Additional ISIN Use Cases in the Works

The consultation began in May 2018, ended July 27 and queried about 370 organizations and 2,000 users, according to Malavika Solanki, a member of the DSB management team.

“As the ISIN gets more embedded in people’s systems, we continue to get requests for additional products and product definitions to be created. For example, at the moment, we’re working on delivering slightly more complex commodity derivative templates, and those will be followed by some work on cross-asset templates,” Solanki says.

Based on the responses received, she says the more the DSB’s flow products have become embedded into firms’ systems, “the more complex product demand seems to have arisen.”

In addition to requests for additional products, Solanki says the consultation also revealed a demand to “either create additional granularities of ISIN or extend the attributes associated with the ISIN so that people could actually use those identifiers in different ways.”

Respondents included trading venues, trade associations, data vendors, buy-side and sell-side institutions. The paper notes that “where members of various trade associations independently responded to the DSB consultation, many requested that their responses be kept anonymous.” According to Solanki, the traditional view has been that the associations’ responses can be used as a proxy for their members’ views. “Receiving member responses that may diverge from trade association views, where the respondents seek anonymity, is helpful in assisting the DSB gain insight into the specific needs of individual firms and how these might differ from the consensus view,” she says. 

In order to meet industry demand, the DSB is expanding its nine-member product services committee, a plan currently under review of the DSB board with details to be released in the coming weeks. As a result of the consultancy, DSB will increase hours of operation and publish monthly ISIN analytics. As far as how to implement requested changes to ISINs, Solanki says DSB will work with the product committee to “get their views on prioritization and on industry demand and drivers,” and to figure out what additional attributes the industry wants, how ISIN will be embedded into systems, and how DSB can make the process as efficient as possible. The proposals may also require review by the DSB technology committee, which, like the product services committee, is made up of industry representatives. “We’re very cognizant that as we develop and step out further, we do it in tandem with industry,” Solanki says.

The consultation results may point to an evolution of the DSB, which is a legal subsidiary of the Association of National Numbering Agencies (ANNA) and was created to serve a regulatory purpose. Solanki has been with the DSB for a little over a year and says when she first joined, the conversation was focused on pushing to meet regulatory needs ahead of the revised Markets in Financial Instruments Directive’s Jan. 3, 2018 deadline. Now, she says, DSB users are using DSB services in different ways that expand beyond compliance.

“Some of our users have integrated into the DSB almost at a pre-trade and pre-quote level,” Solanki says. “They can get an ISIN at that point, attach it at the front of the trade lifecycle, and then have it flow through their entire system base because that drives efficiencies. If that ISIN is attached up front, effectively it means you don’t have to touch the trade for an ISIN reason later on in its lifecycle.”

She says some users are still employing ISINs purely for regulatory purposes, but requests for expanded use cases to increase efficiencies are mostly coming from “institutions that have embedded us into their trading lifecycle and who seem to want to have additional ways of identifying some of their instruments beyond the attributes that are in the ISIN today, which are primarily the regulatory attributes.”

As far as costs associated with expanded use cases for ISINs, Solanki says things like “introducing new instruments, the more complex commodity templates, the cross-asset templates,” are all business as usual for the DSB. If they were looking at offering something “fundamentally new,” she says, there might be a cost, but “that’s not where we are at the moment. When we’re listening to what the industry is saying, most of the demand is coming from users who want us to effectively expand what we do, but within our current remit.”