The Global Legal Entity Identification Foundation (GLEIF) is planning a research project to discuss the use of distributed ledger technology (DLT) for LEI issuance and has this week introduced a free of charge certification process – the GLEIF Certification of LEI Mapping Service – that is designed to ensure organisations that map the LEI to their own identifiers use reasonable processes to do so accurately. Also on the agenda are LEI Golden Copy Files and API access to the GLEIF LEI database that are due to come onstream later this year.
The foundation is also braced for another run on the LEI as the six-month period of reduced requirements for the identifier to meet Markets in Financial Instruments Directive II (MiFID II) compliance ends in early June.
To find out more about the GLIEF’s plans and expectations on LEI uptake in coming months we caught up with CEO Stephan Wolf.
Looking first at the potential of DLT, Wolf says the GLEIF’s initial investigation into the technology (DLT) will start in the second half of this year with an open research project to discuss how the technology could be used to support the LEI. Results of the research are expected to be published in 2019 and are likely to focus on the use of the distribution and encryption capabilities of DLT in LEI issuance.
LEI mapping service
The foundation’s most recent addition, the GLIEF Certification of LEI Mapping Service, certifies and publishes publicly available, open source relationship files that match identifiers against corresponding LEIs, easing the process of gathering, aggregating and reconciling counterparty information. This can be useful for purposes including compliance, regulatory reporting, client relationship management and due diligence.
Essentially, the mapping service evaluates the mapping processes and algorithms applied by organisations seeking to link other identification schemes to the LEI. When seeking certification, the mapping partner documents the nature and extent of mapping processes, the GLEIF reviews the processes, validates sample data from the mapping partner and determines if the sample data meets or exceeds GLEIF’s pre-determined accuracy and quality criteria. In cases where it does, certification is confirmed, although the partner must maintain quality standards.
Golden Copy Files
The GLEIF’s Golden Copy Files were first published for public review in February 2018 and respond to market requirements for more frequent publication of LEI data to support different time zones. The files are generated from GLEIF LEI concatenated files, updated and distributed three times a day at eight-hour intervals, and accompanied by four delta files. The delta files are designed to identify only newly issued LEIs and revisions to a LEI’s reference data historically reported in a Golden Copy File published either eight hours, 24 hours, seven days, or 31 days earlier.
Wolf comments: “Golden Copy Files reduce complexity by providing one complete record for each LEI, while the delta files mean LEI users don’t have to parse large amounts of LEI data every day. By simplifying processes, we can drive out hindrances to using the LEI.”
The Golden Coy Files also add geocoded versions of addresses found in LEI data to each LEI record, providing more normalised address files that offer a more consistent format across all data records.
The Golden Copy Files are in beta test with public release expected in the fourth quarter of 2018, although based on feedback from stakeholders, any changes will be minor. Wolf expects these files and delta files to be the main way of communicating LEI data going forward.
Also in beta test and due for release this summer is an application programming interface (API) that allows electronic access to the LEI database and Golden Copy Files to ease use of the identifier in downstream systems.
Looking at LEI issuance, Wolf notes a surge of activity in the months before MiFID II and Markets in Financial Instruments Regulation (MiFIR), which also requires LEIs, went live on 3 January 2018, continued but slower growth after ESMA announced a six-month temporary easing that removed the threat of No LEI, No Trade, and ongoing uptake towards June 2018 when LEIs will be mandated for use in MiFID II and MiFIR.
With close to 1.2 million LEIs now issued to legal entities, Wolf says: “In the run up to MiFID II, daily issuance of LEIs was up to 10,000. Although that has slowed down considerably, we have seen continued growth in total LEIs issued through the ESMA delay and issuance is four times what is was at this time a year ago. One thing no one knew with any certainty before the advent of the LEI was how many legal entities there are in Europe, the LEI is bringing transparency to that.”