About identifiers

Readers are familiar with the LEI… but do you know what a Unique Transaction Identifier is? Well, the idea is part of the new regulatory framework developed in response to the financial crisis. The plan is that (eventually) off-market financial trades of all kinds will need to be registered with a trade repository, with three key pieces of information.

LEIs, for identity of the parties to the trade. A UTI which will uniquely identify the individual trade that was made between the parties, and a UPI or “unique product identifier” which will provide a way of discovering the instruments and terms that make up the trade. This “three legged stool” is intended to have at least two different uses.

Unique identifiers will ensure that regulators and policy makers will have a better understanding of what is occurring within markets in aggregate. At the same time, these identifiers will allow the rapid dissection of individual trades where that might be necessary. There are still forensic accounting and financial instrument specialists piecing together aspects of the Lehman collapse, a decade later. Once in place, these identifiers would make that kind of process a near-real time and vastly more accurate exercise.

Bringing the plans into practice is… ahem… taking some time, with a host of different priorities and interests that need to be dealt with. However, just before the end of 2017, the Financial Stability Board published its recommendations on the way that UTIs should work and the way they should be governed. It’s expected that these new pieces of reference data may well form part of the financial regulatory reporting landscape, and expect that there will need to be an easy way to represent them in XBRL. A similar taxonomy to the LEI one perhaps?