Governments are poised to impose a global identification system on the financial industry as well as on main street corporations that use financial markets. The U.S. Treasury's Office of Financial Research is scheduled to do this by July 15 if the industry does not come together to do this themselves.

The U.S. government’s bold step will only succeed if regulators of other nations and chief executives of global stature step up and help shape the agenda of a universal identification system. Chief executives of financial institutions and corporations will be wise to organize themselves to put forward an industry-led solution.

The industry has been preparing itself to offer suggestions to the OFR through trade associations and ad-hoc groups that are studying the issue. It will be left to chief executives to rally around one or more industry initiatives or leave it to the OFR to offer their own choices.

The lack of global identification standards for the financial industries' products, supply chain participants and counterparties, was first identified by the Group of Thirty, a think-tank made up of leading current and former heads of state and central bankers, nearly two decades ago.

The current debate on how to anticipate and mitigate systemic risk has spawned many proposed public and private sector solutions. They all point back to the root cause as an inability to aggregate risk information, which in turn points back to missing identification standards that, in a global financial system needs a global solution.

It is noteworthy that the financial industry is far behind other industries in this important effort to standardize identity data. The Internet has evolved from the start with universal identification. The global telephone system has also evolved around universal identification. The manufacturing and retail sectors evolved around universal bar codes and supply chain standards. Each of these industries can trace transactions across the globe and aggregate information of like customers and like products easily and efficiently.

However, financial regulators are still incapable of linking known toxic structured bonds originated in the U.S. to those on the balance sheet of a failing bank on the other side of the globe; nor are they able to observe the counterparty positions building toward the contagion of systemic risk across multiple financial institutions as was the case with so many banks who held collateralized mortgage backed bonds.

Why should financial industry executives get involved? The starting points of most this financial activity is with them. When their boards decide to issue a new class of securities or do a secondary offering or declare a dividend or announce a merger, or its investment committee decides to use hedging and swaps market products, or its treasury department decides to issue commercial paper, or its pension committee decides to investment in alternate asset classes they are at the front of the line in the life cycle of a financial transaction.

Chief executives and their boards engage armies of lawyers, investment bankers, accountants and investment advisors to implement their interests in originating and participating in these transactions. These professionals are the authors of all identifying information and reference data. Written in legal and financial language, this information find its way into prospectuses, offering memorandum, trust agreements, articles of incorporation, corporate event announcements and the like. Interpreting these legal terms and financial jargon through many human subjective processes is necessary today to populate all the disparate and duplicative identification and reference data that supports a financial transaction. This faulty process is a root cause of so much of the problem of lack of transparency. Chief executives' willingness to support the standardization and computerized tagging of this data at its origins and to allow their companies to be uniquely and universally identified is a crucial step in solving this long standing problem.

The benefits to corporate users of financial services are limitless: being able to see inside financial products via automated means and deconstruct their components for risk assessment and valuation purposes; to easily and automatically access financial industry records, i.e., shareholder lists, counterparty activities, risk exposure, trading activity, shareholder ownership concentrations; to penetrate into regulatory data at a granular level, including footnotes in the balance sheet, cash flow and income statements; and the ability to associate news events with any and all of the above, and monitor this all in real time.

Corporations, regulators, the public and financial institutions will be able to easily access the financial data that emanates from corporate filings, prospectuses, corporate notices, etc., and is transformed into analyzed, processed, reconfigured, segmented and structured financial information and products.

To get on with the regulator's global agenda, however, chief executives of all stripes will have to step up and be counted.

Allan D. Grody is the president of Financial Intergroup Holdings Ltd.  He is a founding editorial board member of the Journal of Risk Management in Financial Institutions.