At a speech today at the “The Macroprudential Toolkit: Measurement and Analysis” Conference held in Washington D.C., and hosted by the OFR and the Financial Stability Oversight Council, Treasury Secretary Geithner hinted at the global reach LEI will have:
The OFR will collect and make available, to regulators and to the public, more and better financial data..Although Geithner couched the LEI as collecting data that is necessary to track global financial stability, make no mistake, LEI is a monster global financial tracking system that has a mandate sufficiently broad in scope that it may result in the tracking of the mom and pop coffee shop, if some technocrat deems the mortgage on the coffee shop a trigger "financial contract" that requires an LEI. It, for sure, will cover gold dealers and perhaps any transactions with corporations and businesses. Down the road, it is not difficult to imagine the interpretation of the regulations will be stretched to include individuals, as "financial parties", when gold coins are purchased.
It will seek to better measure and analyze factors affecting financial stability.
It will report to Congress and to the public on its analyses of significant market developments, potential threats to financial stability, and appropriate policy responses.
And it will collaborate with regulators, industry, the academic community, and foreign policymakers and institutions to establish global standards for financial data. The Legal Entity Identifier project, which precisely identifies the parties to financial transactions, will help regulators, risk managers, and market participants all better understand risks and exposures across the financial system. We are pleased that U.S. leadership has helped give a strong start to the LEI project, whose framework was recently endorsed by the G-20.
Your goal today is to help set the agenda for the Office of Financial Research, help us to identify areas where better data and more research offers the best return.
As the architects of both the Council and the OFR have recognized: we need to rely extensively on collaboration—among regulators, between the public and private sectors, internationally, and otherwise.
As stated in the development notice published in the Federal Register:
The scope of the reference data provided for each LEI issued should be sufficient to verify that users have correctly identified an entity and should include at a minimum the following information for each Identifier:
Name
Location
Electronic address
Legal status
in addition to the financial transactions conducted.
The first tracking of financial "contracts" will begin on July 15, 2012. It appears the initial LEIs will be required of those conducting transactions on financial exchanges. Over time, though, regulatory creep will result in more and more entities (and perhaps individuals) being caught in the web of those whose required to have LEIs and have their financial transactions tracked.
