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GLEIF Published the Quarterly Global LEI System Business Report Covering the First Quarter of 2018
The Global LEI System Business Reports highlight main trends relevant to the adoption of the LEI and provide in-depth analysis of the LEI data pool
Author: Stephan Wolf
Estimated Reading Time: 4 minutes
In May 2018, the Global Legal Entity Identifier Foundation (GLEIF) published the latest quarterly report, which highlights key developments relevant to the adoption of the Legal Entity Identifier (LEI). Specifically, the reports assess annual growth and renewal expectations, evaluate the level of competition between LEI issuing organizations operating in the Global LEI System and analyze LEI renewal rates and reference data corroboration. Since July 2017, we also deliver statistics on direct and ultimate parent information provided by legal entities.
To download the ‘Global LEI System Business Report’ which covers the first quarter of 2018, refer to the ‘related links’ below.
This blog post summarizes the main findings of the latest report. Sources cited are included in the ‘related links’ below.
Main findings of the latest Global LEI System Business Report
The Global LEI System Business Report, which was published in May 2018, analyses developments observed in the first quarter of 2018. It shows:
State of play of LEI issuance and LEI growth potential
At the end of the first quarter of 2018, the total LEI population exceeded 1.1 million. Following the peak of almost 400,000 newly issued LEIs observed in the fourth quarter of 2017, the number of new LEIs decreased to 167,353 in the first quarter of 2018. The extraordinary growth in the second half of 2017 was primarily triggered by impacted market participants seeking to achieve compliance with the revised EU Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR), which took effect on 3 January 2018. The drop in LEI issuance in the first quarter of 2018, once the deadline had passed, demonstrates the success of LEI rollout leading up to MiFID II / MiFIR coming into force.
Market participants that have yet to comply with the LEI requirements established by MiFID II / MiFIR are reminded that relevant transitional arrangements communicated by the European Securities and Markets Authority (ESMA) only apply temporarily. (On 20 December 2017, ESMA stated that it allows for a “period of six months that investment firms may provide a service triggering the obligation to submit a transaction report to the client, from which it did not previously obtain an LEI code, under the condition that before providing such service the investment firm obtains the necessary documentation from this client to apply for an LEI code on his behalf.”)
It is also worth noting that LEI issuance in the first quarter of 2018 significantly exceeded historic data:
This trend might be indicative of an increased understanding of the cost saving and efficiency benefits associated with global LEI adoption among the wider business community. (See, for reference, the McKinsey & Company and GLEIF white paper titled ‘The Legal Entity Identifier: The Value of the Unique Counterparty ID’ included in the ‘related links’ below.)
Competition in the Global LEI System
The report identifies the least and most competitive markets of those with more than 1,000 LEIs, based on the number of LEI issuers providing services in the country. In the first quarter of 2018, Bulgaria, Malta, Portugal, Switzerland and South Africa were the most competitive markets. Competition notably decreased in India and Slovenia demonstrating that LEI management in these jurisdictions became more concentrated to one LEI issuer.
LEI renewal rates
In the first quarter of 2018, the overall renewal rate of 66.3 percent remained essentially unchanged compared to the previous quarter. At the end of the first quarter of 2018, 84 percent of all LEIs were in good standing. It must however, be noted that the absolute number of lapsed LEIs increased by 26,645 over the past twelve months.
Statistics on the reporting of parent information by legal entities
In May 2017, the process of enhancing the LEI data pool, by including ‘Level 2’ data to answer the question of ‘who owns whom’, began. By the end of the first quarter of 2018, about 838,000 LEI registrants representing 75 percent of the total LEI population reported information on direct and ultimate parents (previous quarter: 61 percent). 28 percent of the information on direct parents reported has been fully corroborated (no change compared to the previous quarter). Only four percent of legal entities cited legal obstacles preventing them from providing or publishing parent information.
The quarterly reports refer to concepts and definitions unique to the Global LEI System. To facilitate an easy understanding of the reports, we have summarized relevant concepts in the document ‘Background Information on Global LEI System Business Report’.
GLEIF also makes available the ‘Business Reporting Dictionary’, which defines formulas and algorithms used to report on the LEI activity highlighted with the quarterly reports.
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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.