About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Grody Claims GS1’s Position as a Wholly Focused Standards Administrator Gives it the Edge in the OFR Race

Subscribe to our newsletter

The bid by standards body GS1 to become the issuer of the new legal entity and instrument identification codes that are to be introduced as part of the developments around the US Office of Financial Research (OFR) may be only one of a number of options on the table, but key proponent and president of strategic advisory firm Financial InterGroup Allan Grody reckons its chances are high due to its sole focus on the standards issuance and administration process. He contends that every other bidder in the race could be distracted by commercial interests and thus put their business interests ahead of the standards development function – a position that many will, no doubt, find contentious.

“The US government needs to consider that every other bidder to act as the issuer for these new standards has commercial and business interests outside of their role as a standards issuing body, be they data vendors, exchanges or central securities depositories (CSDs),” argues Grody. “The government will therefore be granting such a firm a monopoly and this is potentially dangerous if commercial interests take precedence.”

Instead, Grody is convinced that GS1 is the answer and his firm Financial InterGroup teamed up with GS1 last year to begin to promote the idea of the standards body responsible for UPC barcodes using the GS1 System identification numbering standards to tag financial products and business entities. “GS1 has no other business interest than standards administration, whereas the other contenders are likely to keep the standards captive to their business models,” he continues.

He also points to the use of the GS1 numbering standards in 25 other industry sectors as proof that the system is successful and could be potentially applied to the financial services sector within a period of six months (as noted within GS1’s feedback to the OFR). This expedited time to market with a solution for the government is one of Grody and GS1’s key selling points for the system, as well as the potential to achieve lower capital costs and processing efficiencies in the back and middle office. Grody contends that, much like XBRL, these standards could be used to tag prospectuses at the start of the financial transaction lifecycle thus putting issuers and corporates in charge of their own registration. He reckons that this could allow users to uniquely identify their products, documents and other assets; capture identification numbers; and share related information with their trading partners or counterparties.

He notes that it is very early days for the regulatory community in tackling the systemic risk monitoring challenge and very little has been defined thus far. “If one financial institution is unable to achieve an enterprise-wide view of risk, than how can one be achieved across the industry as a whole? A basic identification system such as GS1 is one step towards achieving this visibility,” he says.

However, the biggest challenge for GS1 will be in convincing the financial services community that such an idea is feasible. On this note, Grody says: “Up until now the financial services community has been very insular and has not looked to other industries for best practices. The retail and manufacturing industries have been tracking supply chain data for years but no one has previously thought to apply this logic to the financial services markets.”

Grody reckons GS1’s track record in other industries will prove its capabilities to the market and the fact that it deals with a third of its traffic electronically demonstrates its ability to deal with products that are non-physical in nature. All of this is contained within the pages of its rather lengthy response to the OFR (the longest response by far, in fact).

He has spent the first couple of months of this year championing the cause of GS1 with industry participants and the other bidders in the OFR race. Moreover. Grody believes that the industry stands a better chance of successfully tackling the standards challenge if it works together on the issue, rather than in competition. “It is strange that after 50 years of working in silos, the industry still seems intent on tackling these issues in the same siloed manner,” he says. “It will be very hard for the regulator to pick between all of these different options if action towards reaching a consensus is not taken.”

Grody and GS1’s task is therefore to convince others including Swift and ISO to drop their OFR bids and instead opt for GS1 as the solution. Obviously this means it is going to be a tough few months for the standards body, but Grody indicates he is happy for industry participants to challenge the proposals. “We want feedback on our proposals and for people to read through our OFR response, even if it is long,” he says.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: How to maximise the use of data standards and identifiers beyond compliance and in the interests of the business

Date: 18 July 2024 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Data standards and identifiers have become common currency in regulatory compliance, bringing with them improved transparency, efficiency and data quality in reporting. They also contribute to automation. But their value does not end here, with data standards and identifiers...

BLOG

BNP Paribas Becomes First EU G-SIB to Join GLEIF Validation Agent Programme

The Global Legal Entity Identifier Foundation (GLEIF) continues to build out the Global LEI System (GLEIS) with the addition of BNP Paribas as a Validation Agent. The addition of BNP Paribas marks the first global systemically important bank (G-SIB) headquartered in the EU to join the Validation Agent programme. Most recently, the GLEIF added Nord...

EVENT

RegTech Summit London

Now in its 8th year, the RegTech Summit in London will bring together the RegTech ecosystem to explore how the European capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Corporate Actions Europe 2010

The European corporate actions market could be the stage of some pretty heavy duty discussions regarding standards going forward, particularly with regards to the adoption of both XBRL tagging and ISO 20022 messaging. The region’s issuer community, for one, is not going to be easy to convince of the benefits of XBRL tags, given the...