DTCC Hits LEI Milestone

A utility operated by the Depository Trust and Clearing Corporation (DTCC) has issued more than 200,000 legal entity identifiers (LEIs), the company has announced.

The Global Markets Entity Identifier Utility (GMEI) has issued these LEIs to entities from 184 jurisdictions since its launch in 2012, according to a DTCC statement, representing a 20% uptick year-on-year. The GMEI has issued about half the world's LEIs and roughly three times more than the next biggest Local Operating Unit (LOU).

Ron Jordan, managing director of data services at the DTCC, says the LEI concept has now achieved momentum and maturity.

"The LEI system is up and running, the Global LEI Foundation (GLEIF) is established, and the LOUs are going through the accreditation process as we speak. We are one of 26 and counting all around the globe.

"The LEI system is now established with more regulatory mandates. This is real and it's a big deal. It's hard for the global community to get to the point where something is widely adopted like this, where it's free to use and unencumbered in its use. It will help both firms and regulators look at counterparty risk in the way that is needed, so this is an achievement."

LEI adoption is largely driven by regulation, and Jordan says he hopes that regulators will continue to endorse the use of the identifier, and extend these endorsements to other regions and asset classes. He insists that the GMEI is equipped to handle a run on LEI as market participants realize that time is running out to register ahead of regulatory deadlines.

"We have lots of capacity built into the system. We can scale up immediately if needed, as we did before EMIR [the European Market Infrastructure Regulation]," he says.

While the GLEIF, the DTCC and other stakeholders celebrate the increasing adoption of LEIs, some have argued that entities are allowing their LEIs to lapse, which presents a data quality issue.

Jordan responds: "We have to remember what 'lapsed' means. Lapsed is an indicator that the registrant has not come back in to renew their record within a year of registering. They are required to do that for two reasons: to take a look at the data and let us know if anything has changed; and to pay for their annual renewal, which is part of the funding mechanism of the LEI system.

"If a registrant does not come back to do that, remember that any record in the database is publicly available and anyone in the world can challenge it at any time. We take that challenge and revalidate that record in the marketplace so that it's up to date. So a lapsed record is not necessarily a record that hasn't been reviewed," he says Jordan.

He adds that some regulations require not only that entities register for an LEI but also that they keep their LEIs up to date, so this will become less of an issue with more regulatory adoption.