Our Number’s Up!A discussion on registry numbering and thepotential impact of the LEI on businessregistries.
A PLAN (OF SORTS) FOR THIS TALK• Registry Numbering - what we all know• The Legal Entity Identifier (LEI) – what is it?• The LEI – what will it mean for business registries?• Will it matter in the end?
WHO MAKE UP THE FSB? CONTD.International Organisations• Bank for International Settlements (BIS)• European Central Bank (ECB)• European Commission (EC)• International Monetary Fund (IMF)• Organisation for Economic Co-operation and Development (OECD)• The World BankInternational standard-setting bodies and other groupings• Basel Committee on Banking Supervision (BCBS)• Committee on the Global Financial System (CGFS)• Committee on Payment and Settlement Systems (CPSS)• International Association of Insurance Supervisors (IAIS)• International Accounting Standards Board (IASB)• International Organization of Securities Commissions (IOSCO)
HOW WILL THEY BE ISSUED?We need some acronyms…• ROC – Regulatory Oversight Committee• COU – Central Operating Unit• LOU – Local Operating Unit
REGULATORY OVERSIGHT COMMITTEE• Has been established and has now taken formal control of the Global LEI Initiative from FSB• Met in Toronto in January 2013 and adopted a Charter• Needs to create the Global LEI Foundation which will operate the COU
CENTRAL OPERATING UNIT• Operational arm of the Global LEI System• Will likely be a not for profit legal entity• Controlled by a Board of Directors (BOD)• May outsource any particular function, having regard to the public good nature of the system.
LOCAL OPERATING UNIT• Primary Interface for entities wishing to register for an LEI• Will offer facilities such as: – local registration, – validation, – maintenance of reference data – and will facilitate the use of local languages and organisation types.
PRE-LOUSpre-LOUs have been given permission to issue pre-LEIs (that comply with the ISOstandard):• Depository Trust and Clearing Corp & SWIFT DTCC/SWIFT CICI 5493 (USA)• WM Datenservice 5299 (Germany)• Central Bank of Ireland Irish Stock Exchange 6354 (Ireland)• Palestine Securities Exchange 1392 (Palestine)• Takasbank 7890 (Turkey)
FUNDING FINANCE FEES• Self sustaining model• A local discretionary charge and…• A common fee to support COU and ROC.• The cost of obtaining an LEI should be modest and not a barrier to acquisition• Access to the LEI and associated reference data will be free and open to all users
AN EASY NUMBER TO REMEMBER…• Characters 1-4: A four character prefix allocated uniquely to each LOU.• Characters 5-6: Two reserved characters set to zero.• Characters 7-18: Entity-specific part of the code generated and assigned by LOUs according to transparent, sound and robust allocation policies.• •Characters 19-20: Two check digits as described in the ISO 17442 standards.
AN EASY NUMBER TO REMEMBER• The official name of the legal entity;• The address of the headquarters of the legal entity;• The address of legal formation;• The date of the first LEI assignment;• The date of last update of the LEI;• The date of expiry, if applicable.
WHO WILL BE LEI’D ?Any legal entity that enters into a financial transaction will be eligible for anLEI. For example:• Transacting entities• Issuing entities• Reference entities• Reporting entities• Ultimate parent entitiesOther participants in financial transactions (including exchanges, utilities,registrars, regulators, and industry organizations) will obtain LEIs asdeemed necessary in the future. Individuals (i.e., natural persons) areexcluded from LEI’s scope.
WHAT ARE PEOPLE SAYING?• Tracking entities could be more accurate if the legal entity identifier (LEI) gets linked to other key identifiers.• There are concerns about identifier duplications, discrepancies between the local operating units (LOUs) being set up to administer the LEI, and costs for the whole effort.• An underlying country-specific registration ID could increase the accuracy of identifiers
WHAT ARE PEOPLE SAYING?• Issues with the potential variations that could result with different local operating units (LOUs) administering the LEI.• The Central Operating Unit (COU) will have to carefully monitor the LOUs, LOU operations should be synchronized to have a single LEI database.• The basic issues with LEI implementation include costs, of course. Costs will come from a host of areas, including systems integration, data migration, internal systems adoption, data remediation and data governance, according to participants in the roundtable
WHAT WILL THE LEI MEAN FOR BUSINESS REGISTRIES?The 1000,000 dollar question…Registries might become LOUsRegistries can consume LEIs (xml feed)Registries might reference LEIs (as part of the searchdata)Registries might not do anything
THE QUESTION I CAN’T ANSWER• When will it impact (if at all) on business registries?
THANK YOUAdditional resources/ reading on the LEI:• Visit the Financial Stability Board’s website at http://www.financialstabilityboard.org/• A Global Legal Entity Identifier for Financial Markets (8 June 2012) http://www.financialstabilityboard.org/publications/r_120608.pdf• White paper on Legal Entity Identifiers from Thomson Reuters. http://thomsonreuters.com/content/news_ideas/white_papers/financi al/legal_entity
Enjoy your conference and Auckland, home of The Registry People