What the Financial Data Transparency Act Means for the Global LEI System

For decades, regulatory reporting in the United States has been siloed, with agencies collecting data using different formats, definitions, and entity identifiers. This lack of consistency increased compliance costs for reporting organizations and made it difficult for regulators to aggregate, compare, and assess information across the financial system. The absence of a common entity identifier compounded these obstacles. The Legal Entity Identifier (LEI) remediates this issue by providing a globally recognized, standardized identifier that enables consistent entity identification and supports greater transparency, interoperability, and efficiency in reporting.

The Financial Data Transparency Act (FDTA), signed into law in December 2022, represents a significant step toward solving this problem. The FDTA requires federal financial regulators to establish and adopt common data standards for information collected from regulated entities. By standardizing how financial data is reported, the Act aims to reduce reporting inefficiencies, improve data quality, and enhance regulators' ability to analyze information across agencies and markets.

A key component of these standards is the use of a globally recognized identifier for legal entities. To satisfy this requirement, regulators have designated the Legal Entity Identifier (LEI) as the preferred entity identification standard due to its global presence, robust governance framework, and ability to facilitate data interoperability.

Agencies Subject to the FDTA

The FDTA applies to a group of U.S. financial regulatory agencies and government bodies, including:

• Securities and Exchange Commission (SEC)
• Federal Reserve System
• Commodity Futures Trading Commission (CFTC)
• Consumer Financial Protection Bureau (CFPB)
• Department of the Treasury
• Federal Deposit Insurance Corporation (FDIC)
• Federal Housing Finance Agency (FHFA)
• National Credit Union Administration (NCUA)
• Office of the Comptroller of the Currency (OCC)

As these organizations implement the Act's requirements, LEIs are expected to serve as a common organizational identifier across financial datasets, helping achieve the objectives of the FDTA.

The Global LEI System

The LEI system is overseen by the Regulatory Oversight Committee (ROC), a group of public authorities established in 2012 to coordinate and supervise the global legal entity identification framework. The Global Legal Entity Identifier Foundation (GLEIF) manages the operational framework of the system under ROC oversight.

LEIs are issued and maintained by accredited Local Operating Units (LOUs), which are responsible for validating entity information and publishing LEI reference data. Today, dozens of accredited LOUs function in the Global LEI System, helping maintain the integrity and reliability of LEI data worldwide.

Bloomberg's Role in the LEI System

As adoption of common data standards increases, accredited LEI issuers such as Bloomberg play a role in validating and maintaining the underlying entity reference data that supports the system. Authorized in more than 200 jurisdictions worldwide, Bloomberg is responsible for the lifecycle of an LEI from issuance and renewals to updating associated metadata for the entity. These services help organizations maintain compliance with regulatory requirements while ensuring that their entity information remains accurate and current within the Global LEI System.

Looking Ahead

The structured format of the LEI marks significant progress for the U.S. as organizations look to leverage artificial intelligence and promote interoperability and transparency. Finally, as agencies and regulators give guidance on their implementation requirements, Bloomberg will be educating, evaluating, and helping those impacted understand how we can assist them in meeting their regulatory requirements.