With brokers and their clients becoming increasingly global in operation, and focusing more on processing efficiencies, it has become apparent that the absence of a market-level, global security identifier is a major cost to the industry.
Failed cross-border trades cost the global securities industry around £800 million every year. It is estimated that £125 million of this loss can be linked directly to problems identifying the securities involved in cross-border transactions.
These include existing systems being unable to provide codes quickly enough in the trading cycle, as well as difficulties providing codes for those with multiple listings.
After extensive discussions with users and vendors, the Exchange's existing seven-character numeric SEDOL code will be updated to alphanumeric and fully extended to market level. The code will be introduced in 2003 in response to significant market demand.
David Lester, the Exchange's Chief Information Officer, said: "This new system will allow us to provide a unique global security identifier to address market needs, and enable the Exchange to build on our position as a provider of the established SEDOL standard.
"It is another example of the Exchange's capacity to develop the products and services that an increasingly global market demands."
In today's interim results announcement, the Exchange said that Information Services accounted for £50.7 million of its turnover in the first half of this year. Instrument numbering, together with the Corporate Data Warehouse initiative announced yesterday, are part of Exchange's strategy to diversify the range of commercial products and services it offers to its customers.
