OFR Speeds Up Legal Entity ID Developments

The Department of the US Treasury's Office of Financial Research (OFR) has released the "Statement on Legal Entity Identification for Financial Contracts," an official stance on the need for a universal system for identifying legal entities in the industry, and a call for market participants to take part in the consultation period due to be completed by January 31.

The policy statement directly addresses what has become one of the most established challenges within data management—the lack of a universal system for identifying the legal entities that participate in financial markets has led to the creation of a variety of identifiers aiming to solve the same problem and, in turn, inefficiencies both for firms, regulators and policymakers.

The policy statement specified that if a legal entity identifier (LEI) is established to the satisfaction of the OFR by July 15, 2011, the OFR, in consultation with the chairperson of the Financial Stability Oversight Council, would issue regulation mandating the use of such a standard for data reported to the Office.

"The Office [of Financial Research] is issuing a statement of policy regarding its preference to adopt through rulemaking a universal standard for identifying parties to financial contracts that is established and implemented by private industry and other relevant stakeholders through a consensus process," says the document.

London-based Richard Young, manager, industry programs, Swift, says: "We are very encouraged by the consultation process which the US Department of the Treasury has initiated... we think they are taking the right approach by looking for an industry consensus and industry driven solutions here."

The full version of the story will appear in the December issue of Inside Reference Data.