n Market report
in from SDRs. “With the
technology, things are
not going well,” he said.
the Commission lacked
the ability to utilise and
analyse the data coming
What’s your alphanumeric code?
The legal entity identifier (LEI) is one of
the many new initiatives that sprung from
the financial crisis, aimed at allowing
regulators to track counterparty entities
and their activities with a unique
When Lehman Brothers collapsed,
many market participants were unable to
identify which legal entity within the
company they were exposed to. Now, firms
will have a LEI that uniquely identifies
them within the financial market.
The US Commodity Futures Trading
Commission (CFTC) was the first regulator
to mandate the use of pre-LEIs, known as
the CFTC interim compliant identifier (CICI),
as deadlines for reporting began in January.
The CICI is meant to serve as an identifier
until the establishment of a global LEI.
The regulator assigned the Depository
Trust and Clearing Corporation (DTCC),
alongside SWIFT, to operate the CICI
Utility, where entities could get their
Bill Hodash, managing director of
operations at DTCC, said since the launch
in April, 87,000 CICIs to corporates and
financial entities have been issued in
about 140 countries.
“It takes about three minutes – it’s a
very simple process,” he said. “It’s exactly
the same process to obtain a pre-LEI in
Europe. We’ve issued a lot of CICIs to
European-based counterparties and those
numbers will be used to report trades in
The Financial Stability Board’s
regulatory oversight committee is setting
up the direction of the global LEI initiative.
In late July, it released guidelines for the
acceptance of pre-LEIs by all regulators.
The committee’s new principles will see
about 18,000 uncertified CICIs that have
never been used in regulatory reporting
deleted. The affected entities will need to
re-register for a new LEI.
The CICI Utility issued an urgent notice
on 5 August, saying it would implement
the changes including an additional five
ISO 17442 fields required: headquarter
address, business registry name,
business registry number, date of expiry
and reason for expiry.
The guidelines were needed to avoid
duplication and promote harmonisation
across pre-LEI issuers, known as local
operating units (LOUs)
Although only the CICI is used in the US,
Europe will have several LOUs, including
the DTCC and the London Stock Exchange.
The buy-side in Europe will need to pay
closer attention to pre-LEIs ahead of
reporting trade data from 1 January 2014.
Firms will need to make system
enhancements to map their internal
identifiers for the funds they manage,
“If firms see an extended use for pre-LEIs, they can make additional
enhancements to embed them in other
internal processing, for instance in risk
n “With the Commission’s current technology, things are not going well.”
Scott O’Malia, commissioner, Commodity Futures Trading Commission