First Data Transparency Breakfast of 2015 Explores the Jungle of Entity Identifiers


Left to right: Christina Ho (Treasury), Irina Leonova (Better Markets, Inc.), Karen Lee (OMB), and Matt Reed (Treasury) lead the panel discussion on Monday, March 2nd. Inclement weather kept our fifth panelist, Robin Doyle of JPMorgan Chase, in New York but she joined by phone.

Left to right: Christina Ho (Treasury), Irina Leonova (Better Markets, Inc.), Karen Lee (OMB), and Matt Reed (Treasury) lead the panel discussion on Monday, March 2nd. Inclement weather kept our fifth panelist, Robin Doyle of JPMorgan Chase, in New York but she joined by phone.

Last week, the Coalition kicked off its Data Transparency Breakfast series for 2015. The series highlights current challenges and opportunities of data transparency for an expanding audience of policymakers and industry leaders. Coalition member Booz Allen Hamilton sponsored and hosted our first breakfast event of the year at their downtown Washington, D.C offices. Despite icy roads, school closings, and a two-hour delay on federal government operations, we were joined by a full audience representing Congressional offices, federal agencies, nonprofits, and the private sector.

The morning’s discussion focused on one of the most important challenges of the open data transformation – the need for the government to adopt consistent and nonproprietary identification codes for private-sector entities. Our five panelists (pictured above with the exception of Robin Doyle) are leading two largest efforts toward the adoption of consistent entity identifiers: one in federal spending and the other relating to federal financial regulation.

Why common IDs matter now

Under the DATA Act, the Treasury Department and the White House Office of Management and Budget (OMB) will, for the first time, have the legal mandate to require the adoption of consistent identifiers for all the grantees, contractors, and others who receive federal funds. By May 9, 2015, with the establishment of government-wide data standards for federal spending, Treasury and OMB must decide whether to announce the establishment of a pathway towards a new nonproprietary identifier for recipients, or stick with the DUNS Number, the identifier that is currently used for most grantees and contractors.

The DUNS Number is proprietary – owned by a contractor, Dun & Bradstreet. Anyone seeking to use federal spending information must pay Dun & Bradstreet for a license. In recent weeks, former Fiscal Assistant Secretary Dick Gregg, the Association of Government Accountants, and the tech industry – including the Coalition – have all been calling for Treasury and OMB to announce a movement away from proprietary identifiers and establish a pathway to use a nonproprietary identifier for grantees and contractors instead.

The Legal Entity Identifier (LEI)

Separately from the DATA Act effort, the Treasury Office of Financial Research (OFR) is seeking to persuade all the U.S. financial regulatory entities to adopt a consistent identifier for the financial firms and public companies that must report under the securities, commodities, and banking laws.

Irina Leonova, a financial data expert and Banking Specialist at Better Markets, and Matt Reed, Chief Counsel at the OFR, started the program off with perspectives on the Legal Entity Identifier (LEI) and their participation in its global rollout.

Since 2010, the OFR has been working with financial regulators around the world to establish the Legal Entity Identifier (LEI) – a global standard for entity identification. The LEI is nonproprietary and built for interoperability. And it’s domain-agnostic, which means it’s just as easily used by a securities regulator as by a contracting office.

According to Matt Reed, simply put, the value of the LEI hinges on its ability to answer three basic questions:

  1. Who is who? LEIs uniquely identify entities.
  2. Who owns whom? LEIs show parent-child corporate relationships.
  3. Who owns what? LEIs attached to products show who owns what.

“A good data standard is defined by the governance model it’s based on.”

Ms. Leonova offered insight into the importance of the LEI’s governance framework for producing high quality data. At the top of the structure is the Regulatory Oversight Committee (ROC). The ROC, a group made up of more than 60 public sector authorities, holds the ultimate responsibility for the governance of the global LEI system. Underneath the ROC are “Local Operating Units” of the Global LEI System. This is where you go to obtain an LEI. Matt Reed estimated that 350,000 LEI’s are already in use today, representing legal entities around the world.

To act as the operational arm of the Global LEI System, the Global LEI Foundation was established in June 2014 as a nonprofit organization overseen by the ROC, Robin Doyle of JPMorgan Chase (who has been involved with LEI program for years given the interest of the financial service industry) explained. Today, there is not yet a centralized database of LEIs and corresponding reference data. But according to Ms. Doyle, the Global LEI Foundation will have access to and maintain the database in the near future.

Matt Reed expanded on the importance of LEI’s governance system. The LEI, Reed said, is useful to use on an ongoing and free basis without the threats offered by proprietary system. For example, if a private contractor owns the data standard that is used to collect, exchange, and publish federal spending information, that information cannot be freely reused and cannot be deemed truly “open.”

DATA Act implementers’ perspectives

Will the work of the DATA Act implementers (in federal spending) and the LEI specialists (in financial regulation) ever come together? Could Treasury and OMB simply adopt the LEI as the common identifier, under the DATA Act, for federal grantees and contractors?

The Coalition firmly believes that the adoption of a nonproprietary system such as the LEI would mark a major step forward in creating transparent and accountable filings. However, as our panelists tasked with the implementation of the DATA Act, Christina Ho of Treasury, and Karen Lee of OMB both acknowledged on Monday: large scale change is difficult.

Christina Ho, Deputy Assistant Secretary of the Treasury for Financial Transparency, indicated that she was impressed by the progress made by the LEI initiative, especially given the global scale of the program, she went on to draw parallels to the DATA Act. In federal spending just as financial regulation, lack of systems interoperability means that we simply can’t share data across the federal government. Data standards will solve that problem but implementing broad standards will mean implementation roadblocks along the way. According to Ms. Ho, Treasury and OMB are working closely on the standards, “We are aware there will be implementation challenges, we have to consider these challenges as we think now about what the right standard is.”

Karen Lee, Branch Chief at OMB, also seemed impressed with the progress on the LEI, noting that the system has been thoughtfully put together. She went as far as to say, “Our perspective should be relooked.” However, Ms. Lee also made points in favor of sticking with the DUNS number. “We need to have the conversation about how we bring the data together for the most utility,” Ms. Lee said, going on to note that we need to find a way to leverage the standards we have now.

Dun & Bradstreet weighs in

A short Q&A session followed the in depth panel discussion. A representative from Dun & Bradstreet bravely (considering the room) weighed in. From D&B’s perspective, 25 years of partnership with the government afford them the experience and best practices to execute great data quality. Proprietary is not evil, the representative said, and concluded: “Let’s get off this rhetoric and get DUNS off the chopping block.”

Treasury and OMB clearly haven’t yet decided whether, under the DATA Act, to move toward a nonproprietary identifier for recipients of federal funds. But if they do, the LEI seems to be their leading candidate.