[Federal Register Volume 78, Number 125 (Friday, June 28, 2013)]
[Notices]
[Pages 38954-38956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15477]


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COMMODITY FUTURES TRADING COMMISSION


Amended Order Designating the Provider of Legal Entity 
Identifiers to Be Used in Recordkeeping and Swap Data Reporting 
Pursuant to the Commission's Regulations

AGENCY: Commodity Futures Trading Commission.

ACTION: Order.

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SUMMARY: The Commodity Futures Trading Commission (CFTC) has issued an 
Amended Order expanding, through mutual acceptance by international 
regulators, the list of Legal Entity Identifiers (LEIs) that can be 
used by registered entities and swap counterparties in complying with 
CFTC's swap data reporting regulations once the conditions provided in 
the Amended Order are fulfilled. The Amended Order revises CFTC's order 
of July 23, 2012, which directed all registered entities and swap 
counterparties required by CFTC rules to use LEIs in swap recordkeeping 
and swap data reporting to use LEIs provided by DTCC-SWIFT, the utility 
designated by the CFTC as the provider of LEIs until establishment of 
the global LEI system.

FOR FURTHER INFORMATION CONTACT: David Taylor, Associate Director, 
Division of Market Oversight, 202-418-5488, [email protected]; or Srini 
Bangarbale, Chief Data Officer, Office of Data and Technology, 202-418-
5315, [email protected]; Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: On July 23, 2012, the Commodity Futures 
Trading Commission (``Commission'') issued an order (``Order'') \1\ 
pursuant to section 21(b) of the Commodity Exchange Act (``CEA'' or 
``the Act'') and to part 45 of the Commission's regulations, 
designating DTCC-SWIFT

[[Page 38955]]

as the provider of Legal Entity Identifiers (``LEIs''), to be known as 
CFTC Interim Compliant Identifiers (``CICIs'') until establishment of 
the global LEI system or further action by the Commission, to be used 
in recordkeeping and swap data reporting pursuant to parts 45 and 46 of 
the Commission's regulations. The Order directed registered entities 
and swap counterparties subject to the Commission's jurisdiction to use 
CICIs provided by DTCC-SWIFT to comply with the LEI requirements of 
parts 45 and 46 of the Commission's regulations.
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    \1\ See 77 FR 53870 (Sept. 4, 2012).
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    As stated in the preamble to the Commission's Adopting Release for 
part 45:

The Commission recognizes that optimum effectiveness of LEIs as a 
tool for achieving the systemic risk mitigation, transparency, and 
market protection goals of the Dodd-Frank Act--goals shared by 
financial regulators world-wide--would come from creation of a 
global LEI, on an international basis, that is capable of becoming 
the single international standard for unique identification of legal 
entities across the world financial sector.\2\
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    \2\ See 77 FR 2136 (Jan. 13, 2012) at 2163.

As recognized in the Order and in part 45 of the Commission's 
regulations, the Commission is participating in an international 
process to establish a global LEI system. Since the Order was issued, 
the international process has moved forward significantly, and 
establishment of the global LEI system has begun. These developments 
are summarized below.
     Regulatory oversight for the global LEI system is now 
provided by an international Regulatory Oversight Committee (``ROC''), 
established in January 2013. The Commission is a charter member of the 
ROC and of its Executive Committee.
     The ROC has determined that the global LEI system will be 
federated in nature, and will include a private sector Central 
Operating Unit (``COU'') and multiple Local Operating Units (``LOUs''). 
Under the auspices of the ROC, a foundation is being established in 
Switzerland to provide the COU. The COU will coordinate the system's 
multiple LOUs, which will issue LEIs.
     As part of the establishment of the global LEI system 
under the auspices of the ROC, seven identifier-issuing utilities or 
pre-LOUs, including the CICI Utility operated by DTCC-SWIFT and 
designated in the Order, have each been sponsored to the ROC by a ROC 
member authority that exercises oversight of the LOU, and have been 
given an identifier prefix for use in ensuring the uniqueness of all 
identifiers issued by any LOU or pre-LOU. A pre-LOU located in Germany, 
operated by WM Datenservice and sponsored to the ROC by Bafin, 
Germany's Federal Financial Supervisory Authority, has now begun 
issuing identifiers known as General Entity Identifiers (``GEIs''), 
which the Commission anticipates will become LEIs in the global LEI 
system. The Commission anticipates that, in the next few months, other 
pre-LOUs sponsored to the ROC by a ROC member with oversight authority 
may also start issuing identifiers that will become LEIs in the global 
system.
     As stated in the Order, the Commission anticipates that 
the CICI Utility operated by DTCC-SWIFT and designated in the Order 
will become one of the LOUs in the global system, and that CICIs will 
become LEIs in the global system.
    The Commission understands that OTC derivatives data reporting in 
the European Union is scheduled to begin in September 2013, pursuant to 
reporting requirements under the European Market Infrastructure 
Regulation (``EMIR'') issued by the European Securities and Markets 
Authority (``ESMA'').
    Once swap data reporting is required under both CFTC rules and the 
rules of another jurisdiction or jurisdictions, as will be the case 
when ESMA's rules take effect, cooperation by the authorities in 
question with respect to the LEIs used in such reporting will be 
required to preserve the essential Principle of Uniqueness for LEIs, 
already adopted by the ROC and mandated by section 45.6(b)(1) of the 
Commission's regulations. Since the identifiers issued by pre-LOUs 
recognized by the ROC, including WM Datenservice, the CICI Utility, and 
eventually others, will become LEIs in the global LEI system, mutual 
acceptance, by each ROC member that mandates use of LEIs in data 
reporting, of the identifiers issued by each ROC-certified pre-LOU, is 
the only way to avoid violation of the Uniqueness Principle resulting 
from issuance of multiple LEIs to a single entity.
    One example of this problem would be the case of a German hedge 
fund that obtains an identifier from WM Datenservice, and later becomes 
a counterparty to a swap with a U.S. swap dealer that must be reported 
to a swap data repository under CFTC rules. If the CFTC does not permit 
the WM Datenservice identifier of the hedge fund to be reported as part 
of the primary economic terms data reported for that swap, but requires 
that a CICI be reported for the hedge fund, it would be necessary for 
the hedge fund to obtain a CICI in addition to its WM Datenservice 
identifier.
    To address this issue, and facilitate the ongoing establishment of 
the global LEI system, the Chair and Vice Chairs of the ROC have asked 
the Commission and ESMA to each move as promptly as possible to take 
whatever action is necessary to provide for mutual acceptance, for use 
in data reporting required by CFTC rules or ESMA rules, of the pre-LEIs 
issued by either the CICI Utility or WM Datenservice. The request notes 
that the ROC previously has publicly identified, as minimum 
requirements for global acceptance of pre-LEIs issued by a pre-LOU, 
both issuance by the pre-LOU of pre-LEIs that comply with ISO Standard 
17442 Legal Entity Identifier, and compliance by the pre-LOU with the 
existing principles for the global LEI system and the existing 
standards for pre-LOUs adopted by the ROC. The Chair and Vice Chairs 
also informed the Commission that, at the ROC's June 2013 meeting in 
Mexico City, the ROC anticipates finalizing a framework for global 
acceptance of pre-LEIs assigned by a pre-LOU that is sponsored by a ROC 
member who assures the ROC that the pre-LOU meets specified principles 
regarding compliance with the LEI standard, technical capacity, and 
agreement to adhere to ROC high level principles for the system. The 
Commission understands that upon such action by the ROC, such globally 
accepted pre-LEIs will henceforth be known as LEIs.
    Bafin has notified the Commission, and Commission staff have 
verified, on the basis of a live demonstration provided by WM 
Datenservice to Commission staff and to other ROC members including 
Bafin, and of a Memorandum of Understanding adopted by DTCC-SWIFT and 
WM Datenservice to provide for cooperation and coordination between 
them with respect to adherence to the principles adopted by the ROC for 
the global LEI system, that: (1) The GEIs issued by WM Datenservice 
comply with ISO Standard 17442 Legal Entity Identifier; and (2) WM 
Datenservice complies with the existing principles for the global LEI 
system and the existing standards for pre-LOUs adopted by the ROC.
    The Commission anticipates, on the basis of discussions between 
members of the ROC including representatives of ESMA and of the 
Commission, that ESMA will, on a timely basis, take the action 
necessary to provide for mutual acceptance by ESMA and the CFTC of both 
the pre-LEIs (now known as CICIs) issued by DTCC-SWIFT and the pre-LEIs 
(now known as GEIs) issued by WM Datenservice, for data reporting

[[Page 38956]]

required under either Commission regulations or ESMA's EMIR 
regulations.
    In light of the foregoing, it is ordered, pursuant to section 21(b) 
of the Commodity Exchange Act and section 45.6 of the Commission's 
regulations, that paragraph 2 of the Order is amended by striking the 
existing paragraph 2 and inserting the following:
    ``2. To comply with the legal entity identifier requirements of 
parts 45 and 46 of the Commission's regulations:
    a. Effective immediately upon (1) issuance of this Amended Order, 
and (2) publication on the Commission's Web site by the Commission's 
Chief Information Officer of a notice that ESMA has informed the 
Commission that LEIs issued by DTCC-SWIFT are accepted for data 
reporting under ESMA's EMIR regulations, registered entities and swap 
counterparties subject to the Commission's jurisdiction shall use 
either LEIs (currently known as CFTC Interim Compliant Identifiers or 
CICIs) provided by DTCC-SWIFT, or LEIs (currently known as General 
Entity Identifiers or GEIs) provided by WM Datenservice. Registered 
entities and swap counterparties may contact DTCC-SWIFT at https://www.ciciutility.org, and may contact WM Datenservice at https://www.geiportal.org.
    b. Prior to adoption by the ROC of standards for approval of pre-
LOUs and the LEIs issued by approved pre-LOUs as globally acceptable, 
registered entities and swap counterparties subject to the Commission's 
jurisdiction may use LEIs provided by another pre-LOU that has been 
issued an identifier prefix by the ROC and is sponsored as a pre-LOU by 
a member of the ROC, in lieu of using LEIs provided by DTCC-SWIFT or WM 
Datenservice, but may do so only after the Commission's Chief 
Information Officer publishes on the Commission's Web site a notice 
that: (1) Commission staff have verified, on the basis of a 
demonstration provided to Commission staff by the pre-LOU, and the ROC 
member sponsoring the pre-LOU has notified the Commission, that the 
pre-LOU issues LEIs that are compliant with ISO Standard 17442 Legal 
Entity Identifier, and that the pre-LOU complies with the existing 
principles for the global LEI system and the existing standards for 
pre-LOUs adopted by the ROC; and that (2) LEIs issued by DTCC-SWIFT are 
accepted for data reporting under the law of any jurisdiction that 
accepts the LEIs issued by the pre-LOU for data reporting.
    c. After the ROC has adopted standards for approval of pre-LOUs and 
the LEIs issued by them as globally acceptable, and has also approved 
DTCC-SWIFT as a globally acceptable pre-LOU and the LEIs issued by 
DTCC-SWIFT as globally acceptable LEIs, registered entities and swap 
counterparties subject to the Commission's jurisdiction may use LEIs 
provided by DTCC-SWIFT, WM Datenservice, or any other pre-LOU approved 
by the ROC as globally acceptable and as issuing globally acceptable 
LEIs. Pursuant to this paragraph, use of LEIs from pre-LOUs other than 
DTCC-SWIFT or WM Datenservice may commence only after the Commission's 
Chief Information Officer publishes on the Commission's Web site a 
notice that such LEIs and such LOUs have been approved by the ROC as 
globally acceptable.
    d. Effective immediately upon ROC approval of the LEIs (currently 
known as CICIs) issued by DTCC-SWIFT as globally acceptable, the LEIs 
issued by DTCC-SWIFT shall be known as LEIs and not as CICIs. For this 
purpose, CICIs previously issued by DTCC-SWIFT shall be named and 
referred to as LEIs, but shall not be reissued.
    e. As provided in section 45.6(b)(1) of the Commission's 
regulations, registered entities and swap counterparties subject to the 
Commission's jurisdiction shall be identified in all swap recordkeeping 
and swap data reporting by a single LEI.

    Authority: 7 U.S.C. 24a(b).

    Issued in Washington, DC, on June 7, 2013, by the Commission.
Melissa D. Jurgens,
Secretary of the Commission.

Appendix to Amended Order Designating the Provider of Legal Entity 
Identifiers To Be Used in Recordkeeping and Swap Data Reporting 
Pursuant to the Commission's Regulations--Commission Voting Summary

    On this matter, Chairman Gensler and Commissioners Sommers, 
Chilton, O'Malia, and Wetjen voted in the affirmative. No 
Commissioner voted in the negative.

[FR Doc. 2013-15477 Filed 6-27-13; 8:45 am]
BILLING CODE 6351-01-P