CUSIP Global Services: From A to Z April 10 , 2014€¦ · · 2018-04-27Permission to reprint or distribute any content from this presentation requires the written approval of CUSIP

Powering Efficient Capital Markets

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Permission to reprint or distribute any content from this presentation requires the written approval of CUSIP Global Services.

CUSIP Global Services: From A to Z

April 10th, 2014


Permission to reprint or distribute any content from this presentation requires the written approval of CUSIP Global Services. 2

Agenda

• About CUSIP Global Services (CGS)

• Leadership

• The World of Standards

• Processes

• Technology

• Licensing

• Products and Services



About CGS

History

Mission

Asset Class Coverage



History of CUSIP Global Services

1960’s 1970’s 1980’s 1990’s

1964-ABA spawns

CUSIP

1968-CGS is formed

ABA selects

S&P to run it

1972-All Clearing Corps

use CUSIP. Mandatory

for brokerage firms

1975-Federal Reserve uses

CUSIP to speed up transfer

US Treasuries

1983- MSRB mandate

Muni’s need CUSIP

CUSIP assigned to CDs

1989- CUSIPs for

Insurance PPNs

1989- CINS

created for Intl

offerings

1990- CUSIPs for

Commercial Paper

1993- 1-hour Xpress service

1998-CUSIPs for

TBAs



History of CUSIP Global Services

2003 2004 2006-2008 2009-now

2003 - CGS partners

with Markit – CLIPS/RED

2004 – CGS partners

with LSTA - Loans

2003 – CUSIPs are

assigned to Indices 2006 – 144A Linkage

Service

2007 – CUSIP NOW

2008 – CGS opens

Asia office

2009 - CGS partners

With FOW on listed options

2009 - CGS partners

With Avox on Entity IDs

2009 - CGS partners

With eVestment on Hedge Funds

2006 – Muni Alert Service

2014 – CUSIPs for private placements

(CrowdFunding)



About CUSIP Global Services

Mission – Powering Efficient Capital Markets

• CUSIP helps foster market liquidity

Over 14 million securities and their issuers worldwide

A unique, common language across institutions, exchanges and nations

A streamlined workflow from the front to back office

• Users rely on the accuracy of CGS information to run their businesses in an

efficient and cost-effective manner

• The numbering system for:

US & Canada

Cayman Islands, Bermuda, & Puerto Rico

35 markets total in North, South, Central America and Caribbean



About CGS: Asset Class Coverage

Equity Debt Other

• Common/Ordinary Shares

• Exchange Traded Funds

• Global/American Depositary

Receipts (GDR/ADR)

• Indices

• Limited Partnerships

• Listed options – US and Canada

• Mutual Funds

• Preferred Shares

• Real Estate Investment Trusts

(REIT)

• Rights

• Unit Investment Trusts

• Warrants

• Corporate Debt

• Municipal Debt

• U.S. Treasury and Government

Agencies

• Federal Government Economic

Stimulus Programs

• Sovereign Debt

• Supranational Agencies

• Bankers Acceptances

• Commercial Paper

• Medium-Term Notes

• Certificates of Deposit

• Asset-Backed Securities

• Mortgage-Backed Securities

• Collateralized Debt Obligations

• Syndicated Bank Loans

• Credit Derivatives (RED Codes)

• Hedge Funds and Funds of Funds

• Restricted Rule 144A and Regulation

S Securities

• Structured Products (Equity- and

Index-Linked Securities; Equity &

Debt Hybrids)

• Variable Annuities and Other

Insurance-Related Products



Leadership

Board Structure

Thought Leadership

Legal Entity Identifiers



Leadership: CUSIP Board of Trustees

• Board includes a wide cross-section of firms and industry

representation

Feedback and guidance directs new initiatives and areas for

growth

Ensures that CGS is responding to industry needs

• Rotating chairperson

• Permanent ABA, SIFMA, and DTCC representation

• Meets formally three times per year

• Highlights CGS independence within S&P Capital IQ



Leadership: Thought Leadership

• Monthly CUSIP Issuance Trends Report

Solid predictor of future capital markets activity

Video on www.cusip.com and print version

Wide publication, including Barron’s and Wall Street Journal

• Solutions Center

Online version of CUSIP A-Z

Product video clips

• News and Events

White papers and articles on standards development

Upcoming events calendar: CGS Summit, Operations Forum, and

Educational opportunities

http://www.cusip.com/



Leadership: Standards Body View of Legal Entity ID’s

• Attempts to create a lingua franca for legal entities

Allows regulators to better monitor systemic risk

Model includes Regulatory Oversight Committee, a Central Operating Unit, and federated

Local Operating Units

A building block for viewing capital structure and corporate hierarchy

• Collaboration between Industry and Regulators

Spearheaded by Financial Stability Board (FSB)

SIFMA and global sister organizations formed under the banner of GFMA

• Current State of Affairs

FSB has endorsed a 20-character code with first four positions denoting the LOU of origin

DTCC and SWIFT issuing Global Markets Entity ID’s (pre-LOU prefix 5493)

CGS collaborating with DTCC: Issuers can secure a GMEI during CUSIP application



Structure of LEI

• A unique 20-character alphanumeric code assigned to all entities

involved in financial transactions through ISO 17442. The LEI will be

neutral, with no imbedded intelligence: 5493QN3K1A1C2R3JL544

– Legal Name: Echo Street Capital Partners, LP

– Address: 2711 Centreville Road, Suite 400, Wilmington DE 19808

– Country: USA

– Entity Status: Active

– Legal Form: Limited Partnership

– Date of Assignment

– Last Update

– Date and Reason for Expiry

12



Leadership: Our LEI Contribution

CABRE Directory

• Registry of financial entities with over 550,000 CABREs to date; semi-annual

quality reviews

• Continuous inbound flow of new entities from Issuance Operations

• Directory is free to CUSIP customers and can be used now

• CABRE will map to LEI

CABRE AVID LEI/CICI CUSIP_ISSUER_NUM LEGAL_ENTITY_NAME LEGAL_FORM ROLE_TYPE

DE0D179P08 4525288 7LTWFZYICNSX8D621K86 D179P0 Deutsche Bank AG AKTIENGESELLSCHAFT ISSUER

DK10611003 7625372 1MX2U20WYJ5121KEZV44 K4277T The Government of the Kingdom of Denmark OTHER COUNTER PARTY

NL07802596 3210953 780259 Royal Dutch Shell PLC ISSUER

US064966H7 2411441 549300ABYZD2SFD5JB29 64966H City of New York OTHER ISSUER

US07134481 3201632 FJSUNZKFNQ5YPJ5OT455 713448 Pepsico, Inc. CORPORATION ISSUER



The World of Standards

ANNA/ASB

ISIN

CFI



The World of Standards: ANNA and ASB

Association of National Numbering Agencies (ANNA)

• CGS one of 22 founding members in 1992 and an original Board member

• Currently 84 full members and 31 partners representing some 122 countries

• Registration Authority for the ISIN standard/ISO 6166 (among others)

• Establish and update ISIN allocation guidelines

• Global expansion to new NNAs/countries

ANNA Service Bureau

• Central hub and largest ISIN repository with over 8.3 million active ISINs

• Receive and consolidate ISIN data from NNAs

• Disseminate ISIN codes to the market

• CGS co-manages with SIX Financial Information (Swiss NNA)



The World of Standards: ISIN

ISO rules govern designation of the ISO Country Code, e.g.

for Equity Issues: country where the entity is incorporated/organized

for Debt Issues: country where the Central Securities Depository is located

The local Identifier is assigned by the individual National Numbering Agency (NNA)

ISO 6166 - International Securities Identification Number

A global, uniform unique code that identifies instruments to facilitate

cross-border trading

Example: Amazon.com Inc – Common Stock

ISO

Country Code

Local

Identifier Check ISIN Identifier

2 Characters

US

9 Characters

023135106

1 Character

7

12 Characters

US0231351067



The World of Standards: CFI

CFI Code ESVUFR

Asset / Product Type

Category E = Equity

Group S = Shares

Attributes

1st Attribute – Voting right V = Voting

2nd Attribute – Ownership U = Unrestricted

3rd Attribute – Payment Status F = Fully Paid

4th Attribute – Form R = Registered

CFI Code DBFUGR

Asset / Product Type

Category D = Debt

Group B = Bonds

Attributes

1st Attribute – Type of Interest F = Fixed Rate

2nd Attribute – Guarantee U = Unsecured

3rd Attribute – Redemption G = Callable

4th Attribute – Form R = Registered

Equity/Shares Debt/ Bonds

ISO 10962 – Classification of Financial Instruments code



Processes

Assigning CUSIP/CINS/ISIN

Sample Codes

General Procedures

Suspicious Deals



Processes: Assigning CUSIP (US and Canada)

Equity

• Public (unrestricted) equity offering by U.S. or Canadian issuer

• Private (restricted) equity offering in U.S. by any issuer

Rule 144A, Regulation D

• American/Global Depositary Receipts (ADR/GDR)

Debt

• Public or private debt offering in U.S. by any issuer

SEC-registered, Rule 144A, Regulation D



Processes: Assigning CINS (International)

Equity

• Equity offered solely outside U.S. and Canada

U.S. company Regulation S stock offering on U.K. AIM exchange or in

Germany

• Public offerings in U.S. by non-U.S./Canadian issuer (except

GDR/ADR)

Cayman Islands, Bermuda and other non-U.S./Canadian issuers

Debt

• Debt offered solely outside U.S. and Canada

Regulation S (any issuer)

Eurobonds



Processes: Sample CUSIP

Structure of a CUSIP

CGS provides a 9-character standard CUSIP identifier for issuers and their

financial instruments offered in the U.S. and Canada


Issuer Issue Check CUSIP Identifier

First 6 Characters

• Identifies the unique name of the:

– Company

– Municipality

– Government agency

• A hierarchical alpha numeric convention linked to alphabetic issuer name

Next 2 Characters

• Identifies the type of instrument:

– Equity

– Debt

• Uniquely identifies the issue within the issuer

• A hierarchical alpha numeric convention

Next 1 Character

• A mathematical formula checks accuracy of the previous 8 characters

• Delivers a 1 character check result

Resulting 9 Characters

• A unique identifier

023135 10 6 023135106



Processes: Sample CINS

Structure of a CINS

CGS provides a 9-character standard CINS identifier for

non-U.S./Canadian financial instruments

Example: Abingdon Capital PLC – Shares

CINS Identifier

First Character

• Identifies country or region where issuer is incorporated

• CGS’s rules-based engine governs designation

• In this case, G=United Kingdom

Next 5 Characters

• Combined with Country Code, uniquely identifies the issuer

• In this case, Abingdon

Next 2 Characters

• Identifies the type of instrument

• Uniquely identifies the issue within the issuer

Resulting 9 Characters

• A unique identifier

G0052B105

Country Code Issuer Issue Check

G 0052B 10 5

Next 1 Character

• A mathematical formula checks accuracy of the previous 8 characters, and delivers 1 character result



Processes: ISIN from CUSIP or CINS

Structure of an ISIN Assigned by CGS

ISIN Based on CUSIPs


ISO

Country Code

Local Identifier

(CUSIP) Check ISIN Identifier

US 023135106 7 US0231351067

Example: Air Canada Inc – Class A Shares ISO

Country Code

Local Identifier

(CUSIP) Check ISIN Identifier

CA 008911703 4 CA0089117034

Example: Cable and Wireless Jamaica Limited – Shares ISO

Country Code

Local Identifier

(CINS) Check ISIN Identifier

JM P19231102 6 JMP192311026

ISIN Based on CINS



Processes: General Procedures

Securities Offerings

• New Public or Private Offering (prospectus, offering document)

• Corporate Action

Name change

Company merger, acquisition or reorganization

Chapter 11 bankruptcy reorganization

Reverse stock split

• CUSIP assigned pre-sale/pre-trade

Preliminary information

Data Quality Group focused on final validation of descriptive data and customer

support/queries

• Internet Requests at www.cusip.com

CUSIPRequest

• Express assignments within one hour




Processes: General Procedures

• CUSIP identifiers are not reused except for discount commercial paper,

government agency discount notes and TBA mortgage pools

• A security is assigned a CUSIP or CINS; and one ISIN

• Fungibility:

One CUSIP and one ISIN if shares trade on multiple stock exchanges or

denominated in different currencies

Separate CUSIPs and ISINs if debt issued in different tranches or classes by

currency, for example U.S. dollar tranche and Euro tranche

Separate CUSIPs and ISINs for each transfer/ownership type: SEC-registered

(unrestricted), Rule 144A, Accredited Investors and Regulation S



CUSIP Workflow: Request and Assignment

Lead Underwriter

Issuers and Obligors

Counsel

Pre-trade self-registration

• Preliminary Prospectus

• Preliminary Official

Statement

• Proxy Statement

• Draft Merger Agreement or

Certificate of Amendment

Electronic

documents

• XPRESS Requests (1 hour or less)

• Standardized Issuer/Issue Descriptions

• Up to 60 Data Elements

• Final CUSIP/CINS ISIN Assignment

Prioritize and process

Electronic Confirmation

Real-Time Web CGS/ASB Data Services

Data Distribution Global Data Vendors

CGS



Processes: Spotting Suspicious Deals

• A CGS Identifier is NOT meant to be a mark of authenticity or seal of

approval for any given security

Offering must meet eligibility for a CUSIP

Must have legal source document

• We do, however, prevent suspicious offerings from reaching the

market with a CUSIP

• Red flags include:

Fake territories/jurisdictions

Backed by precious metals

Absurd offering amounts

No reputable placement agent

No depository eligibility



Technology

SCORE

REACH & FIRST

Web Services/API



Technology: SCORE Assignment System



Technology: SCORE Assignment System



Technology: Speedy Issuance for Large Requesters

• Since early 2008, retail CD brokers can request CUSIP numbers electronically

through the CUSIP REACH interface

• Since late 2010, CUSIP FIRST lets requesters “fast-track” new bulk CUSIP identifier

issuance

CUSTOMER

CUSIP REACH

3. Email

Notification

Request

Received

5. Email

Notification

Response

Available

Customer

Request Folder

Customer

Response Folder

S&P FTP

Server

1. XML

Request

6. Customer

Retrieves and

Deletes

Response File

2. Request

Pickup 4. Response

Posting



Technology: Customized Data via API

• Flexible content in XML-based files; real-time access

• Simple Object Access Protocol (SOAP) Request and Response

messages

• Uses Web Services Definition Language (WSDL) to determine

format of input and response



Licensing

Basic Overview

Value of CGS Data



Licensing: Basic Overview

• Ensures quality and consistency of CGS data throughout the industry

• Allows for direct re-investment by CGS on behalf of market participants

• Protects the ABA’s Intellectual Property

• Allows firm to source data either directly from CGS or indirectly through an

authorized market data vendor

Direct subscribers receive the data straight from the source

Indirect subscribers can leverage existing datasets and workflow

One license covers any number of vendor feeds and allows a firm to take

product up to the value of a license

• Transparent and non-discriminatory

Process begins with Use of Service Statement as completed by client

Sample fees available on www.cusip.com




Licensing: Value of CGS Data

• It’s not “just about the numbers”

Up to 60 data elements required for unique identification

Standardized Issuer and Issue descriptions

CGS is the primary source for pre-trade security information

All major Market Data Vendors consume CUSIP feeds on behalf

of their customers

Brings speed, efficiency, and reliability to market participants

• CUSIP identifiers are interoperable between vendors

Proprietary vendor codes lock a firm into one platform

CUSIP is a common language regardless of environment



Products and Services

Delivery Options

Value Proposition

Content & Solutions



Products and Services: How We Deliver the Data

CGS Data Feeds

One of the largest securities

databases available

• Intra-day, Daily, Weekly

• Master & Delta Files

• Flat & XML formats

CGS Web Services

Fast & accurate source

information

• Near Real Time

• Online web portals

• API Web Services

• CGS iPad Application

FASTEST and MOST RELIABLE WAY TO GET

CUSIP NUMBERS and UNDERLYING

REFERENCE DATA FOR SECURITY SET UP



Value of taking data directly from CGS

Speed

• Real time access to IPOs,

new issuance, and

corporate actions

• Multiple delivery options

via feed or web services

Data Provenance

• Source database

• Legal documentation

• 40 years of historical

reference data and

corporate actions

• Data expertise

Validation & Accuracy

• Ensure accuracy of CUSIP,

CINS and ISIN identifiers

• Protect against dummy

numbers

• Cross check underlying

data elements with legal

documentation

Asset Class Coverage

• Dozens of asset classes

covered across public and

private markets

• Work with industry experts

on expansion to new

classes i.e. LSTA, NAIC,

Markit



Products and Services: CGS’s Flagship Solutions

A Range of Content to Suit Your Needs

CGS CUSIP Access Near real time web access to the CUSIP database

Search by issuer name or CUSIP

CGS CUSIP

New Issue Alert

New issue alert service

Transmission files pushed to clients every 15 minutes

CGS Portfolio

Service

Validate CUSIPs and CINS in your Security Master File or

portfolio

Returns valuable reference data for each inbound security

CGS Data Feeds

CUSIP Master File

CINS Master File + Subsets

CGS ISIN Master File

CGS TBA

(To Be Announced) Temporary CUSIPs for federal agency mortgage pools

(i.e., Equity only, Corp Debt only, etc.)



Products and Services: Segment Solutions

Red Codes Credit derivative entity identifiers for Markit‘s RED

service

CGS Syndicated

Loans

Private corporate bank loans

Working with LSTA

CUSIPs assigned at the deal and facility level

CGS Options U.S. and Canadian listed equity, index, and ETF options

Capturing Client Needs for Additional Coverage Organically

or through Partnerships

CGS Hedge Fund

Service

Hedge funds and fund of hedge funds identified globally

Increase transparency in a traditionally opaque market



Products and Services: Solutions and Linkages

Services to Help You Work More Efficiently

CGS Security

Identifier Linkages

CUSIP to ISIN Linkages

CINS to ISIN Linkages

CGS Associated

Issuers

Link related issuer names in the CUSIP database

Issuers with multiple base numbers

Issuers related through historical corporate actions

144A Service

Link related securities from the same private placement

offering memorandum

CUSIPs are assigned for each type of qualified

institutional buyer including:

144A, Accredited Investor, Registered issues and Reg S

Entity ID (LEI,

CABRE) to Security

CUSIP, ISIN)

Linkage File

Developed new process linking CABRE to global ISINs

Created as part of LEI initiative

Over 10 million entity to security identifier links

Global referencing for

cross border trading

needs



Contact Information

• Jim Taylor, Managing Director, Head of CUSIP Global Services, 212-438-4007

– [email protected]

• Scott Preiss, Vice President and COO, 212-438-6560


• Matthew Bastian, Director of CGS Product, Market & Business Development, 212-438-4072


• Gerard Faulkner, Director, CUSIP Operations, 212-438-6542


• Vinny DeCarluccio, Senior Manager, CGS Data Governance, 212-438-6540


• Peter McNally, Manager, CUSIP Operations, 212-438-6580


• Thomas Baldinger, Senior Manager, Product Development and Support, 212-438-1360


• Robert Corrado, Product Manager, 212-438-2945


• Darren Purcell, Director, CUSIP Global Services EMEA, +44 20 7176 7445


• Eng Ban Ho, Director, CUSIP Global Services Asia Pacific, +65 6530 6457



Permission to reprint or distribute any content from this presentation requires the written approval of CUSIP Global Services. 43 43

Documents

CUSIP Global Services: From A to Z April 10 , 2014€¦ · · 2018-04-27Permission to reprint or distribute any content from this presentation requires the written approval of CUSIP