Sifma tells FSOC Chair: More Regulators Must Require LEI

The Securities Industry and Financial Markets Association (Sifma) has called for more US regulators to mandate the use of the legal entity identifier (LEI), pointing out that only one US regulation currently requires the identifier and the majority of entities that have registered for LEIs are European.

In an open letter, Kenneth Bentsen, Sifma's president and CEO, calls on Treasury Secretary Jacob Lew to use his position as chairperson of the Financial Stability Oversight Council (FSOC) "to advocate for a more fulsome adoption and use by the US regulatory community of the LEI."

The letter emphasizes that Europe has outstripped the US in terms of the number of LEIs issued, with 60% of all LEIs issued to European entities and 28% issued to US entities. The letter points out that in the US, only the Commodity Futures Trading Commission's (CFTC) Swap Data Recordkeeping and Reporting rules require the LEI.

The letter states: "We believe the FSOC and its members can and should play a key role in expanding the US adoption of the LEI and its related benefits by requiring LEIs to be used broadly in US regulatory reporting and other supervisory practices."

Tom Price, Sifma's New York-based managing director, operations and technology, tells Inside Reference Data that all regulators on the FSOC should require use of the LEI. "I don't want to point to a particular rule, but I can point to particular regulators," says Price. "All of the banking regulators, in my view, should be using the LEI, the Securities and Exchange Commission should be using it, and the Financial Industry Regulatory Authority should be using it. So all of the regulators within the US should be using the LEI standard."

Price says Sifma is surprised the LEI has not been adopted more widely in the US, but applauded the progress made in Europe. "It is great to see that there has been good, steady adoption of the LEI globally, and I applaud and point to Europe as leading on this initiative," he says. "What we would like is to see more adoption here in the US, and we are hopeful that Secretary Lew, as chair of the FSOC, will ultimately encourage the use of the LEI by the members of the FSOC."

Inside Reference Data's requests for a response from Lew were unsuccessful. However, the Treasury has previously expressed its support for universal adoption of the LEI by regulators.

In a speech at the Exchequer Club in Washington on October 16, Richard Berner, director of the Treasury's Office of Financial Research, said: "Using the LEI is still largely voluntary. And like it or not, standards work best when they are universal, like the bar code system. Thus, in my view, the time has come for regulators around the world to require companies to use the LEI in reporting financial data. True, in the US and Europe, regulators require that the LEI be used for swap reporting. To be effective, however, the LEI should be ubiquitous."