July 24, 2018
Having earned the perk of an office with windows that opened overlooking Broadway’s Canyon of Heroes, I enjoyed several victory parades and marveled at the outpouring of paper and adoration on the streets of Manhattan known as a ticker tape parade. Years ago, the confetti literally consisted of discarded lists of stock trades from the NYSE and AMEX. Given changes in enforcement of CUSIP licensing, I wonder what that parade would cost today? With the end of the halcyon era of free unlimited CUSIP era, we may never be able to afford a ticker tape parade again.
First, since every attendee would undoubtedly see at least one CUSIP, there would need to be attendee license fees. Would every parade enthusiast be issued a one-day CUSIP “fishing” license with catch limits? Would the firms that shred those pages and blotters to make a derivative work product, “confetti,” be classified as distributors? If a fan obtained an autographed trade blotter containing Birmingham Alabama Muni bonds, would it be confiscated like George Brett’s pine-tarred bat? Would a buyer of that blotter need to be licensed to own that memorabilia? Will the media rights spiral like Olympic bids as millions of viewers crowd around Times Square TV’s hoping to catch a glimpse of a favorite ISIN or SEDOL? Will NYC city trash trucks refuse to pick up the paper without clarity for piracy liability in carrying reams of CUSIPs without a clause of their contract coverage?
Probably not. But let’s face it. The cozy CUSIP is embedded everywhere you look and you can’t swing a delisted pink sheet around without hitting one in a vended platform, report, or database. Running a brokerage business without free CUSIPS mirrors Lt. Aldo Rain’s perspective in Inglorious Bastards about the problems that come with fighting in a basement. Number one being, you’re fighting in a basement – or in this case, running your business without unlimited access to free CUSIPS. The costs of compliance for CUSIPs is a classic monopoly case. Is it time for a CUSIP competitor? Time will tell. I’m sure that the heavyweight consumers of this information will have something to say.
In the meantime, be prepared for this conversation to come with the vendor community in some less obvious ways. Look at your organization’s data governance and see when a CUSIP is really warranted, and for whom? Are your internal databases that rely on CUSIPS licensed properly for their content? Have you budgeted for this surprise? Can you defend your position about CUSIP usage in an audit? If the CUSIP licensing group simply said, “No, you can’t use our CUSIPs anymore without signing a contract with us” what’s the impact on your business?