The European Commission (EC) has opened formal proceedings against Standard & Poor’s (S&P) to look into whether the US firm abused its dominant market position by forcing financial firms to pay for the use of US securities numbering codes when accessing data from third party vendors.
The Commission says it thinks S&P might have broken rules by forcing banks and investment funds to pay licensing fees for the use of US International Securities Identification Number (Isin) codes in their own databases.
Isin codes provide unique cross-border identification for securities issued throughout the world and are attributed by the National Numbering Agency (NNA) of the country of issuance.
S&P runs the US NNA – the Cusip Service Bureau (CSB) – on behalf of the American Bankers Association (ABA), and is the only issuer of identifiers for US securities.
The EC is investigating whether S&P is abusing its monopoly position by charging finance firms a license fees for the use of Isins, and certain descriptive elements attached to them, each time a code is used to access information provided by data services providers like Bloomberg and Thomson Reuters. Annual license fee costs for a typical asset management operation run out to $25,000-$30,000 on average.
To use the market data providers’ information, firms also have to pay for using S&P’s Isin database – “a service that they are not interested in and do not actually use”, alleges the Commission.
In addition, S&P is accused of forcing the information service providers to cut off financial institutions from data feeds on US securities unless they agree to pay the license fee.
S&P says the complaint is “without merit”.
The EC says the opening of proceedings does not imply that it has conclusive proof of an infringement and there is no deadline to complete the investigation.