Legal Entity Identifier (LEI)
Enabling exposure monitoring and risk management
The Legal Entity Identifier (LEI) is the International ISO standard 17442. LEIs are identification codes that enable consistent and accurate identification of all legal entities that are parties to financial transactions, including non-financial institutions. They enable a legal party to a financial transaction to be identified precisely. The LEI links back to a data set of critical information about the transacting entity, which can also include information on the ultimate ownership of the entity.
The financial crisis has underscored the need for additional transparency and regulation in the financial markets. Regulators around the world have been challenged to conduct systemic risk analysis in order to understand the aggregate risks of entities and their counterparties across asset classes and markets. Precise and accurate identification of legal entities engaged in financial transactions has therefore become critically important for both financial institutions and regulators. An essential component of enabling regulators to conduct such risk analysis is the need to for a global, standard Legal Entity Identifier (LEI), the core record attributes that comprise it, and a system to support it. This requires adoption of a reliable, internationally accepted LEI solution.
Following a robust ISO development process, a new standard for LEI was developed and ISO Standard 17442 was created and made publicly available in May 2012.
An LEI governance and implementation framework
The Financial Stability Board (FSB), a supra-national regulatory coordination body, was tasked by the G20 to prepare recommendations for an LEI governance and implementation framework. To fulfil the G20 request regarding LEI, the FSB set-up expert working groups of regulators and industry participants to make recommendations on how to structure a global LEI system. The working groups made proposals and recommendations regarding global governance and oversight, a funding model, a revenue model for self-registration and self-validation, as well as an operating model evolving to a fully federated architecture and a corporate and legal structure for the LEI system itself.
The FSB defined a three-tier structure, consisting of a Regulatory Oversight Committee (ROC), a Central Operating Unit (COU) and Local Operating Units (LOUs), which manage the registration, validation and maintenance of the LEI records. The Central Operating Unit is the main role of the Global LEI Foundation that has been created mid-2014.
Global Markets Entity Identifier (GMEI) Utility
Since August 2012, DTCC and SWIFT have provided an interim global legal entity identifier (LEI) solution, known as the CFTC Interim Compliant Identifier (CICI). In October 2013, the CICI Utility’s pre-LEIs or CICIs, were endorsed by the ROC for use in global reporting across asset classes, and for expanded use of these identifiers beyond reporting to trade repositories. In December 2013, the CICI Utility was renamed GMEI Utility to reflect its broad international scope.
Developed by DTCC and SWIFT in collaboration with the financial industry, the GMEI utility creates and assigns globally-accepted unique identifiers across multiple jurisdictions to entities that are engaged in financial transactions, a critical requirement for compliance with current and future reporting regulations.
The web portal is available at www.gmeiutility.org . It allows entities to query and/or download the data and enables entities to register new records and maintain the quality of the data. It also contains a section on Frequently Asked Questions.