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Creating a Linchpin for Financial Data: The Need for a Legal Entity Identifier

John A. Bottega

Federal Reserve Bank of New York

Linda F. Powell

Board of Governors of the Federal Reserve System

December 10, 2010

The financial industry, like many others, is powered by information and data. A number of government agencies, quasi-government agencies, and private companies collect, process, use, and distribute information about a variety of players in the financial world. While the subjects of the data (balance sheet items or counterparty information, for example) may vary dramatically by agency and use, they all describe a particular financial institution or legal entity. Yet a standard way to uniquely identify one financial entity from another does not currently exist. A Social Security number distinguishes one John Smith from another John Smith, but at present no single identifier distinguishes one First National Bank from another. Several private companies have developed proprietary identifiers created for their own purposes but none of those identifiers are industry-wide, universal, or strictly focused on identifying a specific institution.

A diverse group of analysts from the Board of Governors of the Federal Reserve System, Federal Reserve Bank of New York, Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC), and Treasury have developed guidelines detailing the best way the industry might create, develop, and maintain such a crucial identifier. The paper summarizes the current environment of entity identification and the problems that are currently encountered in both the private and public sectors by the lack of an industry-wide identifier. The paper identifies the key components that should be incorporated into the LEI such as uniqueness, persistence, and public availability. The paper identifies possible alternative approaches to solving the LEI problem and supports a collaborative public and private sector approach. The paper also considers the need for an international solution, as financial markets grow ever more interconnected across the globe.

Number of Pages in PDF File: 19

Keywords: legal entity identifier, LEI, reference data, metadata

JEL Classification: G14

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Date posted: December 12, 2010 ; Last revised: December 16, 2010

Suggested Citation

Bottega, John A. and Powell, Linda F., Creating a Linchpin for Financial Data: The Need for a Legal Entity Identifier (December 10, 2010). Available at SSRN: https://ssrn.com/abstract=1723298 or http://dx.doi.org/10.2139/ssrn.1723298

Contact Information

John A. Bottega
Federal Reserve Bank of New York ( email )
33 Liberty Street
New York, NY 10045
United States
212-720-5922 (Phone)
Linda F. Powell (Contact Author)
Board of Governors of the Federal Reserve System ( email )
20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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