OFR's sec finance data collections to require LEIs

OFR's sec finance data collections to require LEIs

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 regulatory reporting.

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 systems".

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 already.

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 transaction. 

Most Popular