Journal of Risk and Financial Management Article The Global Legal Entity Identifier System: How Can It Deliver? † Ka Kei Chan 1 and Alistair Milne 2,* 1 Department of Economics and Finance, Brunel University London, Uxbridge UB8 3PH, UK;
[email protected] 2 School of Business and Economics, Loughborough University, Loughborough LE11 2TU, UK * Correspondence:
[email protected] † This paper is an updated version of our earlier working paper written with the support of a grant 2012-5-50CD from the Alfred P. Sloan Foundation, updated to take account of developments in the intervening five years. The opinions expressed here are our own, not those of any of the institutions involved in creating the LEI or the many individuals who have generously given of their time in order to be interviewed on the development and future of the system. Received: 17 December 2018; Accepted: 19 February 2019; Published: 7 March 2019 Abstract: We examine the global legal entity identifier (LEI) system for the identification of participants in financial markets. Semi-structured interviews with data professionals revealed the many ways in which the LEI can improve both business process efficiency, and counterparty and credit risk management. Larger social benefits, including the monitoring of systemic financial risk, are achievable if it becomes the accepted universal standard for legal entity identification. Our interviews also review the substantial co-ordination and investment barriers to LEI adoption. To address these, a clear regulatory-led road map is needed for its future development, with widespread application in regulatory reporting. Keywords: big data; data standards; entity identifiers; macroprudential policy; regulation; risk management; Dodd-Frank Act; operational efficiency; systemic risk JEL Classification: G20; G28; M15 1.