About standardized legal entity identifiers and data managementData Management

Financial service industry regulators are focused on observing systemic risk across enormously complex interconnected global financial institutions. While these systemically important financial institutions continue to improve their enterprise risk management systems, regulators are now intent on imposing further regulations to analyze the risk exposures that arise across these firms.

The Legal Entity Identifier

It has been accepted by regulators that the very first pillar of global financial reform is a standard for identifying the same financial market participant to each regulator in the same way. Getting agreement on a globally unique and standardized legal entity identifier (the LEI) is the first step.

Our research has focused on the past and current efforts by industry members and sovereign regulators, newly empowered through the G20's Financial Stability Board (FSB) to develop a global identification system for such purpose. We have reviewed the origins of systemic risk in the financial industry and its related data issues and how standard identification of financial market participants and the products they trade connects to regulators' and financial institutions' ability to analyze systemic risk. This has resulted in our proposals for a global identification system based on approaches taken in other industries and economic sectors.

Reference Data Utility

We are confident that our proposed U3 global identification system and its associated reference data utility (the Central Counterparty for Data Management) addresses all known elements of regulators' requirements for globally unique identification and their associated reference data. It also lays the foundation for further rule making and issues yet to be addressed for operational efficiencies and straight-through-processing; for contract and instrument identification; for corporate event identification; and for data aggregation of valued positions and cash flows for systemic risk analysis, the ultimate objective of the rule making.