A small number of dedicated professionals have been toiling away for the past couple of years trying to create the Global Legal Entity Identification System (GLEIS). As progress is slowly made, many financial industry participants struggle to understand the acronyms, governance, and impact of what global regulatory bodies are trying to bring to the industry. As Alacra’s customers have turned to us asking “What’s going on?” we created the Periodic Table of Entity and Identifiers and the table here, “LEI A to Z.”

Most of the confusion and concern relates to the concept of the “federated model” in which unique legal entity identifiers will be assigned by a number of Local Operating Units (LOUs) around the world. As there is still work to done to coordinate the LOUs, the assigning entities are being referred to as pre-LOUs and the identifiers they are assigning to entities are being called pre-LEIs. There are currently two pre-LOUs assigning pre-LEIs – the CICI Utility run by the DTCC and the GEI Portal, run by WM Datenservice. Hopefully more clarity can be found below.

Please contact us if you have any questions or suggestions.

“ANNA is a global industry association, with the following objectives:

  • Globally develop and promote standards under ANNA’s control;
  • Commit to work for the benefit of the financial industry;
  • Codify, classify and make data accessible and available to industry participants
  • Contribute to the ISO Standards development process;
  • Ensure timeliness, accuracy and quality in the application of standards;
  • Fulfill our obligations as an ISO Registration Authority for the ISIN (ISO 6166) and CFI (ISO 10962) Standards.”

Their mission statement says that they are committed to providing actionable global ID and reference data products and services to global market participants, including Regulators and the financial services industry to uniquely identify, classify and describe entities and financial instruments.”

Committee on Evaluation and Standards
The CES’ functions are:

  • To evaluate the adequacy of existing standards and protocols in the light of the High Level Principles and other principles adopted by the ROC and that serve the broad public interest;
  • To propose revised or additional standards, or protocols as necessary;
  • To recommend to the Executive Committee the development of additional standards and protocols or the modification of existing standards and protocols as necessary; and
  • To perform any other tasks and functions as requested by the Plenary or Executive Committee.

Commodities Futures Trading CommissionThe CFTC is an independent agency with the mandate to regulate commodity futures and option markets in the United States. The CFTC’s mission is to protect market users and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives that are subject to the Commodity Exchange Act, and to foster open, competitive, and financially sound markets.

CICI is designed to be an identifier for all legal entities dealing in Over-the- Counter derivatives falling under CFTC jurisdiction until an international program for a Legal Entity Identifier is launched, which is expected by March 2013.

“Part II of the FSB’s Three-Pronged approach to implementing a global LEI solution. The COU is the principal operational arm of the global LEI system. In particular, the COU has responsibility for ensuring the application of uniform global operational standards and protocols that deliver:

  • Global uniqueness of the LEI;
  • Seamless, open access to the global LEI and to high quality reference data for users (with the depth of access controlled by appropriate access rights); and
  • Protocols and methods for how local systems can connect to the COU”

The DFA is a piece of legislation signed into effect by President Obama, whose purpose is “To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.” It created the Financial Stability Oversight Council (FSOC).

DTCC provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. Along with SWIFT, it is the Pre-LOU in the United States.

The FSB was established to address vulnerabilities and to develop and implement strong regulatory, supervisory and other policies in the interest of global financial stability. It is an international body that monitors and makes recommendations about the global financial system. It was established after the 2009 G-20 London summit in April 2009 as a successor to the Financial Stability Forum. The Board includes all G-20 major economies, FSF members, and the European Commission. It is based in Basel, Switzerland.

Established by the Dodd-Frank Act, the Financial Stability Oversight Council (FSOC) ensures the stability of the US financial system. The Council is charged with identifying threats to the financial stability of the US; promoting market discipline; and responding to emerging risks to the stability of the US financial system. The Council consists of 10 voting members and 5 nonvoting members and brings together the expertise of federal financial regulators, state regulators, and an insurance expert appointed by the President.

Group of Twenty

“The G20 is the premier forum for international cooperation on the most important issues of the global economic and financial agenda.The objectives of the G20 refer to:

  • Policy coordination between its members in order to achieve global economic stability, sustainable growth;
  • Promoting financial regulations that reduce risks and prevent future financial crises;
  • Modernizing international financial architecture.

The G20 brings together finance ministers and central bank governors from 19 countries plus the European Union, which is represented by the President of the European Council and by Head of the European Central Bank. The G20 was formally established in September 1999 when finance ministers and central bank governors of seven major industrial countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) met in Washington, D.C. in the aftermath of the financial crisis of 1997-1998, which revealed the vulnerability of the international financial system in context of economic globalization and showed that key developing countries were insufficiently involved in discussions and decisions concerning global economic issues.”

“In Germany, WM Datenservice has been accredited as pre-LOU and allocates the so-called GEI (General Entity Identifier) as pre-LEI, which is structured like the LEI and serves for all companies and funds with domicile in Germany and are, within the scope of the future regulatory provisions, subject to reporting. Which companies will become subject to reporting is currently discussed and will be agreed by the regulators.

Once the LEI has fully established itself, the GEI will be converted to the LEI, without the changing of the codes. The GEI is structured as per ISO Standard 17442.”

Global LEI System
The ultimate aim is to put in place a system that could deliver unique identifiers to all legal entities participating in financial markets across the globe. In other words, a system to ensure that the LEI is used everywhere.

Institut National de la Statistique et des
Etudes Economiques (or National Institute of Statistics and Economic Studies)
Pre-LOU in France.

“The IOSCO is the acknowledged international body that brings together the world’s securities regulators and is recognized as the global standard setter for the securities sector. IOSCO develops, implements, and promotes adherence to internationally recognized standards for securities regulation, and is working intensively with the G20 and the FSB on the global regulatory reform agenda.

IOSCO’s membership regulates more than 95% of the world’s securities markets. Its members include over 120 securities regulators and 80 other securities markets participants (i.e. stock exchanges, financial regional and international organizations etc.). IOSCO is the only international financial regulatory organization which includes all the major emerging markets jurisdictions within its membership.”

Pre-LOU in Ireland.

“Part III of the FSB’s Three-Pronged approach to implementing a global LEI solution. LOU’s would be the local implementers of the global system. LOUs would offer:
  • Local registration, validation, and maintenance of reference data;
  • Protection of information that must be stored locally; and
  • Would facilitate the use of local languages and organization types. LOUs could build on local business registry or numbering
  • services to maximize the utilization of local infrastructure”

An LEI is a unique ID associated with a single corporate entity. Although no common entity ID convention exists today, a range of regulatory initiatives are driving the creation of universal LEI standard for financial markets worldwide. A key goal of the LEI is to have it “persist over the life of an entity regardless of corporate actions or other business or structural changes.”

Pre-LOU in Russia.

The OFR is an U.S. agency established by the Dodd-Frank Wall Street Reform and Consumer Protection Act within the Department of the Treasury to improve the quality of financial data available to policymakers and facilitate more robust and sophisticated analysis of the financial system.

Any identifier issued with the same goals of the LEI, before its official establishment. Such as a CICI, often issued by a pre-LOU.

Any local allocating unit that occurred prior to the establishment of the LOU.

Pre-LOU in the West Bank.

Private Sector Preparatory Group
“Created by the FSB, the PSPG’s objectives include:

  • Governance and legal work stream: assist and contribute to the work of the Implementation Group on the development of the legal framework and necessary legal documents for the establishment of the global LEI foundation. The work stream will also assist and contribute to the work of the Implementation Group on the development of the fitness criteria, size, role, etc of the Board of Directors of the global LEI foundation, and on recommendations for the sustainable funding model.
  • Operations work stream: under the guidance of the Implementation Group, develop options for a “plug-in” architecture for the Central Operating Unit that supports the federated nature of the LEI system and allows integration of Local Operating Units. The work stream will also assist the Implementation Group in exploring effective and efficient processes for the adoption of the LEI worldwide.
  • Ownership and relationship data work stream: support the Implementation Group in developing recommendations for the early introduction of additional reference data for corporate ownership, relationships and hierarchies.”

Part I of the FSB’s Three-Pronged approach to implementing a global LEI solution. ROC would have the ultimate responsibility for the governance of the global LEI system in the public interest. It would comprise regulatory authorities that support the core principles and purposes of the system.

Similar to DTCC, SWIFT is a member/user-owned industry cooperatives whose missions include reducing risks and costs for the financial services industry. Both firms are user-governed and have non-profit or cost-recovery business models. Along with DTCC, SWIFT is the Pre-LOU in the United States.

Pre-LOU in Turkey.

WM Datenservice
WM Datenservice
Pre-LOU in Germany and supplier of the GEI.