CUSIP Global Services, the numbering agency for North America, and Avox have teamed up to create a new identification code for business entities called Cabre.
Short for CUSIP, Avox Business Reference Entity Identifier, Cabre is a 10-character code. CUSIP Global Services says that it is “leveraging Avox’s existing database of information on business entities extensively in the initial stages of the partnership but CUSIP’s contributions will grow over time.” The new service will start off with over 250,000 entities.
The agreement between CUSIP and Avox, a firm specializing in counterparty data management, represents a growing interest by financial firms in identifying counterparties – their customers and firms with which they trade. The bankruptcy of Lehman Brothers in 2008 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 a corporate hierarchy can lead to huge financial losses. Large corporations often have dozens of interrelated subsidiaries and affiliates but won’t necessarily make good on all their financial deals.
While equities and fixed-income instruments have global identifiers created by numbering agencies in their home markets, such isn’t the case with business entities. Most buy and sell-side firms depend on either proprietary codes, codes from vendors such s D&B, or codes issued by messaging consortium Swift called BICs. Swift’s BIC codes have already received accreditation from the International Organization for Standardization as a standard nomenclature for identifying business entities.
A subsidiary of the Deutsche Borse, Avox also publishes its own identifier for counterparties known as Avid and a set of business entity data records for free on www.wiki-data.com. The data records include business entities, including their legal name, country of incorporation and city of operation. On their own Avids don’t carry any descriptive information about a business entity because they are created sequentially. That means no sophisticated algorithmic methodology is used to create them. By contrast, Cabres contain a six digit code which identifies the business entity in the event it is also an issuer of securities.
“Given their client-driven system maintaining global entity data, Avox is the ideal partner to augment our time-tested system of unique issuer and obligor identification,” says Scott Preiss, vice president of CUSIP Global Services in New York.