The London Stock Exchange (LSE) went live with its pre-Legal Entity Identifier (pre-LEI) system issuing Interim Entity Identifiers (IEIs) on Monday August 5. It reports significant interest in entity registration, with many draft records being created ahead of payment and submission, and one complete transaction issuing an IEI to global equity trading services firm BTIG Ltd.
The LSE was confirmed as a pre-Local Operating Unit (pre-LOU) under the sponsorship of the UK Financial Conduct Authority on August 6 and developed its pre-LEI registration and distribution processes to meet initial pre-LOU requirements set down by the Financial Stability Board, predecessor of the global LEI system’s Regulatory Oversight Committee (ROC), and a more complete set of guidelines and principles that were published by the ROC on July 27.
The IEI system is based on the LSE’s in-house built UnaVista matching and reconciliation platform that also supports the exchange’s SEDOL Masterfile service and corporate events file. Its functionality is broad, allowing other pre-LOUs to look at all its fields, and entities registering for IEIs to search records and files to see if an IEI in relation to the entity already exists and, if it does, consider the process of portability to transfer the IEI record.
Like DTCC and WM Datenservice, the two other pre-LOUs that are up and running, the LSE has integrated all pre-LOU data to assist the entity validation process, check for duplication against existing records and, if necessary, flag up duplicate records when the entity requesting an IEI makes its first submission.
Emma Kalliomaki, head of the SEDOL Masterfile service and leader of the IEI initiative at the LSE, says: “Having a system that already deals with reference data and is user friendly means the LSE has an ideal pre-LOU solution. It also has great experience of reference data as the UK representative of the Association of National Numbering Agencies and the holder of the SEDOL Masterfile.”
She expects volumes of IEIs to increase fairly rapidly as a number are lined up in draft form and pricing based on economies of scale has been put in place for a bulk submission service that is due to come online in a couple of weeks. This service will cater for group companies, fund managers and advisors, allowing them to collect data in Excel spreadsheets and submit the entities for validation as an holistic group.
The formatting and mandatory fields are the same as those on the online interface used for single entity submissions, as are the principles of submission and validation. Bulk submissions will initially be handled manually, but once users are familiar with the process, the bulk upload functionality already on the LSE’s UnaVista platform will be used to automate submissions.
The system also includes a My IEI Folder so that users can keep track of individual submissions and check their accuracy on an annual basis in line with the requirements of the global LEI system. The LSE will not charge for any changes to data, perhaps an entity’s address, during the year, but initial and annual review costs have been set on a cost recovery basis. Individual submissions cost £100 + VAT and then £55 + VAT for annual maintenance, while bulk submissions containing more than 10 entities will cost £75 + VAT per entry and £55 + VAT for annual maintenance. The LSE will price bulk submissions of 100-plus entities on a case-by-case basis.
The LSE has gone live with as complete a pre-LEI system as is possible in terms of the principles and guidelines detailed so far by the FSB and ROC, but there will be more to do. Kalliomaki works with a number of reference data standards groups and is a member of the LEI Private Sector Preparatory Group set up by the FSB as well as the pre-LOU working group put together by the ROC’s Committee for Evaluation and Standards. She says being part of development discussions has benefitted the LSE. It has also given her insight into what still has to be done and how the next development stage of the global LEI system may pan out.
She explains: “We are still waiting for detail on data standardisation between pre-LOUs. Standards and processes were mentioned in the 27 July guidelines and principles for pre-LOUs and these are now being discussed in workstreams that will inform the ROC when it says how pre-LOUs should move forward.”
Kalliomaki says the flexibility of the LSE system will allow any new standards and processes to be adopted and is confident that the IEIs issued by the LSE acting as a pre-LOU will transition smoothly into the global LEI system when it emerges.
The underlying LSE platform is designed for cross-referencing, mapping, incorporating new data and more, so consolidation of LEI data is also expected to work well from a technology point of view. Kalliomaki notes that data consolidation will become more burdensome and time consuming when there are more than three pre-LOUs or LOUs, but expects the LSE will continue to consolidate LEI data when the Central Operating Unit (COU) is in place.
While detail of the COU has yet to be published, Kalliomaki expects it to provide a central data hub that will predominantly be used for validation. She explains: “If the way forward is the COU holding all LEI data, we will continue to do what we are doing, validating and creating legal entity identifiers, and consolidating datasets from all the pre-LOUs. The only thing we are not doing now and will do is pass the data on to the COU.” In terms of who will run a potential COU data utility, Kalliomaki expects the board of directors of the LEI Foundation, which will underpin the COU, to initiate a selection process once it is in place.