The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Quest for Unified Entity Identifiers Gathers Pace as Plans Go to WG8

In the quest for a unified method of identifying international business and legal entities, industry protagonists are pushing forward discussions. Progress has been made by the RDUG/Redac community who have proposed a number of recommend-ations to ISO’s Working Group 8. A group of industry practitioners also gathered at a CityCompass event to discuss various options for the implementation of legal entity identifiers. And participants at Centaur Conferences’ recent reference data event also touched on the subject.

The recommendations made to WG8 focus on defining the scope and role of an International Business Entity Identifier. A key point is that there should be no hierarchy within the structure of the IBEI; users can create their own internal hierarchies based on the IBEI as necessary. It will not contain any existing national or inter-national identifier such as ISIN or tax ID or a country-specific identifier. A membership structure should be set up and only members can request changes to the IBEI database, although non-members can request through a sponsoring member. And links to vendor data should be encouraged.

Initial progress, it was decided, will be carried out by a closed user group covering a minimum data content and format within the newly created database. The user group will work to define the creation, amendment and deletion workflow rules, create linkages to other data sources and create the document repository. It will then work to establish credibility and widen the user base. Critical factors to its success include the ability of the repository to identify the entity type and role and maintain a high data quality including prevention of duplicates; to establish take-up by regulators, exchanges, CSDs and registration authorities as well as financial institutions; and to provide a tangible ROI to participants.

Outstanding issues that still need to be resolved include details about how entities should be classified and the degree of granularity. Details of the commercial model still need to be discussed, such as who pays, what’s the structure, and how do you define the ROI for participants. The group has recognized that it needs to increase the buy side’s involvement, and possibly a regulatory mandate to encourage use and timely updates. And a key question is who would be the registration authority and operate the repository.

On the latter point, participants at the CityCompass event expressed strong views, primarily that any administrator of such a system must be neutral, network-agnostic, and global, which few attendees believe Swift, which has been proposed as a potential administrator, can provide.

Doubts were also raised about how investment in this area could be justified and in the absence of definable ROI figures, Jerry Norton, director of strategy, international financial services for LogicaCMG, suggested a real business case needed to be identified or a small organization of interested parties just goes ahead and does it by stealth, similar to the FIX story. Arguably, this is what Simon Leighton-Porter within the RDUG/Redac community is leading: the challenge is to ensure industry buy-in.

The vendor solution was presented by Keith Webster, VP of enterprise risk and compliance solutions business development at Dun & Bradstreet, who highlighted the issues involved in maintaining accurate business entity databases when every hour 300 businesses have a suit of lien filed against them; and 240 addresses and 150 phone numbers change.

Also discussed at the event were alternative solutions being operated by firms such as Azimuth and CreditDimensions, which are essen-tially pooling legal entity identifier information between participating institutions (RDR, June 2004).

Related content

WEBINAR

Recorded Webinar: The post-Brexit UK sanctions regime – how to stay safe and compliant

When the Brexit transition period came to an end on 31 December 2020, a new sanctions regime was introduced in the UK under legislation set out in the Sanctions and Anti-Money Laundering Act 2018 (aka the Sanctions Act). The regime is fundamentally different to that of the EU, requiring financial institutions to rethink their response...

BLOG

Covid Proof: The Future of Onboarding High-Net-Worth Clients

By Hugo Chamberlain, COO, smartKYC. The future of high-net-worth client onboarding has arrived – and it is one well suited for our post-COVID world. Automated and paperless, it enables wealth managers to accelerate acquisition, fully comply with the most stringent KYC regulations and deliver a frictionless start to the beginning of the client relationship. In...

EVENT

Data Management Summit London

The Data Management Summit Virtual explores how financial institutions are shifting from defensive to offensive data management strategies, to improve operational efficiency and revenue enhancing opportunities. We’ll be putting the business lens on data and deep diving into the data management capabilities needed to deliver on business outcomes.

GUIDE

Enterprise Data Management, 2009 Edition

This year has truly been a year of change for the data management community. Regulators and industry participants alike have been keenly focused on the importance of data with regards to compliance and risk management considerations. The UK Financial Services Authority’s fining of Barclays for transaction reporting failures as a result of inconsistent underlying reference...