LEI's Tentacles

Planning for implementation of the legal entity identifier (LEI) standard has had its own share of conflict, on how to reconcile the LEI with other identifiers (see "Mapping LEI Coordinates" from March 21) and even in agreeing on how to accurately manage the US LEI precursor, the CFTC Interim Compliant Identifier (CICI).

But identifier issues may even be straying into other data management functions that might not occur to you at first, like data quality efforts and even the data being generated by collateral transactions. Linking entity identifiers is a data quality issue, observed MaryRose Carosia, vice president of enterprise solutions at S&P Capital IQ, in a webcast I moderated last week. There is a potential for errors in linkages between entity identifiers as they enter firms' systems, added Carosia.

A similar issue with linking identifiers can be found in reconciliations of trades as they pass from firms' front offices to their back offices, as Adam Cottingham, vice president of data management at SmartStream, observed in the same webcast. Front offices operate using market-level identifiers such as SEDOL or the Reuters Instrument Code (RIC), while back offices use ISIN numbers. SmartStream and Euroclear launched their Central Data Utility in October to address this issue. "The CDU cross-references functionality for all vendor codes, where one ID can be created that can support synthetic codes on the back end, and be mapped onto internal codes as well," says Cottingham.

This is the type of linkage that could serve as a model for how to link CICIs and LEIs with SEDOLs, ISINs and other key identifiers, as mentioned in that March 21 column.

Aside from the efforts of these service providers to address the issue with linking identifiers, an industry group is working on another area touched by identifier issues—collateral management. ISITC's Settlement Working Group has taken on the task of improving the handling of collateral transaction data, first removing manual processing, and now improving on the accuracy of confirmation and status messages as well as end-of-day reconciliations. While the group's collateral management efforts are not only dependent on LEI and identifier issues, those are also playing a large part in being able to manage the collateral data and improve its accuracy and usefulness, according to group member Jason Brasile of State Street's global product and platform solutions business.

So, as the LEI saga continues to wind its way toward a conclusion, it's now evident it will make some unexpected stops along its path.