OFR's LEI Cost Stance Requires Further Clarification, According to Experts

Last December, the Department of the US Treasury's Office of Financial Research (OFR) 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.

As the deadline approaches, discussions have turned to the areas firms and industry bodies are looking to focus on in their responses. While the statement was welcomed, experts agree some areas require further clarification to ensure the industry is on the same page.

Costs have been highlighted as one of these areas. The OFR document states that the security and reliability of all IT systems involved in identifier issuance and database maintenance and publication must meet or exceed industry standards for real-time, high availability, and "identifiers must be available to the public without fees for storage, access, cross-referencing or redistribution."

Frankfurt-based Rudolf Siebel, managing director, head of market and service, at German investment fund and asset management industry group BVI Bundesverband Investment und Asset Management, says that while he thinks costs will not be an issue, clarification on what "without fees" referred to in the document should be specified to avoid confusion. "There needs more clarification on no fees for the end-users," says Siebel.

Currently, the notion of no fees for end users does not imply no administrative fees, which would include license fees or API rights. "Those rights would have to be relinquished or a loyalty-free license has to be offered to any user of such numbers," explained Siebel.

The full story will be featured in the January issue of Inside Reference Data