All eyes are on Basel – even here in New York, where practitioners and other interested parties are awaiting with some trepidation the outcome of next week’s Private Sector Preparatory Group (PSPG) meetings to determine next steps for the legal entity identifier. Up and down the LIE – that’s the Long Island Expressway, in case you’re wondering – the ‘word’ on everyone’s lips is LEI, as one wag put it this week.
As you know, the main items on the agenda for Basel are the acceptance of the governance framework for the ROC, the regulatory oversight committee that will set policy for the operation of the global LEI framework, and the beauty pageant of technology suppliers keen to have their solution adopted in part or in whole as the core platform for the issuance and maintenance of the LEI itself.
But in New York – and doubtless elsewhere – practitioners are waiting for word from Basel on the March 2013 deadline for adoption of the LEI. It’s broadly accepted that the March date will more mark the end of the beginning – rather than the end itself – of the LEI launch process.
After date slippage this past summer, interested parties see a full-blown March 2013 LEI introduction as unfeasible, and the organisers – officials of the Financial Stability Board (FSB) and its backer, the European Central Bank (ECB) – are speaking in softer tones about the rollout timeframes. The question is whether something more concrete emerges from the Basel meeting.
The market certainly hopes so.
As listeners to our webinar on the topic last week will know – and there are several hundred of you – if they have any hope of meeting the deadline for even next spring’s soft launch date, market practitioners need to have started their preparations yesterday for handling the LEI in their business operations.
Many of the larger sell-side firms – those that play in the global swaps marketplace – are already dealing with an LEI of sorts: the CFTC Interim Compliant Identifier, or CICI. At last glance, there were almost 30,000 identifiers in the CICI Utility that’s being jointly run by DTCC and Swift. This is giving practitioners an ‘early look’ at how a wider, more global LEI standard identifier might be managed.
There have been some grumblings about data quality – as per last week’s webinar – chiefly referring to a handful of duplications. This is being put down to the inevitable teething troubles of a new venture and have been identified and, presumably, sorted out.
Perhaps more disconcerting have been mutterings among practitioners about the role of the CICI in the overall process. Executives are quietly suggesting that the release of an interim identifier ahead of the ‘real thing’ has created confusion in the marketplace. This, they believe, may have contributed in a reticence among the firms that really need to start work on their LEI preparations to do so.
People are sitting on their hands – fearful of investing time and resources in a ‘bleeding edge’ set-up that may be rendered redundant by ongoing developments.
And developments keep coming thick and fast.
Incidents like the announcement of an ‘urgent study’ of the structure of the 20-digit identifier – to be conducted late last month – are unhelpful, even if they are innocuous. I asked the ECB’s Frances Gross about this at FIMA DACH in Frankfurt two weeks ago, and he assured an audience of bank LEI practitioners that the review was relatively harmless, concerning the local operating unit (LOU) process for generating random numbers. It would have no discernible impact on consumers or issuers of an identifier, it seems.
Nor does the lack of transparency around the IT beauty contest in Basel next week help the cause of this global initiative to promote, erm, market transparency. We were disappointed to learn that as members of the press we wouldn’t be invited to attend the Basel meeting. I was tempted to go underground, arrive in Switzerland in my sunglasses and sleuther’s raincoat, and collar committee members during the coffer breaks.
Patience is a virtue, though. We’ll all just have to wait and see.