Financial Technologies Forum LLC - A Preview of the LEI Dramas to Come

A Preview of the LEI Dramas to Come

Aug. 09, 2012 by Eugene Grygo | Comments | Print

The push for standardized legal entity identifiers (LEIs) is advancing as evidenced by the recent launch of a legal entity data portal (www.avoxdata.com) via Avox Ltd., a subsidiary of the DTCC. The portal is yet another milestone in the LEI drama, which has many scenes to go before LEIs become a permanent part of the landscape.

I suspect that some of the battles ahead will involve the usual suspects such as the DTCC and SWIFT, which were recently appointed by the CFTC to oversee the CFTC Interim Compliant Identifiers (CICIs) needed for derivatives trading. Yet there are rumblings backstage that other key vendors are more than willing to take on roles similar to the combined efforts of the SWIFT/DTCC duo. The Financial Stability Board (FSB), the driver of the LEI effort, is leaning toward a federated approach to the international administration of LEIs. This approach will likely provide opportunities for many vendors, especially if the national numbering agencies—which have first dibs—opt not to take on the job of overseeing LEIs.

In addition, I also suspect that more grist for the LEI drama will come from the FSB’s recent launch of the LEI Private Sector Preparatory Group (PSPG), which will advise the FSB’s Implementation Group of experts from the global regulatory community on the evolution of the LEI standard. Unfortunately, much of the drama there will happen offstage.

However, there are other characters clamoring for the spotlight.

The market and reference data vendors have been waiting in the wings and watching developments, no doubt developing strategies and readying products, working behind the scenes and occasionally issuing white papers. For instance, Thomson Reuters’ recent white paper, “Legal Entity Data: Mapping the Corporate Genome,” authored by Tim Lind, the global head of legal entity content, includes a very long list of the work that Thomson Reuters has to do to facilitate LEIs. Some of the key LEI links are to:

Fundamental and historical financial data and research on securities
Evaluated pricing for over-the-counter (OTC) instruments, structured products, and loans
Data to screen entities for client onboarding, know your customer (KYC), anti-money laundering (AML), to determine the risk sanctioned by regulators or governments and potential reputational risk
Credit analytics and operational metrics
Funds to fund management companies, trustees, transfer agents, and custodians
Tracking M&A activities, deals, and changes in corporate structure
Supply chain risks including ownership details, environmental compliance, political risks, and geographical risk
Third-party content and analytics

As Thomson Reuters and its competitors race to provide LEI support, end-user firms can explore the aforementioned AvoxData service, which provides “free dynamic entity search and aggregation available to anyone who wants to use the database,” say Avox officials. The publicly available information includes legal name, primary place of business, country of incorporation, trading status, entity type, Avox ID (AVID) and, where available, the CICIs based on the ISO 17442 standard for LEIs.

As always, FTF News will keep you posted on the latest episodes of the LEI drama, which has turned out to be far more interesting than a rubber stamping of a seemingly mundane standard.

Get the latest LEI update at the FTF Navigating the LEI Landscape for 2012 and Beyond conference on September 19, 2012, in NYC.

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