ISO may be the bookie’s favourite to be selected as the Office of Financial Research’s (OFR) standards provider, given its expedited drafting of a legal entity ID standard and its recent selection of Swift as its registration authority for that standard, but that has not deterred standards body GS1 in its own bid to become the issuer of the new legal entity and instrument identification codes. The body, which is responsible for issuing UPC barcodes in the retail world, reckons its sole focus on the standards issuance and administration process gives it the edge over its rivals in the OFR race.
Reference Data Review spoke to financial services intermediary for the group and president of strategic advisory firm Financial InterGroup Allan Grody back in March about the potential that GS1 System identification numbering standards represent for the financial markets, but it is unclear how seriously the OFR and the market is taking the bid. Given that the deadline for the decision on a standard is July, GS1 will therefore have to campaign hard to get its voice heard amongst the other contenders.
One such approach was the sending out of a letter by Grody to regulators following the publication of draft legal entity identifier requirements by the Sifma led association coalition earlier this month. In the letter, he highlights the benefits of GS1 as a self-registered standard, which is in keeping with the associations’ requirements: “Significantly, the Sifma document endorses a paradigm shift in the industry’s thinking, away from financial intermediaries assigning numbers (multiple and proprietary ones) to where financial market participants themselves self-register their own numbers.”
He continues: “The OFR and the trade associations represented through Sifma will find GS1 compatible in all respects of the standards setting requirements for: self–registration; for the fixed length non-intelligent numbering convention; for a global governance structure that embraces industry participation at the local and global board levels; for a respect of regulatory oversight where countries expect such; its required status as an internationally recognised ISO approved standards setting body; and its legacy of steering industries cooperatively through its standards setting regimes without disenfranchising any existing business or commercial interest.”
As specified by the Sifma led group, some of the main requirements for the registration authority include:
- the provider must demonstrate its financial capacity to deliver and maintain the LEI solution, including its ability to meet expected initial start up requirements;
- must have the capability to support regional conventions and regulations and provide local certification while maintaining a single global standard, centralised repository and issuance system;
- must be managed on a cost recovery basis but can be either not for profit or privately operated;
- the solution provider requires a single global governance committee comprised of global market participants (trade associations, regulators and supervisors, utilities);
- access to LEI data should be unrestricted and freely available to all users;
- the provider shall implement a process whereby LEI consumers can challenge the accuracy of the LEI data;
- shall work with the global regulators and the LEI governance committee to fully require and enforce self-registration; and
- during an extended implementation phase, the LEI solution provider has the flexibility to offer both a self-registration process and an alternative mechanism for assigning LEIs to entities that are not required to have an LEI and choose not to self-register.
One can therefore expect all bidders in the race, including GS1 and Swift, to begin to detail how they will address each of these points in turn over the next month or so.