LEI Legal Entity Identifier

Legal Entity Identifier - LEI: Francis Joseph Gross Interview

Francis Joseph Gross, Head of Division, DIV External Statistics at the European Central Bank, discusses key aspects of Legal Entity Identifier – LEI, such as its introduction, implementation and development.

Francis also talks about how Legal Entity Identifiers are going to be driven for further standardisation in the future.

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Transcript:

Interviewer: Hello Francis, thank you very much for joining us today.

Francis Gross: It’s a pleasure, thank you.

Interviewer: Perhaps if you could just introduce yourself and what brings you to FIMA.

Francis Gross: Well I work at the European Central Bank at the external statistics division. I’ve taken a keen interest in data standardisation. I’ve spent the last three years on the side of my job pushing for a Legal Entity Identifier and more generally reference data utility.Interviewer: So what are the commercial advantages then and implications of LEIs?

Francis Gross: For the ECB certainly none. We are not a commercial organisation. But I think that all organisations out there in the industry, to whom I talk, say that they have very high costs due to the low quality of reference data in general. I expect that this will improve the processes, which will save money to all these institutions with plenty of other benefits which are the real reasons for doing it.

Interviewer: What are those benefits?

Francis Gross: Well the benefits are found from the public sector’s point of view. Especially in the ability we will then have to do our job. Which is to better understand systemic race, to understand exposures in industry, which the recent crisis have highlighted as main worries in the modern financial system.

Interviewer: So how will it affect then global market standardisation which I know has been a key topic today?

Francis Gross: Yes. Well I think the innovative part of the Legal Entity Identifier is actually what’s going to drive further standardisation in the future, at least for the part that needs to be mandated by law. It’s the establishment of governance for an operational standard which will need to be backed by law. That’s now widespread consensus in industry and the official world. The LEI is the first implementation of such an infrastructure. Once that infrastructure’s up and running we will be able to do many things along the same line where they are felt useful.

Interviewer: When do you think that’s likely to be?

Francis Gross: Well it’s going to develop in stages. The discussion we’ve had so far among the public sector participants and private sector participants clearly indicate that we’ll have a phased approach. First implementation should be expected in the course of 2012, especially in the US with the CFDC forging ahead. Then it will grow from there.

Interviewer: So what are the latest and most important developments in the work being done to establish LEIs?

Francis Gross: Well clearly beyond development of a broad consensus across the data community throughout the last three years, the most significant recent development is the clear articulation of a political will at the highest level. So the Financial Stability Board, the G20 have expressed their commitment to the issue as well as the European Parliament in a recent resolution. That provides us the basis and the mandate to progress further concretely.

Interviewer: I know one of the talking points before was actually the data that will be contained within that identifier, because obviously as well as being an identifier it has to give out certain amounts of information. You were talking about hierarchical data.

Francis Gross: Yes well the ultimate goal is to be able to pull from one load the whole structure of the group that entity belongs to. That’s still a couple of steps away. The main obstacle to having hierarchical data in the public utility is currently the whole field of confidentiality protection and privacy laws that will need to be studied more closely. So the consensus is that we will start with what we call level one data. So basically the ID card of the legal entities, they will be linked later on through hierarchical data.

Interviewer: What have been the key challenges then you’ve faced so far in the introduction of LEIs?

Francis Gross: Well it’s basically to negotiate or to discuss among the authorities to find out a mode of governance that is acceptable to the public organisations. That is as the G20 formulated in the public interest. But that is in the same time conducive to having a competent governance that associates industry as well. That’s the first challenge.

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