The European Commission has decided to open formal proceedings with respect to Standard & Poor's (S&P) behaviour towards end users of International Securities Identification Numbers (ISINs), for possible breaches of the EC Treaty's rules on abuse of a dominant market position. The Commission believes that S&P may abuse its monopoly position as the US national numbering agency by forcing financial institutions (such as banks and investment funds) to pay licensing fees for the use of US ISIN codes in their own databases.

The initiation of proceedings against Standard & Poor's (S&P) originates from a complaint filed by several associations representing investors, such as financial institutions and asset managers. It is important to note that the opening of proceedings does not imply that the Commission has conclusive proof of an infringement but merely means that it will deal with the case as a matter of priority, always respecting the company's rights of defence.

The alleged infringement consists of an abuse by S&P of its monopoly position by requesting licensing fees from financial institutions located in the EU for the use of US ISINs and certain descriptive elements attached to these numbers each time such an ISIN is used in order to access value-added financial information provided by information services providers. Allegedly financial institutions are obliged to pay for a service that they are not interested in and do not actually use, i.e. the S&P's ISIN database as such. Moreover, it is alleged that S&P forces its contractual partners, the information services providers, to cut off financial institutions from data feeds on US securities unless the latter enter into licensing agreements with S&P for the use of US ISINs.

There is no strict deadline to complete inquiries into anticompetitive conduct. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate with the Commission and the exercise of the rights of defence.

ISSIN and cross-border identification for securities

The International Securities Identification Number (ISIN) is a standard developed by the International Organization for Standardization (ISO) to provide unique cross-border identification for securities (shares, bonds, etc.) issued throughout the world. ISINs are attributed by the National Numbering Agency (NNA) of the country of issuance.

S&P runs the CUSIP Service Bureau (CSB) – the US NNA – on behalf of the American Bankers Association (ABA). S&P/CSB is the only US ISIN issuer and the only operator to receive first-hand information from all US securities issuers. S&P/CSB includes the information gathered from securities issuers in a descriptive database ("the S&P ISIN database"), which is then licensed to information services providers such as Bloomberg, Reuters, etc.

It appears at this stage that US ISINs are the only universal or common identifier for US securities and that they are essential for the day-to-day business of financial institutions, including those located in the EU.