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Talking Reference Data with Sarah Underwood: Pushing Forward the Global LEI System

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While many capital markets participants eased off the pace and headed out for a vacation over the summer, it seems there has been no slowdown for those developing the global legal entity identifier (LEI) system, with the system’s Regulatory Oversight Committee (ROC) taking two significant steps forward in as many weeks in August.

First was a call for applications to the board of directors of the global LEI Foundation, a fundamental element of the LEI system that will establish and oversee the Central Operating Unit (COU) and manage the system’s Local Operating Units (LOUs). More on this later – and don’t worry if you missed August’s developments as we will review all that’s new and more during an A-Team Group webinar covering the LEI on September 10.

Second was the ROC’s endorsement of pre-LOUs in China, Argentina, Poland and Italy. These pre-LOUs are the China Financial Standardization Technical Committee sponsored by the People’s Bank of China, the Central Bank of Argentina that is self-sponsored, Krajowy Depozyt Papierów Warto?ciowych sponsored by the Polish Financial Supervisory Authority, and Italiana per le Camere di Commercio, Industria, Artigianato e Agricoltura sponsored by Banca d’Italia and Commissione Nazionale per le Società e la Borsa.

These operating units join nine existing pre-LOUs and are eligible to issue pre-LEIs following guidelines set down by the ROC and formerly by the Financial Stability Board (FSB). No details yet of when these pre-LOUs will go live, but they add to the global feel of the emerging system and should add significantly to the number of pre-LEIs issued when they get going.

Back to the board of the global LEI Foundation and it is expected to have around 15 members – under Swiss laws establishing the foundation there will be no compensation – with members serving an initial two-year term and half the members then expected to serve an additional one or two years.

A note published by the ROC on August 14 provides a list of information that is requested from potential board candidates and the criteria that will be used to select members of the board. While the criteria were previously set out in the FSB’s fourth progress note on the LEI initiative published in December 2012, the latest note leaves a little room for manoeuvre, stating: “The LEI ROC will prepare a recommendation for the composition of the initial board guided by the criteria set out in Annex A [the criteria set out in the fourth progress note].”

Applicants seeking a place on the board must detail their experience and intent as a board member in response to 13 headings set down by the ROC. These headings cover general requirements such as proving that candidates are fit and proper and that they will uphold the objectives of the GLEI Foundation and ensure the GLEI system operates in the broad public interest.

More specifically, the ROC is looking for sectoral experience, including data or technology experience; organisational experience; developmental experience, including implementing new processes; legal experience; technical experience, including working with distributed or federated network, information and identification systems or infrastructure, or developing data and information standards or risk management systems; international experience; and cross-cultural awareness.

The ROC’s selection criteria for the foundation’s board of directors reflects the candidate requirements and is based on a matrix embracing skills, sector knowledge and geography. The skills element covers organisational skills, including the start-up and operation of a federated international organisation. It also covers technical skills including: data management experience; distributed network systems knowledge and operation; identification systems knowledge and operation; risk management system experience; data standards development and implementation; national or international identification infrastructure knowledge and experience.

The sector element includes data and technology, broken down to include: data standards; data management; enterprise architecture; coordination or integration of global systems of identifiers; and other relevant data and technology experience.

The geography element of the matrix outlines a requirement for a minimum of three directors from each of North America, Europe, Asia, and Central and South America, Africa, Oceania and the Middle East. Making up the total of around 15 directors, at least one director must be a Swiss citizen or a citizen of a member state of the European Union or the European Free Trade Association who is domiciled in Switzerland.

While the ROC acknowledges that individual candidates seeking a place on the foundation’s board of directors will not meet all the selection criteria, it has set the bar high and suggests all are likely to be at C-suite or equivalent level.

To find out more about these developments and gain insight into the next stages of the global LEI build out, join the A-Team Group webinar on September 10. You can sign up to take part here.

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