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GLEIF Pioneers the Inclusion of LEIs in Machine-Readable Financial Reports, to Enhance Trust Through Identity Verification and Easy Online Data Aggregation

GLEIF 2018 annual report in Inline XBRL becomes first financial statement to embed LEI


Author: Stephan Wolf

  • Date: 2019-05-22
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The Global Legal Entity Identifier Foundation (GLEIF) has pioneered the inclusion of a Legal Entity Identifier (LEI) within digital, machine-readable financial documentation. In partnership with XBRL International, GLEIF has published its 2018 annual report in human and machine-readable Inline XBRL and HTML format, with GLEIF’s LEI embedded into the financial information for the first time. It becomes the first official business report globally which automatically links the filing entity to its verified LEI reference data held within the Global LEI Index.

The Global LEI Index is the only global online source that provides standardized, high-quality and free-to-access legal entity reference data on entities with an LEI. Reference data includes business card information on an entity, including name and registered address, together with relationship data which confirms if the entity owns, or is owned by, other entities. Verified annually by GLEIF accredited LEI issuers, reference data is accurate and up-to-date.

XBRL International is the standards development organization behind the freely-licensed XBRL specifications. The purpose of XBRL International is to improve the accountability and transparency of business performance globally, by providing the open data exchange standard for business reporting. The standards are used by more than 130 regulators in more than 70 countries to collect high quality, reliable and timely digital business information from millions of companies around the world.

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Integrating the LEI in machine-readable reports can generate significant industry-wide benefits, including enhanced data check methods and reduced fraud.

Integrating the LEI into digital business reports: improved entity verification and easy online data aggregation

The process of embedding an organization’s LEI – or that of its affiliates, subsidiaries and parent companies – within digital financial reports, allows market participants who rely on official documents to inform strategic decisions (e.g. traders, investors, regulators) to quickly and easily consolidate and verify information on a filing entity.

Significant advantages of this approach to financial market participants include:

  • Easy verification of the filing entity’s identity based on its LEI, resulting in greater end-user trust in the authenticity and integrity of the documents.
  • Automated access to aggregated data on the filing entity. This will create multiple benefits including: enhanced visibility of the entity’s reference data available within the Global LEI Index; opportunities to create new online databases that collate key data assets of entities with an LEI; and easy aggregation of information on companies obtained from multiple sources supporting comparability of standardized financial information.
  • Increased transparency for end users on an entity’s ownership structure. Relationship networks between LEIs can be quickly and automatically established when the LEIs of the filing entity, its affiliates, subsidiaries and parent companies are provided in machine-readable financial reports.
  • Improved ability for regulators to minimize market abuse.
  • The GLEIF annual report 2018 has been signed with eIDAS (electronic IDentification, Authentication and trust Services, an EU regulation) compliant certificates. It represents the use of an LEI embedded in a certificate to provide lifetime trust and (technically) non-repudiation. 

By publishing GLEIF’s 2018 annual report with an embedded LEI, GLEIF and XBRL International have taken the first step in revolutionizing the process of publishing, accessing and aggregating trusted digital financial information. Filing financial statements in Inline XBRL format has already become a compliance requirement across many jurisdictions. GLEIF encourages companies preparing for this scenario to consider not only the advantages of making paper or PDF-based reporting a thing of the past, but of also integrating the LEI of the filing entity, its affiliates and parent companies in their machine-readable reports. Such a simple action can generate significant industry-wide benefits, including increased trust, enhanced data check methods, and reduced fraud. Through this development, GLEIF has demonstrated another tangible way in which LEIs support the global digital economy.

John Turner, XBRL International CEO, comments: “This important first step towards integrating the LEI with the XBRL standard demonstrates the global benefits that are possible with unique identification and digitized, structured reporting. This is a clear example of the efficiencies to be gained when tagging and structuring data and the potential of structured data for analysis, innovation and collaboration. The natural collaboration between the LEI and XBRL will offer new, heightened transparency, enhanced trust and clarity, providing significant assistance to regulators and financial markets.”

Incorporating the LEI into digital signatures: increased certainty and trust

Within GLEIF’s 2018 annual report, GLEIF’s LEI is also embedded within the digital certificates of GLEIF’s signing executive officers. These certificates, for the first time, connect the role of the signatory to an organization through the LEI and can therefore be used to verify – automatically, through the shared LEI – that the filed document and the signatories represent the same organization. Incorporating a company’s LEI within digital certificates of its executive officers used to sign financial statements provides reassurance on the data’s reliability and that the information has not been tampered with, despite permitted access to the filed document via any public server globally. Deploying digital signatures, including that of the auditor, also enables efficient report production and distribution processes, the elimination of paper and increased certainty and trust.

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Incorporating the LEI into digital certificates supports the digitization of business transactions and increases certainty and trust.

The digital certificates of GLEIF’s signing executive officers included with its 2018 annual report are compliant with the European Union’s Electronic Identification and Trust Services (eIDAS) Regulation. As stated on the European Commission’s website (see ‘related links’ below), the eIDAS Regulation “enables the use of electronic identification means and trust services (i.e. electronic signatures, electronic seals, time stamping, registered electronic delivery and website authentication) by citizens, businesses and public administrations to access on-line services or manage electronic transactions.” It creates a European internal market for electronic trust services “by ensuring that they will work across borders and have the same legal status as traditional paper based processes. Only by providing certainty on the legal validity of all these services, businesses and citizens will use the digital interactions as their natural way of interaction.”

With a view to further the digital economy globally, GLEIF aims to make standardized digital signing with the LEI available to all. A standard way to embed the LEI in digital certificates as a new separate part of the LEI standard (ISO 17442) has been proposed and is currently under development by the International Organization for Standardization.

Acknowledgements

GLEIF would like to thank XBRL International, PortAlchemy, Aguilonius, FirmaPro, Workiva and Lange Design Intelligence for their software development and support during this project. Without them, creating the GLEIF annual report 2018 in Inline XBRL would not have been possible.

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About the author:

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.


Tags for this article:
Client Relationship Management, Data Management, Digital Identity, Global Legal Entity Identifier Foundation (GLEIF), Global LEI Index, Know-Your-Customer (KYC), LEI Business Case, Open Data, Over-the-Counter (OTC) Derivatives, Risk Management, Standards