GLEIF Published the Quarterly Global LEI System Business Report Covering the First Quarter of 2020
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
In April 2020, 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 2020, 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
With COVID-19 impacting economic and financial markets activity worldwide, GLEIF and its LEI issuing partners are doing everything we can to maintain the highest levels of service in the Global LEI System, which is continuing to operate without disruption. As the global pandemic impacts countries around the world, GLEIF has recorded a slight decline in LEI issuance and renewal activities in the last two weeks of Q1, which is explained further in this report. However, GLEIF remains confident that the LEI population will continue to grow in 2020, as shown in Fig. 5. The Global LEI System was built to provide greater transparency for governments and industries around the world, particularly during times of crisis, and GLEIF is committed to offering our full support during this time.
The Global LEI System Business Report, which was published in April 2020, analyses developments observed in the first quarter of 2020. It shows:
LEI issuance and LEI growth potential: State of play
At the end of the first quarter of 2020, the total LEI population was around 1.56 million. Over 76,000 LEIs were issued during this quarter, compared to approximately 60,000 in the previous quarter. This represents a quarterly growth rate of 5.2% (previous quarter: 4.2%).
In the first quarter, China had the highest quarterly LEI growth rate at a jurisdiction level (53.4%), followed by India (17.8%), Estonia (15.2%), Poland (9.5%) and Mauritius (9.3%). This growth is primarily attributed to regulatory initiatives mandating the use of the LEI.
Despite the high issuance of new LEIs overall in the first quarter of 2020, the number started to fall during the last two weeks of March, most prominently in jurisdictions most heavily affected by COVID-19 for example, the United States and Italy. In addition, deadlines for regulatory implementations mandating the LEI are being extended. These included the Securities Financing Transaction Regulation (SFTR) reporting in the EU and the requirements laid out by the Reserve Bank of India. This is expected to delay further growth until later in 2020.
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 jurisdiction. In the first quarter of 2020, China, the Netherlands, Italy, Spain and the Czech Republic were the five least competitive markets in descending order. The five most competitive, also in descending order, were Lithuania, Romania, Portugal, Latvia and Malta. It is worth noting that the five least competitive markets are jurisdictions with local governmental authorities acting as LEI Issuers, indicating that legal entities seem to have a strong preference to working with these LEI Issuers.
In the first quarter of 2020, many markets continued to exhibit increased competition among LEI Issuers. In particular, the United States, India and the Scandinavian countries (Sweden, Norway and Denmark) have shown more relatively equal market shares among the LEI Issuers operating in these jurisdictions.
LEI renewal rates
The annual renewal process ensures that the legal entity and the LEI issuing organization review and re-validate the legal entity reference data at least once per year. The Global LEI System is unique in providing absolute transparency on the timeframe when data was last verified.
In Q1 2020, the overall renewal rate of 62.5% was lower than the previous quarter (66.7%). At the end of the quarter, 68% of all LEIs were in good standing (last quarter: 69.2%).
The renewal rate in the EU dropped slightly to 65.9% (previous quarter 67.3%). In non-EU jurisdictions, it was also lower at 56.1% (previous quarter: 58%). In the reporting period, the five jurisdictions which demonstrated the highest renewal rates were Finland (89.2%), Liechtenstein (87.4%), Japan (85.4%), Switzerland (76%), and Norway (75.8%). Brazil (62.1%), the United States (58.8%), the United Kingdom (57.4%), the Russian Federation (55.1%) and China (54.2%) had the highest non-renewal rates.
LEIs that were scheduled to be renewed in the last two weeks of March are being renewed at a lower rate than seen in previous weeks, especially for the United States, Finland, the Netherlands, China and India. Not enough time has passed, however, to confirm if this is a trend. GLEIF will monitor developments closely in the coming weeks.
Level 1 reference data corroboration
The business card information available with the LEI reference data, e.g. the official name of a legal entity and its registered address, is referred to as ‘Level 1’ data. It defines ‘who is who’. The Level 1 data is considered fully corroborated if, based on the validation procedures in use by the LEI issuer, there is sufficient information contained in authoritative public sources to corroborate the information provided by the legal entity for the record. If this is not the case, or the legal entity is not required to file with a local register (e.g. fund or trust), the business card information available with an LEI record is classified as ‘entity-supplied only’.
In the first quarter of 2020, the percentage of fully corroborated Level 1 reference data within the entire LEI population increased slightly to 81.1% from 80.6% in the previous quarter.
Statistics on the reporting of parent information by legal entities
In the first quarter of 2020, approximately 1.41 million LEI registrants representing 90% of the total LEI population had reported information on direct and ultimate parents. 99.9% of LEI registrants who obtained a newly issued LEI or renewed an existing LEI in this quarter reported 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.