Tine Thoresen: Great Expectations for Business Identifiers

The first email I received one Monday morning last month was a single line from an industry contact: “Any news regarding an international business entity identifier?” I get these questions a lot now. Business entity identification is taking center stage, and there is an expectation in the industry that the announcement could come any day now.

In fact, Mike Atkin, managing director of industry association EDM Council, keeps saying that he thinks an identifier like this will be implemented by the end of the year—at least in the US, and potentially globally.

At an EDM Council and Headstrong event in London last month, Atkin said he had been in regulators’ offices every day for the past week-and-a-half. Although he didn’t provide details of what went on there, the fact that regulators are interested in data management could signal a shift in focus—data is important, and this is pushing the debate about standards.

Atkin’s comments seem to have resulted in a flurry of rumors—the latest being that a new business entity identifier will be revealed at a conference this fall. But somehow I can’t see why a regulator would want to make a big splash about a new standard and do it at a conference. This sounds more like something a vendor would do.

However, the new identifier may well have a link to a vendor. The Depository Trust and Clearing Corp. (DTCC) acquired Avox earlier this year, and there were then talks about how the combined group could position itself as a reference data utility, owned by the financial services industry. At that time, some suggested the Avox and Standard & Poor’s work on the entity identifier, Cabre, could benefit from the deal. In fact, this identifier, which covers issuers, continues to be mentioned as a possible industry-wide identifier. The link-up between Avox and the DTCC is seen to have made the group more international, as the DTCC was better known in the US, and Avox in Europe.

The same is true for the Swift-assigned bank identifier codes (BICs) that identify financial firms, or entities within financial firms. In 2008, Swift suggested an extension of the BIC standard to cover non-financial institutions, an initiative also aimed at helping firms solve the business entity identification problem. Swift announced plans earlier this year to finish the work done to extend the scope of BICs to non-financial institutions by the end of 2010.

The third option is the ISO-led initiative to create a new business entity identifier. A working group submitted a proposal for an international business entity identifier (IBEI) that failed to pass the ISO process a few years ago. The working group reconvened last year, and narrowed the scope of IBEI to cover only issuers and guarantors.

The code, now called IGI, may also be included on the list of business entity identifiers reviewed by regulators. The problem for users is that none of these appear to cover all business entities. The local corner shop is not an issuer—or a guarantor. It is not a financial institution.

Will there be a new identifier entering the market? That is what the US chapter of standards organization GS1 is suggesting. GS1, the group behind standards such as the retail industry’s barcode, has also assessed opportunities for managing standards for the financial services industry. One option that has been mentioned is to expand coverage of its Global Location Number standard, which identifies physical locations and business entities.

I think GS1 has an interesting proposal. It might appear to be a little out of left field, but it is based on a proven model with international recognition. Critics say the financial services industry is more complex and fast-moving than other industries, so we need our own approach to standards. But you would think this organization could have a good starting point as it is already serving more than 20 industries. No politics, just standards. That’s what I think is needed if we really want to see an announcement about a business entity identifier this year.