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Association of National Numbering Agencies scrl
ACSDA General Assembly
Santiago – Chile – April 4, 2014
ANNA & Legal Entity Identifier (LEI)
Martin Paladino
ANNA Marketing Director
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Agenda
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ANNA and its membership
ANNA’s role in the international standardization
Legal Entity Identification
The LEI Solution
ANNA and the LEI Project
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ANNA Overview
 ISIN Standard was developed in the 1970’s
 ANNA formed from group of ISIN Experts
 ANNA founded in 1992 by 22 National Numbering Agencies
 ANNA <-> ISO: interactive relationship
 More than 20 years of constant membership growth
 Formation of ASB as single ISIN database for all NNAs
 Registration Authority (RA) for ISIN, CFI
 Possible additional RA functions for new standards
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ANNA Members
 Total full ANNA memberships (per 31 Dec 2013):
 84 National Numbering Agencies;
 ANNA Partners (as of 31 Dec 2013): 31 organisations
 ISIN coverage in excess of 120 countries
Overview of Membership by Business
Stock Exchanges
25
Data Vendors
3
CSDs/ICSDs
48
Regulatory Bodies
4
Central Banks
4
Total
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84
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ANNA Mission Statement
ANNA (the “Association of National Numbering Agencies”)
is fully committed to proactively promoting, implementing,
maintaining and making available, standards for securities
and related financial instruments, in a uniform and accurate
structure for the benefit of their home markets and of the
securities industry as a whole.
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ANNA – The Standardisation Competence
As the Registration Authority for ISO 6166 (ISIN) and ISO 10962 (CFI),
ANNA is empowered by ISO to carry out its duties with respect
to the two standards.
This illustrates the close working cooperation required both directly
and indirectly among ISO as our governing body, the SC4 membership
(the responsible ISO sub-committee focused on ISO standards
related to financial instruments) and ANNA as the entity responsible for
the implementation of the standards.
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LEI Legal Entity Identifier - Background
• Long standing issues with risk and exposure management
- unequivocal identification, including company hierarchies, is critical for
risk assessment, systemic analysis, compliance, money laundering
prevention
• No unique identifier, similar to the ISIN, for legal entities
- use of proprietary identifiers (e.g. BIC codes, Tax numbers)
- identification based on address data only is prone to error
• Several previous attempts to create a standardized method for
identifying legal entities
- International Business Entity Identifier - IBEI (ISO 16372 – 2004)
* scope too broad
- Issuer & Guarantor Identifier – IGI (ISO 16372 – 2010)
* on hold pending GLEIS
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Challenges
• Regulators working in isolation
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regulators unable to cross-reference and carrying out analysis on a
global basis
• Implementation cost & timeframe
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how should the costs be covered?
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global adoption of an international standards can take years
• Scope and coverage
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too many companies worldwide
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some companies are deliberately non-transparent
• Data quality and governance framework
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how can adequate data quality be ensured?
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Driving the LEI Initiative forward
• Office of Financial Research (OFR, a U.S. Treasury Department)
issued a policy statement with a deadline on 31 January 2011, on the
requirements for a global and universal legal entity identifier for reporting
• G20 (Cannes Summit, Nov. 2011) “We support the creation of a global
legal entity identifier (LEI) which uniquely identifies parties to financial
transactions. We call on the FSB to take the lead in helping coordinate work
among the regulatory community to prepare recommendations for the
appropriate governance framework, representing the public interest, for such a
global LEI by our next Summit.”
• Financial Stability Board (FSB) responsibility for coordination of the
process to implement a Global LEI System
• International Standards Organisation (ISO) development of
international standard ISO 17442 Legal Entity Identifier; published in June
2012 and selected as the format for the identifier Global LEI System
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Driving the LEI Initiative forward
• Regulators mandating the use of LEIs for the reporting of
counterparties of derivatives transactions to trade repositories:
– Commodities and Futures Trade Commission (CFTC) imposed
regulation requiring parties engaging in swap trades with companies in
the U.S. to provide a legal entity identifier from April 2013
– European Securities Markets Authorities (ESMA) introduction of
the European Market Infrastructure Regulation (EMIR) requiring LEI for
reporting scheduled for implementation Feb 2014
• The Regulatory Oversight Committee (ROC):
– Committee of authorities from around the world
– Established after recommendations by the Financial Stability
Board (FSB)
– Endorsed by the Group of 20 (G20)
– Implementation of the official Global LEI System (GLEIS)
– Authorization of Pre-LOUs
– Establishment of the Central Operating Unit (COU)
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LEI Scope and Coverage
• all financial intermediaries;
• banks and finance companies;
• all entities that issue equity, debt or other securities for other capital
structures;
• all entities listed on an exchange;
• all entities that trade stock or debt, investment vehicles, including
mutual funds, pension funds and alternative investment vehicles
constituted as corporate entities or collective investment agreements
(including umbrella funds as well as funds under an umbrella structure,
hedge funds, private equity funds, etc.);
• all entities under the purview of a financial regulator and their affiliates,
subsidiaries and holding companies;
• counterparties to financial transactions
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LEI Structure
20 character code - allocated in accordance with ISO 17442:2012
XXXX XX XXXXXXXXXXXX XX
4 char
LOU code
2 char
reserved
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12 char entity
identification
2 char
checksum
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LEI Minimum Data Set
The following set of reference data attributes are regarded as the
minimum set of information that should be available at the launch of the
LEI as specified in ISO 17442:2012:
1.
2.
3.
4.
5.
6.
7.
The official name of the legal entity;
The address of the headquarters of the legal entity;
The address of legal formation;
The date of the first LEI assignment;
The date of last update of the LEI;
The date of expiry, if applicable;
For entities with a date of expiry, the reason for the expiry should be
recorded, and if applicable, the LEI of the entity that acquired the
expired entity;
8. The official business registry where the foundation of the legal entity
is mandated to be recorded on formation of the entity, where
applicable;
9. The reference in the official business registry to the registered entity,
where applicable.
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Pre-LOU Principles
• Financial Stability Board & Regulatory Oversight Committee Principles
to be observed by Pre-LOUs* (27July 2013) – Compliant with ISO 17442:2012
– Self-registration
– Uniqueness and exclusivity
– Portability
– Relevant Pre-LEI survivor
– Compatible reference data
– Historical data
– Data quality
– Open access to Intellectual Property (IP)
– Flexibility
– Federation
– Standards
* Document - Principles to be observed by Pre-LOUs that wish to integrate into the Interim Global LEI System (GLEIS) dated 27 July 2013
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Cost Recovery
• Financing of the Global LEI System is on the basis of cost recovery
– Registering entities provide payment for LEI allocation to LOUs
– LOUs contribute funding to the establishment and maintenance of COU
• Cost recovery factors
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Validation process
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Revalidation during the year (for instance due to a corporate action)
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Technological infrastructure for registration and publication (hardware,
software, operation)
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Mail and telephone support
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Development of the portal, adapting to the regulatory requirements
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Provision for necessary investments and system enhancements
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Pre-LOU Sponsorship & Endorsement Process
1. Local regulator must be a full member of the ROC
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ROC Observer status is inadequate
2. Review requirements and obligations
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Principles can be met
Consideration to allocation scope and coverage
3. If Principles can be met, approach local regulator for sponsorship
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Demonstration of adherence to Principles may be required
4. Regulator must contact ROC Secretariat and apply for allocation of
a pre-LOU prefix
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Local regulator will act as Sponsor
Pre-LOU prefix will be published on ROC website
5. Pre-LOU commences allocation of pre-LEIs
6. For pre-LEIs to be globally accepted the pre-LOU must obtain
endorsement from the ROC
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Demonstration of adherence to Principles
Process takes approximately 30 days
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NNAs with Pre-LOU Status
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As of 12/03/2014 22 Pre-LOUs were sponsored and received a prefix by the
ROC. 9 of these are NNAs:
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WM Datenservice (Germany)
Irish Stock Exchange (Ireland)
Palestine Securities Exchange (Palestine)
Takasbank (Turkey)
National Settlement Depository (Russia)
London Stock Exchange (United Kingdom)
Krajowy Depozyt Papierów Wartościowych S.A. (Poland)
Centralni Depozitar Cennych Papiru (Czech Republic)
Centralny Depozitar Cennych Papierov (Slovakia)
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Currently 14 pre-LOUs are operational, of these, 7 are NNAs (highlighted in
bold above).
- All NNA Pre-LOUs have been endorsed by the ROC: pre-LEIs globally
accepted
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ANNA has set up a Working Group ((WG5) for those NNAs considering or
intending to become a pre-LOU
- All NNA Pre-LOUs are part of WG5 to share their expertise
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Pre-LOU Validation Requirements
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Self-registration
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Entity eligibility
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Ensure entity type and legal form is eligible for LEI allocation
Duplicate avoidance
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Registrant must be authorised to request the LEI on behalf of the entity
Check for duplicates in local and other pre-LOU databases
Data record validation
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Check business register (legal name, legal form, address)
Entity type specific check steps for investment funds and corporations of
public law
Only following successful completion of all validation stages can a
pre-LEI be allocated
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The same validation process applies for initial registrations &
renewals
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Data Consistency
How do you ensure that the data received from an applicant is
compatible with your systems with respect to the particular format
used, the data conventions employed or the specific fields
required?
• Mandatory field requirements in online forms for the registrant data
and LEI data record
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Ensure data record and minimum data is complete
• Dropdown selection lists
–Consistent use of data
–Minimises input errors
• Use of ISO standards where possible
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Country fields
Date formats
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Registrant Validation
How do you ensure that the data has been received by an
individual who is authorised to act on behalf of the applicant?
•User registration process requiring population of mandatory fields
confirming registrant name, company name, address, title, email
address and telephone number
– Validate function of applicant against business registers
– Validate in the Power of Attorney the signed person against a public
list of authorized signatures
– Cross-reference registrant profile with entity details in pre-LEI request
– Completion of registrant authorisation form
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Data Validation
How do you ensure that the reference data received from the
registrant is accurate?
• Validation and cross-referencing against official public sources and
legal documentation
– Business registers
– Legal form documentation e.g. prospectus, trust deeds, partnership
agreements
– Annual reports
– Regulator records
– Exchanges and trading venues
– Regulatory disclosures
– Numbering Agency data
– Data vendors
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Association of National Numbering Agencies scrl
Questions?
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