The establishment of a private consortium for managing the global legal entity identifier system represents a milestone in the effort to develop data about entities operating in financial markets.

The Global Legal Entity Identifier Foundation, created by the Financial Stability Board, will begin to take full operational management of the Global LEI System, under the oversight of the LEI Regulatory Oversight Committee.

Under an interim system established in 2013 under the supervision of the ROC, 16 endorsed “pre-Local Operating Units” (pre-LOUs) had assigned almost 300,000 “pre-LEI” codes to entities for use in regulatory reporting.

However, with the establishment of the GLEIF, all codes issued by endorsed pre-LOUs will no longer be considered interim and henceforth will be called “Legal Entity Identifiers” or “LEIs.”

“Recently the term ‘pre-LEI’ was dropped by global regulators, and the use of the word LEI is used to name the identifiers,” William Hodash, managing director of business development at Depository Trust & Clearing Corp., told Markets Media. “I view this as a very significant milestone that signifies how far the global system has come along.”

During the time regulators were drafting and finalizing rules, they used the term “pre-LEI” in order to account for the fact that the system wasn’t firmly established. “Several recordkeeping and reporting rules have language that deals with interim identifiers prior to establishment of the global LEI system and that language is irrelevant now,” said Hodash.

Of the 16 pre-LOUs that have been endorsed by the ROC, DTCC’s Global Market Entity Identifier (GMEI) utility, formerly known as the CICI utility, is the largest. “There is a fairly large group now that has been endorsed and they’re issuing numbers, and those LEIs are available for regulatory reporting to any regulator that has a trade reporting requirement requiring LEIs,” Hodash said.

GMEI, which launched in 2012, is designed to apply a single, universal standard identifier to any organization or firm involved in a financial transaction globally.

In 2010, DTCC bought a company from Deutsche Borse called Avox, which provides entity reference data management. “We noted that legal entity identification was going to be a problem for the industry and regulatory community even in the early days of the drafting of Dodd-Frank, so we have been really focused on this for a long time,” Hodash said.

The transition of certain activities from the ROC to the GLEIF was a prerequisite for the pre-LOU status to move to LOU status.

The Ontario Securities Commission has agreed to sponsor CDS Clearing and Depository Services Inc. (CDS), Canada’s national securities depository, clearing and settlement hub, as a Canadian pre-LOU. CDS is a unit of TMX Group.

CDS Securities Management Solutions, an operating subsidiary of CDS, has entered into a collaboration with DTCC. Once endorsed as a pre-LOU by the ROC, CDS will offer Canadian entities LEI-issuance in collaboration with DTCC’s GMEI utility.

“CDS is pleased to enter this partnership with the GMEI utility, the industry leading pre-LOU, and looks forward to completing the Pre-LOU endorsement process with the guidance of the OSC,” said Jean Desgagné, president and CEO of CDS, in a statement. “This new role will allow us to expand the scope of CDS’s service offerings to strengthen Canada’s markets, enhance our international competitive position and enable regulators and customers to more effectively manage systemic and counterparty risk.”