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GLEIF Published the Quarterly Global LEI System Business Report Covering the Fourth Quarter of 2017
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: 3 minutes
In February 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 fourth quarter of 2017, 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 February 2018, analyzes developments observed in the fourth quarter of 2017. It shows:
State of play of LEI issuance and LEI growth potential
In 2017, the LEI population nearly doubled to approximately 953,000 LEIs. (As of 12 February 2018, almost 1.1 million LEIs have been issued to legal entities globally.) Of the almost 500,000 LEIs issued in 2017, 77 percent were issued in the fourth quarter: in October 2017, LEI issuing organizations issued 105,525 LEIs, followed by 118,195 LEIs in November and 163,059 LEIs in December. In December, the volume of LEIs issued daily peaked at over 10,000. Growth is particularly high in EU countries with the highest increase observed in the UK, Germany and The Netherlands, respectively. As in the previous quarter, we attribute the high rate of newly issued LEIs primarily to 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. According to MiFIR, investment firms should obtain LEIs from their clients before providing services which would trigger related reporting obligations.
The extraordinary growth managed in the fourth quarter of 2017 demonstrates the robustness of the Global LEI System and the strong capabilities built by the LEI issuing organizations to handle a massive surge in LEI registrations. This is further substantiated by the very high level of data quality maintained throughout the reporting period as demonstrated with the data quality reports published monthly by GLEIF.
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 fourth quarter of 2017, Germany, Belgium and the Cayman Islands proved to be the three countries where competition between LEI issuers increased most significantly. However, competition notably decreased in The Netherlands and Spain. The five most competitive markets were Bulgaria, Cyprus, Switzerland, Malta and Panama.
LEI renewal rates
The renewal rate in the EU (70.2 percent) and also in non-EU countries (51.9 percent) remained essentially unchanged compared to the previous quarter. (This includes only those countries with at least 1,000 LEIs in total at the previous quarter-end date.) With regard to the renewal rate in non-EU countries it has to be kept in mind that this is influenced strongly by the renewal rate in the U.S (45 percent in the fourth quarter of 2017). LEIs issued to legal entities in the U.S. make up almost 15 percent of the total LEI population. About 38 percent of all LEIs that have not been duly renewed represent entities based in the U.S. Between March 2015 and March 2017, we have consistently observed an overall renewal rate of about 70 percent. Due to the high increase in the total number of LEIs in the fourth quarter of 2017, the overall percentage of LEIs in good standing increased to 84 percent by December. However, the total absolute number of LEIs that failed to duly renew has grown by some 30,000 LEIs in 2017.
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 fourth quarter of 2017, about 581,000 LEI registrants representing 61 percent of the total LEI population reported information on direct and ultimate parents (previous quarter: 26 percent). 28 percent of the information on direct parents reported in the fourth quarter has been fully corroborated (previous quarter: 46 percent). Only three percent of legal entities cited legal obstacles preventing them from providing or publishing parent information, i.e. to date the number of entities opting out of reporting Level 2 data remains very low. It is expected that parent information for the entire LEI population will be available during the first half of 2018, i.e. towards the end of the one-year renewal cycle after the date when collection of Level 2 data started.
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.
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.