Standard identifiers are playing an increasingly important role in finance and trade globally. TFG’s Deepesh Patel heard from Richard Young at FIGI (Bloomberg).

Firms need to identify what they have traded, together with identifying the parties to the trade. Failure to do so risks trade failures and potentially also falling foul of ever more demanding regulatory transparency requirements.

Historically there has been a bewildering choice of codes and identifiers for use in the messaging and documentation associated with trade and finance.

Recently two trends have had a significant impact on the choices facing firms:

  • Regulatory mandates
  • Open data and best practice developments

Regulatory Mandates

Regulatory authorities, particularly but not exclusively, those overseeing securities markets, have started to specify the identifiers that financial firms must use when reporting their transactions to markets and to regulators. 

A clear example of such regulatory mandate has been the adoption of the Legal Entity Identifier (LEI) for the identification of entities – counterparties, issuers and clients – relevant in securities market transactions.  The LEI is required for reporting under various European Union regulations e.g. the recently revised Markets in Financial Instruments Directive and Regulation (MiFID II). Firms with trade and transaction reporting obligations under MiFID II must not only have obtained an LEI for themselves, but must also ensure that they only deal with counterparties that also have such a code.  

Regulators use the LEI, and the standard set of data attributes associated with the code, as a tool to provide certainty around the parties to transactions, removing any doubts as to the identity of parties involved in trading activity.  The LEI continues to be adopted by regulators in major financial markets across the globe, not just in Europe. A crucial reason for the adoption of LEI is the way in which it is very much a poster child for the other key trend impacting identifiers; open data and best practice.

Open Data and Best Practice

What do we mean by open data and best practice?

As we mentioned above, historically there has been a wide choice of codes and identifiers used in financial transactions and beyond.  Many of these codes were issued by particular vendors and associated with the use of services and systems from those vendors. Outside of a closed environment such codes were either not available for use, or if they were available, they attracted some form of licence fee or restriction on usage. This is the very opposite of ‘open data’, which in terms of the way it applies to identifiers, clearly means that the code can be obtained without obligation to purchase any other service, and can also be re-used without restriction or payment of any fees for such usage. 

This brings us to another important qualifier – how useful is the identifier code on its own?  

Paradoxically the code should not be of use on its own, ideally it should be associated with a set of defined standard metadata that makes the code usable.   

Best practice dictates uniqueness, and also that the code itself should not contain embedded intelligence relating to whatever it seeks to identify. For data continuity purposes the identifier itself should be persistent, but of course the details of what it identifies may change over time. In the case of the LEI this could most likely be a name change. If the name of the entity identified by the LEI was part of the identifier code itself, then that identifier code would need to change or risk becoming legacy and misleading.  

The LEI conforms to this best practice by consisting of a 20 character alpha-numeric string, which contains no information about the entity it is associated with. Instead, the name and address and other details of the entity, are associated with the LEI code in an open database that can be freely downloaded from the LEI scheme website (, or from one of the accredited issuers of LEIs such as; Bloomberg LEI ( 

The metadata based approach of the LEI ensures that it will become an identifier with a wide application beyond financial market reporting.  For example developments are taking place to embed the LEI in digital certificates, thus making it easier to use such certificates to confirm the identity of another party. This is something with substantial implications and potential benefits for trade finance.

The open data and best practice factors mentioned above do not only apply to LEI. Other identifiers with a wide applicability in financial markets and beyond, also now take this approach. 

For example in the financial instrument space, the Financial Instrument Global Identifier (FIGI), is a free, persistent, unique financial instrument identifier available on an open basis (in this case at along with the associated metadata.

Open Symbology (FIGI) – from Open Symbology on Vimeo.

We expect that open identifiers, conforming to best practice, will play an increasing role in financial transactions and global trade going forward.