(Bloomberg News) The U.S. Securities and Exchange Commission should limit fees that Standard & Poor's charges for identification numbers for bonds and other instruments, three financial groups said yesterday in a letter.
S&P, the credit-rating unit of McGraw-Hill Cos., charges from $10,000 to "hundreds of thousands" for so-called Cusip numbers, said the Bond Dealers of America, the Investment Adviser Association and the Government Finance Officers Association. They sent the letter to SEC Chairman Mary Schapiro saying the agency should "reduce burdens," and issued a press release today.
S&P runs the American Bankers Association's Cusip Service Bureau, which assigns the numbers to securities and charges licensing fees for their use. Often those fees get passed to investors, according to the release.
The bureau's "insistence on charging increasing and non-transparent fees is having a chilling effect on market transparency and the free flow of information for investing, trading, accounting risk management and regulatory reporting," Mike Nicholas, chief executive officer of the bond dealers group, said in a prepared statement.
Market regulators often require the numbers. Bond dealers and investment advisers use them for trade confirmations, account statements and electronic databases, and municipal-bond issuers use them in official statements, the letter said. S&P has been setting fees for their use "without any publicly stated rationale," and charges even when firms use the numbers to track securities internally, according to the letter.'Fair, Reasonable'
The letter is inaccurate and misleading, said Michael Privitera, a spokesman for S&P, which hadn't seen the document. S&P's licensing and charging practices "are transparent and in line with data provider industry norms and based on fair, reasonable and non-discriminatory terms," he said in an e-mail.
John Heine, an SEC spokesman, declined to comment.
Last year, S&P received a European Union antitrust complaint claiming that it unfairly charges licensing fees for the numbers. The European Commission in Brussels said in a statement Nov. 19, 2009, that its preliminary view was that "this behavior amounts to unfair pricing and constitutes an infringement" of EU rules.