GLEIF and Five ‘First Mover’ LEI Issuers Successfully Conclude a Prototype Exercise to Identify Who Owns Whom in the Global LEI System
Starting in 2017, the publicly available LEI data pool will be gradually enhanced to include information on direct and ultimate parents of legal entities
Author: Stephan Wolf
Estimated Reading Time: 4 minutes
The Global Legal Entity Identifier Foundation (GLEIF) and five ‘first mover’ Legal Entity Identifier (LEI) issuing organizations have successfully concluded a prototype exercise to test the end-to-end process of collecting and validating data on the direct and ultimate parents of legal entities that have an LEI. GLEIF will start publishing parent information in early 2017. Including this information in the publicly available LEI data pool will allow connecting the corporate dots globally with open, standardized and high quality LEI data.
The LEI issuers that participated in the prototype exercise, which was completed on 7 December 2016, are: Bundesanzeiger Verlag, Business Entity Data (DTCC’s GMEI Utility), London Stock Exchange Plc, Saudi Arabia Credit Bureau and Unione Italiana per le Camere di Commercio, Industria, Artigianato e Agricultura. LEI issuing organizations act as the primary interface for legal entities that have registered, or wish to obtain, an LEI.
The LEI connects to a set of reference data that enables clear and unique identification of legal entities participating in financial transactions. The information available with the legal entity reference data, to date, e.g. the official name of a legal entity and its registered address, is referred to as ‘Level 1’ data. It provides the answer to the question of ‘who is who’. In a next step, the LEI data pool will be gradually enhanced to include ‘Level 2’ data, i.e. information that will answer the question of ‘who owns whom’.
With the prototype exercise, all aspects of the process, developed to collect, validate and eventually publish information on direct and ultimate parents of legal entities, were tested successfully. The participating LEI issuers worked with selected actual legal entities that have obtained an LEI to collect the parent information. The LEI issuers received accounting documents from the legal entities to validate the information and created data records using technical documentation developed by GLEIF. In addition, the participating LEI issuers uploaded the data records via an interface provided by GLEIF, using an encrypted transfer protocol, and electronically signed the files to ensure authenticity. GLEIF performed checks to verify compliance of the sample files created by the LEI issuers with relevant technical documentation and business rules.
In addition, during a three-month pilot project, GLEIF tested the process of collecting and validating Level 2 data with a large bank that is the direct or ultimate parent of hundreds of legal entities. Both the prototype exercise and the pilot project allowed identifying important lessons learned as regards the specific requirements that must be observed to ensure a smooth process and, in particular, streamline the efforts required to validate parent information.
In summary, the prototype exercise confirmed that a proven and robust process is now in place that facilitates the inclusion of parent information in the publicly available LEI data pool in accordance with agreed timelines.
In early 2017, GLEIF will start publishing, as a first step, data on direct and ultimate parents collected by the LEI issuing organizations participating in the prototype exercise. In a phased approach, parent information for legal entities that have obtained, or wish to get, an LEI will be added to the LEI data pool. It is expected that parent information for the majority of the LEI population will be available at the latest at the start of 2018.
The 2008 financial crisis, and more recently, the leak of the Panama papers, has made apparent the importance of increasing transparency in the financial markets. Once parent information for the entire LEI population is available, GLEIF will provide a unique and free data source that allows corporate dots to be connected globally based on open, standardized and high quality LEI data.
In March 2016, the LEI Regulatory Oversight Committee, representing public authorities from around the globe, published the policy document entitled ‘Collecting data on direct and ultimate parents of legal entities in the Global LEI System – Phase 1’ (see ‘related links’ below). It sets out the principles governing the process of collecting, validating and publishing parent information in the Global LEI System.
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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.