Future repo and securities lending data collections by the
US Treasury's Office of Financial Research (OFR) will require
firms to use Legal Entity Identifiers (LEIs).
Speaking in Washington DC on Thursday, OFR director Richard
Berner called on US financial regulators to mandate the LEI in
He also urged the industry to amplify support for LEIs and
added that the OFR will propose requiring the LEI in repo and
securities lending data collections going forward.
Essentially bar codes for identifying parties to financial
transactions, LEIs help make the flood of data flowing in the
financial system easier to compare and share.
An LEI code that identifies a legal entity is similar in
concept to how an ISIN identifies a security.
Last year the OFR published a three-day snapshot of
securities lending activity, capturing a significant share of
total US securities lending activity having received data from
seven major lending agents.
The pilot study followed a similar exercise by the OFR on
bilateral repurchase agreements (repos), another crucial part
of the financial system.
OFR's Berner said that more comprehensive data collection
exercise will soon get soon underway.
"The LEI helps us answer the first of three basic questions
about the financial system: Who is who? Who owns whom? Who owns
what?," he added, speaking this week at the Financial Data
Summit hosted by the Data Transparency Coalition.
In Europe, the upcoming Securities Financing
Transactions Regulation (SFTR) will require the use of global
LEIs to identify all of the legal entities involved in an
securities finance trade.
Last year securities finance vendor Pirum said it is likely
that "few, if any, SFT market participants are currently using
LEI codes to identify participants to SFTs in their existing
The firm added that the industry’s existing
Agency Lending Disclosure (ALD) process will need to be updated
to use standardised global LEI codes.
However, LEI codes are already mandated for derivatives
reporting, so any market participants involved in European
derivatives are likely to have been issued an LEI code
SFTR also mandates the use of unique trade identifiers
(UTIs) so that each SFT has its own identifier, thereby
enabling the regulators to pair together the separate
transaction reports from both sides of the