Looking for the Finish Line
In the two years since I became editor of Inside Reference Data, we have been busy covering efforts to implement a global legal entity identifier (LEI), from its benefits through to its likely effects and all the intricacies in between, such as preliminary versions of the identifier, founding an organization to administer the LEI, and sorting out likely discrepancies between local jurisdictions.
There is no let-up this month, as the LEI drumbeat gets ever louder, whether in the US or in Asia-Pacific countries. Morgan Stanley's John Sproat advocates some of the LEI's benefits, namely the ability to make client onboarding more efficient and obtain clearer views of client data. Nicholas Hamilton delves further into how careful planning is needed to achieve these benefits, hearing from Sproat and others during last month's Tokyo Financial Information Summit co-sponsored by IRD in "The Secrets of LEI Success." The care in planning centers on cost, he reports, with firms' internal mapping being the largest expense. And to secure budgets for implementing such mapping and other efforts in support of the LEI, as Ian Blance of SIX Financial Information suggests, other regulatory requirements where the LEI is an important element for compliance can support funding for LEI implementation.
Funding initiatives represent one hurdle for LEI supporters. Getting a handle on collecting all the identifier data is another, and presents new challenges that are also covered in this issue. While the US Commodity Futures Trading Commission says 65,000 entities registered for its LEI precursor, the Interim Compliant Identifier (CICI), criticism surfaced concerning the Depository Trust & Clearing Corporation database collecting CICIs. Though it's only a fraction of all the registered entities, about 600 are duplicate files or incomplete records, says Peter Warms of Bloomberg -- not a huge number, but still not completely error-free.
By itself, discrepancies in a small percentage of a pre-LEI are unlikely to derail implementation of a global LEI. The CICI is not guaranteed to become the global standard without any alteration. There's also the issue of coordinating the LEI with other identifiers, which BNY Mellon's Kerry White addresses in our "Interview With."
Addressing that coordination could turn out to be a function of data quality. Linkages, verification and validation are all considered parts of data quality, and the LEI will impact those functions, says Northern Trust's Brian Sobolak. The question is will it make those tasks easier or just more challenging?
So, aside from the client information management benefits, overall data quality is likely to rise once the LEI is mature and universal. The next question for the industry is whether the benefits of the LEI are understood well enough to inspire leaps over its hurdles.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@waterstechnology.com or view our subscription options here: http://subscriptions.waterstechnology.com/subscribe
You are currently unable to print this content. Please contact info@waterstechnology.com to find out more.
You are currently unable to copy this content. Please contact info@waterstechnology.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@waterstechnology.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@waterstechnology.com
More on Regulation
US Supreme Court clips SEC’s wings with recent rulings
The Supreme Court made a host of decisions at the start of July that spell trouble for regulators—including the SEC.
This Week: FCA, Plato/Turquoise, Franklin Templeton, and more
A summary of the latest financial technology news.
Insurers deny cyber premiums are rising
Contrary to banks’ complaints, underwriters and brokers claim current market for policies is soft.
Size matters: US equity market players wrangle over new tick size regime
The industry expects the SEC to finalize the Reg NMS shake-up as soon as late summer. While there is broad agreement about the need for change, the extent of the reduction in access fees and tick sizes will have a big impact on markets.
CME: CFTC OKs clearing move to Google Cloud
The CFTC has given the Chicago-based exchange approval to run its clearing and settlement infrastructure on the Google Cloud Platform, while the exchange and vendor have extended their partnership to last until at least 2037.
Cutting through the hype surrounding the FDTA rulemaking process
A bill requiring US regulators and institutions to adopt a machine-readable data framework for reporting purposes applies to entity identifiers, but not security identifiers, in a crucial difference, writes Scott Preiss, SVP and global head of Cusip Global Services.
Northern Trust offers internal fund accounting, data tools to clients
Regulations and a mandate to enhance quality and transparency in a bid to improve the investor experience are pushing buy-side firms to have more oversight of their third-party providers.
EU firms press for faster move to T+1 after smooth US rollout
Following the example set by North America, 70% of attendees at a European hearing on shorter settlement cycles favored a Q4 2027 switch to next-day settlement.