The LEI system is an alphanumeric code and associated set of six reference data items to uniquely identify a legally distinct entity that engages in financial market activities. This global standard is endorsed by the G-20 and is consistent with the specifications put forward by the International Organization for Standardization (ISO 17442:2012) in May 2012: a 20-digit code and associated “business card” information.
Successful operation of a global LEI system will require support from the global regulatory community, private sector firms, and industry associations. Thus, the endorsed recommendations define clear roles for the public and private sectors through a “federated” model. Regulators will govern through a Regulatory Oversight Committee (ROC); private industry will participate and consult on the development and operations of a Central Operating Unit (COU); and local implementation will be conducted through Local Operating Units (LOU), which will benefit from local knowledge of infrastructure, corporate organizational frameworks, and business practices. The COU will ensure that all parties that implement the LEI adhere to governing principles and standards, including reliability, quality, and uniqueness, that will result in “one golden standard” for the LEI.
Although the FSB recommendations target March 2013 for operation of the global LEI system, the recommendations allow for some jurisdictions to act as “early adopters.” Before the full global LEI system is established, local jurisdictions may move ahead with identification systems, consistent with the global LEI standard, which will eventually be folded into the global system.