US ISIN Codes

Concessions

There are some concessions at the time of writing, March 2018. The website states the following, under CGS Licensing Policies FAQs:

“Are all end-users of CGS data required to enter into a license agreement with CGS and pay a fee to CGS?

CGS requires a license agreement with the end-user only when such end-user obtains access to CGS identifiers and related descriptive data either: (a) directly from CGS via a particular CUSIP product or service, or (b) indirectly from an Authorized Distributor in downloadable, machine readable or similar bulk format.

End-users who obtain display-only access to CGS Data by virtue of an Authorized Distributor's on-line screen display either through a terminal or website (as distinguished from receipt of the CGS Data from the Authorized Distributor in downloadable, bulk or machine readable format), do not have to enter into a license agreement with CGS or pay any license fees to CGS.

Additionally, CGS waives the license fees for an end-user customer who receives access to CGS Data from an Authorized Distributor in machine readable or downloadable format (e.g., a data feed or other bulk delivery method) but maintains fewer than 500 securities containing CGS Data in its internal database.”

It is clear that a licence is needed if you have a data feed, and it suggests that a licence is not required if you enter the CGS ISINs manually. (But this second point is not completely clear: Could it be argued that manual data entry is a “similar bulk format”?)

It is also clear that if you need a licence and have fewer than 500 CGS ISINs on the database (whether or not they are in use) then the licence fee is waived. In practice any data feed is likely to contain more than 500 CGS ISINs.

On-site Reviews

If you have a licence, even if it is one with the fee waived, you may be subject to an “on-site review”. These can be extremely onerous. According to one user who had one, they start with a meeting in which CGS may interview your staff members. The meeting can last all day, and you must prepare for it by completing various documents such as a flow diagram of which servers in your practice hold the CUSIP data and who can access it. There may then be follow up enquiries lasting months.

European Union Anti-trust Review

In November 2011 the European Commission, published an antitrust review, which prevented these charges for 5 years, subject to certain conditions. That period has now expired, but CGS issued a voluntary extension on March 17 2017.

CCH Policy

The voluntary extension suggested that users need not worry about CGS licence charges and on-site reviews. Unfortunately CCH has only received news of the on-site reviews since March 2017. Our data suppliers have also advised us that US ISIN charges do apply. CCH have therefore decided to remove US ISINs from users’ databases on upgrade to 2017.4. The only exception is for users with no data feed who have fewer than 450 securities.

Telekurs feed users

US ISIN codes have already been recoded for Telekurs feed users. In their place, the supplier, SIX Financial, provided Valoren codes. So the upgrade to version 2017.4 makes little difference. However if any US ISIN codes remain, they are removed as described for Exshare users below. This could affect codes for some countries that were not recoded earlier, e.g. MX (Mexico), BR (Brazil), PH (Philippines) as well as any US ISINs codes added manually.

Exshare feed users

After CUSIP Global Services (https://www.cusip.com) introduced extremely high charges for holding US ISIN codes on a database, CCH removed them. For users of the Telekurs data feed, securities were altered to use Valoren codes instead. But for users of the Exshare data feed (from ICE, formerly Interactive Data), there was no substitute code. Securities with a US ISIN code were changed as follows:

• If the security was not in use on any client, it was deleted.
• If the security was in use, it was modified to a random code that started U* (U for US).

Either way, the US ISIN code was removed and no more data was read in from the Exshare data feed for US securities and other securities using “US ISIN codes”. "US ISIN codes" here means not just codes that start "US", but also codes from other countries that use a CUSIP code as their middle digits, e.g. those of Canada, the Philippines etc.

With this release, data for these securities is read into Trust Accounts using a code that is a substitute for the US ISIN. The substitute code used is the "Common code" which is a nine-digit identification code issued jointly by CEDEL and Euroclear in Luxembourg. These codes are prefixed in Trust Accounts by "C*". So you might see a security with a code "C*123456789". The first file to contain this new data was the February 2019 file. The band P file contained around 32,000 securities identified by Common codes, which is around a quarter of the full set of US ISINs, but at least this should include the most important securities.

Updating to the Common Code

Firstly run the Exshare data feed in the usual way, selecting the option to Add New Securities. This will add all the securities from the Exshare file including all the C* codes.

For many US securities, there will now be two codes, a U* code and a C* code created from the data feed.

• The U* codes were created as explained above, and will be in use on the clients. They are not updated by the Exshare data feed.
• The C* codes were created from the Exshare data feed and will contain the latest dividend history and prices from the data feed.

So you will want to replace the U* codes with the new C* codes which are updated. The way to do this for each U* security is as follows:

1.    Select a U* security on the Securities list and click Delete.

2.    The system recognises that the code is in use and says that the code "cannot be deleted without merging".

3.    Select Yes to merge and select the equivalent C* code.

4.    The U* code is now deleted and all holdings are transferred to the C* code.

The same procedure can be used to remove any US securities that you have created manually.

No data feed

If the user has no data feed set up then the upgrade program scans the security codes on the database and counts how many are US ISINs. If the number is more than 450, the upgrade program removes them as described for Exshare users above. If the number is fewer than 450 then the user is given a choice whether they wish to remove them.

Notes

• The chargeable ISINs include not just those with a US prefix but also those of other countries which are listed on the CGS website. These include Canada, Bermuda etc. As a precaution against the list changing in the future, Wolters Kluwer has taken a defensive approach of only allowing ISINs with certain specified prefixes to be stored on the Trust Accounts database. All the rest are treated as “US ISINs” whether they really are or not. The permitted prefixes cover the most popular non-chargeable countries. They are:

AT, AU, BE, BG, CH, CN, CS, CY, CZ, DE, DK, EG, ES, FI, FR, GB, GG, GR, HK, HR, HU, ID, IE, IM, IN, IT, JE, JP, KR, LK, LU, MY, NL, NO, NZ, PK, PL, PT, QQ, RO, RS, RU, SE, SG, SK, TH, TR, TW, UA, VN, XD, XS, ZA

• If a US ISIN code is found as the successor stock on a complex capital event then a record for this successor stock may or may not exist on the database.
  • If a record for the successor does exist then the US ISIN on the complex capital event is recoded to the same “U*” code that was given to the successor.
  • If a record for the successor does not exist, then the code is blanked out.

Either way, the US ISIN code is removed

• Trust Accounts users rarely use CUSIP codes, but if any have been added manually or imported, they are treated in the same way as US ISINs and are removed or recoded on upgrade to 2017.4. The system checks for CUSIP codes as having a 9 character code with the correct check digit for a CUSIP.

Unable to Import US ISINs back into Trust Accounts

Once the data has been upgraded it is no longer possible to import US ISINs into the database:

• The Telekurs data feed ignores securities with US ISINs. Usually these will have a Valor code instead.
• The Exshare data feed ignores securities with US ISINs. At the time of writing there is no nonchargeable substitute code available in the Exshare feed, although CCH is discussing this with the supplier.
• Any user who imports securities, e.g. from a broker, is also unable to import US ISINs.

Manually adding US ISINs into Trust Accounts

You are able to add a security code manually that is a US ISIN. But a warning is displayed: “Security code could be a chargeable ISIN or CUSIP code”. The warning is given if:

• The code is a valid ISIN, i.e. is 12 characters and has the correct check digit for an ISIN, and
• It does not start with one of the permitted prefixes given above.

So in some cases, the warning is given even for certain non-chargeable ISIN codes.

Checking the number of US ISIN codes

Since it is possible to add US ISIN codes manually, albeit with a warning, users may wish to check from time to time how many they have on their database to ensure the number never exceeds 500. To do so:

• Run Reports > Investment Ledgers > Securities Reports > Securities in use
• Tick Include unused securities. Untick Valid SEDOLs. Tick US ISINs.
• Run the report.

Deleting US ISINs at a Later Date

If you wish to remove manually added US ISINs at a later date, two options are available, both accessed through QTRUMP32.EXE.

Removing Unused US ISINs

To remove only unused US ISINs, proceed as follows:

• All users should exit Trust Accounts and you should take a backup.
• Run the program QTRUMP32.EXE in the Trust Accounts programs folder.
• Select Tools > Delete unused securities.
• Tick Only delete unused securities with US ISINs.
• Click OK

Removing All US ISINs

If you wish to remove all US ISINs in the same way as described for Exshare users above, proceed as follows:

• All users should exit Trust Accounts and you should take a backup.
• Run the program QTRUMP32.EXE in the Trust Accounts programs folder.
• Select Tools > Delete US ISINs.
• Click OK