Bloomberg doesn’t get outplayed very often.  Yet an attempt to get the Bloomberg-backed Financial Instrument Global Identifier (FIGI) accredited by the International Organization for Standarization (ISO) lost by a landslide vote in early 2019, a defeat that represents more than merely an unsuccessful push to get FIGI approved as a global standard. FIGI’s failure to become ISO-approved exposes the extraordinary passion and politics that surround standards, and demonstrates how firms’ unquenchable thirst for cost-cutting ultimately can result in diminished political pull when it comes to market-changing decisions. 

FIGI is an instrument identifier under the domain of the Object Management Group (OMG) standards consortium. Bloomberg was the FIGI’s registration authority until OMG adopted it in 2014; the standard was called the Bloomberg Global Identifier (BBGID) until then. OMG, supported by Bloomberg, is leading the effort to get FIGI accredited by ISO.  

In January 2019, ISO Technical Committee (TC) 68’s subcommittee 8 (SC8) overwhelmingly voted down a ballot item attempting to “fast track” the FIGI’s accreditation. TC 68 does not have authority over SC8, and the subcommittees’ voting parties are the national standards bodies (NSBs) of about three-dozen countries. In many cases, the countries’ respective national numbering agencies control the vote. The Association of National Numbering Agencies (ANNA) is the registration authority for the International Securities Identification Number (ISIN), which has been an ISO standard since 1990.  

In other words, the decision to vote down the FIGI came from participants in a standards organization that issues an identifier arguably directly in competition with the FIGI. 

“Sixty-five to 75% of SC8 consists of ANNA member countries,” says Peter Warms, Bloomberg head of LEI and FIGI ID services. “So it’s not a level playing field.” 

Dan Kuhnel, ANNA chairman and head of primary market relations and international fixed-income products at Euroclear, says the decision-making process is not that simple, because each ISO member country has a forum for discussing ISO standard proposals, and that is the democratic process employed when deciding on those proposals. 

“It’s not the ANNA members or numbering agencies that are deciding such matters in the various countries voting at the ISO level,” he says. “I’m aware of cases where the numbering agency is one of the participants in the industry discussion at a national level. But, I’m also aware of many cases where they’re not a party to those discussions, because either that country doesn’t have a standards group that is looking at financial standards, or they just haven’t been involved in the national standards body discussions and decisions.” 

TC 68 chair Jim Northey is relatively new to his position, taking on the role right about the same time FIGI voting closed. However, he’s a long-time advocate for industry standards and is unsurprised by the feud and fallout over the FIGI. 

“The reality is that standards are just part of the competitive landscape of business,” Northey says. “People try to exploit them for commercial benefit; people use them to try to restrict access. Standards will always be a battleground.” 

Regulatory Demand

Identifiers aren’t anything new—Bloomberg released its open symbology (BSYM) in 2009 and the ISIN has been around since 1981—but they’re gaining prominence, and ISO accreditation is increasingly desirable, primarily due to regulators.  

“Increasingly, globally, more and more regulatory bodies are looking for ISO standardization,” says Northey, who points to strict requirements under Mifid II that reports need to use ISO standards, as opposed to less rigid rules under the original Mifid back in 2007. Northey says the Standardization Administration of the People’s Republic of China (SAC) has informed exchanges that they need to use ISO standards, which are “what all countries have agreed is the primary standard everyone can agree to use,” and “ISO has the authority of the countries,” because the standards get vetted and accepted globally. 

Spokespeople for the European Securities Markets Association (Esma) acknowledge that “the use of ISO standards in the regulatory reporting requirements developed by Esma has been a frequent choice in recent years,” citing ISO’s robust development process, high-quality standards, consistent implementation and the fact that in many areas, ISO standards are the only ones available and widely adopted. 

“Regulators are not market practitioners,” says Warms. “As such, they look to ISO for solutions when coming up with new regulations. For example, we feel FIGI would have been a better solution with regards to Mifid II, but because it is not an ISO standard, it was not even considered.”  

Bloomberg has been trying to make FIGI happen as an ISO standard for three years. 

“It takes a long time to create an ISO standard. Everyone knows that,” Northey confirms. “So we’re always looking for ways to reduce the time it takes to create a standard.” 

One get-accredited-quick method is a Fast Track proposal.  “The Fast Track process is designed to streamline the incorporation of existing standards into ISO,” Northey says. Namely, when an ISO liaison has an existing standard that is adopted and in use, they can skip over the working group process of accreditation and go straight to the ballot. OMG is an ISO liaison and submitted the FIGI via the Fast Track, resulting in the January vote. 

However, preceding every election is a campaign. 

Identity Politics

OMG submitted FIGI to ISO in October 2018, opening a three-month ballot, during which countries could vote yes, no, or abstain. ISO requires technical justification for negative votes. 

In November, Cusip Global Services, the US National Numbering Agency responsible for assigning US-based ISINs, brought on Mike Atkin, strategic advisor for the EDM Council, which is also a member of OMG, as a consultant. He says FIGI was positioned inappropriately as a technical standard, through the Fast Track process, and no one at the time was communicating with the industry about the implications of FIGI becoming an ISO standard. 

“My role was to talk to the US representatives at [US national standards body] Accredited Standards Committee X9 and others about the issue and what it meant and why it was important,” Atkin says. 

Also in November, ANNA distributed a 17-page document to its members and affiliates reportedly urging a negative vote on FIGI, complete with 28 reasons why it should not be ISO-accredited. 

Both ISO and ANNA have confirmed the existence of the document, and while ISO representatives expressed a preference that it not be released, they ultimately left the decision whether to share the paper up to ANNA. The body has opted not to release the document. 

“ANNA prepared and circulated a paper looking at the proposal that was sent as part of the FIGI ballot, and correcting some of the confusing elements, because the document was very technical, so adding clarity to certain elements and also identifying where certain risks arise with the proposal of having a second identification standard,” says Kuhnel, who adds the information was requested by ANNA’s membership.  “They had looked to the ANNA board to give them some clarity in terms of what does this additional FIGI ballot mean for the industry and what are the associated risks that may arise from having two identifiers overlapping the same functionality.” 

ANNA managing director Emma Kalliomaki says the association’s membership was confused about the Fast Track process, as well as the requirement to submit technical comments with negative votes. 

“Members turn to ANNA when there is an issue that is affecting the industry, to have an understanding as to what the broader membership are thinking,” Kalliomaki says. “As a mechanism to consolidate that feedback, and to assist the members to be able to provide a balanced discussion for consideration within their standards bodies, ANNA assisted by providing a memo to the members. But it was for the members only, it was not an externally shared document, and it was specific to their needs.” 

In March 2019, Richard Beatch, a semantics and metadata architect for Bloomberg, who sits on the OMG board of directors, presented a FIGI update to OMG’s Finance Domain Task Force. He reported that “the letter was distributed in violation of both ISO rules and the rules of various national bodies,” and  “the reasons [to vote against FIGI] were either false or irrelevant or non-technical.” 

Kuhnel says ISO had no issue with ANNA’s document, except “there was one thing where we made a reference to how ANNA is the registration authority for ISIN. That apparently was a piece of text that should not have been included because it confused that this was ANNA writing in its ISO registration authority capacity, rather than ANNA writing to its members as an informative paper.”

Beatch’s presentation also claims Atkin acted out of bounds in his advocacy efforts, specifically citing a December email he sent to X9 board members. 

“The email was sent from [Atkin’s] EDM Council email address with no disclosure that he had been hired to lobby against FIGI by interested parties. The email distribution list was provided to [Atkin] in violation of X9 policies,” the presentation reads. 

Atkin calls the email from his EDM account a “clumsy” one-time error because EDM Council is neutral, but firmly denies that he violated any X9 or ISO policies. 

“[The SC8 vote] was up against the holidays, with a vote scheduled right after the new year, with people on X9 who for the most part were there for payment processing or security standards. Almost none of them knew about instrument identification. I got on the phone and started talking to people and realized they were voting on something they didn’t really care about or understand, and they were doing so because they were there for a different reason,” Atkin says. “My task was simply education.”

He says OMG and Bloomberg hired legal counsel to investigate whether there were any violations, but they found none. 

“I’d be careful throwing stones, OMG. We should be in this for only one reason, which is to support our industry in achieving automation and confidence in its data,” Atkin says. “I am shocked.”

His theory is that the accusations are an attempt to divert the conversation from the real issues, which are about the implications of FIGI becoming an ISO standard, and questioning why OMG and Bloomberg are determined to make that happen.  

FIGI’s Cross-Examination

Tangled among the politics is a legitimate debate over the FIGI’s merits. 

Kuhnel says the SC8 vote was “overwhelmingly negative” because “the FIGI did not warrant progressing to be endorsed to be an ISO standard. The ISIN has been in existence for 35 years, remains fit for purpose and because the FIGI and the ISIN pretty much do the same thing.” 

Both identifiers are 12-character alpha-numeric codes intended for uniform identification of financial instruments. An ISIN uniquely identifies most types of financial instruments, including equities, debt, and derivatives and is mostly used outside of the US—whereas the US and Canada primarily use Cusip numbers. The FIGI covers all financial instruments across all asset classes. 

Kuhnel says having “a second identifier that looks exactly the same as an ISIN in existence, in parallel, would simply cause more confusion, more costs, and additional operational risks,” because the identifiers are in use for more than asset management; market participants also use them for settlement. “From a clearing system perspective, the core identifier of instruments within the Euroclear system is ISIN, so if the settlement instructions are generating ISINs, and you put in the wrong number because you’re confused which one is which, that’s going to lead to fails and additional costs. So, I’m assuming the industry saw exactly that as being a risk of having two standards doing more or less the same thing.” 

However, OMG and Bloomberg argue that the two identifiers are not so similar. In 2015, Beatch filed a report with OMG’s FIGI Task Force intended to clarify how FIGI relates to other standards. 

“ISIN is focused on serving as a reference for a fungible instrument at the initial issuance level, which serves a proper and needed function in and of itself. FIGI, in contrast, while capable of serving in that capacity, is focused on providing a consistent and unique data point that serves to identify financial instruments and the different contexts they exist in throughout their lifecycle, so as to enable robust and comprehensive data management and, from that, compliance,” the report reads. 

Bloomberg’s Warms says FIGI’s composition provides something that does not exist among other identifiers: “a metadata approach composed with a hierarchy that makes it superior to other existing identifier schemes.” The FIGI’s other key tenets, he says, are that it is persistent, meaning it does not change, as opposed to “other identifiers, like the ISIN, that are more composite-based,” and “most of all, the fact that the FIGI is open and free,” meaning “it doesn’t come with any legal language that curtails the marketplace from using it broadly.” 

He points to Cusip as an example of an identifier that is not open. 

“You have to pay to be able to get a Cusip assigned. You have to pay licensing fees to use it. That is very restrictive,” Warms says. “So when you go to send a report or anything along those lines, think of end-of-day back-office operations, communicating with different firms and settlements and things of that sort, the recipient has to have a Cusip license; otherwise they’re in violation of the Cusip agreement.”

Of course, there is a competitive advantage to becoming the identifier of choice, especially for a data vendor like Bloomberg, because an identifier can be linked to various types of data, making it more attractive to clients. 

“Getting your identifier planted as a standard kind of gives people an avenue into the breadth and scope of data that you have, and it’s easier to integrate it into their systems, so it’s easier to sell it,” Atkin says. “It’s been a vendor strategy as long as I’ve been looking at the information industry.”

Back and Forth

Despite arguably valid concerns that issuing an ISO standard would make data giant Bloomberg even more imposing, Kuhnel says, “It’s not about finances or revenue; it’s not about power or influence. It’s about keeping the capital markets working efficiently and keeping risks to a minimum.” 

In other words, ANNA’s objection isn’t to the FIGI itself; it’s about putting both identifiers under the ISO umbrella, which Kalliomaki says would mean there is “no longer a uniform and consistent way,” of deploying the identifiers. “You’ve got two different approaches to doing the same thing, and that really is a contradiction to standardization. A number of financial instrument identifiers exist today that aren’t under the ISO umbrella; however, [FIGI becoming ISO accredited would] change that dynamic by putting two identifiers that serve the same purpose under the same framework,” Kalliomaki argues.

Warms contends that “redundancy is not a reason to prevent a new standard from existing or being introduced,” and cites programming languages, entertainment systems, and Android vs. iPhone as examples of redundant product offerings that serve to strengthen competition within a market.

Northey agrees that redundancy isn’t a reason to block FIGI from ISO. The standard exists, FIGI identifies more instruments than ISIN, and a single listed stock in the current market already has up to a dozen identifiers attached to it. 

“I understand that it would be nice if there were only one identifier but there’s a myriad of them, and so that’s not an argument [against the FIGI],” Northey says. 

In an era when there is concern about declining competition in capital markets, there may be an argument that even if the two standards are similar, there is merit in allowing both to be eligible to become global standards and letting consumers decide whether there should be only one.

“Competition is a good thing,” Warms says, noting that ISO’s policies specifically spell out that standards should foster competition. “The financial markets are moving toward transparency and openness, and if the current anticompetitive factions continue to exist, then progress will be stifled.”

However, are the two standards in direct competition? Kalliomaki says framing the discussion as “ISIN versus FIGI” is incorrect. 

“As market practitioners and experts who deal with data and standardization, it’s the bigger picture, looking at the operational disruption, potential fragmentation and the costs associated with that, as well as the direct economic costs that correspond with implementation and the change of infrastructure required for adapting to have another instruments identifier within the standards world. This is not personal—it is really about the market and the industry as a whole, and us looking at standardization from the angle from which it’s intended and just moving forward on that basis,” Kalliomaki says. 

Taking it a step further, Atkin says that allowing FIGI to become an ISO standard would be fundamentally in opposition to the larger goal of standardizing reference data within financial services. He looks back to the early 1960s when automation hit the industry and banks teamed up with the American Bankers Association to improve operating efficiencies by developing a standard method of identifying securities, which led to the creation of the Cusip. 

“That process involved all of the right players from the financial institutions who were getting together to solve a challenge that we collectively faced,” Atkin says. “That begat the entire standards process.”

He says the industry is now past the problem of multiple identifiers, but adding new global identifiers would unravel that hard work—instead, standards participants should be celebrating their victories. 

“We’ve got identification resolution managed. We’re smart enough now to be extending this to over-the-counter derivatives. This is a big, important step for the industry to solve its identification problem,” Atkin says. “So, to go back and recreate the problem that we escaped from is the wrong thing to do.” 

Atkin also says the TC 68 discussion about the FIGI focused on the wrong question. The industry shouldn’t be debating whether the FIGI is a competent standard; they should be asking whether it is necessary. As he puts it, what problem is the FIGI trying to solve?

“The problem is that the financial marketplace lacks a dependable, open identifier,” Warms replies. “We created the FIGI in 2010 because our customers were exhausted by the current regimes with regards to the restrictive language, the cost to use those identifiers and the fact that those identifiers were not perfectly created.” 

Amid the ongoing debate as to whether adopting the FIGI as a global standard would represent a step forward or backward for the industry, Northey raises one important point in favor of the FIGI: Having it as an ISO standard might lead to more inclusive participation in the standards process. 

Stacked Deck 

While the politics surrounding the FIGI are captivating, they also illustrate a larger problem: a lack of diversity within the groups responsible for making crucial decisions about financial industry standards. 

Northey is keenly aware of this problem and is actively working to solve it, but it will be a tough obstacle to overcome because the people who are the most affected by reference data standards will naturally gravitate toward bodies that make decisions about those standards. 

“We always look for a way to get the broadest audience possible, trying to bring in asset managers, people who use these standards, not just people who produce these standards. That’s an ongoing process,” Northey says, but notes that it is difficult to get standards consumers involved in the proceedings, which often involve a significant time investment and “boring” meetings. “We struggle with it. We work hard to pull in participants from all aspects.”

It’s a challenging goal, made even more daunting by decreasing employment numbers in electronic trading and relentless efforts to cut costs. Northey says many firms no longer see the value in participating in standards decisions, but even if they do, they weigh it against demands for operational cost reduction. 

“It takes time for their employees to get involved in these processes. On the asset manager side, everything is about cutting costs. Are you going to let somebody participate for a couple of hours a week in standards meetings? That two hours of standards meetings are about 5% of an employee’s time, and so it’s a tougher sell in our current climate,” he says. 

Of course, the rub is that if consumers don’t participate, that leaves standards decisions to the producers. 

“The consumer has to take responsibility, too. If they’re not involved, the outcome may favor the producer side. There’s a responsibility on the consumer side to look out for their interests,” Northey says. 

Atkin is also working to increase and diversify the market’s involvement in the standards process. Since Cusip started, he says, participants have “faded out” of standards discussions, and now the industry is standing at the next big precipice, where a common financial language about reference data is a crucial step toward knowledge graphs and straight-through processing. 

“When the banks, which are the participants, fall off of the discussion and it then becomes a conversation among only a few, some of which might have their interests at heart—that’s a problem,” Atkin says. “We want the banks, the participants, the fund managers, the custodians, the securities operations professionals back into the conversation, because this is about building a standards infrastructure for our industry.” 

In a market where firms take a tactical view, standards evangelists must continuously fight against the inertia of cost containment, prioritization, and time. 

“It’s one of the crosses that you bear when you try to deal with an industry-wide thing that requires collaboration, versus a company thing that requires attention and focus,” Atkin says. “When you position it correctly, to the people that matter, about the value of trust and confidence in data and in the underlying infrastructure that we’re building to ensure its acceptance compared to the cost and the time and the focus, there is no comparison. But overcoming inertia is really hard.”

Although inertia is part of the pace of business, current participants in the standards process could also be more explicit about their goals and improve efforts to recruit and engage. “We don’t do a very good job of that,” he says. 

Gettin’ FIGI With It

As the people passionate about standards continue their quest to spark those of the broader industry, OMG and Bloomberg continue their mission to have the FIGI become an ISO standard. Following the defeated vote, Northey indicates OMG remains committed to getting the standard accredited, news that is surprising to Kuhnel. 

“If it were introduced again, the NSBs that have already voted on it would probably be quite confused as to why they’re having to entertain and consider this again, when they’ve already taken a decision, but let’s see what happens,” he says. 

What is happening is that OMG and Bloomberg have dusted themselves off and are still swinging. The FIGI is now before ISO/IEC JTC 1, a joint technical committee that specializes in standardization in the field of information technology. Warms says one of the reasons Bloomberg decided to work with OMG on the FIGI is because OMG has put forth 11 standards in the past 10 to 15 years that are now ISO-accredited. 

“We feel that the FIGI spec, as put together in conjunction with OMG, is very much a technical standard, and JTC 1 seems like the appropriate place to re-engage with ISO with an audience that is going to take it on its merit and avoid any political hurdles that exist in other processes,” he says. 

When asked why FIGI wasn’t put before JTC 1 in the first place, Warms says it seems obvious in retrospect, but their initial thinking was that because the FIGI is an identifier that represents the financial industry, it should go before the technical committee in charge of financial industry standards. “But in reality, it is very much a tecchie type of standard, one that would not be appreciated
by TC 68. The FIGI is going to be looked at with a better set of eyes among JTC 1,” he says. 

As of press time, the FIGI was registered with JTC 1 but still waiting for the committee to initiate a ballot. “We’re watching that, seeing how it does progress but there isn’t a specific timeline at this point,” Warms says. “We are eager for it to proceed.” 

Maybe Bloomberg didn’t get outplayed, after all—perhaps the data giant needed to find a friendlier playing field.