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in scope, like the American Bankers Association, the Association of Stock Exchange Firms, the American Society of Corporate Secretaries, the Stock Transfor Association, the Investment Company Institute, and the National Association of Securities Dealers. Conceivably, government agencies like the Federal Reserve Board and the Securities and Exchange Commission would be interested in providing the coordination. In due course, a National Securities Depository system would have need for a nationwide FINS numbering plan. While it probably would not have direct contact with all financial institutions-particularly the smaller ones-it might well become the logical organization to coordinate the national numbering plan.

Numbering in alphabetic sequence

Some who commented on the ABA's FINS suggested that the system provide that numbers be assigned to institutions in their alphabetic order. As with ABA, this is not contemplated in the plan advanced herein, for these reasons:

1. The gapping requirements for a continuing system where entries change would probably require an added digit, and the fewer the digits the better;

2. Name changes would often require changed numbers for the same institution, complicating the clerical job of those accustomed to using such numbers; and

3. The advantage of retaining most existing local numbering plans would be lost, since many if not most of them do not provide alphabetic sequencing.

Of course, any sequential numbering system must be accompanied by a directory in which institutions are listed in alphabetic order along with the number assigned to each.

Numbers for branches or departments

Many financial institutions have an extensive network of branches across the country. Some have suggested that the numbering plan provide a separate number for each branch of an institution.

Similarly, some institutions have two or more departments involved in handling securities transactions. They have suggested that FINS provide a separate number for each such department.

It is believed inadvisable to attempt to incorporate such refinements in a comprehensive numbering plan, for these reasons:

1. The needs appear in only a small portion of the total "universe" of institutions;

2. Again, one or more digits would probably have to be added to the numbering plan; and

3. The changes in directories, particularly to reflect new and discontinued branches, address changes, etc. would be substantially increased, magnifying the problem of keeping them up-to-date.

The proposed plan does provide five geographic subdivisions within the U.S., but that probably will not accomplish the branch identification needs of most national organizations. Further identification of subdivisions within an institution would have to be provided by suffixes outside FINS.

CONCLUSIONS

There is at present no urgent need for a nation-wide directory of numbers each uniquely identifying a financial institution involved in some aspect of the processing of securities transactions. But such a need will undoubtedly come.

Meanwhile, some device is needed to provide that numbering systems presently being developed or in use can be assured of fitting into the ultimate national plan, or brought into harmony with it over a period of time.

The long- and short-term goals can be served by using the first two digits of an ultimate six-digit code to identify, respectively, the industry and broad geographical area. This results in reducing identified segments of the "universe" to a size small enough that none will exceed the 9,999 capacity provided by the code's last four digits. Any one of the identified segments, therefore, can proceed with assigning the last four digits to institutions within that segment, with the knowledge that such numbers will fit into an ultimate universal plan.

Mr. WILLIAM F. JAENIKE,

EXHIBIT III

BANK ADMINISTRATION INSTITUTE,
Park Ridge, Ill., May 22, 1972.

Banking and Securities Industry Committee,
New York, N.Y.

DEAR MR. JAENIKE: Mr. Disney asked me to review and reply to your letter and enclosure of April 28, 1972, on FINS. I am particularly happy to do this as I am working currently on a comparison of several of the existing and proposed communications systems for banking.

I have prepared a report for you of descriptions of the identification systems currently in use by or proposed for the banking industry. I have also commented on the apparent advantages and disadvantages which I see in them.

This comparison of identification systems is part of a report I am completing on the communications standards currently in use by or proposed for the banking industry. When the report is complete, I shall send you a copy.

My personal opinion is that the development of FINS should be coordinated with the development of BIN (Bank Interchange Number) currently underway by the ABA Bank Card Standardization Task Force. This coordination could be achieved through the Coordinating Committee on Bank Communication Standards chaired by George DiNardo of Mellon Bank. I understand that both BASIC and the ABA Task Force are represented on the Coordinating Committee.

I also feel that BIN should be the subset of the FINS which identifies domestic and foreign banks. If the payments system is moving toward an electronic funds transfer system, a number like BIN should supplant the Federal Reserve routing and transit number as an electronic identifier. I would also hope that FINS could include more varieties of financial institutions such as Savings and Loans, Credit Unions, etc. With possible changes in payment powers, these institutions should not be disregarded in any planning for an uncertain future.

If you have any further thoughts or questions, please feel free to contact Mr. Disney or myself. If there is a place for us, we would appreciate being able to work with you.

Sincerely,

Enclosure.

TRENTON C. THOMPSON,

Research Associate.

BANK IDENTIFICATION SYSTEMS

FINS FINANCIAL INDUSTRY NUMBER SYSTEM

Format.-6 digit number plus Mod 10 double-add-double check digit. Numbers are blocked in units of 100,000. Each block is reserved for assigning numbers to a member of one of 7 groups.

These groups include domestic and foreign banks, brokers, nominees, transfer agents, clearing corporations, regulatory agencies, and Statistical Service Organizations.

The first digit identifies an industry group. The second identifies a geographic region. The remaining 4 digits identify a particular organization

BANK WIRE

The bank wire uses a 4 character, alphabetic code to address banks on its system. These are used to identify both the sender and receivers of a message. In addition the receiver is further identified by typing the complete alphabetic name of the receiver on the third line (72 characters, maximum) of the message.

In its 4 character code, the first character is always a "C" or an "N." The "C" designates that the bank referenced by this address is connected to Bank Wire through the Chicago switching center. The "N" indicates the New York City switching center.

FEDERAL RESERVE WIRE SYSTEM, CALIFORNIA SCOPE & BAI LOCK BOX STANDARDS

All three of these systems use the 8 digit Federal Reserve Transit-Routing Number with a check digit. In addition, California SCOPE provides 23 character fields for the alphabetic names of banks or automated clearing houses.

CHIPS-CLEARING HOUSE INTERBANK PAYMENTS SYSTEM

This system uses a 4 digit numeric identifier input from the terminal. The computer system responds by typing at the terminal the alphabetic name, and in some instances the address, of the banks involved as verification of the entry of the proper 4 digit codes.

ABA-BANK CARD STANDARDS

As of their latest paper, the subcommittee recommends the use of the BIN (Bank Interchange Number). The BIN is a 6 digit number a BIN represents either a bank or a switching center.

ANSI-STANDARD IDENTIFIER FOR ORGANIZATIONS (SIO)

Note: This information was taken from the American National Standards Institute draft: "Proposed A N Standard for Identification of Organizations for Information Interchange". As to my best knowledge this document represents a standard which is still proposed and not yet endorsed by ANSI.

The SIO supposes that complete identification of an organization requires two identifiers an alphabetic one and a numeric one. The alphabetic identifier consists of the true and alternate names of the organization (such as Bank Administration Institute-BAI) and a set of characters which are reserved for delimiting those names. For reason which I shall cover later in this paper, I shall concentrate on the numeric identifier.

The numeric identifier in the SIO is made up of two components. The first is the single digit Identification Code Designator, ICD. This ICD designates which standard or non-standard identifier is used to complete the SIO. The following table shows the ICD's and the code corresponding to each one.

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Note: The numeric part of the SIO is always the size of the particular identifier used plus 1 digit for the ICD.

The SIO attempts to allow the use of any coding system available by creating "catch-all" categories with ICD's ø and 9.

If the financial industry were to adopt such an open ended coding system, it should be modified such that the second digit of the SIO is an Identification Code Subdesignator which would further identify the particular financial industry coding system in use.

COMMENTS ON THE NUMBERING SYSTEMS

Pros:

FINS

1. It recognizes both regions and industries.

2. It is compact being only 6 digits.

3. It includes a larger segment of the financial industries than other existing financial systems, either in use or proposed.

Cons:

1. Could it include the other financial industries such as Savings and Loans, Savings Banks, Credit Unions, Insurance Companies and Loan Companies?

2. It is not established and would have to start from scratch in gaining acceptance.

3. If it were coordinated with the BIN system of the credit card designers, that might make it a more attractive system for banks, since credit card could lead the way to its acceptance as the automated identifier.

Pros:

THE ABA ROUTING AND TRANSIT NO.

1. It is well established and understood.

2. It has the Federal Reserve Banking System's full support and enforcement. 3. It can identify any bank.

4. It seems to accommodate future growth under the established financial industry structure.

5. It is useful for regional analysis.

Cons:

1. It is eight digits, perhaps too many.

2. It accommodates only banks. If other institutions gain bank powers, it might not be able to expand.

3. The dash is useful for manual recognition but should not be included in its electronic format.

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1. They're short and can bear some mnemonic qualities for the banks they identify.

Cons:

1. They are limited in the number of institutions they can identify.

2. It is clumsy to apply a structure to them.

3. Unless an interactive system applies reinforcement in their use, they are error prone.

Pros:

ANSI-STANDARD IDENTIFIER FOR ORGANIZATION

1. It can accommodate any numbering system which special groups may devise. 2. It is before ANSI and may gain its endorsement.

Cons:

1. Without sub-designators, the system would not be particularly useful in the financial industry. Users must still have agreed on the particular codes used other than the DUNS, Social Security and Employer Identification Numbers.

2. The proposal still gives no specification of the actual size of identifier. This makes programming more difficult especially when the ICD-9 is used.

3. I question the necessity of inputting both an alphabetic and a numeric identifier. As in the case of CHIPS, a system could provide the alphabetic verification of the correlation of the addresses' name and number.

EXHIBIT IV

NATIONAL CLEARING CORP.,

July 20, 1972.

To: Clearing members, bank members.
Attention: Manager, Cashier's Department.

Subject: Member identifiers.

NCC Notice No. 195, dated May 25, 1972, outlined a change in NCC's system for identification of Clearing Members for trade comparison purposes. This notice

provides greater detail. Also note that due to requests from the Membership, this system change will begin with trades of October 5, 1972, not September 1, as previously announced.

The following is applicable only to CNS (continuous net settlement) at this time:

A. Commencing with trades of October 5, 1972, for clearance in the CNS system, NCC will accept, at the Clearing Member's option, either of these two identifiers:

(a) Four numeric characters, for instance, 0161. For Clearing Members having a previously assigned NCC numeric identifier, they will retain the last four digits of that number.

(b) Four alphabetic characters, for instance, MOTC. The four character alphabetic mnemonic will be identical to the NASDAQ symbol for those Members who are NASDAQ market makers. All members must complete and return the attached questionnaire, (Exhibit G) by August 14, 1972 to Mr. John Carrera, NCC Assistant Vice President-Member Services.

B. Commencing with trades of October 5, 1972, NCC will also implement a geographic identifier to be used to indicate trade comparison location. This will be an alphabetic character and will appear as the fifth character of the symbol. Clearing Members must use this identifier on all trade input data and it will be a part of the comparison process.

These location symbols will be used initially :

New York City-Y

Philadelphia-P
Boston-B

The use of this location code by the Clearing Member will also determine the location for the distribution of trade comparison reports (Contract Lists) and advisories.

The Clearing Member ID will then consist of five positions-four positions either alpha or numeric to identify the Member plus one position, always alpha, to identify the location.

Example: MOTCB or 0161B-Merrill Lynch, Boston; MOTCP or 0161P-Merrill Lynch, Philadelphia; and MOTCY or 0161Y-Merrill Lynch, New York. C. In addition to the above, each Clearing Member must select one location for settlement purposes.

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How the new system will work

1. Clearing Members will submit either the four character alpha or numeric identifier plus the location symbol on all P & S input (Original, As Of's and Withholds). See Exhibits A, B, and C for the exact location of the Member ID field.

Input can be submitted by the Clearing Member from any or all of the three facilities, thus the Clearing Members have the option of centralizing, or decentralizing, their P & S operation.

2. The trade comparison process will only compare trades that were submitted by both the Buyer and Seller with identical location codes, all other entries will result in uncompares.

Example 1

Buyer.-Merrill Lynch, Boston. Major: MOTCB or 0161B. Minor: NYHCY or

0510Y.

Seller.-N.Y. Hanseatic, New York. Major: 0510Y or NYHCY. Minor: 0161B or

MOTCB.

In this example both the buyer and seller submitted the same office locations, B and Y and Y and B respectively, therefore, the trade would compare. This assumes all other input data matches.

Example 2

Buyer.-Merrill Lynch, Boston. Major: MOTCB or 0161B. Minor: NYHCP or

0510P.

Seller.-N.Y. Hanseatic, New York. Major: 0510Y or NYHCY. Minor: 0161B or MOTCB.

In this example the trade would show as uncompared because, although the member identified the contra side correctly, he did not identify the locations correctly.

Merrill Lynch showed N. Y. Hanseatic as reporting the trade via the Philadelphia facility, while N. Y. Hanseatic was actually entering the trade through New York.

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