Pinpointing Attributes

Accuracy and timeliness of identifiers and pricing figure prominently in the data management issues covered in the December issue of Inside Reference Data.

In "The Big Picture Of Solvency II," we recount how panelists in our webcast on the topic last month examined how legal entity identifiers (LEIs) are especially relevant for compliance with the European capital adequacy regulation. UBS's Mohammad Ahmad explained how two different types of bonds can be classified the same without LEIs. Thomson Reuters' Tim Lind goes so far as to advocate making LEI registration a condition for equity and debt offerings.

In "Evolving Identification," our "Interview With" feature, Jefferson Braswell lays out a status report on the LEI itself. Braswell has played a big role in planning and organizing the administrative infrastructure for LEI registration and operations, in different capacities—with the Tahoe Blue consultancy which co-founded p-lei.org, an LEI distribution project that is the forerunner to Braswell's other affiliation, the Global Legal Entity Identifier Foundation (GLEIF), of which he is a board member.

In the interview, Braswell emphasizes that tremendous progress has been made on the LEI, with the designation of 15 or more local operating units over the past 18 months. Since the common file format for the LEI was established in June and GLEIF began collecting fees to fund LEI administration in July, the foundation had the basis to actively oversee local operating units (LOUs) and become the source for LEI data under the new format. As Braswell explains, pre-LOUs no longer have to publish LEIs in the old legacy format of p-lei.org, and that organization will start handing over responsibility to GLEIF.

Reaching this tipping point in LEI administration should not be the end of concerns, however, Braswell told Inside Reference Data. He also advocated for enforcement of LEI updates from year to year, and harmonization of foreign character sets that can be present in LEIs in some countries with English language- or Latin character-based customer rosters that are universally used.

Lastly, in pricing and valuations, a different accounting method called "prudent valuation," promoted by the European Banking Authority, is surfacing as an alternative to the fair-value pricing method—applicable for the European arms of any financial firm that is global in scope, as reported in "Evaluated, Scrunitized," Joanna Wright's look at Asia-Pacific end-user client concerns about evaluated pricing. The intent around prudent valuation is to get greater certainty in valuations. And regarding timeliness, clients are now demanding evaluated pricing updates as often as every 30 minutes.

That demand has been fueled by regulation, particularly Basel III capital adequacy requirements, as Interactive Data's Magnus Cattan tells us. The increased intensity concerning timeliness is also manifesting in a need for more insight into pricing methods.

Overall, a combination of regulation and standards initiatives, as well as financial firms' efforts to get more accuracy, faster, is driving changes in data collection and administration, as we track in these stories this month.