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GLEIF Published the Quarterly Global LEI System Business Report Covering the Third 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: 5 minutes
In November 2017, the Global Legal Entity Identifier Foundation (GLEIF) published the third 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 latest ‘Global LEI System Business Report’ which covers the third quarter of 2017, refer to the ‘related links’ below.
This blog post summarizes the main findings of the third Global LEI System Business 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 November 2017, analyses developments observed in the third quarter of 2017. It shows:
State of play of LEI issuance and LEI growth potential
In the third quarter of 2017, the number of newly issued LEIs increased by 17.3 percent in European Union (EU) countries and 12.7 percent globally to a total of 565,700 active LEIs. This represents the biggest increase in LEI issuance in a single quarter since the first quarter of 2014. Growth is particularly high in several EU countries led by the UK and Germany. We attribute the high rate of newly issued LEIs primarily to impacted market participants seeking to achieve compliance with the forthcoming revised EU Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). Failure to obtain an LEI (by the firm or its client) by 3 January 2018 will prevent firms from being able to comply with the reporting requirements applicable in the EU. GLEIF reminds market participants that this will also apply to non-EU entities in many cases. Any impacted entity that has not yet obtained an LEI must act now. It cannot be guaranteed that LEIs will be issued in time for MiFID II/MiFIR to apply, if registration is delayed any further.
Outside Europe and dependencies of European countries, the highest growth rate was achieved in Hong Kong (19%).
Competition in the Global LEI System
The quarterly 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 third quarter, competition decreased in the UK, Finland and the Netherlands. The leading LEI issuers located in these countries, which held a market share of about 75 percent in the previous quarter, further increased their market share. In several other countries however, LEI issuers currently ranking second to the issuer holding the highest LEI portfolio, increased market share.
LEI renewal rates
The renewal rate in the EU remained stable at 69 percent. However, the renewal rate in non-EU countries decreased further to 49.8 percent (previous quarter: 52.3 percent). This includes only those countries with at least 1,000 LEIs in total at the end of the previous quarter. 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. LEIs issued to legal entities in the U.S. make up about two thirds of the non-EU LEI population. In the U.S., the renewal rate has dropped to an all-time low of 43 percent in the reporting period.
GLEIF reiterates that the Financial Stability Board, a key driver of the LEI initiative and founder of GLEIF, has stressed that LEI rollout should support “higher quality and accuracy of financial data overall”. The Global LEI System’s ability to meet this objective relies on the availability of trusted and open data that is regularly validated.
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 third quarter of 2017, 147,000 LEI registrants representing 26 percent of the total LEI population reported information on direct and ultimate parents (previous quarter: 11 percent). 46 percent of the information on direct parents reported in the third quarter has been fully corroborated. 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.
Background information on the Global LEI System Business Reports
The reports are derived from the Global LEI Index, which contains historical and up-to-date LEI records including related reference data in one authoritative source. This data provides information on a legal entity identifiable with an LEI. The Global LEI Index is the only online source that offers open, standardized and high-quality legal entity reference data with the potential to capture any entity engaging in financial transactions globally. Interested parties can access and search the complete LEI data pool using the web-based LEI search tool developed by GLEIF.
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.