GLEIF Published the Quarterly Global LEI System Business Report Covering the Second 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: 7 minutes
In July 2017, the Global Legal Entity Identifier Foundation (GLEIF) published the second 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. From this second report, published in July 2017, we will also start to deliver statistics on direct and ultimate parent information provided by legal entities.
To download the latest ‘Global LEI System Business Report’ which covers the second quarter of 2017, refer to the ‘related links’ below.
This blog post summarizes the main findings of the second Global LEI System Business Report. Sources cited are included in the ‘related links’ below.
Main findings of the second Global LEI System Business Report
The Global LEI System Business Report, which was published in July 2017, analyzes developments observed in the second quarter of 2017. It shows:
LEI growth and renewal
At the end of the second quarter of 2017, there were approximately 503,000 active LEIs managed by 30 LEI issuers. These LEIs represent legal entities in 200 countries. Bloomberg Finance LP started to issue LEIs as an accredited LEI issuer. Bronnoysund Register Centre completed the transfer of its managed LEIs and has stopped operations. For the first time, LEIs have been issued in Suriname. The U.S. remained the top market, increasing its overall share by one percentage point compared to the previous quarter and comprising 26% of all LEI issuance to date.
The five countries with the largest LEI volumes increased their collective share of LEIs by one percentage point, while the collective market share of the top ten countries remained the same as last quarter. The top five and top ten countries comprise 57% and 76% respectively of active LEIs in the Global LEI System.
Overall, the quarterly LEI growth rate increased from 3.7% to 4.4%, resulting in a one percentage point increase in the annualized growth rate of 14% in Europe and 19% in the rest of the world, where it remained the same as last quarter. Approximately 4,000 more LEIs were issued in the second quarter of 2017 than the total issuance observed in the first quarter. Hong Kong ranked second in the second quarter whereas it ranked 20th in the first quarter of 2017. Overall, the average quarterly growth rate of the top five countries increased from 10% to 13% in the second quarter.
There is no change in the LEI population in the second quarter of 2017 compared to the forecast. The GLEIF outlook for LEI activity until the end of 2017 remains unchanged from the previous report.
The renewal ratio in the Netherlands increased by five percentage points while the renewal ratios of the other top five countries with the highest ratios remained the same. The average renewal ratio among countries is 66% (unchanged compared to the previous quarter). The lowest renewal ratio, with only 35%, was seen in Brazil; Japan achieved the highest renewal ratio with 90%. GLEIF predicts the LEI system will achieve an overall renewal ratio of 73% by the end of the year. The five countries with the highest non-renewal ratios remained the same as in the previous quarter.
Competition amongst LEI issuers
The countries with high numbers of LEIs tend to be the least competitive (most concentrated) and vice versa. The concentration score for each country is measured based on the share of the portfolio across LEI issuers operating within that country. North America has the most concentrated markets as opposed to Cyprus, Norway, Slovakia, Portugal or Ireland where LEI issuers have had a greater opportunity to introduce their services. In the second quarter of 2017, Cyprus was identified as the least concentrated market. Competition amongst LEI issuers in this country was not measured in the first quarter report, as less than 1,000 active LEIs were registered in Cyprus at that time.
Parent information reported by legal entities since May 2017
In May 2017, the process of gradually enhancing the LEI data pool, by including ‘Level 2’ data to answer the question of ‘who owns whom’, began. This data allows the identification of the direct and ultimate parents of a legal entity and, vice versa, in order that the entities owned by individual companies can be researched. The collection and validation of Level 2 data by the LEI issuing organizations for LEIs that existed prior to May 2017, takes place with the annual renewal of the LEI. Level 2 data was collected for more than 14,000 LEIs that were newly issued and approximately 42,000 LEIs that were renewed in the last two months of the second quarter of 2017. Of these records, the distribution of direct and ultimate parent reporting is very similar:
Approximately 14% of legal entities reported parents having an LEI. Approximately 33% of legal entities reported parents who do not have an LEI. Approximately 50% of legal entities reported having no parent according to the definition used. Approximately 3% of legal entities reported having legal obstacles which prevented the provision or publication of parent information.
193 ultimate parent legal entities are associated with more than five child entities and the maximum number of child relationships per ultimate parent is 619.
222 direct parent legal entities are associated with more than five child entities and the maximum number of child relationships per direct parent is 262.
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 global online source that offers open, standardized and high-quality legal entity reference data. 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 on the GLEIF website page ‘Download Global LEI System Business Report’ (see ‘related links’ below).
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.
* GLEIF published version 1.0 of the Q2 2017 Global LEI System Business Report on 13 July 2017. This was replaced by version 1.1 on 14 July 2017. With version 1.1 of the report, figures 2 and 4 on page 10 identifying the percentage of fully corroborated relationship records have been updated to state 24%, respectively. The summary text included in the report has been updated accordingly.
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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.