The CFI code has been developed to address a number of problems which have concerned the financial community on the past years. Among others the following problems have affected the financial community:

·lack of consistent and uniform approach to grouping financial instruments

·use of similar terminology for instruments having significantly different features in the different countries

·inability to group securities in a consistent manner leading to reports of holdings being categorized differently.

The benefits of the new code are:

·Definition and description for an internationally valid system to classify financial instruments

·provision of a set of codes to be used by all market participants in an EDP environment and permission of electronic communication between participants

·improved understanding of the characteristics of financial instruments will lead to a better understanding by investors.

The structure of the CFI code:

The CFI reflects characteristics that are defined when a financial instrument is issued and remain unchanged during its entire lifetime.

The CFI consists of six alphabetical characters:

The first character indicates the highest level of classification (categories).

Categories:

Equities (E)
Debt instruments (D)
Entitlements (Rights) (R)
Options (O)
Futures (F)
Others/Miscellaneous (M)

The second character indicates specific groups within each category:

Groups e.g. for equities:

Shares
Preferred shares
Convertible preferred shares
Units, i.e. unit trusts/mutual funds etc.
Others

The third to sixth character indicate the most important attributes to each group:

Attributes e.g. for equities:

Voting right
Ownership/transfer restrictions
Payment status
Form

Report on CFI developments

Requests from some countries (such as the US and Switzerland as well as from some industry organizations) have required ISO TC68/SC4/WG6 to reconvene and discuss these requests for a possible revision of ISO Standard 10962.

After 2 meetings in May and October 2005, WG6 came up with some additions to some of the categories, groups and attributes of the CFI.

The proposals for revision have been presented to the members of ANNA and will now be circulated among the ISO members for voting. After approvement by the ISO member countries a revised new version of the standard will be published.