On December 11, DTCC participated in a SIFMA-hosted seminar entitled, "Implementing a Global LEI Framework - Ready. Set. Go." The symposium focused on evolving global policy in the area as well as current implementation issues facing the industry as legal entity identifiers (LEI) are used in regulatory reporting of transactions in over-the-counter (OTC) derivatives to regulators around the world.
David Wright (Secretary General, International Organization of Securities Commissions) delivered the keynote speech and focused on the importance of the LEI solution for regulators, financial markets and public interest. In his speech, he stated that in 20 years there might be 20 different centers of capital markets across the globe. A key to controlling the risks associated with high volume daily interactions in these markets, according to Wright, is to issue LEIs for all participants. Wright also acknowledged U.S. leadership for moving ahead with an LEI solution while not using that position to gain a global advantage.
A regulators panel focused on the Financial Stability Board (FSB) process to create a global LEI framework and future reporting and regulatory requirements. Kenneth Traub (Standards Strategy Consultant, GS1) served as moderator and panelists included Michael Gaw (Assistant Director, Division of Trading and Markets, SEC), Matthew Reed (Chief Counsel, Office of Financial Research, Treasury Department) and Edward Toy (Director, NAIC Capital Markets Bureau, National Association of Insurance Commissioners). An NAIC rule allowing insurance companies to report transactions at the end of Q1 and positions at year-end was a topic of conversation and it was stressed that insurance companies need to identify themselves and their counterparties in this reporting using LEIs. Mr. Toy indicated that NAIC will accept CFTC Compliant Interim Identifiers (CICIs) as interim identifiers that will transition to LEIs once a global LEI solution is implemented.
One of the main points highlighted throughout the seminar was the need for entities to register and certify their CICI records. During the CICI implementation panel, industry experts including Karel Engelen (Director and Global Head, Technology Solutions at ISDA), Linda Avery (Managing Director, Reference Data & Client Onboarding Technologies at Goldman Sachs) and Robin Doyle (Managing Director, Corporate and Regulatory Affairs at J.P. Morgan Chase & Co.) discussed how firms have begun using identifiers and explained steps to get ready for swaps reporting using the CICI.
Event participants were reminded that the deadline for swap dealers and major swap market participants to begin reporting trades is no later than December 31 for credit and interest rate swaps, and no later than February 28, 2013 for commodities, foreign exchange and equity derivatives. All other traders will need to begin reporting trades by April 10, 2013 and all counterparties, including non-major swap market participants must self-register for a CICI or certify their record by April 10. David Taylor (Associate Director, Division of Market Oversight, CFTC) reinforced the necessity of meeting these deadlines and stated that the recently issued No Action letters regarding reporting deadlines do not cause a delay in the need to register for and obtain CICIs.
During the implementation panel, I provided an update on the CICI Utility functionality and on the current status of CICI registration since its launch in August. As of December 14, 18,707 additional legal entities have been added to the CICI database and each month, approximately 2,000 new entities are registered. To date, approximately 43,000 entities from 114 countries are currently registered in the CICI database.
Attendees inquired about future CICI enhancements and recent adaptations in response to FSB guidance. For example, a structured number scheme including a 4-character prefix for LEIs is currently in place. As of November 30, the CICI Utility began assigning new identifiers with the prefix “5493” followed by two zeros, then a randomly generated 12 alphanumeric string and two check digits, in line with FSB guidance
Since its implementation, CICI has evolved to support federated registration and validation by local market partners. Recently, WM Daten, the NNA for Germany, received the FSB prefix “5299” and as a result, will soon begin to issue pre-LEIs. ANNA is one of the industry’s recommended service providers for LEI and is working with DTCC and SWIFT to implement NNAs in a federated network to support the CICI.
We are also awaiting guidance from ISO and the FSB regarding recommendations for new ISO fields such as national business registry name and number, headquarters address and expiry date. Other planned CICI enhancements include expanded multi-language support, push notifications for file downloads and web search improvements.
Timothy Cameron (Managing Director, Asset Management Group, SIFMA) moderated the funds implementation panel and participants including Martin Burns (Senior Director, Operations and Distribution, Investment Company Institute) and Deb Culhane (Chief Operating Officer, Fidelity ActionsXchange) explored how CICIs apply to fund structures. Cynthia Meyn (Executive Vice President, Operations, PIMCO) was also a panelist and discussed how buy side firms are managing CICI assignments using the Bulk File both for primary registration of their own sponsored mutual funds and assisted registration of other funds that they are advisor for. This bulk file functionality was implemented by the CICI Utility to meet requirements designed by the Asset Manager Forum
The FSB Fourth Progress Note on the Global LEI Initiative was released the morning of the seminar. During the funds panel, I highlighted several items from the note such as the need for implementation of a single, global database and more immediate policies whereby each local operating unit (LOU) checks each other’s files and registering entities agree that they have not previously registered. These policies will assist in preventing duplicates during the interim period until a global LEI solution is in place.
Overall, the SIFMA seminar was successful in bringing together business and regulatory leaders to address key issues impacting global LEI standardization including reporting requirements, global adoption, timelines, building a federated infrastructure and the future state of the LEI.
For More Information on CICI:
For More Information on CICI:
Last updated December 21, 2012
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