Issue 30 – August 2011
Six months before the expected publication of the completed document, a draft ISO Standard for the financial services industry has earned significant recognition as a global solution for the accurate identification of entities engaged in financial transactions. ISO 17442, Financial services – Legal entity identifier (LEI), is currently at the Draft International Standard stage and expected to be published as an ISO Standard by January 2012. However, it was recently recommended by the Global Financial Management Association (GFMA) – a federation of global financial services trade associations – as a basis for a viable, global LEI solution.
ISO technical committee (TC) ISO/TC 68 Financial services is developing the Standard. 'We are pleased with the recommendation from the global industry and await endorsement of the LEI standard for use by global regulators in the collection of information for the analysis of systemic risk,' says Karla McKenna, Chair of ISO/TC 68. Secretary of ISO/TC 68 Cindy Fuller said the committee believed that the voluntary Standards it develops can fulfil the requirements of both national and global regulators as they develop solutions to address the data collection and analysis needs resulting from the recent global financial crisis.
LEIs can be assigned to a legal person or structure that is organised under corporate laws of any jurisdiction. These entities include, but are not limited to, all financial intermediaries, banks and finance companies, all entities listed on an exchange, all entities that trade stock or debt, partnerships and pension funds, and all entities under the purview of a financial regulator and their holding companies and supranationals.
- enables unique identification of global entities requiring an LEI
- defines robust open governance of the issue and maintenance of the LEI scheme
- defines an LEI that contains no embedded intelligence
- can be applied worldwide to support the financial services industry
- leverages the expertise of ISO/TC 68 in defining and maintaining identifier Standards
- defines a scheme that is scalable and free from assignment limitations.
The GFMA recommends ISO 17442 as the foundation for an LEI system including a central registry, the assignment of LEIs in accordance with requirements outlined by industry and regulator, and a federated model for LEI application and collection of company information.
ISO/TC 68 has selected the Society for Worldwide Interbank Financial Telecommunications (SWIFT) as the primary ISO registration authority for the Standard. Other organisations are being recommended as key partners to operate the core LEI utility as the central point of data collection, data maintenance LEI assignment, and quality assurance.
For more information read the article on ISO 17442 in the April 2011 issue of ISO Focus+ magazine (www.iso.org/iso/iso-focusplus_april-11_p.13.pdf).