EUROPE - The European Commission (EC) will investigate ratings agency Standard & Poor's (S&P) for what is says is potential abuse of its market position, by setting pricing policies for European financial institutions which use international securities identification numbers (ISINs) applied to North American securities.
The EC said in a memo it had started the formal proceedings against S&P following complaints from several associations representing institutional investors and asset managers.
The Commission said it suspected S&P might have broken rules by forcing banks and investment funds to pay licensing fees for the use of US ISIN codes in their own databases and "certain descriptive elements" attached to the ISIN as an identifier key.
ISIN is a standard developed by the International Organisation for Standardisation (ISO) to provide unique cross-border identification for securities issued globally.
S&P runs the US NNA - the Cusip Service Bureau (CSB) - on behalf of the American Bankers Association (ABA), and is the only issuer of identifiers for US securities.
The European Fund and Asset Management Association (EFAMA), who filed the complaint together with organisations such as the German BVI and the French AFG on July 16 last year, yesterday welcomed the EC's decision to open formal proceedings against the agency.
"EFAMA, AFG, BVI, IPUG and SIPUG are confident that the complaint will succeed and that S&P will be required by the European Commission to stop the illegal ISIN licensing practice in Europe thereby ending this long-standing dispute in favour of the European financial services industry," the association said in a statement.
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