Russia's National Depository Takes on Business ID Role

22 October 2013
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Russia's national securities depository has become the latest market infrastructure to join the ranks of pre-legal entity operating units (pre-LOUs) issuing codes to identify financial firms and other organizations.

The National Settlement Depository (NSD) in Moscow has started assigning ID codes to Russian legal entities based on information they submit as well as information available from a government list of legal entities where all Russian companies must register. The companies requesting the pre-LOUs or interim ID codes must ultimately validate the data the NSD will use in assigning the codes based on the principles of self-certification.

"The NSD has just launched its pre-LEI assignment services, and we have already received requests from Russian legal entities about the process for issuing codes and expect to get the first requests shortly," says Eddie Astanin, chairman of NSD's board. The NSD, which was accredited as Russia's central securities depository in late 2012, also serves as the country's national numbering agency to identify Russian financial instruments.

The NSD will charge Russian companies RUB6,000 (US$188) for each ID code and an additional annual fee of RUB3,000 (US$94)to validate their reference information -- a pricetag comparable to what is charged by the US market infrastructure Depository Trust & Clearing Corp. (DTCC) and global message network provider SWIFT to assign US codes coined CICIs as operators of the US pre-LOU called CICI utility.

Pre-LEIs are temporary IDs assigned by designated organizations, or pre-LOUs, in several markets to identify local or overseas financial companies and other entities so regulators can more closely monitor systemic risk. So far, three pre-LOUs -- the US CICI utility, Germany's WM Datenservice, and France's INSEE have been endorsed by the Regulatory Operating Committee (ROC), a group of global regulators charged with designing a global legal entity identification system. The goal is for interim codes and pre-LOUs to take on a permanent status once the global LEI system takes effect.

The London Stock Exchange is also seeking the ROC's endorsement, which makes the pre-LEI issued by the pre-LOUs acceptable to all of the regulatory bodies which have agreed to follow the ROC's charter for how such identification codes must be issued and updated so regulators can track counterparties in transaction reports. Such reports are required by the US CFTC for players in the US swaps market and have also been mandated by the European Securities and Markets Authority (ESMA)for European deals in early 2014 once several swap data repositories have been authorized for operation., October 22, 2013

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