Instability Board

Discussion of the International Organization for Standardization's (ISO) removal of Swift's registration authority role for the legal entity identifier (LEI) at the behest of the Financial Stability Board (FSB) continues to echo comments made in this space two weeks ago. Now, the question is whether this event will create a divide that could defeat the purpose of setting an LEI standard to begin with.

The FSB wanted to avoid a conflict with Swift over how to govern the LEI, but the end result of the dismissal of Swift is more likely to be that both ISO and Swift will be administering the standard with less communication or coordination between them. Swift, as mentioned before, out of practicality, will continue to be involved in handling identifiers.

So who will really have overall authority to standardize LEIs? The financial industry had recommended a combination of ISO, Swift, DTCC and Anna, but can that hold together with a new complication in all these bodies working together?

So the FSB, having set this chain of events into motion, ought to bear some responsibility for answering these questions that the industry undoubtedly will have. As of this writing, the FSB plans to present recommendations on how to implement the LEI to the G-20 nations in June. The FSB also was due to present a report signaling what these recommendations might be in advance of the G-20 gathering in Mexico. If the FSB is in fact rejecting the idea that the aforementioned associations and entities can work together on the LEI, it ought to show a rationale for that and present some details on how these authorities could implement the LEI standard.