May 3, 2012 
April passed and a final decision on the future of the new legal entity identification (LEI) standard from the Financial Stability Board (FSB) was not forthcoming (in spite of its earlier promised deadline - see more here). However, the rumour on the street is that Swift is now out of the running for the role of registration authority (RA) for the LEI and DTCC has gone very quiet on the subject (check out an editorial from the Sifma show floor by STN…
Very interesting - perhaps this is the reasons why CICIs are needed, as it appears progress towards implementation of LEIs will take longer than expected.
Amir Khwaja
Ben Larah
Michael Beaton
corinaki24
Jon Skinner
Mihir Vaidya
Maria Leontiou
Martin Schuhmayer
samihodgson
Bill Hodgson
Tom Riesack
Most interesting developments Bill, I have wondered previously whether the roll-out & registration process was going to cause issues for various reasons lest of all the huge-changes required at many firms to incorporate LEI into BAU, this one is going to run & run I feel but interesting to track also, take care out there, DP
I would have thought most firms would get busy with their static data teams uploading the right LEI for each account – what the rumours above suggest is that the world is quite some distance away from implementing the infrastructure to create and issue the LEIs in the first place. Surprising since it’s not nearly as difficult as creating a CCP or trading platform.
Point well made Bill re the CCP change, it’s a behemoth for sure & you made me chuckle:)
We’re all aware of the historical unwillingness of the bulk of buy-side to invest in Ops per the pre-crisis view of post-trade as cost-centre only.
Clearly that has now changed & radically. Whilst that change is welcomed by many Ops pros. we’re now seeing all the ‘hidden’ internal process-flow inefficiencies bubble-up to the surface so it’s payback time somewhat. LEI is a new initiative but is only one of many changes that firms need/must now incorporate into their work-flows. I can remember ‘discussing ‘ with a senior mgr at one of my old firms 6 years ago how the importance of accurate static-data was in OTC world & how I needed buy-in/budget to make changes. My plans got nowhere as this guy viewed data as a backwater so ‘not important’. I now wonder how that conversation would go now in this new world
as accurate data is everything as feeds into so much of the valuation & reporting etc. Many proposed idea’s to achieve exception-based processing can only be achieved via automation & industry-standards. LEI will cater to one aspect of data-standards & frankly always was the logical move but no-one wanted to do it! So whilst I’m glad to see the changes & crucially the industry having to adjust. It’s a pity that it’s taken the crisis for these such areas to get buy-in rather than being beating with the regulatory stick to achieve, flashback to the credit-confirm backlog when ISDA had to step-in & lay down the law blah.
Here’s another area lacking standards; OTC’s & trade economics across multiple asset-class’s. Disparate systems, some bolted-on via buy-outs (eg. CS & First Boston) means that internally, many firms (banks for sure) have valuation systems that capture one or only a few asset-classes each only so to produce a consolidated port-rec for a month-end NAV or a daily collateral portfolio per the margin-call is a logistical nightmare. On this one, I’m very interested to see if standards can ever be agreed by all players & rolled-out globally. That nirvana is the key achieve much more STP, real-time risk-exposure monitoring 7 crucially, quality systemic-risk reporting to industry-overseers ++.
I’d be most interested in anything you’ve come across in that space as I’m sure there’s a middle-ware opportunity but ultimately, if a bank/broker etc cannot provide all required trade-economics in their reporting (for any purpose) then that will trigger breaks which have major-impact to funding-deadlines on CCP margin calls and let’s not forget, we’ve not even factored in pricing of those assets per the major differences in pricing of the same trade from either cpty’s view let alone a 3rd party with interest i.e. a fund admin whose been tasked with providing NAV’s and is ion a SLA deadline etc. All of these will run & run I’m sure but fascinating to read the daily developments & media so, keep em coming Bill !
Best, DP
Further evidence: http://www.securitiestechnologymonitor.com/news/ofr-standardize-data-system-breakdowns-30478-1.html
The difficulty is that LEIs are not a new, all-encompassing standard, but yet another additional standard to be implemented on top of all of the legacy standards. The legacy standards still have to be used because they are conformed with all the existing systems for document and transaction processing. Historic data still has to be maintained because of all the changes wrought by mergers and acquisitions among all trading partners. The authorities are just starting to appreciate that they are not getting what they want from LEI, and the costs and burdens imposed are huge.
More of it:
http://m.waterstechnology.com/inside-reference-data/news/2172530/iso-agrees-remove-lei-registration-role