After lengthy fight, Bloomberg’s Figi recognized as official US data standard

Data giant Bloomberg has succeeded in gaining US accreditation for its reference data standard, the Financial Instrument Global Identifier (known as Figi) by the Accredited Standards Committee X9, a non-profit organization endorsed by the American National Standards Institute (ANSI). The accreditation makes the US the second country to formally adopt the standard after Brazil became the first in July 2020, putting Figi on the same level as Cusip, the main identifier that has served the American and Canadian securities markets for more than 50 years.

The ASC X9 committee, which is responsible for developing standards for the financial services industry, voted to adopt the Figi in early August. X9 is affiliated with ANSI, which represents the US as an International Organization for Standards (ISO) member. Under the committee, Figi is titled ASC X9.145-2021. Figi becomes the first X9 data standard to incorporate the Massachusetts Institute of Technology (MIT) open-source license, in which the data created and identified within the standard is available to the public and free to use.

Steve Meizanis, global head of symbology and Legal Entity Identifier services at Bloomberg, says that he hopes that cost-effectiveness and flexibility will entice market participants to use the identifier in regulatory reporting and rule-writing, not necessarily as a replacement for existing identifiers—which include Cusip, the International Securities Identification Number (Isin), and Sedol—but as an alternative in situations where permanence or uncovered asset classes are an issue.

“The purpose of the Figi is not to replace an existing identifier scheme. We understand the cost involved with replacing that. But working in conjunction, we provide, on the equity side, for example, levels of granularity [that] Cusip does not,” Meizanis says.

The 12-character alphanumeric code, once issued, is permanent; other identifiers sometimes change in reaction to corporate actions that companies take. The Figi also now extends to previously uncovered securities, crypto assets, and loans, in addition to traditional equities, derivatives, and corporate and government bonds.

Kaiko, a market data provider in the blockchain-based digital assets industry, was recently approved as a certified provider of Figi for crypto assets. Meizanis hopes that more companies will try to become certified providers. Currently, Kaiko and Bloomberg are the only two, with Bloomberg acting as the registration authority under the Object Management Group, a standards consortium that adopted Figi in 2014 and which has created several ISO-accredited standards.

Now that Figis are accepted alternatives to Cusips, end users must determine the degrees to which they’ll incorporate them. Figi may save them money in the long term, but they would have to weigh those savings against the operational cost of adding a new entity to their systems, let alone switching over entirely. Cusips, Isins, and Sedols are typically tightly interwoven with firms’ infrastructures due to legacy technology practices and prior lock-in to specific identifiers forced by respective data providers.

Cusips carry licensing fees for end users based on the number of unique identifiers accessed, stored, maintained, processed, or otherwise used by or for the benefit of a customer. For example, an end-user who uses Cusip numbers for up to 40,000 securities throughout four or more business lines in three or more regions would pay $441,000 in licensing fees. Using Cusips for up to 20,000 securities throughout two lines of business in two regions would amount to $94,500.

“Cusip serves a critical role in the financial markets, a position earned over the course of decades delivering proven results and forming trusted partnerships with the global financial services industry. In fact, Cusip was created in direct response to an industry need and gained widespread adoption long before it ever became an X9 standard. We will continue to do our part to foster efficient markets with the widely adopted—and globally recognized—industry standard Cusip identifier,” says a spokesperson for Cusip Global Services.

An unlikely victory

Bloomberg has tried to push Figi as a standard for years, and its accreditation journey has not been smooth. In 2019, a technical committee of the ISO, TC 68, voted against the identifier. Following the TC 68 defeat, the Figi was registered with another ISO technical committee, ISO IEC/JTC 1, and was waiting for that committee to initiate a ballot. JTC 1 is a joint technical committee that specializes in standardization in the field of information technology. The vote with the second technical committee, however, never happened.

Last year, the Securities and Exchange Commission (SEC) proposed amendments to forms 13F and N-CSR, which are both filed by investment managers, and raised questions specific to Figi, albeit buried in both consultations, to market participants: should the SEC consider omitting each of these form’s requirement to provide a Cusip number for each reported security? Should managers and funds be permitted to provide alternative identifiers, such as the Figi, in lieu of a Cusip? Would permitting voluntary use of an alternate identifier to have a beneficial effect for investors, reporting managers and funds, or users of the data? Why or why not?

While responses to N-CSR changes were few and subdued, respondents railed against proposed changes to 13F, the basis of which would have raised the reporting threshold required of investment managers from $100 million AUM to $3.5 billion. The SEC reportedly scrapped the idea, following the backlash. Meizanis says Bloomberg never heard anything again from the SEC about the matter after submitting its own response.

At the time, Bloomberg was only a few months into its accreditation process with X9/ANSI. From start to finish, it took the company about a year and a half to secure this latest win, which was finalized on August 6.

Meizanis says Bloomberg may try for ISO accreditation again but isn’t sure yet.

“We’re still digesting what this means to become a US standard, and we’re hoping that the US standard will help us in other markets, maybe with ISO. The answer is we haven’t really formulated that official strategy yet. We’re going to digest this, go over some feedback from some of our relationships we’ve built over the years, and then take it from there,” he says.