Financial InterGroup
Specialists in Risk Management, Data
Management and Technology

Tel: +1 917 414 3608
Email: info@financialintergroup.com

Gateway to the Barcodes of Finance – Progress on Implementation of the Global Legal Entity Identifier (LEI)

$895.00

SKU: f_rp_03

Description

A global identification system, similar to the commercial barcodes, is being designed around regulatory mandates at the global level through the G20 and at the local level through sovereign market regulators. It is being coordinated through the Financial Stability Board, a standards body created by the G20 to instigate and coordinate regulations to stabilize the global economy.

The first implementation of this system is being tested for trading, reporting and clearing of swaps transactions. The intent is to observe the risk exposures associated with these transactions. The system has been inaugurated by requiring each counterparty and each financial supply chain participant in a swaps transaction to obtain a unique code, the Legal Entity Identifier (LEI). It is then intended that these codes will become associated with its parent or controlling entity.

It is planned to extend the LEI to all financial market participants involved in the supply chain of all financial transactions. In parallel, unique codes for instruments and contracts, the Unique Product Identifier (UPI), and the Unique Transaction Identifier (UTI) for observing an audit trail throughout a transaction’s life cycle will follow a similar mandated trajectory, first for swaps transactions then for all financial transactions. The ultimate goal is to develop the electronic equivalent of the unique codes found in commercial barcodes – the ‘Barcodes of Finance.’ This would permit computerized data aggregation and matching of financial transactions for any specific firm, counterparty, contract, instrument or market and, ultimately for all  firms in all markets for global systemic risk analysis and straight-through-processing.

Number of pages = 29

Number of Figures = 10

Extract

“A global identification system for financial market participants is being designed around regulatory mandates at the global level through the G20 and at the local level through sovereign market regulators. It is being coordinated through the Financial Stability Board, a standards body created by the G20 to instigate and coordinate regulations to stabilize the global economy.”

Table of contents

Introduction
Background
– Early Interest in Reference Data in the US
– The Financial Stability Board Takes it Global
A Typical Example of the LEI
– The ISO LEI Standard
– The LEI in Practice
The Depth and Breadth of the GLEIS
– The LEI is Part of a Bigger Issue – Data Aggregation
– Hierarchies of Ownership
– Global Dispersion of Grandfathered Codes
The Issues – Known and Yet To Be Explored
– Duplicate Codes
– Mapping Issues
– Resolving Names into LEI Codes
Exploring Next Steps
– Self-Registration
– Current Implementation of LEI Registries
– The Role of the GLEIF in Resolving GLEIS Issues
Technical Solutions
– The Common Handle
– An Alternative Code Fit for Purpose
– The First Test – Issues with Swaps Data
– Privacy Issues
– The Central Operating Unit
Promises Made
Financial InterGroup’s Opinion
Contact Us

Figures

Fig 1: Example of the Many Strands of Ownership of a LEI
Fig 2: Example of the Federal Reserve Legal Entity Database
Fig 3: Example of Existing LEI Codes
Fig 4: Describing a Hierarchy of LEIs in the Interim GLEIS in Germany
Fig 5: The LEI Structured Code Format
Fig 6: Example of a Mapping Table for a Legal Entity with Existing Proprietary Codes
Fig 7: Sample of a SIFI’s LEIs in the Interim GLEIS for the US Swaps Market
Fig 8: Alternative LEI Code Substituting Multiple Unique Registering Parent for Unique LOU Prefixes
Fig 9:  Example of Alternative LEI Construction Existing Within Existing ISO LEI Standard
Fig 10: Alternate LEI Use Case