Nov. 01, 2021
November 1, 2021 Subject: File Number 265-33: Setting the Record Straight on CUSIP Pricing and Small Investment Advisory Firms The Small Advisors and Small Funds Subcommittee (SASFS) of the SEC’s Asset Management Advisory Committee (AMAC) made recommendations to AMAC regarding CUSIP on 10/28/21. Before the AMAC considers these observations and recommendations on November 3rd, it is important that all committee and subcommittee members understand the facts about CUSIP pricing. Contrary to the assertions made by the SASFS, CGS has an established policy of completely waiving licensing fees for investment advisory firms with less than $5 billion in client assets. Moreover, 95% of investment advisory and wealth management firms accessing CUSIP data do not even require a license. CGS has been steadfast in its effort to help small investment advisers and funds access the trusted, tested and reliable CUSIP system at the lowest cost possible. The panel's recommendations seek to fix a problem that does not exist. It is simply not accurate to state that CGS charges burdensome licensing fees to this segment of market participants; as stated clearly on its website, CGS’s licensing fees are waived for tens of thousands of small to mid-sized industry participants, with the relevant section copied below. CGS has always focused on providing a level playing field for similarly situated users of CGS data and has simultaneously demonstrated transparency and flexibility with its licensing model as well. As a recent example, CGS modernized and modified its guidelines for displaying CUSIPs on public websites. Today, mutual fund companies, ETF providers and similar collective investment vehicles have the ability to display an unlimited number of CGS Identifiers (including those of their underlying fund constituents) on their public facing websites without any requirement that the consumer of such CGS data have a direct relationship with CGS, which is supportive of various SEC Rules including 6c-11, 2a-7 and 17g-2. In the instances where CGS license fees are charged to a firm with greater than $5B in AUM, these fees are based on specific usage including volume - firms with smaller usage paying smaller fees, and firms with greater usage paying more. Since the CGS licensing model is based on each customer’s usage of the CUSIP databases, CGS can fulfill its goal of creating parity and a level playing field for customers of its data. This model based on usage is consistent with standard industry practice among financial data providers. We regularly review and, when necessary, refine our pricing model based on market developments (including technology advancements) while also incorporating industry feedback. We also want to take the opportunity to address the SASFS’s comments on issuer fees. The fees charged to the issuers of the securities are entirely on a cost-recovery basis and are publicly disclosed here. In the case of municipal securities, issuance fees are also reviewed with the Municipal Securities Rulemaking Board (MSRB) annually. CGS is disappointed by the inaccuracy of SASFS’ observations and subsequent recommendations but welcomes this opportunity to set the record straight on CUSIP pricing and our ongoing initiatives to support smaller firms. Please let us know if we can provide you with any additional information or perspective. Scott J. Preiss Scott J. Preiss Managing Director, Global Head - CGS CUSIP Global Services Operated for the American Bankers Association by S&P Global Market Intelligence