18 December 2014

Sifma calls for US rulemakers to step up deployment of Legal Entity Identifiers

14 April 2014  |  4028 views  |  0 ticker 1

US securities trade body Sifma has called for broader uptake of Legal Entity Identifiers by the country's regulators, amid fears that the US is being left behind as other nations push ahead with mandatory implementation of the uniform trade reporting standard.

In a letter to Jacob Lew, treasury secretary and chairperson of the Financial Stability Oversight Council (FSOC), Sifma urges the Council to advocate for a more "fulsome adoption" and use by the US regulatory community of LEIs.

"A uniform, global legal entity identifier will help regulators and supervisors, researchers and firms to better measure and monitor systemic risk, as well as to more effectively measure and manage counterparty exposure and improve operational efficiencies," says the letter signed by president and CEO Kenneth Bentsen.

Globally, there are now 13 operating pre-Local Operating Utilities (LOUs) which provide LEIs; including the US-based GMEI Utility, which is run by the DTCC in collaboration with Swift for CFTC reporting. The CFTC is currently the only US regulatory body to have gotten behind the standard, where it used for swaps reporting.

New rulemaking in Europe is moving LEI usage beyond the swaps markets, where agreement on technical standards will ensure uniform reporting requirements across all EU Member States in a number of areas such as own funds, financial information, large exposures, liquidity ratios, leverage ratios and asset encumbrance. In addition, the EU's Markets in Financial Investments Regulation (MiFIR) will require use of the LEI in reporting of securities and other transactions.

To date, nearly 238,000 LEIs have been issued globally, representing registrations from more than 160 countries. Of these records, about 28% represent US entities. In contrast, LEI registrations in Europe are nearly 60% of the total.

Says Sifma: "We believe the FSOC and its members can and should play a key role in expanding the US adoption of the LEI and its related benefits by requiring LEIs to be used broadly in US regulatory reporting and other supervisory practices. We believe FSOC efforts in this regard will help further catalyse the development of the LEI as the unique global standard for identification of legal entities that transact in financial markets, and the foundational tool underpinning improved operational efficiencies, systemic risk management and financial stability."

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