Nicholas Hamilton: Surprise, Surprise

Who would volunteer to take responsibility for establishing and managing the operational arm of the legal entity identifier (LEI) system, developed in order to uniquely identify participants in financial transactions? After a longer-than-expected five-month wait, the industry found out last month when the Financial Stability Board (FSB) published the nominees for the board of directors of the Global LEI Foundation, which is charged with setting up and running the operational unit of the LEI system, known as the Central Operating Unit (COU). In choosing 16 nominees from the roughly 50 applications it received, the Regulatory Oversight Committee (ROC) of international authorities who are steering work on the LEI have closely followed the selection criteria they published in August.

Surprises
When applications for the board of directors opened last year, the ROC explained that it was looking for a combination of people with backgrounds in data technology, financial services, non-financial services companies, and not-for-profit work. It highlighted the importance of finding directors with experience in operating federated international organizations, data standard development, and risk management. It also specified that it wanted three directors each from four geographical areas: North America; Europe; Asia; and Central and South America, Africa, Oceania and the Middle East. Despite following these criteria, the ROC’s nominations for the board of directors of the Global LEI Foundation include a number of surprises and some interesting clues about the form the COU might take. Some practitioners have expressed surprise that more representatives from banks and other financial firms have not been nominated. However, their concerns have been allayed somewhat by the inclusion of JPMorgan Chase’s Robin Doyle, who is respected throughout the industry and who has contributed much to the LEI project.

It is also noticeable, if hardly surprising, that the US is the only country with more than one representative on the list of nominees. After early concerns that the LEI was being seen as an American project and that other countries might therefore be reluctant to become involved, it is surprising that the ROC has put forward four Americans. However, given the variety of skills available in the US, this situation was perhaps always likely, and it is right that the quality of the board of directors should take precedence over public relations sensitivities.

Interesting Aspect
Perhaps the most interesting aspect of the ROC’s choices is the inclusion of three nominees from organizations behind P-LEI.org—a website that collects and consolidates pre-LEI data into a single file. The website was launched midway through last year and has become an invaluable tool for industry participants faced with the challenge of managing the LEI data that is now being published by multiple organizations.

P-LEI.org is a joint project of GS1, Tahoe Blue, FIX Protocol and the Corporation for National Research Initiatives. The nominees for the board of directors of the Global LEI Foundation include Ravi Mathur, CEO of GS1 India, and Tim Smucker, the chair of JM Smucker Company, who is also on GS1’s management board. Tahoe Blue is represented on the list by its founding partner, Jefferson Braswell.

The industry has begun to wonder whether P-LEI.org can be viewed as a prototype for the COU.

P-LEI.org emphasizes that it is not affiliated with the FSB, the ROC or any financial regulator. However, with the organizations behind the website well represented in the nominations for the Global LEI Foundation board, the industry has begun to wonder whether P-LEI.org can be viewed as a prototype for the COU.

With the nominees still subject to legal checks in Switzerland and ratification by the FSB board, we will have to wait a little longer to see how closely the COU will follow the example set by P-LEI.org.