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Financial Industry Trade Associations Coalition Releases Framework for a Global Legal Entity Identifier System

A coalition of financial-services trade associations today released a comprehensive set of requirements for establishing a legal entity identifier (LEI) system to aid regulators and industry in monitoring systemic risk. The Trade Associations note that the requirements document released today is meant to be an evolving solution that will be refined as others participate in the discussion on the topic. The requirements document can be found here: www.sifma.org/Legal-Entity-Identifier/Resources.

“The accurate and unambiguous identification of legal entities engaged in financial transactions is foundational and critically important towards the improved measurement and monitoring of systemic risk by regulators and supervisors,” the groups noted in the proposal. “A global standardised Legal Entity Identifier will help enable organisations to more effectively measure and manage counterparty exposure, while providing substantial operational efficiencies and customer-service improvements to the industry.”

The objective of the Trade Associations is to develop an international consensus-based proposal that identifies requirements and standards for a viable, uniform and global LEI solution. The Trade Associations believe it is critically important to release the current version of the requirements to facilitate continued dialogue on establishing a global industry solution. Specifically, the Trade Associations intend for the following:

  • Near-term, continued discussion of the requirements with participants in the financial markets and regulators around the world;
  • Discussion, refinement and convergence of different approaches by those developing potential solutions for the LEI standard; and
  • Immediate engagement with potential solution providers to help them understand the requirements as they prepare and present their proposed solutions for issuing and maintaining an LEI solution.

The Trade Associations aim to submit a final recommendation to regulators by July 2011. The Trade Associations also request parties interested in submitting a proposal for providing LEI solutions to contact LEIresponse@sifma.org before the proposals are due on May 30, 2011.

The proposal was authored by members of the following organisations: The British Bankers Association, Customer Data Management Group (CDMG), The Clearing House Association, Enterprise Data Management Council, The Financial Services Roundtable, the Futures Industry Association (FIA), the Global Financial Markets Association (representing the Association for Financial Markets in Europe (AFME), the Asia Securities Industry & Financial Markets Association (ASIFMA) and the Securities Industry and Financial Markets Association (SIFMA)), the Global Regulatory Identifier Steering Group (GRIS), the Investment Company Institute (ICI), and the International Swaps and Derivatives Association (ISDA).

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