June 10, 2013

CFTC Provides For Mutual Acceptance of Approved Legal Entity Identifiers

Washington, DC — The Commodity Futures Trading Commission (CFTC) has issued an Amended Order expanding, through mutual acceptance by international regulators, the list of Legal Entity Identifiers (LEIs) that can be used by registered entities and swap counterparties in complying with CFTC’s swap data reporting regulations. The Amended Order revises CFTC’s order of July 23, 2012, which directed all registered entities and swap counterparties required by CFTC rules to use LEIs in swap recordkeeping and swap data reporting to use LEIs—currently known as CFTC Interim Compliant Identifiers (CICIs)—provided by DTCC-SWIFT, the utility designated by the CFTC as the provider of LEIs until establishment of the global LEI system.

As a member of the international LEI Regulatory Oversight Committee (ROC), the CFTC is participating in the ongoing establishment of the global LEI system. WM Datenservice, a European utility sponsored by a ROC member, which like DTCC-SWIFT may become a Local Operating Unit (LOU) of the global system, has now begun issuing LEIs—currently called General Entity Identifiers (GEIs)—that, like the CICI, are anticipated to become LEIs in the global system. Other utilities sponsored by ROC members may follow. In addition, derivatives data reporting is scheduled to begin in the European Union in September 2013.

In these circumstances, cooperation between regulators is needed to ensure that a single legal entity is identified by only one LEI. To this end, the Chairs of the ROC recently asked the CFTC and the European Securities Markets Authority (ESMA) to take the action necessary to provide for mutual acceptance, for use in data reporting under their rules, of the LEIs now issued by either DTCC-SWIFT or WM Datenservice, and for mutual acceptance of other LEIs later approved by the ROC as globally acceptable.

CFTC’s Amended Order provides for the mutual acceptance requested by the Chairs of the ROC, effective as soon as the conditions essential to mutual acceptance are fulfilled. First, under the Amended Order, as soon as ESMA informs CFTC that CICIs are accepted for data reporting under ESMA’s reporting rules, registered entities and swap counterparties will be able to use either a CICI or a GEI in swap data reporting under CFTC rules. Second, LEIs issued by another utility sponsored by a ROC member will become usable under CFTC rules as soon as CFTC receives the necessary assurance that such LEIs comply with applicable international standards and that authorities accepting such LEIs for data reporting will also accept CICIs. Finally, once the ROC adopts standards for global acceptability of pre-LOUs and the LEIs they issue, and has approved pre-LOUs and pre-LEIs including DTCC-SWIFT and CICIs as globally acceptable, registered entities and swap counterparties subject to CFTC rules will be able to use either CICIs or other identifiers (including GEIs) approved by the ROC as globally acceptable.

Last Updated: June 10, 2013