In today’s global markets, standardizing the identification of banks, brokerage firms and other legal entities that engage in financial market transactions and then making the ID data readily accessible is critical to the functioning of the markets. Ron Jordan, DTCC’s Chief Data Officer, explains how the information provided by DTCC’s legal entity identifier (LEI) solution, the Global Markets Entity Identifier utility (GMEI) offered in collaboration with SWIFT, is helping regulators and market participants better understand exposures while enhancing market-wide and firm-level transparency and improving global systemic risk management.
How has the growth of the GMEI utility enabled DTCC to play a larger role in the Global Legal Entity Identifier System (GLEIS)?
Since its launch in 2012, the GMEI utility has issued over 165,000 LEIs to entities from over 140 jurisdictions, which is about 50% of all the LEIs issued worldwide. In 2014 alone, we registered more than 60,000 LEIs, making DTCC the clear leader in the marketplace today. But the biggest source of pride for us is the role DTCC has played in supporting the growth of the Global LEI Foundation (GLEIF), which was created last year to help manage the overall system. The industry, together with DTCC, plus other Local Operating Units (LOUs) and the GLEIF, are working together to coordinate and fully implement the LEI process, which is critical to increasing transparency for better counterparty and global systemic risk analysis.
A key element of your strategy is partnering with other organizations to support the issuance of LEIs in different jurisdictions globally. How did you execute on this in 2014?
We spent a good amount of time over the past few years engaging and collaborating with industry partners to determine the most efficient way to increase our geographical coverage. As a result, we were able to develop strategic partnerships in 2014 with NordLEI in Sweden, LuxCSD, the LOU in Luxembourg, and CDS Clearing and Depository Services in Canada. This teamwork leverages the GMEI utility’s infrastructure and capabilities and complements a collaboration formed back in 2013 with CUSIP Global Services (CGS), the largest national numbering agency in the world. But our intention is more than just expanding geographical reach. These collaborations are vital to the success of the federated operating model of the LEI system. DTCC is working seamlessly with our partners to provide best-in-class LEI assignment and reference data quality, including leveraging data from our subsidiary, Avox, and we are gratified that the GMEI utility has been recognized as the leader in both areas.
We are particularly proud that the GMEI utility was ranked number one for LEI data consistency and uniformity by the TABB Group and Alacra’s LEI Comprehensiveness Ranking in its initial two quarterly evaluations of the LOUs. As with GLEIS, we look forward to the continued growth of the GMEI utility in the months and years ahead.
What can the industry expect in 2015?
We anticipate that EU regulations, including European Market Infrastructure Regulation (EMIR), Markets in Financial Instruments Directive II (MiFID) and Central Securities Depositories Regulation (CSDR), will all require the use of LEIs in their reporting architecture, which creates further opportunity for the GMEI utility. We also anticipate that more U.S. regulators will mandate the use of LEIs. We look forward to continuing to work in collaboration with the industry and regulatory bodies to help clients meet their LEI compliance requirements.