Developed in collaboration with the industry, the CICI utility solution creates and assigns unique identifiers to any financial organization that engages in a transaction, and stores and validates the accuracy of the associated reference data. The solution offers the industry a tool for complying with recently implemented swap data reporting regulations.

"Since the 2008 financial crisis, widespread support has grown for the creation of a unique LEI as a way to help firms and regulators assess systemic risk," explained Ron Jordan, DTCC Managing Director and Chief Data Officer. "Initially, these identifiers served as a global tool to quickly identify parties to over-the-counter (OTC) derivatives trades across financial markets and jurisdictions. But, now, we are very pleased that our solution has been well-received by the industry and is also being used to comply with recently implemented swap data reporting regulations."

In July 2012, the CFTC designated the DTCC/SWIFT solution as an interim CICI utility that would be able to issue identifiers to firms involved in OTC derivatives trading, and would ultimately comply with the global framework for a system being designed under the auspices of the Financial Stability Board (FSB) and the G20. The CFTC designated the CICI Utility as the source for CICIs to be used in swap data recordkeeping and reporting under CFTC rules, after evaluating all candidates with respect to their ability to meet the requirements established by CFTC's data reporting rules and comply with the global principles established for LEIs. DTCC and SWIFT are industry-owned and governed utilities. The CICI utility maintains global operations, and is not designed solely for the US market or for OTC derivatives; it was architected to support all asset classes and jurisdictions to provide an LEI wherever needed.

Identification of legal entities is recognized as a critical element to aid regulators and financial market participants alike in measurinke in measuring and managing systemic risk. The requirement to provide an LEI is increasingly found in regulatory rulemaking around the globe as a key data element needed in G20-mandated OTC derivatives reporting. The use of LEIs is also emerging in other regulatory data collection rulemaking proposals across asset classes. The CICI utility established by DTCC and SWIFT issues identifiers compliant with International Organization for Standardization (ISO) 17442 LEI standards.

"The utility has been developed on a flexible infrastructure to easily adapt to evolving industry and regulatory requirements globally," said Paul Janssens, LEI Programme Director, SWIFT. "With just about 50 percent of the records representing US entities, we are pleased to report a high adoption rate of the solution by the international financial community."

CICIs in Action

All swap counterparties subject to CFTC jurisdiction must have CICIs, which are required for recordkeeping as well as for data reporting. CFTC's swap data reporting rules require that both counterparties to a swap be identified by a CICI when the swap is reported to a swap data repository. Dec. 31, 2012, was the deadline for swap dealers to register with the CFTC and begin reporting credit and interest rate transactions.

Reporting of equity, foreign exchange, and other commodity swaps by swap dealers begins on Feb. 28, 2013. By April 10, 2013, all swap counterparties subject to CFTC jurisdiction, including non-swap dealer/non-major swap participant counterparties, are required to register for a CICI, or to certify their own CICI records if registered with assistance of another party.

"CICIs are instrumental in improving transparency, efficiency and risk mitigation in the global marketplace," explained Bill Hodash, DTCC Managing Director. "DTCC will continue to work closely with the global financial services industry and global regulatory community, including the newly established Regulatory Operating Committee, to gain consensus around the design and implementation of the global LEI solution. In the meantime, the assignment of CICIs is a key step forward in managing risk in the OTC derivatives markets, and CICIs will transition into LEIs, subject to meeting the agreed global LEI standards."

CICI 2012 Highlights

DTCC and SWIFT launched the CICI website, www.ciciutility.org, on Aug. 21, 2012.
As of Dec. 31, 2012, more than 47,000 legal entities were registered in the CICI database. More than 5,000 new entities are expected to register in the CICI utility database each month, going forward.
Of the 47,000 registered legal entities, 8,000 were added to the database through 90 bulk files, which allow users to register multiple entities by submitting a file transfer rather than using the web portal.
The FSB called for a structured LEI number scheme and as a result, CICI was the first system to be assigned a 4-character prefix. On Nov. 30, 2012, CICI began assigning identifiers with the prefix "5493" followed by two zeros, then a randomly generated 12 alphanumeric string and two check digits.
To accommodate bulk file registrations where credit cards cannot be obtained or may have insufficient maximums, the CICI Utility expanded its capabilities to accept wire payments.
The CICI database is fully accessible to the public and more than 14,500 file downloads occurred in 2012. The FTP file download functionality was enhanced to give users more robust functionality when downloading files.
CICI staff addressed more than 1,200 public challenges of the accuracy of reference data.