is an exciting time for those of us at the Treasury’s Office of Financial Research and others around the world who have been working to establish a global
system for precisely identifying parties to financial transactions.
Legal Entity Identifier, or LEI, is like a bar code—a unique ID for companies
participating in global financial markets.
The need for an LEI system has long been recognized. However, the recent financial crisis exposed
the critical nature of that need, when government regulators and market
participants were unable to quickly assess exposures to failing firms or the
network of interconnections among financial companies and markets.
the efforts to produce an LEI system are coming to fruition. We have reached agreement on a framework for global
acceptance of so-called pre-LEIs that will underpin an interim LEI system for producing
fully standardized codes until the LEI system is fully up and running.
construction is well under way on the governing framework for the LEI system. At the top of that framework is a fully
operational Regulatory Oversight Committee.
The committee convened for the first time in January and met most
recently this month to finalize details for creating a nonprofit foundation to ensure
adherence to governing principles and standards in the implementation of the
LEI. The final steps will be to set up a worldwide network of Local Operating
Units to handle LEI registrations and provide the identifiers. Nine candidates to become Local Operating
Units have been established or are in the planning stages.
the build-out of the system continues, we are pleased that global acceptance is
now expected for the more than 50,000 pre-LEIs that are already in use. When the LEI system is fully implemented
globally, government entities like the OFR will be better equipped to assess
potential threats to financial stability, while financial firms will have not
only a better view of their risks and interconnections, but also reduced costs
cleaning, and aggregating data, and in reporting data to regulators.
more information about the LEI, see the new LEI Primer and my recent remarks at the SIFMA Tech
Matthew Reed is Chief
Counsel at the Office of Financial Research and Chair of the LEI system’s
Regulatory Oversight Committee