The Depository Trust & Clearing Corporation (DTCC) and SWIFT have launched the Web portal for the registration and assignment of CFTC Interim Compliant Identifiers (CICIs). CICIs are the interim identifiers being used by the Commodity Futures Trading Commission (CFTC) prior to the launch of a global legal entity identifier (LEI) system.
The portal, at www.ciciutility.org, allows firms to register for CICIs once they have been designated to do so by the CFTC and also allows users to search for entities.
CICIs are intended to follow the framework to be used for LEIs so that CICI codes and information will automatically become LEIs once the global LEI system is established and approved by the G20. CICIs follow the ISO 17442 standard developed for LEIs.
Paul Janssens, LEI program director for SWIFT, says the cooperative considers the CICI registration utility the first step toward a global LEI solution. We are continuing to work with regulators and the industry globally to provide a fully formed and practical solution to solve the LEI challenge, he says. This includes further work to evolve the solution to a federated data contribution and validation model over time.
LEIs will be used by market participants to identify counterparties and by regulators to monitor systemic risk. The use of the interim identifiers are required by CFTC for swaps data reporting by October 12 for OTC derivatives transactions in credit default swaps and interest rate swaps.
A standard way of identifying counterparties will help regulators and market participants better aggregate risk and exposures on a global scale, says William Hodash, managing director of Business Development for DTCC.
In July the CFTC appointed SWIFT and DTCC to be the suppliers of CICIs, in line with the recommendations of the Global Financial Markets Association (GFMA) and numerous other industry groups. They will be supported by the Association of National Numbering Agencies, which will assisting in the registering and validating of entities.
The CICI Utility portal will be operated at cost by DTCC and SWIFT. The institutions, along with the GFMA, expect the utility to be leveraged in the global LEI system. It currently contains identifiers for about 24,000 legal entities from more than 80 countries.
Ultimately as many as 1.5 million legal entities are expected to register for LEIs. It is anticipated that the number of CICIs that will be registered for CFTC reporting purposes will be less than 50,000.
The GFMA also commented on the launch of the portal. David Strongin, managing director of the Securities Industry and Financial Markets Association (SIFMA), representing GFMA, says: GFMA commends DTCC and SWIFT for developing a CICI Utility that meets the needs of the CFTC and the financial industry for swaps reporting. GFMA strongly encourages prompt registration by all institutions that are required to obtain a CICI. This first-of-its-kind identifier will provide industry participants with a powerful new foundational tool for risk management in OTC derivatives trading.
Additionally, GFMA continues to support the Financial Stability Boards efforts to develop a global LEI system, which will dramatically improve systemic risk management across the financial industry.
For more on LEIs, see Standardizing legal entity identification, Global Custodian, Winter 2011.
(CG)