Let's hear it for three little acronyms that are set to bring straight-through processing (finally) to the finance industry. They are: LEI (legal entity identifier), UPI (unique product identifier), and UTI (unique transaction identifier). Fans of abstraction will notice these are identifiers for the three core entities that turn up in every business: party, product, and transaction.
A progress update on the uptake of these identifiers by Allan Grody of Financial InterGroup is frank and instructive. There are more acronyms to negotiate, but I take two key points from this useful report. First, I note the impetus for standardization is coming largely from regulators even though financial institutions stand to make great gains in understanding their risk exposures.
Second, I appreciate the small but significant point about difficulties implementing the LEI. The LEI is 20 characters – too long for many legacy systems. It could easily be halved and still have all the coverage and longevity it needs. This looks like it was a miss-step – but kudos to Grody for exploring the issue. Human beings aren't perfect and we learn from our mistakes.
I want to add that “barcodes of finance” is a great phrase. Grody and his colleagues are to be congratulated for creating an image with great power and resonance. This is a great way of encapsulating the nature, universality, and value of standardized identifiers for a general audience. TABB