OTC derivatives data reporting requirements – is this a dotLEI showcase?
http://www.bis.org/publ/cpss100.htm for the publication – and read our comments to understand the reasons that this could become a dotLEI or better dotLegID.
financial TLDs
connecting the dots of the financial world
ICANN feed
- March 29 Reg. Deadline Q&A w/ Michael Salazar & Robb Antrobus March 8, 2012 Michele Jourdan
- Video Blog March 2, 2012 Michele Jourdan
- ICANN Stands Ready for New gTLD Launch January 9, 2012 Rod Beckstrom
We read with interest the report of the Committee on Payment & Settlement Systems called “OTC derivatives data reporting and aggregation requirements”, published in January 2012.
The report outlines ideas to implement Legal Identifiers “LEI” to identify counterparties in order to reduce settlement risks and improve reporting. Central solutions and central databases for Legal Identifiers have had many implementations – D&B Numbers, SWIFT Codes, BIC Codes, Company Registration Codes, VAT Codes and so on.
None of these systems fulfill the set objectives of uniqueness, neutrality, reliability, open source and extensibility. We believe major restrictions of existing systems are due to:
1. restricted competition
2. “sole provider” administrative bottlenecks
3. no acceptance outside regional boundaries
4. heavy multilateral synchronization issues
5. providers restricting access to the information (to sell onwards)
It is no surprise that a system of ACCREDITED entities is preferred, who can be many in a large country. Oversight is with one entity, and accreditation is based on size and competition issues. Examples are “mobile licenses”. These systems are, however, still restricted, and issues 3, 4 & 5 are not really solved.
We strongly believe that for “LEIs” the best solution would be a DOMAIN based system, making use of the ICANN Registry-Accredited Registrar model . The system has the advantage that it is global and can be implemented very decentralized, with the highest level of integrity, accessibility and control. Only unique domain names can exist at any time. Today’s domain registration systems (“whois”) register, change, delete and renew hundreds of millions of domains since many years in a very reliable modus operandi.
As a pre-requisite, a LEI DOMAIN should only be registered when the applicant uses an FSA ACCREDITED registrar anywhere in the world. The registrar checks the applicant, and is supervised by the registry and Financial Services Authority.
The largest benefit would however accrue from the PUBLIC OVERSIGHT, since anybody being able to access the Internet can verify the LEI DOMAIN information and can raise a concern or objection of non-valid data to the registrar-registry. Information to be placed is template-like (see http://telnic.tel as example) and transparent due to the nature of the Internet.
LEI DOMAIN content (the necessary information the counterparty must provide) is accessible at no cost by all people being able to use the Internet – and multilateral synchronization issues are solved through the Domain Name System (DNS).
LEI DOMAIN information can be updated real time. If the Registrant or Registry “pulls the plug” on LEI DOMAINS, i.e., they are no longer valid counterparties – this action can be seen the very same moment it happens around the world. Uniqueness, neutrality, reliability, open source, and PUBLIC PROPAGATION AND VISIBILITY (transparency) are typical benefits of the DNS.
Which central system would allow this to happen at minimal cost for the involved?
As a new solution possible as of 2012, is to apply to ICANN to register .LEI as a Top Level Domain.
For the purpose of communicating the idea we framed it “.LEI” but also believe it should be changed to something more appropriate, such as “.legid”. Registering LEI counterparties on a worldwide basis with domain names can be globally implemented in less than a year. We believe the implementing entities should be seriously looking into a new global TLD to register and maintain LEIs and the reporting of TRs.