GLEIF Published the Quarterly Global LEI System Business Report Covering the Third Quarter of 2019
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 November 2019, 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 third quarter of 2019, 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 November 2019, analyses developments observed in the third quarter of 2019. It shows:
LEI issuance and LEI growth potential: State of play
At the end of the third quarter of 2019, the total LEI population exceeded 1.44 million. Approximately 41,000 LEIs were issued in this period. This represents a quarterly growth rate of 2.9% in the third quarter.
China saw the highest LEI growth rate at a jurisdiction level (29.4%), followed by India (10.6%), Australia (7.7%), South Africa (7.6%) and Estonia (5.6%). Growth in China, India and Australia can primarily be attributed to regulatory initiatives mandating the use of the LEI.
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 third quarter of 2019, Italy, the Netherlands, Spain, Finland and the Czech Republic were the five least competitive markets in descending order. The five most competitive, also in descending order, were Romania, Lithuania, Portugal, Malta and Bulgaria.
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 has last been verified.
In the third quarter of 2019, the overall renewal rate of 70% remained essentially unchanged compared to the previous quarter (70.3%). (This includes jurisdictions with at least 1,000 LEIs in total at the previous quarter-end date.) At the end of the third quarter, 72.1% of all LEIs were in good standing (last quarter: 73.1%).
The renewal rate in the EU remained stable at 71.2% (previous quarter 71.5%). In non-EU jurisdictions, it was stable at 59.8% (previous quarter: 60.3%). In the reporting period, the five jurisdictions which demonstrated the highest renewal rates were Finland (92.6%), Japan (92.1%), Liechtenstein (90.6%), India (88.3%), and Norway (84.2%). Brazil (56.1%), the United States (55%), the Russian Federation (48.2%), the United Kingdom (46.9%) and Canada (45.8%) had the highest non-renewal rates.
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 that the legal entity has provided for the record. If this is not the case, the business card information available with an LEI record is classified as ‘entity-supplied only’.
In the third quarter of 2019, the percentage of fully corroborated Level 1 reference data within the entire LEI population increased slightly to 80.1% from 79.6% in the previous quarter.
Statistics on the reporting of parent information by legal entities
In the third quarter of 2019, approximately 1.29 million LEI registrants representing 89% 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.
Since February 2019, GLEIF has worked closely with LEI issuing organizations to review the level 2 data, especially legal entities reporting that their parents do not have an LEI, to improve the data quality. At the end of the third quarter, over 21,000 legal entities had updated the information of their direct parents. 7,200 of these have provided the LEIs of their direct parents. Similarly, approximately 21,000 legal entities updated the information of their ultimate parents, and around 6,600 of these reported the LEIs of their ultimate parents. Such improvement will further increase the transparency in identifying the network of legal entities and enhance data quality.
As a result of this data quality campaign, the share of legal entities reporting direct parents having an LEI increased from approximately 6% at the end of 2018 to approximately 7% at the end of the third quarter of 2019. The share of legal entities reporting direct parents who do not have an LEI dropped from approximately 7% at the end of 2018 to less than 5% at the end of the third quarter of 2019.
At the same time, the share of legal entities reporting ultimate parents having an LEI increased from approximately 6% at the end of 2018 to approximately 8% at the end of the third quarter of 2019. The share of legal entities reporting direct parents who do not have an LEI dropped from approximately 6% at the end of 2018 to approximately 4% at the end of the third quarter of 2019.
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.