also totally different.  ANNA and its members define the licensing and pricing of their services as ISIN issuers and as distributors of ISIN-related data.  The European Commission has already had to take action against the National Numbering Agency for the USA, which is also the Substitute Numbering Agency for over 50 other countries, because of its pricing policies, and this situation is not yet resolved.

ESMA has said that it considers that its recommendation for the use of ISINs-only is the “least-worst” option available to it.  One reason why the industry does not use only ISINs is that the ISIN standard doesn’t meet its full requirements.  ESMA’s recommendation may end up being the “most-worst” for everyone, including ESMA.

(Chris Pickles is an independent consultant and a member of the Open Symbology Team at Bloomberg)