GLEIF Published the Quarterly Global LEI System Business Report Covering the Third 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 October 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 third 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
The Global LEI System Business Report, which was published in October 2020, analyses developments observed in the third quarter of 2020. It shows:
LEI issuance and LEI growth potential: State of play
At the end of the third quarter of 2020, the total LEI population was over 1.65 million. More than 48,000 LEIs were issued during this quarter, compared to approximately 61,000 in the previous quarter. This represents a quarterly growth rate of 3.3% (previous quarter: 4%). The drop of new issuance was primarily driven by the summer holiday season in EU jurisdictions.
In the third quarter, China had the highest quarterly LEI growth rate at jurisdiction level (17.8%), followed by India (9.3%), Japan (6.8%), Estonia (6.6%) and Lithuania (6.5%). China continued to lead the growth for five consecutive quarters, primarily driven by regulatory implementations.
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 2020, China, the Netherlands, the Czech Republic, Spain and Italy were the five least competitive markets in descending order. The five most competitive, also in descending order, were Lithuania, Romania, Portugal, Latvia and Malta.
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 the third quarter of 2020, the overall renewal rate of 67.6% was higher than the previous quarter (64.2%). At the end of the quarter, 67.7% of all LEIs were in good standing (last quarter: 68%).
The renewal rate in the EU increased to 69.2% (previous quarter 66.2%). In non-EU jurisdictions, it also improved to 59.8% (previous quarter: 55.9%). In the reporting period, China (84.6%) entered the ranking of the five jurisdictions which demonstrated the highest renewal rates. Other jurisdictions in the top five are Liechtenstein (96.3%), Japan (94.5%) Finland (92.7%) and Germany (83.9%).
The five jurisdictions with the highest non-renewal rates include Brazil (56.8%), the United Kingdom (54.9%), Thailand (54.2%), the United States (53.9%) and South Africa (51.9%).
While the COVID-19 pandemic appeared to impact renewal activities in the first and second quarter of 2020, the renewal rate recovered to its pre-pandemic level in the third quarter.
Level 1 reference data corroboration
The business card information available with the LEI reference data, for example, 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 third quarter of 2020, the percentage of fully corroborated Level 1 reference data within the entire LEI population increased slightly to 81.6% from 81.4% in the previous quarter.
Statistics on the reporting of parent information by legal entities
In the third quarter of 2020, approximately 1.51 million LEI registrants (previous quarter: 1.46 million), representing 91% of the total LEI population, had reported information on direct and ultimate parents. 99.9% of those LEI registrants who obtained a newly issued LEI, or renewed an existing LEI, in this quarter reported parent information.
In the reporting period, the percentage of legal entities reporting a direct parent that has an LEI was 6%. 5% of legal entities reported a direct parent that does not have an LEI. 81% of legal entities reported no direct parent according to the definition used. 8% of legal entities cited legal obstacles preventing them from providing or publishing direct parent information. The share of all four categories has remained stable over the past four quarters. The pattern is almost identical for ultimate parent reporting.
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.