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LEI – Legal Entity Identifier

LEI – Legal Entity Identifier. 27 March 2012. Why a Legal Entity Identifier ?. Driver: New regulatory framework for swaps (US, Canada, Hong Kong, Australia and Europe) US regulation comes into effect on July 16th 2012 Goal: Reduce systemic risk Increase transparency

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LEI – Legal Entity Identifier

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  1. LEI – Legal Entity Identifier 27 March 2012

  2. Why a Legal Entity Identifier ? • Driver: • New regulatory framework for swaps (US, Canada, Hong Kong, Australia and Europe) • US regulation comes into effect on July 16th 2012 • Goal: • Reduce systemic risk • Increase transparency • Promote market integrity within financial system • How: • Via reporting of all swap transactions and positions to Trade Repositories (TR) Requirement: unique and unambiguous identification of parties involved LEI Update 2012 March

  3. Industry Process - Timeline November 2010 December 2011 July 16, 2012 September 28, 2011 FSB sponsored workshop on global adoption of LEIs CFTC to release swaps rules, likely mandate LEI use in reporting Expected start of swaps reporting using LEIs to meet CFTC swaps regulations Office of Financial Research releases policy statement on LEI Regulator Initiatives December 2010 February 2011 18 July 2011 24 August 2011 4 November 2011 June 2012 Linchpin Group of US regulators releases principles for LEI infrastructure EU Commissioner Barnier calls for global LEI Effort G-20 Leaders declare support for LEI initiative FSB announces support for LEI initiatives IOSCO-CPSS OTC report advocates adoption of LEI FSB Working group to deliver recommendations on LEI solution Regulator Support Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 H1 2012 H2 2012 Ongoing 3 May 2011 31 January 2011 11 July 2011 Industry Response • Continued engagement with global regulators to advocate international use of LEI standard • Industry coalition releases requirements document • Industry coalition releases comment letter on LEI principles & offers to lead development • Industry recommends ISO-SWIFT-DTCC to offer infrastructure , partner w. ANNA May 13, 2011 Summer 2012 Summer / Autumn, 2011 • Solicitation of Interest released calling on potential providers • Solution providers expected to have core solution infrastructure in place • Engagement on implementation, governance and operating model LEI Update 2012 March

  4. LEI definition • LEI = unique ID associated with a single corporate entity • Any party to a financial transaction • No materiality threshold of any type to the issuance of LEIs (e.g., capitalization of legal entity) • Natural persons are excluded from LEI scope • Draft International Standard = ISO 17442 • Structure • 18!an + 2!n (check digit) • LEI does not replace the BIC LEI Update 2012 March

  5. LEI registration and validity • An LEI can be assigned via: • Self Registration • Third Party Registration • Following attributes are requested for submission • Legal name (mandatory) • Address (mandatory) • Entity Status (mandatory) • Ultimate parent LEI (not mandatory for Phase 1) • The LEI record is subject to yearly certification • Both self-registration and certification are subject to payment • A record state indicates the level of validity of the LEI record LEI Update 2012 March

  6. How will it work ? • Self-registration • Third-party registration • Self certification • Data distribution • Processing • Validation • De-duplication WWW LEI • Allocation • Publication LEI Update 2012 March

  7. LEI Record • An LEI record consists of: • One LEI number attribute • One Legal name attribute • One Address consisting of some combination of: PO Box, Floor, Building, Street, City, State, Country and Postcode • One Entity Status attribute • One or multiple Events (event type + timestamp) • None, one or multiple Previous Name attributes • One Record State attribute • One Certification State attribute • One Next Validation Date attribute • None, one or multiple Ultimate Parent attribute • None or one Successor LEI LEI Update 2012 March

  8. What does a LEI look like ? • A LEI record looks like this • A test file containing 4,000+ records and technical documentation is available on GFMA website: • http://www.gfma.org/initiatives/legal-entity-identifier-(lei)/legal-entity-identifier-test-file-download/ LEI Update 2012 March

  9. Next steps • LEI Solution implementation • April: publication third test file, containing 9,000+ records • May: final UAT testing • June: “go live” LEI portal • Regulators • CFTC: • Regulation comes into effect on July 16th • SWIFT, DTCC, ISO & ANNA submitted proposal to CFTC • FSB: • Recommendations to be finalised by end of April • Endorsement by G20 during Mexico summit (June 18-19) • Hong Kong, Australia and Canada • Regulation under construction, probable date of effect: January 2013 • Europe • Discussion paper on technical standards (including notion of LEI) published LEI Update 2012 March

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