The Legal Entity Identifier (LEI) solution is designed to create and apply a single, universal standard identifier to any organization or firm involved in a financial transaction internationally.
The Global Markets Entity Identifier (GMEI) utility, DTCC's legal entity identifier (LEI) solution offered in collaboration with SWIFT, is enabling the industry to solve a long-standing problem: how to standardize the identification of legal entities that engage in financial transactions and make the data readily accessible.
The information afforded by GMEI is a critical tool for helping regulators and market participants understand exposures, enhance market transparency and manage systemic risk.
Facing increasingly complex financial markets, DTCC and SWIFT joined forces to create a global LEI data management system that is publically available and used primarily by regulators and the industry globally. The system has been formally endorsed by the Global Financial Markets Association, a consortium of 14 global financial services industry organizations, and the Commodities Futures Trading Commission (CFTC).
The GMEI assigns unique identifiers in a standard format. The system validates the accuracy of the associated reference data and stores all the information in a public database free for all to use and redistribute. In 2012, financial institutions began using the database, initially to identify parties to over-the-counter (OTC) derivatives trades across markets and jurisdictions.
GMEI PORTAL GLOBAL ADOPTION
Establishing an LEI Utility and Web Portal
In 2012, DTCC and SWIFT leveraged existing capabilities to build the first LEI database, known as the CICI Utility (the CFTC Interim Compliant Identifiers). The CICI Utility (now known as the GMEI utility) was built to help firms comply with global swap data reporting regulations, the first of which became effective in October. Many of the capabilities leveraged were provided by Avox, DTCC’s wholly-owned subsidiary specializing in entity validation services. DTCC and SWIFT were selected by the CFTC to launch this utility, which assigns CFTC identifiers to swap dealers and major swap market participants registered with the agency, and to their counterparties around the world. These identifiers are required for recordkeeping and transaction reporting in this complex asset class.
When the solution went live in August 2012, it had more than 24,000 legal entities preloaded into the database with their reference data validated. As of May 2014, the service has registered and maintains over 130,000 globally endorsed pre-LEIs.
The GMEI utility portal can be found at http://www.gmeiutility.org/. It includes registration and maintenance functions, a search capability, file download services plus a user guide and a set of answers to frequently asked questions to assist individuals and organizations in using the portal. In addition, webinars are planned to educate the industry and address open questions.
DTCC and SWIFT will continue to upgrade the GMEI utility based on the needs of the industry, the CFTC and the Regulatory Oversight Committee (ROC), the group of global regulators formed by the Financial Stability Board (FSB) to oversee the development and launch of the global LEI system. As the framework for global acceptance of all LEIs is implemented, we expect many regulators to require transaction reporting across many asset classes requiring self and counterparty identification with LEIs. The GMEI utility will be enhanced to support this broad rollout of the LEI.
Taking LEI Universal
DTCC and SWIFT designed the LEI solution to meet global requirements – across asset classes – set by the industry under the auspices of the Global Trade Associations Group, led by the Global Financial Markets Association.
The solution is built on a flexible infrastructure that can be easily adapted to meet evolving industry and regulatory requirements globally. For example, as the GMEI utility was under development, the Financial Stability Board (FSB) published its recommendations for structuring a global LEI system, which included a federated registration model, a focus on self-registration and a structured 20-character alphanumeric code based on the International Organization for Standardization (ISO) 17442 LEI Standard. What’s more, DTCC/SWIFT quickly updated the GMEI utility to meet these guidelines so that all existing records can ultimately transition to the global LEI solution without change.
DTCC continues to work closely with the industry's LEI Steering Committee, the FSB Private Sector Participatory Group, SWIFT, the CFTC and other global regulators in the Regulatory Oversight Committee (ROC) to gain consensus on the design and implementation of a universal LEI solution.
In the meantime, the GMEI utility is bringing a new level of transparency and risk management to the OTC derivatives markets. It is also a prototype that can be leveraged by regulators and market participants in other asset classes to better manage risk and exposures on a global scale.
Please view the CFTC press release for more information.
FSB and G-20 Recommendations
The G-20 nations have endorsed the creation of the LEI and have called for the Financial Stability Board (FSB) to oversee the program and to make recommendations in several areas, including the governance framework, the funding and operational models, the scope of the reference data including access and confidentiality and implementation phasing. The G-20 reviewed these recommendations at their most recent Summit in June 2013 and came forward in support of the following:
The U.S. Commodity Futures Trading Commission (CFTC) became the first regulator to mandate the use of the LEI in regulatory reporting. Since mid-2012, CFTC Rule 17 CFR Part 45 -- Swap Data Recordkeeping and Reporting Requirements has required dealers executing OTC derivatives transactions with their global counterparties to report those transactions subject to CFTC oversight to Trade Repositories, identifying themselves, their counterparties and the reference entities of the contracts with LEIs. The CFTC also played a role in the FSB recommendation process. All swap market counterparties whose transactions are required to be reported to swap data repositories registered with the CFTC, were required to register for a Pre-LEI by April 10, 2013 and to maintain the reference data associated with their Pre-LEI as it changes and at least annually.
Statement on FSB Recommendations
DTCC fully supports the position of the GFMA in their media statement on the FSB recommendations, and worked with GFMA and SWIFT in the analysis of those recommendations. DTCC looks forward to continuing to work with our industry partners and the FSB to successfully implement the LEI.
For more information about DTCC's legal entity identifier solution, the GMEI Utility, please contact Client Support at email@example.com.