Response to the Financial Stability Board's Request for an Engineering Study on the Best Approach to Managing the Structure and Issuance of Legal Entity Identifiers (LEIs)

This paper is a joint response on the part of the authors to a request from the G-20 Financial Stability Board (FSB) for an engineering study to determine which scheme for the management of ISO 17442-compliant Legal Entity Identifiers (LEIs) best serves the purposes of the global LEI system that is being developed under the auspices of the G-20 FSB with the active contributions and participation of the Private Sector Preparatory Group (PSPG). While there are a range of different schemes to manage the issue of identifiers that fit the characteristics of the 18 digit number (plus two check digits) approach outlined in the ISO 17442 standard, for simplicity the representative schemes considered and evaluated were categorized into two general groups: -- An unstructured numbering system – an 18 character random unique identifier fills the whole numbering spectrum; -- A structured number – one where subsets of the spectrum are partitioned according to a structural guideline; for instance, an N digit prefix. Each subset is assigned to a different LEI "Local Operating Unit" (LOU, or LEI Registrar) for exclusive use. The consensus view of the joint authors is that a structured identification number is crucial for supporting decentralized local decision‐making and hence maximum adoption of the standard. This view is supported by actual practice in the management of existing global identity standards. All the existing federated global identification standards of which the authors are aware (e.g., DOI, GS1, Media Access Control [MAC address], Internet Protocol [IP and IPv6], EIDR ) , use a structured solution in order to allow maximum possible flexibility of local members in the allocation of identities. The authors have not, in contrast, been able to find any examples of unstructured global federated identifiers. Successful federated global identification standards have found it necessary to adopt a structured numbering system, and this paper supports that view and recommends that a domain-partitioned scheme for the management and issuance of ISO 17442-compliant Legal Entity Identifiers by a globally federated network of LEI registrars (a.k.a. Local Operating Units, or LOUs) be adopted.