ANNA and GLEIF Join Forces on ISIN-to-LEI Mapping Initiative
Linking both standards to improve transparency and aid risk and exposure management
Author: Stephan Wolf
Estimated Reading Time: 8 minutes
On 4 September 2018, the Association of National Numbering Agencies (ANNA) and the Global Legal Entity Identifier Foundation (GLEIF) have announced the signing of a new initiative to link International Securities Identification Numbers (ISINs) and Legal Entity Identifiers (LEIs). The initiative has been created to help improve transparency of exposure by linking the issuer and issuance of securities.
The ISIN is the recognized global standard for unique identification of financial instruments, e.g. securities. “A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some jurisdictions the term specifically excludes financial instruments other than equities and fixed income instruments. In other jurisdictions, it includes some instruments that are close to equities and fixed income, e.g., equity warrants. In some countries and languages, the term ‘security’ is commonly used in day-to-day parlance to mean any form of financial instrument, even though the underlying legal and regulatory regime may not have such a broad definition.” (Wikipedia). The LEI connects to key reference information that enables clear and unique identification of legal entities participating in financial transactions, e.g. the issuers of securities.
The new, global initiative will map new and legacy ISINs to their corresponding LEIs. By linking the two ISO standards together, firms will be able to aggregate the data required to gain a clear view of their securities exposure within a given issuer and its related entities. Once implemented, the ISIN-to-LEI mapping table will be made freely available to all without restriction on both the GLEIF and ANNA websites.
As the registration authority for the ISIN, ANNA has been responsible for evolving and promoting the ISIN standard through its work and collaboration with members, regulators and the industry at large. As a result, today ISINs are issued in more than 200 jurisdictions worldwide, enabling global cross-border trading and improved transparency. This initiative underlines ANNA’s commitment and mission to promoting the use of standards, including the two ISO standards used in this initiative: ISIN (ISO 6166) and LEI (ISO 17442).
Public authorities in many jurisdictions rely on the LEI to evaluate risk, take corrective steps and, if required, minimize market abuse and improve the accuracy of financial data. Taking advantage of the open LEI data pool empowers organizations across the board to cut costs, simplify and accelerate operations and gain deeper insight into the global market place. The LEI offers a one-stop approach to identifying legal entities, which has the potential to take the complexity out of business transactions.
Dan Kuhnel, Chairman, ANNA, said, "We are constantly looking at ways to promote standardization and bring about harmony in the financial industry, and are delighted to work together with GLEIF to link two important ISO standards together. We look forward to working with the National Numbering Agencies to help move this initiative forward into the implementation stage.”
From the GLEIF perspective, it is important to highlight that while the linking of ISINs and LEIs has been mandated by some regulations, we see this new initiative as beneficial to the entire global market. It is the first big step in having the tools available for aggregation of the data necessary to assist with risk and exposure management.
Recap: LEI mapping and the GLEIF certification process
(We first reported the following information with the GLEIF blog post published on 15 May 2018 titled ‘GLEIF Launches Certification of LEI Mapping Service’.)
The GLEIF Certification of Mapping service is a free of charge certification process. It ensures that organizations which map the LEI to their own identifiers use reasonable methodologies and / or processes to do so accurately. Data vendors and other organizations benefit significantly from mapping their applicable identifiers to the LEI, as this provides enhanced functionality to their customers. The Certification of Mapping service also supports the integrity of the Global LEI System, by ensuring that quality controls associated with mapping identifiers to the LEI meet or exceed requirements defined by GLEIF.
Following certification, the mapping partner is required to maintain these quality standards and at regular intervals GLEIF performs validation activities to confirm that the output continues to meet GLEIF’s required performance standards. GLEIF also publishes a relationship file that matches the applicable identifier against the LEI. Data users may access this information via the GLEIF website for integration into their existing data platforms.
In February 2018, GLEIF and SWIFT successfully pioneered the certification process with the launch of the first monthly open-source relationship file that matches the Business Identifier Code (BIC) assigned to an organization against its LEI. This cooperation demonstrates how market participants can work with GLEIF to cross-reference key entity identifiers, completely free of charge. The BIC-to-LEI relationship files are built upon a mapping process established by SWIFT and certified by GLEIF.
Detailed information on the certification process as well as relevant documentation is available on the dedicated GLEIF website page ‘GLEIF Certification Process’ (see ‘related links’ below).
Recap: The benefits
Entity identification can be a time-consuming, costly and complex task. Relevant information is often stored in disparate internal and external systems and tagged under different client ID numbers. To address these challenges among others, GLEIF publishes the Global LEI Index, which contains the historical and current LEI records including related reference data in one authoritative, central repository. The reference data provides the information on a legal entity identifiable with an LEI, answering ‘who is who’ and ‘who owns whom’. The Global LEI Index is the only global online source that provides open, standardized and high quality legal entity reference data.
By mapping an entity’s alternative identifiers against their corresponding LEI, data vendors and other organizations can provide enhanced functionality and a smoother, frictionless experience to their customers. The resulting interoperability across parallel ID platforms leads to more streamlined entity verification processes and significant reductions in data management costs for data users.
The Certification of Mapping service, and the subsequent publication by GLEIF of publicly available, open source relationship files which match identifiers against corresponding LEIs, eases the process of gathering, aggregating and reconciling counterparty information. It is easy to understand how this can be valuable in many instances, including compliance, regulatory reporting, client relationship management, and of course, due diligence. It is also clear to see that the benefits of a certified process for mapping identifiers to LEIs can be enjoyed across any industry which relies on accurate entity verification and which values enhanced transparency in the global marketplace.
In summary, the GLEIF Certification Mapping service responds to the pressing market demand for more streamlined entity verification processes recently confirmed with a GLEIF research study. (To learn about GLEIF’s research findings on the challenges of entity identification in financial services, refer to our website page ‘LEI in KYC: A New Future for Legal Entity Identification’ included in the ‘related links’ below.)
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Stephan Wolf is the CEO of the Global Legal Entity Identifier Foundation (GLEIF). Since January 2017, Mr. Wolf is Co-convener of the International Organization for Standardization Technical Committee 68 FinTech Technical Advisory Group (ISO TC 68 FinTech TAG). In January 2017, Mr. Wolf was named one of the Top 100 Leaders in Identity by One World Identity. He has extensive experience in establishing data operations and global implementation strategy. He has led the advancement of key business and product development strategies throughout his career. Mr. Wolf co-founded IS Innovative Software GmbH in 1989 and served first as its managing director. He was later named spokesman of the executive board of its successor IS.Teledata AG. This company ultimately became part of Interactive Data Corporation where Mr. Wolf held the role of CTO.