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

A-Team Insight Blogs

SIFMA Urges Coordination on Creation of Legal Entity Identification System

SIFMA, along with the Clearing House, Enterprise Data Management Council, the Financial Services Roundtable, the Futures Industry Association, International Swaps and Derivatives Association, the Investment Company Institute, and the Managed Funds Association today submitted a comment letter to the Treasury Department’s Office of Financial Research (OFR) on a proposal to develop a system of uniform legal entity identifiers (LEIs) to measure and evaluate systemic risk in the financial system.

“SIFMA is actively engaged in the process of identifying an effective LEI standard. We have been in dialogue with OFR and other regulatory agencies to understand their goals and preferred approaches, and are working with other trade associations and industry stakeholders as well,” said Randy Snook, executive vice president at SIFMA. “It is critically important that the FSOC coordinate disparate LEI efforts taking place across regulatory agencies. We appreciate the OFR’s outreach to foreign regulators, as a globally coordinated approach will be necessary for effective implementation. SIFMA and the industry are committed to finding the right solution for an LEI standard, but we are working on a very tight timeframe and hope that pre-existing deadlines do not prevent us from developing the right structure to meet the FSOC’s policy goals.”

Currently, there is no universal system for identifying legal entities that participate in financial markets. To assist in their efforts to monitor connections in financial markets for systemic risk, OFR released a statement discussing its intent to standardise how parties to financial contracts are identified in the data OFR collects.

In the joint letter, the trade associations urged the Treasury Department to coordinate with all the major domestic and global financial services regulators so that there is only one LEI standard.

The trade associations also made preliminary observations, including:

* The entity responsible for the LEI process (the LEI “issuer”) should be a non-profit with a stable funding source and an open and transparent process;

* The Treasury Department should clearly define who is responsible for obtaining an LEI, and preliminarily the trade associations see benefits to a self-registration model in which legal entities would register a limited amount of information about themselves and then would certify that information periodically, or upon changes;

* The trades agree in concept with the LEI characteristics contained in the cross-regulatory whitepaper entitled “Creating a Linchpin for Financial Data: The Need for a Legal Entity Identifier,” especially that the LEI be neutral;

* The data elements for the LEI process should be considered carefully; and

* The trades believe it is important to have a carefully thought out strategy to phase in the use of LEIs.

The associations also noted that they will be working together to develop an industry proposal.

Related content

WEBINAR

Upcoming Webinar: Adverse media screening – how to cut exposure to criminal activity, from money laundering to human trafficking

Date: 23 September 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Screening for adverse media coverage of counterparties is a significant challenge for financial institutions. It is required by regulations such as the EU’s sixth Anti-Money Laundering Directive (AML 6), and is one of the most effective ways to steer...

BLOG

How to Implement Strategies, Standards and Technologies for Best Practice Customer Data Management

Getting customer data right has been a problem for financial institutions for many years, but it is beginning to ease as regulation drives data aggregation underpinned by data governance, data standards emerge, and technologies replace manual processes. Getting management buy-in to improve customer data has also moved on and become more persuasive as conversations about...

EVENT

Data Management Summit Virtual

The Data Management Summit Virtual brings together the global data management community to share lessons learned, best practice guidance and latest innovations to emerge from the recent crisis. Hear from leading data practitioners and innovators from the UK, US and Europe who will share insights into how they are pushing the boundaries with data to deliver value with flexible but resilient data driven strategies.

GUIDE

Entity Data Management Handbook – Seventh Edition

Sourcing entity data and ensuring efficient and effective entity data management is a challenge for many financial institutions as volumes of data rise, more regulations require entity data in reporting, and the fight again financial crime is escalated by bad actors using increasingly sophisticated techniques to attack processes and systems. That said, based on best...