WM Datenservice being one of the currently five endorsed pre-LOUs is welcoming the opportunity to comment on EBAs Consultation Paper.
For various reasons we fully support EBAs recommendation to use the LEI when providing information to the EBA concerning institutions:
1. LEIs uniquely identify legal independent units and not parts of it like for instance the BIC
2. LEI is indeed best solution out of the validated options as it is already covering broadly the financial sector. Nearly all Financial Institutions will be subject to EMIR regulation meaning that they would already have pre-LEIs shortly. In Germany for instance nearly 90% of the Financial Institutions already have a pre-LEI today.
3. In our function as pre-LOU and central service provider we are receiving a lot of positive feedback by the market. The LEI is seen as most important identifier for legal entities.
4. Positive aspects for the use of the LEI are:
- no IPRs (meaning also no potential licensing issues), no commercial interests
- Unrestricted use of data with expectation of high quality which is ensured by local expertise of the pre-LOUs
5. First pre-LOUs have received global endorsement by the ROC giving a positive signal to the markets
6. Pre-LEIs will become LEIs (without any change) after completion of the GLEIS (Global LEI System) i.e. the establishment of the COU (Central Operating Unit). So users can already rely on the currently allocated pre-LEIs
We estimate that at least in the longer term the benefits are much bigger for all users than implementation costs as LEI gives a lot of opportunities in addition to the regulatory requirements. LEI will most likely become the global identifier for use also in many future regulations.
We deem the timelines indicated (March 31 and December 31) to be realistic for the introduction.
There are already sufficient pre-LOUs active and it is likely that more pre-LOUs would be appointed and start allocation in the coming weeks and months.
Finally it is most likely that already before the start of EMIR reporting on Feb 12, 2014 nearly all financial institutions would have a pre-LEI.