Speaking to an audience of more than 150 industry executives, data experts and policy makers at a Meet the Market North America event, U.S. Securities and Exchange (SEC) Commissioner Kara M. Stein called the Legal Entity Identifier (LEI) “a Rosetta Stone to clearly and uniquely identify firms and entities participating in the global financial markets.” During her speech, she referred to LEI as “a model for how we can improve data aggregation and usability, and help prevent and respond to future financial system issues and problems.”
The forum, co-hosted by The Global Financial Markets Association (GFMA), The Depository Trust & Clearing Corporation (DTCC), SWIFT and The Global Legal Entity Identifier Foundation (GLEIF), provided a comprehensive look at the current global LEI system, global marketplace adoption and insight into future deliverables.
Following Commissioner Stein’s opening remarks, Thomas Dunlap, Global Head of Reference Data at Goldman Sachs & Co., led a panel of representatives from DTCC, the U.S. Department of Treasury, the Ontario Securities Commission and GLEIF in a discussion about establishment of the global LEI (GLEI) system.
The panel covered the key components and infrastructure that form the basis of the global LEI system as well as ways to increase LEI adoption and the challenges of maintaining LEI records. Of importance, the panelists highlighted key areas of opportunity, including data attribute expansion beyond ‘business card’ data points. Regarding this ‘level 2’ data, William Hodash, DTCC Managing Director, said “the LEI system will not fully meet its systemic risk analysis related objective unless it expands to relationship data that enables accurate ownership hierarchies to be developed. The question is not if, but when, as we feel the regulators must pass additional mandates for LEI in reporting across other asset classes before implementing full Level 2 data.”
Robin A. Doyle, Managing Director, Office of Regulatory Affairs at JPMorgan Chase & Co., moderated a second panel on marketplace adoption of the LEI. The discussion included input from both buy-side and sell-side firms, including speakers from Invesco, Nomura Securities Co., Ltd. and Citi.
The panelists expressed strong support for the LEI, citing risk mitigation, consolidation of knowledge and potential Know Your Customer (KYC) and anti-money laundering (AML) applications of the LEI when combined with other data sets as key benefits. Panelists also identified possible drivers for further industry adoption, including regulation requiring LEIs in reporting across additional asset classes and regions as well as partnerships with the vendor community. Doyle referenced DTCC’s collaboration with CUSIP Global Services (CGS) to centralize the LEI registration process as one such partnership.
DTCC’s Legal Entity Identifier (LEI) solution, the Global Markets Entity Identifier (GMEI) utility, was developed in collaboration with SWIFT. The utility creates and assigns globally accepted unique identifiers to entities that engage in financial transactions and stores and validates the accuracy of the associated reference data. With more than 175,000 globally accepted registered entities from over 140 countries, the GMEI utility maintains approximately 50% global market share, making it the largest Local Operating Unit (LOU) within the Global Legal Entity Identifier System (GLEIS). The GMEI utility was ranked #1 in the initial two quarterly evaluations of the LOUs, in TABB Group and Alacra’s LEI Comprehensiveness Ranking, based on data consistency and uniformity.