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CICI Utility Cuts 18,000 pre-Legal Entity Identifiers from its Database

The CICI utility that issues CFTC Interim Compliant Identifiers (CICIs) for use in the interim global legal entity identifier (LEI) system will today remove 18,000 records from its database. These records are part of the tranche of 22,000 records that DTCC, which works with Swift as a pre-Local Operating Unit (pre-LOU) in the interim global LEI system, imported to the CICI utility when it went live on 21 August 2012. They are being removed on the basis that they were third-party registered, have not subsequently been certified by their associated legal entities and have not yet been used in regulatory reporting.

Before the opening of the CICI utility, the 22,000 pre-LEI records were made available in a test file on the GSMA website. They were supplied by DTCC’s Trade Information Warehouse on behalf of the swaps market and validated by DTCC subsidiary Avox. Their 20-character codes adhere to the ISO 17442 standard that sets out the framework of the LEI code, but they do not carry the four-digit prefixes that were directed to be added to the codes by the Financial Stability Board in its third progress note on the global LEI initiative in October 2012. The note states: “Pre-LEI solutions wishing to transition into the global LEI system upon its launch shall be required to adopt the numbering scheme outlined above [including the four-digit prefixes that identify the pre-Local Operating Unit issuing the pre-LEIs] no later than 30 November 2012.” The note also stated that in the interests of ensuring high quality data, all pre-LEI systems would only allow self-registration for pre-LEIs from 9 November 2012.

William Hodash, managing director of DTCC and chairman of the CICI utility, says the decision to remove the 18,000 CICIs from the utility was made in consultation with the CFTC, the regulator that sponsors DTCC/Swift as a pre-LOU. The removal will take the total number of CICIs in the utility down from about 90,000 to 72,000. Hodash adds that data vendors and financial services firms using the CICI data have been informed that the third-party registered, uncertified and unused CICIs are being removed from the database, but suggests this will have no severe implications for the very reason that these CICIs have not been used for regulatory reporting. He comments: “We have given data vendors notice of what we are doing. From 1 September, when data vendors download the database those 18,000 records will no longer be included.”

Hodash denies any suggestions that these or any other records are being removed from the utility on the grounds of data quality issues and explains: “The records’ reference data needs to be high quality. We validate every self-registered record against public sources and open every record to consumers who consume the data for free. Consumers can see what data has been corroborated and can challenge the data. If they do this, we then revalidate the data to see if it has changed in any way.”

Hodash does not expect remaining CICIs issued without a four-digit prefix before the 30 November 2012 cut-off and already in use for regulatory reporting to be given a prefix at this stage and instead expects them to transition to LEIs when the interim global LEI system gives way to a final and complete global system.

Meantime, DTCC and its fellow pre-LOUs are in the process of seeking endorsement and global acceptance of the pre-LEIs they issue from the Regulatory Oversight Committee (ROC) of the global LEI system. The requirements and processes for endorsement were detailed in a document published by the ROC on 27 July 2013 and entitled ‘Principles to be observed by pre-LOUs that wish to integrate into the Interim Global Legal Entity Identifier System’. It notes ‘a need to establish interim principles and guidelines to facilitate coordination among existing pre-LOUs so that future integration into the overall system will be smoother and so that those pre-LOUs that have been endorsed by the ROC as adhering to these principles can issue pre-LEIs that are globally accepted for reporting purposes by ROC member authorities now, rather than waiting for Central Operating Unit operational oversight’.

The ROC has yet to endorse any pre-LOUs and notify global acceptance of their pre-LEIs, but once this is done the concept of a cohesive and sustainable global LEI system should begin to morph into practical reality. As Hodash concludes: “The industry agrees that the move to endorsement and global acceptance of pre-LEIs is an important milestone in the development of the global LEI system. The ROC’s aim is to make sure all pre-LOUs are following the principles it has set down. If there is feedback from the ROC during the endorsement process, we will respond to it.”

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