Identifying a Winner


When I was in New York in November last year, a reference data expert told me he already knew what the 2011 reference data buzz word would be‹the Office of Financial Research (OFR). So far, I would say he¹s spot on.
The OFR¹s call for universal business entity identification has been the top conversation-starter this month. The industry had until the end of January to respond to the statement from the OFR, and the comment letters have now been made public. There appears to be agreement that the industry needs a unique global identifier for legal entities‹something that has been discussed for more than a decade. But there continues to be little agreement on how to solve the problem.
Most organizations are betting on their own horse. The main contenders are:
the issuer and guarantor identifier, which is currently going through the ISO process; the Cabre identifier, which was developed by Cusip Global Services and Avox last year; the BIC code, which Swift has suggested changing and extending to cover all legal entities; and the GS1 global business entity identifier, a standard based on the existing global location number scheme.
In my view, the bookie¹s favourite would have to be Swift¹s BIC code‹or that¹s at least the one I¹ve heard most people talk about. The BIC option is also highlighted in the response from the Depository Trust & Clearing Corporation, as Swift and DTCC could potentially work together if Swift assigns the legal entity identifier and DTCC builds the utility to make it and other core data elements accessible to the public.
But the race is still on. The BIC benefits and development might be well-known in the industry, but the IGI could soon become an ISO standard; Cusip has stressed how Cabre has been created to meet the immediate market need; and the GS1 proposition is based on a standard issuers are already familiar with.
The favourite wins in around one-third of horse races, but in the race to become the legal entity identifier of choice the outcome is still difficult to predict. Many industry veterans keep their bets secret in the responses to the OFR. Instead, they go on to explain how the industry has tried solving this problem before, and some go into detail on why the industry needs a legal identifier.
Last time I checked, there were more than 30 of these letters to the OFR, and one is actually 170 pages long. It looks like the passion in the reference data industry will keep the US Treasury and the OFR busy in the near future. The plan now is that they have until mid-July to review the horses¹ forms, and it is not before then that the industry expects to get the news on who takes the legal entity identification trophy. May the best horse win.

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