The concept of having a barcode attached to all financial trades, so that transactions can be better monitored, is moving closer to reality as politicians and regulators around the world push for their introduction.

The latest to endorse the introduction of a global framework for a Legal Entity Identifier (LEI) was Andrew Haldane, a leading official at the Bank of England, at a speech this week in New York.

The lack of any standardization to identify financial trades caused a major problem in the aftermath of the Lehman Brothers collapse in September 2008 as many financial institutions struggled to work out their counterparty risk to the firm.

“Missing inventories and mistaken counterparties could be all but eliminated if financial firms’ information systems spoke in a common tongue,” Haldane, the Bank’s executive director for financial stability, told the Securities Industry and Financial Market Association.

“It is clear that these failures in data infrastructure and aggregation were not unique to Lehman. They were endemic across the financial industry.”

The G20, a group of finance ministers and central bank governors from the world’s leading economies, is looking to endorse plans for a global system of LEIs at its next session in Mexico in June.

“We support the creation of a global legal entity identifier which uniquely identifies parties to financial transactions,” said the G20 in November at its last meeting in Cannes, France.

An LEI, a 20-digit code, would identify a firm by its name, address and jurisdiction but would not contain any embedded intelligence and would be designed by the International Standards Organization and operated as an at-cost utility by the U.S. Depository Trust & Clearing Corp and the Society for Worldwide Interbank Financial Telecommunication (SWIFT), an electronic messaging system between banks, whose headquarters is in Brussels, Belgium.

“At its core, the LEI is simply a reference data tool to standardize how a counterparty is identified on financial transactions,” said Sven Bossu, program manager, securities and treasury markets, at SWIFT.

“For regulators, a standard identifier will allow them to conduct more accurate analysis of global, systemically important financial institutions (or other firms with regulatory reporting obligations) and their transactions with all counterparties across markets, products and regions, providing them with a new tool for better identifying concentrations and emerging risks.

“For risk managers in all financial institutions, the LEI will similarly increase the effectiveness of tools aggregating their exposures to counterparties across the globe.”

The Financial Stability Board, the regulator for the G20, aims to produce a framework draft by next month for the G20 outlining key recommendations for any global LEI system.

The introduction of an LEI system is part of wider plans by the G20 to introduce far-reaching reforms to the $700 trillion global OTC derivatives market by the end of this year. The G20 wants all over-the-counter derivatives to be traded on electronic platforms and, where possible, be cleared by central counterparties by this date.

Others to back the reforms include the European Union’s financial services chief Michel Barnier, who has said: “We must also work together in a common identification of market players. This is an area where the U.S. is already committed, but that requires global standards.”

A system of identifying swaps has to be in place by July 16 to meet the rules laid down by the U.S. Commodity Futures Trading Commission, a U.S. regulator of futures and options markets, for new U.S. financial services regulation under the Dodd-Frank Act.

“The CFTC rules, requiring an LEI, enter into effect on July 16,” said Bossu at SWIFT. “Though this is after the G20 summit [in Mexico], a solution will need to be in place before in order to allow the industry to prepare itself.”