ANNA Derivatives Service Bureau Launches OTC Transactions Identification

MiFID II, which comes into force in January 2018, requires the use of unique ISIN numbers for certain OTC derivatives.

The Derivatives Service Bureau (DSB) has finally launched its automated system for allocating product reference numbers to OTC derivatives, developed by the Association of National Numbering Agencies (ANNA) with London-based Etrading Software.

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The new ID creation service, known as International Securities Identification Number (ISIN), assigns a unique identification code to each new security as it is issued, leading to a global adoption of the ISIN numbers to meet a new regulatory requirement in the European Union from 2018.

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The ISINs have traditionally been used across the listed asset classes such as equities and bonds, but not for OTC derivatives. But since the product now falls under MiFID’s scope, it was proving problematic as OTC derivatives have never had ISINs, and the traditional method of issuing ISINs does not work for them.

For the first time, MiFID II, which comes into force in January 2018, requires the use of unique ISIN numbers for certain derivatives in the OTC market before any new instrument starts trading on an EU trading venue. Although the use of product identifiers for this segment of the industry is only mandated by European regulators, the DSB will offer the solution on a worldwide basis.

Commenting on this, Dan Kuhnel, Chairman of the Board of the Association of National Numbering Agency, parent of the DSB, said: “The successful launch into production illustrates the effective collaboration between industry and the DSB to enable market participants to meet their European reporting obligations.”

The statement continues: ”Today’s launch signals the beginning of the transition from pre-production User Acceptance Testing (UAT) mode that has been open for five months. More than 500 users from 167 organizations made use of the UAT environment. Sixty-six organizations have applied for direct FIX connectivity, of which 36 are active across 130 connections. Three organizations have connected with the UAT environment through the REST API. Many more organizations have informed the DSB that they are evaluating connectivity options, including utilizing intermediaries for programmatic connections.”

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