The initiative has been led by the US watchdog, the Office of Financial Research (OFR) as a way to create a more transparent capital markets industry and to limit the possibility of systemic risk.

The OFR has subsequently called on the industry to develop a set of LEI requirements and to have a solution ready for use by 2012. So far ISO 17442 has been selected as the messaging standard for the project and Swift has been appointed as the registration authority and the US-based clearing utility Depository Trust and Clearing Corporation will act as facilities manager.

"The standard is very simple," said Paul Janssens, LEI programme director, Swift. "It will be 20 numbers long and there will be no intelligence in there that could create any privacy issues. It will be neutral." All that will be required from users is a registered legal name and a place of incorporation.

Janssens added that there are still areas open to discussion such as the status and legal forms of entities - things which can vary from country to country. If the LEIs are to be used for risk management, then these potential ambiguities need to be resolved.

The data that is collected will also be made freely and publicly available, said Janssens. "It is data that is already in the public domain but it is not always easily available or accessible. Through this it will be made available in one aggregated repository."

Clarity was also given to the question of how the new LEI code will work with the old BIC code used for payments messaging. "The LEI will not replace the BIC. The LEI will be used for regulatory reporting and risk management while BIC will continue to be used for payments - that will not change," said Janssens. "But we do intend to link the two with mapping and cross-referencing tables."

As regards the potential IT impact, firms are advised to begin their preparations as early as possible. "Without some early thinking, you will end up in a spiders' web," said Daniel Maury, managing director, Group Data at UBS Global Asset Management. "I don't think the impact will be in the front office. It will be in the golden record and control functions that the challenges will reside."

Maury is heading up the firm's project to build a cross-divisional, legal entity database and he outlined the considerations that other firms must make when embarking on a similar implementation plan. "You have to look at the quality of your data, how many identifiers do you have for the same entity and how are you sourcing your data (manually or otherwise."

The considerations are both technical and cultural says Maury. These relate to the number of systems holding the data, whether that be one streamlined database or several, the adoption culture of the firm and an indication of how seriously the whole LEI issue is being taken - be that a debate between two operational staff dedicated to LEI implementation or a board level discussion.