Prospects for a March 2013 launch of a global system of legal entity identifiers (LEIs) appear to be thin, with issues over who the LEI issuers will be still to be ironed out.

There remains a significant amount of discussion around how long it will take, and who will be the issuers of LEIs for entities and in jurisdictions not covered by the current DTCC/Swift initiative for LEIs.

“The outlook appears to be mixed at the moment,” said Bill Meenaghan, global product manager for Alert at Omgeo, a post-trade service provider. “A lot of work has already been done to set up the framework, but the target date of March 2013 seems unlikely.”

The Financial Stability Board, the G20’s regulatory body, recommends a three-tier structure for the global LEI system: a regulatory oversight committee, a central operating unit and a local operating unit.

“There are many factors to take into account, including how to set up the central operating unit and what jurisdiction this should be legally based in,” said Meenaghan. “Progress is being made to overcome these issues so hopefully the initiative will yield some positive results soon.”

In parallel to this, the Commodity Futures Trading Commission, a U.S. regulator, has instigated provisional LEI, called the CFTC’s Interim Compliant Identifiers, or CICI, which is designed to be an identifier for all legal entities dealing in OTC derivatives falling under CFTC jurisdiction and which the CFTC hopes will morph seamlessly into a future global LEI system.

“Expectations need to be managed in terms of the time frame and sequences as to which legal entities will be addressed and when,” said Gavin Kaimowitz, director of data management at Sapient Global Markets, a capital markets consultancy.

“Concurring with many industry professionals, the belief is that the majority of systemically important legal entities are likely to be addressed by March. Using the LEI initiative’s framework, it is expected that the remaining legal entities will be identified over a much longer duration.”

With the regulations now solidifying and the increasing pressure to make the LEI a reality, the outlook is positive.

“The CICI utility is up and running,” said Meenaghan at Omgeo. “This is on the back of the CFTC requirements, and is gaining a lot of traction with entries for entities being received from all over the globe.”

CICI is essentially a global LEI utility, but solely focused on the entities that trade interest rate swaps and credit default swaps at the moment.

“Ultimately, the CICI utility may become the de-facto standard ahead of the global LEI system,” said Meenaghan.

Omgeo has been in discussions with some large buy-side firms who are getting ready to apply for an LEI for all of their funds, and would like to include this information in ALERT for dissemination to their brokers, he said.

An LEI is a 20-digit numeric or alphanumeric code, which would identify a firm by its name, address and jurisdiction but would not contain any embedded intelligence.