NEW YORK -- (BUSINESS WIRE) -- The Depository Trust & Clearing Corporation (DTCC) and SWIFT announced today that their global legal entity identifier (LEI) solution has progressed at a robust pace since its August, 2012 launch with more than 47,000 entities from 125 countries registered in the US Commodity Futures Trading Commission (CFTC) Interim Compliant Identifier (CICI) database.
Developed in collaboration with the industry, the CICI utility solution creates and assigns unique identifiers to any financial organization that engages in a transaction, and stores and validates the accuracy of the associated reference data. The solution offers the industry a tool for complying with recently implemented swap data reporting regulations.
“Since the 2008 financial crisis, widespread support has grown for the creation of a unique LEI as a way to help firms and regulators assess systemic risk,” explained Ron Jordan, DTCC Managing Director and Chief Data Officer. “Initially, these identifiers served as a global tool to quickly identify parties to over-the-counter (OTC) derivatives trades across financial markets and jurisdictions. But, now, we are very pleased that our solution has been well-received by the industry and is also being used to comply with recently implemented swap data reporting regulations.”
In July 2012, the CFTC designated the DTCC/SWIFT solution as an interim CICI utility that would be able to issue identifiers to firms involved in OTC derivatives trading, and would ultimately comply with the global framework for a system being designed under the auspices of the Financial Stability Board (FSB) and the G20. The CFTC designated the CICI Utility as the source for CICIs to be used in swap data recordkeeping and reporting under CFTC rules, after evaluating all candidates with respect to their ability to meet the requirements established by CFTC’s data reporting rules and comply with the global principles established for LEIs. DTCC and SWIFT are industry-owned and governed utilities. The CICI utility maintains global operations, and is not designed solely for the US market or for OTC derivatives; it was architected to support all asset classes and jurisdictions to provide an LEI wherever needed.
Identification of legal entities is recognized as a critical element to aid regulators and financial market participants alike in measuring and managing systemic risk. The requirement to provide an LEI is increasingly found in regulatory rulemaking around the globe as a key data element needed in G20-mandated OTC derivatives reporting. The use of LEIs is also emerging in other regulatory data collection rulemaking proposals across asset classes. The CICI utility established by DTCC and SWIFT issues identifiers compliant with International Organization for Standardization (ISO) 17442 LEI standards.
“The utility has been developed on a flexible infrastructure to easily adapt to evolving industry and regulatory requirements globally,” said Paul Janssens, LEI Programme Director, SWIFT. “With just about 50 percent of the records representing US entities, we are pleased to report a high adoption rate of the solution by the international financial community.”
CICIs in Action
All swap counterparties subject to CFTC jurisdiction must have CICIs, which are required for recordkeeping as well as for data reporting. CFTC’s swap data reporting rules require that both counterparties to a swap be identified by a CICI when the swap is reported to a swap data repository. Dec. 31, 2012, was the deadline for swap dealers to register with the CFTC and begin reporting credit and interest rate transactions.
Reporting of equity, foreign exchange, and other commodity swaps by swap dealers begins on Feb. 28, 2013. By April 10, 2013, all swap counterparties subject to CFTC jurisdiction, including non-swap dealer/non-major swap participant counterparties, are required to register for a CICI, or to certify their own CICI records if registered with assistance of another party.
“CICIs are instrumental in improving transparency, efficiency and risk mitigation in the global marketplace,” explained Bill Hodash, DTCC Managing Director. “DTCC will continue to work closely with the global financial services industry and global regulatory community, including the newly established Regulatory Operating Committee, to gain consensus around the design and implementation of the global LEI solution. In the meantime, the assignment of CICIs is a key step forward in managing risk in the OTC derivatives markets, and CICIs will transition into LEIs, subject to meeting the agreed global LEI standards.”
CICI 2012 Highlights
Through multiple operating facilities and data centers around the world, DTCC and its subsidiary companies automate, centralize, and standardize the processing of financial transactions for thousands of institutions worldwide. With 40 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry, simplifying the complexities of clearance, settlement, asset servicing, global data management and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, derivatives, money market instruments, syndicated loans, mutual funds, alternative investment products, and insurance transactions. In 2011, DTCC’s subsidiaries processed securities transactions valued at approximately US$1.7 quadrillion. Its depository provides custody and asset servicing for securities issues from 122 countries and territories valued at US$39.5 trillion. DTCC’s global OTC derivatives trade repositories record more than US$500 trillion in gross notional value of transactions made worldwide across multiple asset classes.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 10,000 banking organisations, securities institutions and corporate customers in 212 countries and territories. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.