Looking for the Finish Line

In the two years since I became editor of Inside Reference Data, we have been busy covering efforts to implement a global legal entity identifier (LEI), from its benefits through to its likely effects and all the intricacies in between, such as preliminary versions of the identifier, founding an organization to administer the LEI, and sorting out likely discrepancies between local jurisdictions.

There is no let-up this month, as the LEI drumbeat gets ever louder, whether in the US or in Asia-Pacific countries. Morgan Stanley's John Sproat advocates some of the LEI's benefits, namely the ability to make client onboarding more efficient and obtain clearer views of client data. Nicholas Hamilton delves further into how careful planning is needed to achieve these benefits, hearing from Sproat and others during last month's Tokyo Financial Information Summit co-sponsored by IRD in "The Secrets of LEI Success." The care in planning centers on cost, he reports, with firms' internal mapping being the largest expense. And to secure budgets for implementing such mapping and other efforts in support of the LEI, as Ian Blance of SIX Financial Information suggests, other regulatory requirements where the LEI is an important element for compliance can support funding for LEI implementation.

Funding initiatives represent one hurdle for LEI supporters. Getting a handle on collecting all the identifier data is another, and presents new challenges that are also covered in this issue. While the US Commodity Futures Trading Commission says 65,000 entities registered for its LEI precursor, the Interim Compliant Identifier (CICI), criticism surfaced concerning the Depository Trust & Clearing Corporation database collecting CICIs. Though it's only a fraction of all the registered entities, about 600 are duplicate files or incomplete records, says Peter Warms of Bloomberg -- not a huge number, but still not completely error-free.

By itself, discrepancies in a small percentage of a pre-LEI are unlikely to derail implementation of a global LEI. The CICI is not guaranteed to become the global standard without any alteration. There's also the issue of coordinating the LEI with other identifiers, which BNY Mellon's Kerry White addresses in our "Interview With."

Addressing that coordination could turn out to be a function of data quality. Linkages, verification and validation are all considered parts of data quality, and the LEI will impact those functions, says Northern Trust's Brian Sobolak. The question is will it make those tasks easier or just more challenging?

So, aside from the client information management benefits, overall data quality is likely to rise once the LEI is mature and universal. The next question for the industry is whether the benefits of the LEI are understood well enough to inspire leaps over its hurdles.