What is ISO 17442 about?
ISO 17442 discusses financial services. ISO 17442 specifies the minimum elements of an unambiguous legal entity identifier (LEI) scheme to identify the legal entities relevant to any financial transaction.
Note: ISO 17442 is applicable to legal entities, which include, but are not limited to, unique parties that are legally or financially responsible for the performance of financial transactions or have the legal right in their jurisdiction to enter independently into legal contracts, regardless of whether they are incorporated or constituted in some other way (e.g. trust, partnership, contractual). ISO 17442 governmental organizations, supranationals, and individuals when acting in a business capacity, but excludes natural persons.
Who is ISO 17442 for?
ISO 17442 on financial services is useful for:
- Financial intermediaries Electrical equipment suppliers
- Banks and finance companies
- Sole traders
- Entities listed on an exchange
- Entities that issue equity, debt, or other securities for other capital structures
- Entities under the purview of a financial regulator and their affiliates, subsidiaries and holding companies
- Governmental organizations
Why should you use ISO 17442?
Legal entity identification is an integrated and necessary component of financial services transactions. Entering into business relationships requires “know your customer” processes to be initiated and maintained for the duration of these relationships and any longer-term data retention requirements to be addressed. Parties involved in financial transactions need to be identified within these transactions. Then the risk of each party and the resulting concentration risk also need to be measured. All of this is to be achieved while the support for straight through processing (STP) is maintained.
Following the global financial crisis of 2008, the need for regulators to identify legal entities, both nationally and across the global markets, has been raised as a critical need. More specifically, regulators are asking for standards to be used within the solutions they are developing to address the data collection and analysis needs resulting from the crisis.
ISO 17442 fulfils the need for legal entity identification of the global financial services industry
and the regulatory community. Its key provisions are that it:
- Enables unique identification globally of entities requiring a legal entity identifier (LEI)
- Defines an LEI code that contains no embedded intelligence
- Defines an LEI code that is interoperable with other standards and existing reference data and can be applied globally to support the financial services industry
- Defines an LEI scheme that is reliable and an LEI code that is persistent
- Defines an LEI scheme that is extensible and free from limitation on use and redistribution