After months of jumping through the requisite hoops, industry network provider Swift has beaten the Association of National Numbering Agencies (ANNA) to the punch and has been selected as the registration authority for ISO’s new 20 character legal entity ID code, which is currently in draft format. The standards setting body is currently in the process of pitching the ID standard to the US Office of Financial Research (OFR) and is due to vote on the draft standard in June (ahead of the OFR’s July deadline for a final decision on the entity ID). The selection of a registration authority is therefore one more step towards providing a viable solution to the new US Treasury agency.
Swift has been particularly active in championing its cause, although it faced stiff competition from ANNA in the final vote, which happened on Friday. ISO announced the result on Monday to its constituent members and, according to Swift’s senior product manager Paul Janssens, Swift gained “much more” than the requisite 50% majority vote.
In order to select between ANNA and Swift, ISO requested that both parties respond to a number of detailed questions regarding operating models and how the bodies would proceed with regards to establishing the new standard. “We think that we were selected on the basis of how we indicated that we would approach the solution,” says Janssens. “Plus there were certain key differences such as we have centralised model versus ANNA’s federated model.”
He notes that one of ANNA’s benefits is that it has local presence due to this federated model, but it seems that ISO was in favour of the more centralised option. Swift’s governance model as a body that is governed by the financial industry via its board is also likely to have been a contributing factor, says Janssens.
The next priority for Swift and ISO is to respond to the request for proposal (RFP) that has been issued this week by the Sifma led financial association coalition that has been charged by the OFR with the responsibility of selecting a technology provider and issuing body for the legal entity ID. “The ISO standard is in draft mode at the moment but we are working with the Depository Trust and Clearing Corporation (DTCC) as the facilities manager to respond to the RFP. We don’t know who else will respond, but we will certainly be one of them,” says Janssens.
Swift will also need to sign the pending registration authority agreement with ISO in order to formally complete the administration around the selection process, which Janssens indicates could be completed in a matter of weeks. Some of this may also be dependent on tweaking the legal agreement with regards to meeting the requirements of a registration authority as set out by the recent LEI paper by the 13 industry associations.
The most important next step is therefore to work out the requirements in further detail with regards to ticking all the boxes set out by the Sifma led group. “This is starting from scratch with a new ID, so we need to build from the ground up. One of the priorities is therefore talking to our community to understand their requirements because they will be the consumers of this standard,” continues Janssens.
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.
In terms of the impact of its selection as a registration authority on Swift overall, he notes that this is largely still to be determined, but it may lead to “further developments” concerning its reference data strategy for the market in the long term. For now, he says: “We are the registration authority for the new ID and we are also the same for the Bank Identifier Code (BIC), so we will work on ensuring there is compatibility between the two. So, from a user perspective, we can minimise the impact.”