The ISINs and CFIs that are assigned by the national numbering agencies are part of a larger family of financial identifiers known as the ISO-standard identifiers. They identify aspects such as the country and currency in which securities are traded, where they were issued, the names of the issuer and the home-country depository, and the exact type of securities and its terms.
ISO-standard identifiers have become the common language of financial transactions and processing around the world, because they are developed by the financial industry itself, under processes established by the International Organization for Standardization (ISO). The ISO process, the resulting identifiers and the long-term governance standards are used by every business sector, because of their characteristics of ethical integrity, commitment to open communications and the continuing involvement of the businesses affected.
This means that each of these ISO standards was initially developed by a working group of experts, through many rounds of proposals by the working group and constructive feedback from the industry as a whole. The ultimate acceptance happens only after a vote by all affected nations. The process begins again each time an ISO standard is updated.
In addition each identifier is subject to an ongoing governance process, to ensure that its integrity is protected. This includes making and enforcing rules about the registration process that precedes the assignment of the identifier, the validation of the collected data and work to keep it up to date, and the business practices of the agencies that issue the identifiers. In many cases, a Registration Authority is commissioned by ISO to oversee this governance. ANNA is the ISO-appointed Registration Authority for ISINs.
Both the ISIN and the CFI have been through recent updating to reflect the changing world of traded securities, especially the increasing importance and variety of derivative transactions – both exchange traded and over the counter.
The impact of these ISO-identifiers on the financial industry is immense and ongoing. They have been essential to the ongoing evolution of the entire lifecycle of investment operations. They have massively reduced the time, cost and risk of cross-border transactions. They provide standards for sharing information among all the entities involved in capital markets operations – investors, asset managers, broker-dealers, exchanges, custodian banks, clearing houses, depositories and other specialists.
Today, as the regulators of the world impose wave after wave of new reporting obligations to avoid future destabilization of global markets, these standards continue to be the common global foundation for reporting protocols.