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October 27, 2012 • 1:11 am 0

News and updates on LEI standard progress and development

As a follow up on G20 acceptance in Los Cabos in July 2012 and the Financial Stability Board guidelines and recommendations of the Legal Entity Identifier  LEI, we will regularly update this post with news and article to provide an overview of  LEI standard progress and development.

 
First Published  13.07.2012 , Last Update 27.09.2012

Filed under: Data Management, Data Vendor, Reference Data, Standards, , , , , , , , , , , , , , , , , , , ,

June 24, 2012 • 9:39 pm 1

Reference Data: LEI system Real and Ready for Use…or maybe not?

The morning after the G-20 leaders endorsed the Financial Stability Board’s recommendations for a global system of precisely identifying legal entities, the co-chairwoman of the LEI Trade Association Group said, “I think we have something that is real and ready for use.’’

Robin Doyle, a senior vice president at JPMorgan Chase, noted that 20,000 ready-to-use “legal entity identifiers” have already been generated by a prototype jointly developed by the Depository Trust and Clearing Corporation and the Society for Worldwide Interbank Financial Telecommunication. A copy of that file can be downloaded here.

The online portal that would allow financial market participants to register and receive 20-character ID codes and to search for the codes of counterparties or other entities was demonstrated Wednesday morning at the 2012 Technology Leaders Forum of the Securities Industry and Financial Markets Association.

That portal can be turned live “within 24 hours” of its need, said Mark Davies, 
Vice President, Business Development
 at The Depository Trust & Clearing Corporation, during the demonstration.

The LEI Trade Association Group represents a group of firms and financial industry trade associations trying to develop a global and uniform legal entity identifier. The group is supported by the Global Financial Markets Association, which includes SIFMA.

SIFMA and a variety of other trade groups have recommended that DTCC and SWIFT operate a central authority for registering and issuing the codes that the leaders of the G-20 industrial nations Tuesday endorsed.

The G-20 endorsed the 35 recommendations of an international coordinator known as the Financial Stability Board.

The board’s recommendations differed in one significant aspect from the SIFMA and trade association recommendation. Where the trade groups recommended a centralized system for registering and issuing ID codes – a point reinforced Tuesdya in opening remarks at SIFMA Tech by SIFMA president T. Timothy Ryan Jr. – the FSB recommended a “federated” registration model. Under that approach, local authorities, aka nations, could and theoretically would act as the agencies for registration, issuing and storing the codes.

The central authority would maintain a database that would be logically managed, but whose contents might be spread around the world, as on servers spread across the Internet.

“We think it can work,” but it has to be set up and maintained properly, Doyle said.

The federated model will only be as good as it adheres to the global standards set by the FSB and the International Organization for Standardization, which defined the 20-character code.

Doyle said a central authority under the FSB approach likely will need to conduct audits of local operating units, to ensure compliance with the overall standards. The challenge will be to make sure the codes are kept correctly and not, in some fashion, duplicated.

The local authorities will need to take on the expense of maintaining high standards. “It is an expensive, difficult process to validate data,” Doyle said.

“A public-facing system like this needs a huge amount of control,” Davies said.

The next shoe to drop on the development of the system will come within the next couple weeks. That’s when Commodity Futures Trading Commission member Scott O’Malia said a decision will be announced on what organization or organizations will handle the registration and issuance of ID codes for the swaps markets it will oversee. O’Malia said at SIFMA Tech Tuesday that the decision among what industry executives say are four competing proposals will come “very soon.”

Srinivas Bangarbale, the CFTC’s Chief Data Officer, said Wednesday that the regulator’s “interim compliant identifier” will support the ISO 17442 standard set out by the FSB and ISO. r

It’s decision to move ahead “presupposed the standard” and that the chosen implementing group would “adopt the standards as published.” The CFTC will not directly or indirectly create another set of reference data for the industry to keep track of

“It’s important to use the standard as soon as possible,” he said, however.

O’Malia said the CFTC is likely to begin issuing IDs as early as September. That is so the commission can fulfill its mandate to oversee interest-rate and credit-default swap markets, as mandated by the 2010 Dodd-Frank Wall Street Reform Act.

The FSB’s implementation schedule calls for a functional system to be ready to use by March 2013.

Source: Securities Technology Monitor, 20.06.2012 by Tom Steinert-Threlkeld

Filed under: Data Management, Reference Data, Standards, , , , , , , , , ,

June 9, 2012 • 11:28 pm 0

LEI : FSB recommends 3-Tier System for Issuing Global Identifiers

The Financial Stability Board will recommend to the G-20 industrial nations that a three-tier structure involving local registration authorities be established for registering and issuing 20-character codes that will identify participants in financial transactions, worldwide.

In a report released Friday morning, the FSB said it will recommend that national financial authorities set up a system that gives overall responsibility to a Regulatory Oversight Committee, creation, integration and maintenance of a unified databased of the codes to a Central Operating Unit, and registration of legal entities to receive the codes to Local Operating Units .

A central database of the identifiers is seen as fundamental to helping regulators watch for risks to the global financial system. A 20-character code has been set out as the basis for the code, known as a Legal Entity Identifier, by the International Organization for Standardization; and, backed by the FSB, which has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies.

Legal Entity Identification and Code

A number of different technology and communications organizations are expected to vie to operate the Central Operating Unit.

The Securities Industry and Financial Markets Association and 16 other trade associations have put their weight behind the Depository Trust and Clearing Corporation and the Society for Worldwide Interbank Telecommunications as the “dream team” assembled for creating the technology and operations that would act as the “linchpin” as SIFMA executive vice president Randy Snook puts it for managing and regulating financial system risk, globally.

Also in the hunt is a New York financial industry consultancy, Financial InterGroup, which has proposed a “federated” approach to the issuance of the codes. That would involve allowing nations to set up their own registration authorities, that would feed the codes into the centralized database.

The three-tiered structure, which includes both centralized and localized operations, will be proposed 10 days from now to leaders of the G-20 industrial nations. They are holding a summit in Los Cabos, Mexico, from June 18 to 20.

“This system would be a ‘building block’ for many financial stability and regulatory objectives, and it would deliver substantial benefits to financial firms,” FSB Chairman Mark Carney said.

The Central Operating Unit will create “ global operational standards and protocols that deliver: global uniqueness of the LEI; seamless, open access to the global LEI and to high quality reference data for users (with the depth of access controlled by appropriate access rights1); as well as protocols and methods for how local systems can connect” to the central unit.

Local Operating Units would be handle local registration, validation, and maintenance of reference data and protect information that must be stored locally.

The FSB plan calls for the system to start operating by the end of this year and operate on a self-standing basis by March 2013.

See detailed FSB Recommendations

The self-standing part will come from two proposed sources of ongoing funding: a local discretionary charge; and a common fee for support of central functions of the COU and ROC.

Early “seed-corn” funding could come from charitable foundations, loans from interested financial institutions and private companies.

that are interested in the area about funding a global LEI foundation which will form the COU12 – other options, which could be complementary, include loans from IFIs or from the private sector).

The 20-digit alphanumeric code, covered by ISO standard 17442:2012, would be linked to reference data about each market participant that would include:

  • The official name of the legal entity
  • The address of the headquarters of the legal entity
  • The address of legal formation

Among other pieces of information. Those core pieces of information can then be tracked using the code across all financial transactions, worldwide.

The G-20 may either assign the FSB the task of preparing and endorsing the Charter, or could decide to undertake the final endorsement itself at the Finance Ministers and Central Bank Governors meeting in November. Endorsement of the Charter will establish the ROC11.

A technology stream, the FSB said:

“will undertake preparatory work with a wide range of private industry representatives interested in joining a global industry LEI foundation consultative group13 to develop a central platform that will facilitate the integration of a local identification schemes (whether currently existing or emerging) into a logically centralised database of unique LEIs based on consistent standards, protocols, procedures etc that appears seamless to users.”

FSB Implementation Timeline.

Source: Securities Technologies Monitor, 08.06.2012

Filed under: Data Management, Library, Reference Data, Standards, , , , , , , , , ,

July 30, 2009 • 7:29 am 0

SWIFTNet goes live in Hong Kong for high-value payments

SWIFTNet went live on 25 May as Hong Kong’s financial messaging platform for Clearing House Automated Transfer System (CHATS) payments as the Hong Kong Monetary Authority (HKMA) switched from its proprietary network to SWIFT. The HKMA and Hong Kong Interbank Clearing Limited (HKICL) decided in 2006 that they would implement the new open platform and replace their proprietary platform.

“This is a classic example of why a market infrastructure moves from a proprietary platform to SWIFT,” said Esmond Lee, Executive Director of the HKMA’s Financial Infrastructure Department. “The benefits of moving to a platform already used by most of the banks were clear.” Most of the real-time gross settlement (RTGS) participating banks have been using SWIFT for international payments for many years.

The HKMA added that interoperability is another key benefit of SWIFTNet. For example, incoming domestic messages received by the banks in Hong Kong can now be automatically converted into the RTGS message, just as these firms were already doing for international transactions. According to John Laurens, Head of Global Payments and Cash Management, HSBC Asia Pacific, “HSBC sees strong value in having the Hong Kong RTGS infrastructure adopt SWIFT as its connectivity platform.

Not only does it allow banks to streamline their back office environment, but it also provides Hong Kong with a future-proof infrastructure. It also allows for the seamless end-to-end transmission of information, thereby strengthening the value proposition for our customers.” Michael Cheung, head of North Asia, SWIFT, who started the SWIFT project back in 2006, added, “The implementation further establishes Hong Kong’s position as a major financial centre in Asia, and provides a platform for future growth for Hong Kong-based institutions as well as institutions from across Asia to use Hong Kong’s platform to grow their cross-border activity.

Besides HK dollars, HK RTGS participants can use their SWIFT connection to clear US dollars, euro and renminbi through Hong Kong for more efficient linking with their foreign counterparties, who are also using SWIFT.”

“The platform also provides significant opportunity for increased certainty, efficiency and cost reductions for SWIFT customers and firms because they are all using the same standards and platform for both their domestic and international transactions,” said Mr. Cheung. “Standardisation leads to major improvements in interoperability, also as demonstrated by TARGET2 in Europe.”

By mid-2010, SWIFTNet InterAct and Browse functions will be added to the platform. Customers will be able to use these two additional features to benefit from the interactive and query services available from SWIFT. Average daily traffic expected from the SWIFTNet platform is around 100,000 messages, mainly generated from the 30,000 payment transactions that have moved to SWIFT from the former proprietary platform.

Source: SWIFT 31.07.2009

Filed under: Asia, Hong Kong, News, Services, , , ,

July 10, 2009 • 3:20 am 0

SWIFT appoints Michael Cheung as Head of North Asia

Hong Kong, July 14 2009 – SWIFT, the financial communications and messaging platform provider, has appointed Michael Cheung as its new Head of North Asia, responsible for  all commercial activities in North Asia, covering Greater China, North and South Korea, Vietnam, and The Philippines .

Michael retains his responsibilities as Head of China at SWIFT in Beijing, where he was tasked with expanding the influence and impact of SWIFT on the financial industry in China across the banking and securities sectors. He will share his time between Beijing and Hong Kong and reports to Ian Johnston, Chief Executive for SWIFT Asia Pacific.

With more 20 years’ experience in the financial industry, Michael became SWIFT’s Head of China in 2007. He first joined SWIFT in Hong Kong in 1992 with responsibility for sales in Asia Pacific. In 1998, he set up SWIFT’s Beijing office and has been the Chief Representative since then. In 2003 he returned to SWIFT Hong Kong to head the commercial team and work on the Hong Kong RTGS and various payment systems projects in the region.

Before moving to SWIFT, Michael worked for several multinational IT companies in Hong Kong, where he held sales and marketing positions focused on the financial services industry. He holds an Honours degree in Electrical and Electronics Engineering from the University of Bath in the UK, as well as an MBA and Masters degree in China Business Studies.

Michael replaces Neil Stevens, who has been head of North Asia at SWIFT since August 2006 and now returns to a senior management role at SWIFT’s headquarters in Belgium.

Source: SWIFT, 10.07.2009

Filed under: Asia, China, News, , ,

May 29, 2009 • 10:17 am 0

DTCC, Swift and XBRL US team on corporate actions processing

The Depository Trust & Clearing Corporation (DTCC), Swift and XBRL US have joined forces in a bid to improve communications between issuers and investors for corporate action announcements in the US market.

The partners claim they will “fundamentally change” corporate actions announcement processing, bringing greater accuracy, and reduced risks and costs by improving transparency and communication between issuers and investors.

The firms say that on average, approximately 200,000 corporate actions such as dividends, bond redemptions, rights offerings and mergers are announced each year by publicly traded companies and other issuers or offerors in the US.

Because the processing of these announcements throughout the corporate actions lifecycle is mostly handled manually, these practices remain beset by error-prone, time-consuming inefficiencies, creating the potential for heavy losses and significant negative impact on investors.

The partners cite a 2006 study from research firm Oxera which found losses on corporate actions worldwide were between $400 and $900 million each year.

The group’s plan, outlined in a statement of direction, will look to build on the existing ISO standards by integrating the benefits of XBRL electronic data tagging technology, already used by public issuers in the US, to streamline the processing of corporate action announcements.

The three organisations will work together on a corporate actions taxonomy, or classification, aligned with ISO 20022 repository elements.

This new taxonomy will support a seamless transition from issuer-generated documentation to data, using XBRL technology, enabling issuers to tag or electronically capture and identify key data, such as the terms of a reorganisation when preparing documents for a corporate action.

The data “tags” and elements will be aligned with ISO 20022, permitting XBRL-tagged data to be readily converted.

Swift will roll out the new ISO 20022 corporate actions messages on a global basis, which builds on the efficiencies gained through ISO 15022 adoption.

DTCC will make all corporate action announcements it publishes available in the ISO 20022 format beginning in 2010. All existing legacy publication files will be decommissioned by 2015.

Chris Church, CEO, Americas and global head of securities, Swift, says “our initiative will increase the return on investment for the industry’s existing market infrastructures by bringing greater efficiencies and reducing the costs and risks associated with processing corporate actions. Manual interpretation, re-keying and manual exceptions in corporate action processing will be significantly reduced.”

Source: FINEXTRA, 28.05.2009

Filed under: Corporate Action, Data Management, News, Reference Data, Risk Management, Services, Standards, , , , , , , ,

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