The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

A-Team Data Management Summit: Proliferation of Entity and Securities Identifiers Adds to Data Management Burden

Legal entity and securities identifiers have hit the headlines over past months, but their value to the financial industry and how they will be used remains uncertain. Leading an industry panel at this week’s A-Team Data Management Summit, A-Team Group editor-in-chief Andrew Delaney asked panellists for their views on securities identifiers, particularly legal entity identifiers (LEIs) that are being developed as a global standard under the auspices of the G20 mandated Financial Stability Board and will first be used to identify all parties to a financial transaction in the US this summer.

Tony Moulange, an independent consultant and long-time market data practitioner, said: “There is danger in proliferating naming types and standards, and there is also danger in the LEI being introduced on a federated basis. There are many unanswered questions about the LEI, but the industry is concentrating on it as the threat of regulation is approaching.”

Considering the burden of managing multiple identifiers from a user point of view, Colin Gibson, head of data architecture at RBS Global Banking and Markets, said: “Our work on identifiers reflects what regulators ask us to do, but it also drives down business costs and capital requirements. We won’t move away from our own internal entity identifiers, but we will map them to an external identifier scheme such as the LEI. When it comes to instrument identifiers, we expect vendor to use their own identifiers so we will need to map to them too.”

Such parallel running of existing and new identifiers is expected to run for many years, but David Berry, a market data manager at a major international bank and also a member of the Cossiom market data user group, warned: “There is danger and could be confusion in doing this as being sure of exchanging the right fields could be difficult.” On the LEI, he added: “Here is more confusion as the LEI will not be the legal entity master. If vendors don’t want to share their information, regulators must face up to them.”

One such vendor, Thomson Reuters, was represented on the panel by Gerry Buggy, global head of enterprise content at the company. He didn’t comment on the ongoing situation around broader EU access to Thomson Reuters’ RICS identifiers, but on the LEI he said: “We are cautious about reference data and cross-referencing is tough for customers. But our LEI programme has brought us to the cross-referencing table and we will provide cross-referencing for our customers.”

Gibson said RBS concentrates on keeping its internal identifiers in good shape as they are used comprehensively, but the bank also makes sure it can recognise external identifiers, such as the LEI. “We need clear internal and external relationships,” he commented.

Considering the number of identifier schemes in the market, Delaney questioned whether the LEI would simplify the situation. Moulange answered: “If the industry adopts the LEI as a generic marker this will be helpful, but there will still be a lot of mapping technology to build and the federated nature of the LEI could fragment into regional variations.” Berry added: “I am not too worried about the introduction of the LEI. We have internal entity identifiers, but if the law says we must use the LEI and we have no choice, in 48 hours every bank will do so.”

Moving on from the LEI, the proposed Unique Product Identifier (UPI) for OTC derivatives appears to have the potential to cause more confusion. As Gibson observed: “The UPI will be horrendous. The early signs of where it is going do not look good. It was suggested that the number should be meaningless, but it seems that meaningful information is being embedded into the code.”

Related content

WEBINAR

Recorded Webinar: Data Standards – progress and case studies

Global data standards and identifiers are essential to business growth, market stability and cost reduction – but they can be challenging to implement, while a lack of consistency across jurisdictions has presented obstacles to global take-up. However, with regulators starting to sit up and take note, the issue of data standards is coming increasingly to...

BLOG

SmartStream Adds API Suite to Reference Data Utility

SmartStream Technologies has made its first move since rebranding at the end of last year and bringing its Reference Data Utility (RDU) into the mainstream of its product line-up, with the addition of an API suite for the RDU. The APIs are designed to provide faster access to accurate data, operational efficiency, greater agility, and...

EVENT

TradingTech Summit London

The TradingTech Summit in London brings together European senior-level decision makers in trading technology, electronic execution and trading architecture to discuss how firms can use high performance technologies to optimise trading in the new regulatory environment.

GUIDE

MiFID II Handbook – Second Edition

With the compliance deadline for Markets in Financial Instruments Directive II (MiFID II) just over two months away, A-Team Group has updated its MiFID II handbook to bring you the latest details on the regulation’s compliance requirements. Version 2 of the handbook, commissioned by Thomson Reuters, also includes new sections covering data sourcing and data...