Next Step For Identifiers: Spotting Red Flags

A few weeks ago, in "Roots of Data Management Rationales," I tied risk management concerns to data management concerns, including the launch of the legal entity identifier (LEI), which Inside Reference Data has covered so extensively.

The financial industry workflow tools provider Alacra has produced a model that could be used with LEIs—a database called the Alacra Authority File, which uses other identifiers, including agency issue identifiers, ISIN, SEDOL, ticker symbols, Markit Red Code and others.

With LEIs put in place by regulatory bodies such as the Financial Stability Board's Regulatory Oversight Committee (ROC) and the Local Operating Units (LOUs) still to be designated, tracking of changes in regulatory status can be enhanced. The Alacra Authority File compiles data from major G-20 nations' financial regulators and tracks such changes using the aforementioned identifiers.

Regulatory status changes could be due to corporate events that firms ought to note in their reference databases, according to a recent entry in Alacra's corporate blog. If Alacra can successfully tie the LEI into its Authority File offering, it could be a key cog in consolidating information on regulatory status changes. Those changes are the red flags that ought to trigger alerts within data management systems.

Tracking such changes, as an exercise unto itself, would be a welcome complement to other improvements in data management, such as data quality and data hierarchy improvements discussed in that prior piece, and data verification, validation and linkage efforts described in our recent feature "Evaluating the Quality Chain."

As the industry has seen in the past year and a half, the LEI is an effort with a lot of moving parts. It requires coordination of regulators and standards bodies in many jurisdictions worldwide. It also presents the challenge of adding another identifier with another stated purpose to a host of other identification methods that already exist and have other aims. We may not be able to give a complete ringing endorsement to the potential solution from Alacra, but that company's offering has certainly spotlighted another dimension of the identifier problem that ought to be addressed.