WASHINGTON - The American Bankers Association is warning that the use of Cusip identification numbers as part of the Municipal Securities Rulemaking Board's EMMA system violates the ABA's intellectual property and contractual rights and that EMMA should not move forward until these legal hurdles are resolved.
The ABA's warnings come in a
"Protection of our intellectual property and contractual rights is necessary to prevent those organizations and individuals that might seek to misappropriate proprietary data or otherwise use it for business purposes absent a valid license," ABA said in its letter, which was signed by Douglas Adamson, executive vice president in the group's technical services division. "It is critical that these legal issues be resolved before the MSRB is allowed to move forward with the proposed expansion and full implementation of EMMA."
Cusips are used to identify stocks of all registered U.S. companies and government and municipal securities. The term stands for Committee on Uniform Securities Identification Procedures, referring to a committee established by ABA in 1964 at the request of industry clearing corporations. The Cusip system is owned by ABA, but it is operated by Standard & Poor's as the Cusip Service Bureau.
Specifically, a Cusip number consists of nine characters, including letters and numbers, that uniquely identify the issuer and type of security. The first six "common" digits identify the issuer and two other characters identify the issue. The ninth digit is a "check" digit used to check the accuracy of the preceding numbers.
ABA's letter comes as the MSRB is entering the final stages of developing the EMMA system. When finalized this summer, EMMA will collect and display primary and secondary market disclosure documents, real-time trade information, as well as reset information and program documents for short-term securities. The quickest way to search for information on EMMA about a specific issue is with a Cusip number.
In an interview yesterday, MSRB general counsel Ernesto Lanza said that the board is in negotiations with ABA over the use of Cusips on EMMA, though he declined to discuss specifics, including the amount ABA is seeking in licensing fees.
Still, Lanza said that EMMA would be ready for its formal launch date on July 1, when SEC rule changes go into effect mandating that issuers submit continuing disclosure documents to the MSRB rather than four existing national repositories.
Asked about ABA's request that EMMA include password protections, Lanza said, "That will not be happening" because it would present an additional barrier to the site and could potentially disrupt its use.
"That's counter to the goal of EMMA, which is democratizing information," he said. "We don't see any utility to anyone to have a password."
Lanza added that the board likely will unveil additional language in its terms of use documentation that would reflect some of ABA's concerns.
"That's already largely worked out," he said.
ABA officials were not available for comment before press time.
