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LEI – Legal Entity Identifier 27 March 2012. Why a Legal Entity Identifier ? Driver: –New regulatory framework for swaps (US, Canada, Hong Kong, Australia.

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Presentation on theme: "LEI – Legal Entity Identifier 27 March 2012. Why a Legal Entity Identifier ? Driver: –New regulatory framework for swaps (US, Canada, Hong Kong, Australia."— Presentation transcript:

1 LEI – Legal Entity Identifier 27 March 2012

2 Why a Legal Entity Identifier ? Driver: –New regulatory framework for swaps (US, Canada, Hong Kong, Australia and Europe) –US regulation comes into effect on July 16th 2012 Goal: –Reduce systemic risk –Increase transparency –Promote market integrity within financial system How: –Via reporting of all swap transactions and positions to Trade Repositories (TR) Requirement: unique and unambiguous identification of parties involved LEI Update 2012 March2

3 Q4 2011Q4 2010Q1 2011Q2 2011Q3 2011H Regulator Initiatives Office of Financial Research releases policy statement on LEI Linchpin Group of US regulators releases principles for LEI infrastructure November 2010 December 2010 Industry coalition releases comment letter on LEI principles & offers to lead development February January 2011 EU Commissioner Barnier calls for global LEI Effort Industry Response Solicitation of Interest released calling on potential providers May 13, 2011 Industry recommends ISO-SWIFT-DTCC to offer infrastructure, partner w. ANNA 11 July 2011 September 28, 2011 FSB sponsored workshop on global adoption of LEIs December 2011 CFTC to release swaps rules, likely mandate LEI use in reporting Regulator Support H July 16, 2012 Expected start of swaps reporting using LEIs to meet CFTC swaps regulations Engagement on implementation, governance and operating model Summer / Autumn, 2011 Solution providers expected to have core solution infrastructure in place Summer July 2011 FSB announces support for LEI initiatives Industry coalition releases requirements document 3 May 2011 Continued engagement with global regulators to advocate international use of LEI standard Ongoing 24 August 2011 IOSCO-CPSS OTC report advocates adoption of LEI 4 November 2011 G-20 Leaders declare support for LEI initiative June 2012 FSB Working group to deliver recommendations on LEI solution Industry Process - Timeline LEI Update 2012 March3

4 LEI definition LEI = unique ID associated with a single corporate entity –Any party to a financial transaction –No materiality threshold of any type to the issuance of LEIs (e.g., capitalization of legal entity) –Natural persons are excluded from LEI scope Draft International Standard = ISO Structure –18!an + 2!n (check digit) LEI does not replace the BIC LEI Update 2012 March4

5 LEI registration and validity An LEI can be assigned via: –Self Registration –Third Party Registration Following attributes are requested for submission –Legal name (mandatory) –Address (mandatory) –Entity Status (mandatory) –Ultimate parent LEI (not mandatory for Phase 1) The LEI record is subject to yearly certification Both self-registration and certification are subject to payment A record state indicates the level of validity of the LEI record LEI Update 2012 March5

6 How will it work ? LEI Update 2012 March WWW LEI Self-registration Third-party registration Self certification Data distribution Self-registration Third-party registration Self certification Data distribution Processing Validation De-duplication Processing Validation De-duplication Allocation Publication Allocation Publication 6

7 LEI Record An LEI record consists of: –One LEI number attribute –One Legal name attribute –One Address consisting of some combination of: PO Box, Floor, Building, Street, City, State, Country and Postcode –One Entity Status attribute –One or multiple Events (event type + timestamp) –None, one or multiple Previous Name attributes –One Record State attribute –One Certification State attribute –One Next Validation Date attribute –None, one or multiple Ultimate Parent attribute –None or one Successor LEI LEI Update 2012 March7

8 What does a LEI look like ? A LEI record looks like this A test file containing 4,000+ records and technical documentation is available on GFMA website: identifier-test-file-download/http://www.gfma.org/initiatives/legal-entity-identifier-(lei)/legal-entity- identifier-test-file-download/ LEI Update 2012 March8

9 Next steps LEI Solution implementation –April: publication third test file, containing 9,000+ records –May: final UAT testing –June: “go live” LEI portal Regulators –CFTC: Regulation comes into effect on July 16th SWIFT, DTCC, ISO & ANNA submitted proposal to CFTC –FSB: Recommendations to be finalised by end of April Endorsement by G20 during Mexico summit (June 18-19) –Hong Kong, Australia and Canada Regulation under construction, probable date of effect: January 2013 –Europe Discussion paper on technical standards (including notion of LEI) published LEI Update 2012 March9


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