G20, FSB, DTCC, CFTC Develop New Way to Monitor Risk


The G20 nations and the Financial Stability Board (FSB) have established an ROC for the purposes of monitoring risk exposure in the global economy. The Regulatory Oversight Committee (ROC) met for the first time last week. It will be headed by Michael Reed, currently chief counsel at the U.S. Office of Financial Research.

G20 and LEI

The task of the Regulatory Oversight Committee under Reed will be to finalize and implement the Legal Entity Identifier (LEI). The LEI acts as a a global ID tag for financial counterparties. In effect, it will potentially help to standardize information across markets and potentially reduce risk exposure.

DTCC, Swift, CFTC, and LEI

The Depository Trust & Clearing Corporation (DTCC) and the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced this week that they have made significant progress on their own legal entity identifier (LEI). The announcement states that approximately 50,000 entities from around the globe have now registered with the CFTC. These entities are now required to register in the US Commodity Futures Trading Commission (CFTC) Interim Compliant Identifier (CICI) database.

The LEI and CICI tools will help financial entities store and verify data ahead of transactions, and their standardized, global nature will allow them to be used across financial markets. Additionally, they were designed to function across asset classes, including swaps and OTC derivatives. The industry, as demonstrated by teamwork of DTCC, SWIFT, and the CFTC, has embraced the process. DTCC and SWIFT are entities of the financial industry.

“The utility has been developed on a flexible infrastructure to easily adapt to evolving industry and regulatory requirements globally,” said Paul Janssens, LEI Programme Director, SWIFT, to Finextra. “With just about 50 percent of the records representing US entities, we are pleased to report a high adoption rate of the solution by the international financial community.”

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About the Author

Felix Shipkevich
Mr. Shipkevich’s practice focuses on regulatory, transactional, and enforcement matters in the fields of futures, commodities, and derivatives. He works with Futures Commission Merchants (FCMs), Retail Forex Exchange Dealers (RFEDs), Introducing Brokers (IBs), Commodity Pool Operators (CPOs), Commodity Trading Advisors (CTAs), Swap Dealers (SDs), Swap Execution Facilities (SEFs), and domestic and offshore hedge funds. Mr. Shipkevich guides clients on procedures related to registration with the U.S. Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA), as well as domestic and international regulators in local jurisdictions. Mr. Shipkevich prepares and helps implement compliance, anti-money laundering (AML), and Electronic Trading Systems (ETS) procedures for clients in the commodities and derivatives fields.