Following proposals for a federated approach (from the Financial Stability Board) and a centralised approach (from DTCC/Sifma) to development of the global legal entity identifier (LEI) standard, Cusip Global Services (CGS) is proposing a hybrid solution that calls for the active involvement of the National Number Agencies in the LEI process. The proposal is aimed at combining the openness of the FSB proposal with the data-checks and security of the Sifma/DTCC proposal.
Cusip’s board of trustees, CGS sponsor the American Bankers’ Association (ABA) and Cusip chair Jane Washington, vice president of operations at Wells Fargo, are proposing making the National Numbering Agencies responsible for data integrity and ID creation, while allowing the marketplace to access this information through whatever means they choose.
The proposal was presented at the Cusip Board of Trustees’ meeting in New York today. CGS has to date actively participated in ISO and industry working groups to develop the 20-character LEI technical standard that was recommended by the FSB at the G20 global summit in Los Cabos, Mexico, last month.
At its own meeting, the Cusip Board of Trustees recommended that global regulators and market authorities embrace the possible contribution to the LEI effort offered by the existing infrastructure and issuer relationships maintained by CGS and its fellow National Numbering Agencies. CGS is a founding member of ANNA, the Association of National Numbering Agencies, a federation of 118 members providing unique (ISIN) instrument identifiers globally for more than 16 million securities.
According to Cusip Board chair Washington, “Given the critical role that CGS and other global NNAs play in uniquely identifying Issuers, Obligors and securities, the Board cannot imagine a successful and robust LEI global solution without the active collaboration and input from CGS and other key numbering agencies.”
The Cusip Board also cited CGS’s provenance over primary source documentation for every identifier in its system as another key advantage in leveraging the existing numbering agency processes to the collective benefit of the global LEI community. Data quality and primary sourcing of company address information is under heightened scrutiny as a result of the LEI initiative, and traditional country registries have come under fire for the lack of standardisation and update latency in some jurisdictions.
The 18-member Cusip Board of Trustees is comprised of senior-level executives from banks, securities firms and securities depositories, representing leading financial institutions in the capital markets.