RegTech Intelligence 
The Regulatory Oversight Committee (ROC) for the Legal Entity Identifier (LEI) system has endorsed 3 Local Operating Units as being compliant with the ROC’s criteria for mutual acceptance. The 3 pre-LOUs endorsed are Germany’s WM Datenservice, France’s INSEE, and the CFTC’s CICI utility.
With 13 pre-LOUs in existence, it’s likely we’ll be seeing this list updated frequently over the coming months, starting with the LSE’s pre-LEI. This is a major step towards mutual acceptance, cross-border harmonisation and the eventual roll-out of the global LEI system.
These endorsements are as a result of the principles the ROC released in July designed to harmonise the creation of the interim system for the LEI until the Central Operating Unit (COU) takes over operational governance of the system (no date yet set). The principles state that those pre-LEIs) issued by pre-LOUs that have been endorsed by the ROC will be acceptable by the ‘ROC authorities’ requiring the use of a common identifier to meet regulatory requirements.
This endorsement statement may not be the end of the mutual acceptance problem. As we noted earlier in the year, while the CFTC have said in their amended order that they are happy for EU firms to use CICIs, ESMA, however, has yet to reciprocate.
Seeing as a firm who operates both in the US and EU, will need to report trades under both Dodd-Frank and EMIR, this stalemate means that firms will be unable to use a single identifier (e.g. the CICI) for both sets of reporting requirements. This is a problem that has not necessarily been solved by the ROC’s statement, as is made clear in this footnote:
“…the ROC does not mandate the use of these codes [Pre-LEIs], nor does it determine whether the use of these codes by a local authority should be mandated. ROC members, having assented to the ROC Charter, which promotes the use and scope of the Global LEI System to expand the collective benefit from widespread adoption, through this process seek to be able to rely on codes issued by endorsed pre-LOUs for their own reporting purposes.”
This raises the question of what regulatory requirements can, in reality, be fulfilled by the separate pre-LEIs. Seeing as there has yet to be any communication from ESMA on this issue, are the recently endorsed CICI acceptable for use in Europe, or not? Can local regulators e.g. BaFIN mandate the use of their own local codes in the absence of formal communication from the EU?
Globally, we seem to be aligned on this issue, but not quite yet at the local level. Communication is desperately needed from regulators on these issues to avoid unnecessary cost, or misguided approaches to regulatory implementation.
There is still a lot of work to be done, (new guidance on the porting of pre-LEIs from pre-LOU to pre-LOU is expected soon, and the COU will set the final standards for the LEI), but this is a new and commendable step towards a working Global LEI system, that has overcome a major roadblock.