One of the issues that could have held back the adoption of Legal Entity Identifiers (LEIs) by market participants and regulators has been the question of “who runs the system?” LEIs are going to be as fundamental to identity management in the financial
sector as passports and identity cards are to the world’s population.
It shouldn’t be a surprise that governments and regulators would be concerned about having LEIs for their domestic financial institutions being issued by an organisation in another country. Some countries might be even more sensitive than others about which
other country might have the role of being the single global issuer of LEIs.
That’s one reason why a “federated” approach has been adopted by governments and regulators around the world for the Global LEI System. Each country can have one or more issuers of LEIs, all of which can be equal Local Operating Units (LOUs) within the
Though this new push to have LEIs for participants in financial markets comes as a by-product of the US Dodd-Frank act, the work didn’t start with this – it began as far back as the 1990s with ISO working groups addressing the need for an International Business
Entity Identifier, with experts from around the world joining in that initiative. Many countries, and not just the USA, have been pushing in this same direction for a long time.
But now the planets are aligning as are governments and regulators to get the Global LEI System on the move. More countries are sponsoring local organisations to be issuers of LEIs as “pre-LOUs”.
The latest of these organisations is the China Financial Standardization Technical Committee. Hopefully this is the beginning of a trend for other countries in the Asia/Pacific region to get actively involved as well.