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by Rich Marulanda

DTCC joined forces with CUSIP Global Services (CGS) in a move to support new regulatory reporting requirements and centralize the Legal Entity Identifier (LEI) registration process. Through this collaboration, users will be able to simultaneously apply for CUSIP numbers and interim compliant identifiers required by the Commodity Futures Trading Commission (CFTC). These identifiers, known as CICIs, are a precursor to a global LEI system, which is in the final stages of launch.

“We are pleased to join CGS in this endeavor and look forward to providing users with an integrated and efficient approach to assigning CICIs,” said Ron Jordan, DTCC Managing Director and Chief Data Officer.

CGS provides a unique common language for identifying financial instruments across institutions, exchanges and nations, enabling financial services firms to benefit from improved operating efficiencies and substantially reduced administrative costs. CGS is operated by the CUSIP Service Bureau, which acts as the National Numbering Agency (NNA) for North America.

LeiGlobal effort

The CICI Utility, developed by DTCC in conjunction with SWIFT, provides the identifiers needed for compliance with the world’s first regulatory mandate for use of LEIs under CFTC rules. It is part of a larger global effort to solve a long-standing problem: how to standardize the identification of legal entities that engage in financial transactions, and make entity reference data readily accessible.

This global effort is now led by the new Regulatory Oversight Committee (ROC) established in January 2013, which includes financial regulators from around the world. With respect to the global LEI system that is being launched, the CICI Utility functions as a pre-Local Operating Unit (pre-LOU), and plans to become one LOU within the global LEI system. CICIs will transition into LEIs once the global LEI system is operational.

The global system includes a three-tier hierarchy with the ROC at the top governing the global LEI system, followed by a Central Operating Unit (COU) coordinating, setting and enforcing technical standards for each LOU. The COU also connects the local systems and LOUs to issue LEIs and validate infor-mation. The LOUs, which are the third tier, are responsible for authenticating the registrations and collecting the data.

How it will work

Under this new arrangement, CGS will develop an integrated interface with the CICI Utility, offering issuers a streamlined solution to simultaneously apply for both CUSIP numbers and CICIs by using a single interface. This will greatly aid issuers by making the adoption and maintenance of LEIs a seamless part of the new security issuance workflow. The new platform will also help U.S. insurance companies and their counterparty issuers meet newly issued National Association of Insurance Commissioners (NAIC) regulations requiring use of LEIs in transaction and position reporting.

The CICI Utility and CGS will function in accordance with the principles set forth by the Financial Stability Board (FSB) Implementation Group for the LEI initiative, operating on a cost-recovery basis and making the LEIs and associated data publicly available, free of charge and free of restrictions on redistribution.

Widespread adoption

CGS is partnering with the CICI Utility to further its reach as a single pre-LOU (and later, LOU) helping it cover a wide segment of entities that will require LEIs within the community of issuers. What’s more, furthering widespread adoption of the LEI is the goal of the CGS partner-ship with the CICI Utility.

“Given our role in providing unique identification for instruments, their issuers and obligors, as well as our active role in legal entity standards development, partnering with the CICI Utility at this time makes perfect sense,” said Scott Preiss, Vice President of CUSIP Global Services. “We are confident that global market participants will be the beneficiary of this important collaboration.”

Collaborative efforts such as this one are consistent with the financial services industry’s original vision for leveraging the Association of National Numbering Agencies (ANNA) as part of a federated LEI system.

“The CGS-DTCC collaboration is an extremely important step forward along the continuum to a successfully managed and globally accepted LEI,” said Dan Kuhnel, ANNA Chairman. “This illustration of cooperation serves as a potential model for how local National Numbering Agencies can contribute their local market expertise, issuer relationships and federated connections within the context of the Utility.”