Avox Launches Free Service For Business Entity IDs
July 6, 2009
Avox, a counterparty data management firm, late last month started to publish a subset of business entity data records in a wiki, a Web site that allows people to easily post and edit listings.
But people logging onto Avox's free service at www.wiki-data.com will not only find basic information on more than 200,000 business identifiers, including their legal name, country of incorporation and operation, and city of operation. They'll also find an Avox-created identifier known as Avid - an attempt by Avox, which is majority owned by the Deutsche Borse, to develop a global standard for identifying and describing business identifiers.
"We are publishing the new service for free in an effort to facilitate a common standard," said Ken Price, chief executive of Avox, headquartered in Wrexham, U.K. "The industry has been demanding a low cost business entity data standard for years."
Avox is capitalizing on the growing interest among financial firms in ensuring accurate counterparty data as evidenced last year when the bankruptcy of Lehman Brothers left firms scrambling to understand their risk exposure to various Lehman owned entities and affiliates. Incorrect information on the identity of a trading partner or customer and how it fits into its corporate hierarchy can lead to a huge financial loss. Large corporations often have dozens of interrelated subsidiaries and affiliates but won't necessarily make good on all their financial deals.
But does the financial services industry really need another business entity standard?
No, according to Michael Atkin, managing director of the Enterprise Data Management Council, a trade group of large financial firms and vendors promoting best practices in data management. "We don't need more than one identifier," he says.
So far, however, no one has agreed on just what the identifier should be. While equities and fixed-income instruments do have standard global identifiers created by numbering agencies in their home markets, such isn't the case with business entities. Most buy- and sell-side firms typically depend on either their own proprietary codes, codes from data vendors such as Dun & Bradstreet, or codes issued by messaging consortium Swift called BICs (Broker Identification Codes).
Although Swift's codes are often cited as the most commonly used, they are not detailed in terms of corporate hierarchy nor do they encompass every type of firm. More than one BIC code is often assigned to the same entity.
Swift officials acknowledge the limitations of the current BIC system, but last year vetoed plans to create a brand new international business entity identifier (IBEI), as proposed by some financial firms. Instead, Swift will expand the issuance of BICs to corporations and will require financial firms with multiple BICs - typically used to identify different branch offices - to decide on a single BIC code as their unique identifier, said Paul Janssens, product manager for directories at Swift. The firm will initially add the legal name, registered address to the unique BIC; it will eventually also include information on corporate hierarchies.
The Enterprise Data Management Council's Atkin is hopeful that the International Standardization Organization will eventually agree on a single solution and acknowledges that Swift could end up the winner if its extension of BIC codes meets ISO's imprimatur.
