By Tim Lind, Global Head of Strategy and Business Development, Enterprise Content, Thomson Reuters
Back in November 2010 the US Treasury’s Office of Financial Research (OFR) called for the adoption of a Legal Entity Identifier (LEI). Less than a year later and now backed by a consortium of trade associations, the LEI initiative has facilitated a newly vigorous interest around the globe to bring an end to the counterparty data identification challenge.
Aiming to create an accurate and unambiguous identification standard for legal entities engaged in financial transactions, the LEI could bring an ultimate end to the legal entity identification hurdles. Well renowned for being one of the outstanding and more taxing reference data barriers the industry has encountered. The urgency around being able to asses counterparty data quality and risk while having a complete view of entities, is on the rise.
Acting like the U.S. Social Security number or U.K. National Insurance number, the LEI represents a critical opportunity to change the way in which the industry thinks about and tackles risk management.
The LEI would not only identify institutions but would also become the common key to link financial activity helping assess credit risk with an entity or related affiliates. By helping automate the exchange of information between financial institutions and regulators and eventually between market data vendors and their customers, it would also help (more…)