DTCC Connection

Nov 01, 2013 • DTCC Connection

10 Things to Know About the ROC’s Global Endorsement of The CICI Utility, the DTCC/SWIFT LEI Solution

The Regulatory Oversight Committee (ROC), a body of global regulators established by the Financial Stability Board (FSB), recently endorsed three pre-Local Operating Units (LOUs) as the latest step in implementing a global Legal Entity Identifier (LEI) system. Once fully operational, the system will give regulators stronger systemic risk monitoring capabilities in order to analyze positions and transactions they oversee on a global basis, and provide financial institutions a critical counterparty risk management tool. The CICI Utility, an interim LEI solution developed by DTCC in collaboration with SWIFT, received the ROC’s endorsement, along with WM Datenservice in Germany and INSEE in France.

Outlined here are 10 key takeaways, resulting from a global endorsement from The ROC:

1. Marks an important milestone in establishing full operational deployment of a global LEI system -- a key enabler of stronger systemic risk monitoring capabilities for regulators and stronger counterparty risk management for financial firms.

2. Facilitates the process of establishing a global LEI system since all the globally-accepted pre-LEIs will become LEIs and all globally-endorsed pre-LOUs will become LOUs when the global LEI system is fully operational.

3. Illustrates the power of successful partnerships between the regulatory and private sector communities to improve market transparency.

4. Enables regulators to have a standard set of expectations around legal entity identification.

5. Enables all globally accepted pre-LEIs to be recognized by regulators that endorsed the ROC charter for all trade reporting; allowing trade repositories registered with CFTC (and ESMA in February 2014) to accept all the pre-LEIs issued by all three globally-accepted pre-LOUs.

6. Paves the way for regulators to amend trade reporting rules and adopt new rules that require pre-LEIs on all trade reporting across all asset classes.

7. Enhances the federated operating model because the global acceptance framework creates shared best practices and standardization among globally accepted pre-LOUs.

8. Facilitates an environment where a legal entity will have only one legal entity identification record. All globally-accepted pre-LOUs will work closely with the ROC’s Committee on Evaluation and Standards and the COU, once it is formed, on procedures to avoid issuing duplicates.

9. Validates the trust that the financial industry has placed in the CICI Utility, as these records can now be utilized in to meet all reporting required by international rulemaking.

10. Underscores the thought leadership of DTCC and Avox around best practices for maintaining entity data quality.

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