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CFTC Names DTCC and Swift to Provide CICIs Ahead of FSB LEI Development Meeting

The Commodity Futures Trading Commission (CFTC) has designated DTCC and Swift as the provider of CFTC Interim Compliant Identifiers (CICIs) that will be used by registered entities and swap counterparties to comply with the CFTC’s swap data reporting regulations. The CICI identifier and its infrastructure that will be used by the CFTC are billed as a precursor to the Legal Entity Identifier (LEI) and its infrastructure that is being developed under the auspices of the Financial Stability Board (FSB) and is due to be introduced in March 2013.

The CFTC decision was made public today, on the eve of the first meeting of the LEI Private Sector Preparatory Group, a group initiated by the FSB and designed to support the FSB’s LEI Implementation Group.

The CFTC issued a public request on 9 March 2012 for industry players wishing to be considered as the provider of CICIs to make their submissions. Four submissions were made, system demonstrations took place and the CFTC today issued an order stating: “An LEI is available that: satisfies the requirements of the Commission’s regulations; is provided by a utility fully set up by June 1, 2012, as required; and can be provided to market participants sufficiently in advance of the initial compliance date for swap data reporting to enable compliance with the Commission’s regulations. That LEI is the LEI provided by DTCC-Swift. DTCC-Swift met all Commission requirements and evaluation criteria.”

Perhaps trying to deflate industry concern in some quarters that DTCC and Swift were the powerhouses behind an initial Sifma proposal of a centralised global LEI system – the FSB has since take a federated approach that has been approved by the G20 – and that first-mover advantage could make them a fall-back for the FSB solution, the CFTC stated: “This designation is subject to four conditions:

(1) DTCC-Swift’s website and other facilities and documents must refer to the CICI rather than the LEI.

(2) DTCC-Swift must continue to comply with all CFTC LEI-related requirements, including the requirement to be subject to supervision by a governance structure that includes the Commission and other financial regulators in any jurisdiction requiring use of LEIs pursuant to applicable law.

(3) DTCC-Swift must pass to the global LEI system, once established, all CICI identifiers and associated reference data and all CICI intellectual property.

(4) The designation is made for a limited term of two years, and is terminable on six months’ notice in connection with establishment of a global LEI system. At the conclusion of the two-year term, if the global LEI system is not yet operational, CFTC may consider the feasibility of having multiple CICI providers and of coordination among them to avoid duplicative LEIs. If CFTC believes this is feasible, it may consider submissions from DTCC-Swift as well as from other parties that seek to become CICI providers.”

Underlining its apparent intention to play into the FSB’s endgame, the CFTC added: “Once the global LEI system is implemented and operational, the CFTC anticipates that the interim identifier will transition into the global LEI.”

While no mention has been made of DTCC and Swift, or any other organisation, as providers of identifiers in the FSB’s regime, the selection of DTCC and Swift to provide CICIs will no doubt be a keen subject of discussion at tomorrow’s FSB private sector group meeting in New York – as will the fact that the CFTC has not yet registered a final rule in the Federal Register that will start the clock on a 60-day countdown to CFTC registration of legal entities ahead of the CICI system going live.

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