By recommending that the European Commission should adopt Technical Standards that mandate the use of only ISINs for MiFIR regulatory reporting, ESMA has in practice reinforced the sole-supplier status  of each non-competing ISIN issuer across the 28 EU member states.  So - who are these ISIN issuers?

Of the National Numbering Agencies (NNAs) in the EU, 23 out of 28 are Central Securities Depositories (CSD) or part of groups that include a CSD within them.  In financial markets, CSDs have little or nothing to do with derivatives or commodities operations, whether they are traded on exchange or OTC.  Two of the remaining five NNAs are national regulators (in Italy and Spain).  One of the remaining three NNAs is a stock exchange (Ireland).   And the last two NNAs out of these 28 are commercial data vendors: London Stock Exchange Group and WM Datenservice from Germany.

If one of the 28 NNAs in the EU doesn't want to take on the role of identifying a particular asset class or set of instruments for its country, that's where the Substitute Numbering Agency can step in to take on that role, with prior permission of that country's NNA.  In the EU there is a single Substitute Numbering Agency for 25 of the member-states: WM Datenservice.  For Germany, WM Datenservice is both the National Numbering Agency and the Substitute Numbering Agency, thereby avoiding any problems of competition.  The UK is one of the countries for which WM Datenservice is the Substitute Numbering Agency.

In the UK, only if London Stock Exchange Group doesn't want to issue ISINs for a particular asset class or set of instruments can WM Datenservice step in to issue them.  This leaves the UK financial markets sector with no choice of which supplier to go to in order to obtain ISINs, because that possibility is pre-defined for all UK market participants by two commercial data vendors.

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