Legal entity identifiers: The beginning of a new platform in financial data

Abstract

When the crisis hit, the absence of globally standardised information in the financial industry created problems for both regulators and firms, as it was difficult for them to aggregate data quickly and accurately to support decisions. Standardising data will allow regulators, market participants and new entrants to build powerful new tools to enable improved risk management both for individual firms and the financial system as a whole. The legal entity identifier (LEI) is the first part of a new global platform of standardised financial data. Universal product identifiers (UPIs) will be the second part. But standardisation of data does not mean standardisation of products. As the creation of barcodes and the world wide web has shown, the emergence of new data platforms can enable beneficial innovation and reduce barriers to entry. This development could help technology firms enter the financial industry, which could be as transformative as it has been elsewhere.