We’ve written about unique corporate identifiers on this blog with relative frequency over the past year. We even built a microsite to explain that this seemingly mundane bookkeeping detail actually has big implications for government transparency. Tracking entities uniquely in federal spending data, campaign contributions and lobbying data is very difficult right now. The federal government relies on DUNS numbers, which are not only expensive, but are also restricted in their use because of their proprietary nature.

This week, I attended a meeting for the Financial Stability Board‘s (FSB) Global Legal Entity Identifier initiative. The initiative has the backing of the G20 countries, all of which have already endorsed the FSB’s 35 recommendations and 15 high level principles. The recommendations and principles contain many elements we at Sunlight are particularly thrilled to see:

Recommendation 5:

SYSTEM FLEXIBILITY Flexibility must be built into the global LEI system to provide the capability for the system to expand, evolve and adapt to accommodate innovations in financial markets. It must also allow the seamless introduction of new participants. To these ends, critical software and other relevant elements must be defined and made publicly available without any licensing, intellectual property or similar restrictions under open source principles. The LEI should be portable within the global LEI system.

Recommendation 12:

LEI REFERENCE DATA ON OWNERSHIP The FSB LEI Implementation Group should as soon as possible develop proposals for additional reference data on the direct and ultimate parent(s) of legal entities and relationship or ownership data more generally and to prepare recommendations by the end of 2012. The group should work closely with private sector experts in developing the proposals.

Recommendation 31:

LEI INTELLECTUAL PROPERTY The LEI Implementation Group should conduct analysis and provide recommendations on the treatment of the “LEI” intellectual property (such as the LEI code, software, reference data, anhttp://www.irs.gov/businesses/corporations/article/0,,id=236667,00.htmly other LEI data, operational protocols, etc) according to the principles of open access and the nature of the LEI system as a public good. The objective of this analysis shall be to ensure a regime that assures the availability in the public domain, without limit on use or redistribution, of LEI data, reference data, and processes. Any intellectual property rights should be held by, or licensed to the global LEI foundation unless defined otherwise by the Regulatory Oversight Committee. Copyright should be used to the extent possible to promote the free flow or combination of information from disparate sources.

The dedication to preventing vendor lock-in and the definition of the LEI as a public good is a huge step towards achieving a long term solution for this problem. And while the implementation is still not solidified, the FSB has nailed some of the core principles.

The motivation for a highly reliable LEI stems mostly from the need for international financial stability, and as such, financial institutions are specifically targeted with this initiative. The meeting I attended had a majority representation from financial regulators, investment banks, and related contractors. However, there was also strong representation from academia, NGOs, and foundations, especially those working in the prevention of international money laundering. Even though the financial sector is the main audience right now, there’s a general acknowledgement that the global LEI will have further reaching applications than the board can initially anticipate. Because of this, they are soliciting diverse participation to make it as useful as possible to the greatest amount of people.

It was great to see that there are hundreds of people who are thinking about this problem from different perspectives and are committed to devising a system that will comprehensively address it. It may still take many years for the global LEI to become truly ubiquitous, but the foundation being built right now is a great start.