By Friday SIFMA should have a remendation for the Office of Financial Regulation (OFR) on who should be in charge of Legal Entity Identifiers (LEI), the first step toward improving global regulation. After all, if you don’t know whom you are dealing with, how can you measure exposures or react to bankruptcies? In 2008, banks and rporations scrambled to determine their exposures to Lehman and its many subsidiaries. Just three years after the financial crisis, the industry is preparing to think about creating the infrastructure needed to respond to, or maybe even prevent, a repetition. The LEI would provide a unique identification tag for every financial services entity and perhaps extend to the financial instruments they issue.

SWIFT and DT may be the frontrunners in the financial services industry, largely because they are a known quantity and SWIFT has backing from the ISO, the International anizations for Standards.

GS1, while little known in finance, has also applied for a role in developing the identifier. It’s best known for, or rather its its best-known product, is the Universal Product de — the familiar bar de which shows up on all sorts of products and packages. It is a global not-for-profit group working in a federated structure of national anizations, under a Brussels headquarters. It has 115 national anizations reaching into 150 untries and 25 industries. It has experience in plex fields, such as identifiers for drugs which can reach down to the individual bottles, for defense operations where its bar des ensure the right helipter blades get to the right bases in Afghanistan, and in agriculture where its identifiers can be used to track ntaminated produce back to the producer, plant and individual field.

The anization, which has been meeting with federal regulators to explain what it does, said: “The GS1 proposal leverages existing global industry standards voluntarily used by over 1.5 million panies today. It provides key ponents that can help fix the current data issues quickly and with minimal ernment oversight. There is no need to create new identification standards in a lengthy development process; existing GS1 global standards can meet the needs of the financial services industry. The GS1 proposal is a proven approach greatly rcing the associated risk in inventing a new solution.”

“One of our key tes is that proper identification of assets, products or documents needs to start at the point of origination,” said Bob Carpenter, CEO of GS1 U.S.   Pharmaceutical panies, distributors and hospitals are using its unique des, which can be run down to the level of an individual bottle of a prescription drug or an hip replacement part, to track goods, see who has legal custody, and fight theft and unterfeiting.

“What we have heard from CFOs in the industry is that in 2008 there was a lot of requests from auditors and boards of directors on what exposure does the firm have to Lehman.” That was very difficult to answer because there was no legal identification with the unterparties or the exposures which had been acquired through syndication. He thinks the financial services industry should create the identifier at the time of origination rather than work with closing and settlement rerds and then relying on data vendors such as Bloomberg or Reuters to trace back the instruments.

Although this is meant to be a global initiative, so far SIFMA, the U.S. securities industry trade anization, has not signed up any international partners among regulators or trade associations.

GS1 has developed an international framework for health care, said Carpenter and he is nfident it uld do something similar in financial services. This methodology applies to financial services once the U.S. takes the first step, he added.

“I think people are looking to U.S. to offer leadership, and then they will e in behind it and support it or amend it.” He has talked with European Central Bank executives and at least one of their leaders was active in the Dodd-Frank legislation, he said.

“People are waiting to see what U.S. remendation will be and then will see if they can build a nsensus around that globally. This is where the federated approach of GS1 works. We can leverage a global anization to take an opinion that may e out of the Dodd-Frank or SIFMA process, and discuss it and work it through key targeted membership anizations and their local regulatory bodies to build nsensus and get feedback.”

The anization has limited exposure to financial services now — most around delivery of cash and EDI payments in Europe. But in its submission to regulators, GS1 has proposed a broader set of identifiers than simply legal entities. The identifiers uld extend to products and reference data using XBRL.

In its summary, GS1 said:

“The GS1 proposal deuples the issuance of identification numbers from the registration of reference data. In the GS1 proposal, GS1 acts as the issuing authority for numbers, but other anizations act as registrars of reference data, subject to local regulation. This allows for petition to drive down sts, avoids disenfranchising existing anizations with experience in financial data management, and also provides for local regulations that may vary from untry to untry.”

“Global data synchronization as it relates specifically to LEI is nventional,” explained Carpenter. “When you extrapolate that to the broad needs of the industry and data ordination, it will be more plicated, but that is something that the nsumer packaged goods, health care and food industry do pretty actively today.”