From Strength to Strength: Charting the Evolution and Future of the Global Legal Entity Identifier System
In today’s globalized digital economy, the availability of open, accurate, and relevant entity identification data has never been as important. Indeed, transparency of all actors involved in financial transactions is a prerequisite for any sustainable investment, qualified reporting, or analysis.
In this blog post, Stephan Wolf, CEO, GLEIF, emphasizes why a strong, credible, and globally expansive Legal Entity Identifier (LEI) issuance ecosystem – overseen by international regulators and underpinned by high-quality, accurate data – is key to delivering this transparency, trust, and compliance.
Author: Stephan Wolf
Date: 2023-11-16
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Since its inception almost ten years ago, the Global LEI System has revolutionized how legal entities are identified and tracked globally - providing a robust framework for uniquely identifying legal entities participating in financial transactions. This has been made possible through the collaborative efforts of its founding body, the Financial Stability Board (FSB); the Regulatory Oversight Committee (ROC), which comprises representatives from public authorities worldwide to ensure effective governance; and the LEI issuing organizations which serve as the primary interface for legal entities wishing to obtain an LEI.
A Collaborative Approach to Strengthening the LEI Issuance Ecosystem
The Global LEI System has undergone significant enhancements over the years, and a unique strength is the continuous collaboration between its three 'tiers' - regulators, GLEIF, and LEI issuing organizations - to optimize the consistency, quality, reliability, and usability of LEI data. The ROC sets comprehensive rules and guidelines for the Global LEI System, with GLEIF ensuring that all LEI-issuing organizations adhere to standardized practices when issuing LEIs.
For example, implementing three new ROC policies on Fund Relationships and Guidelines for registering Investment Funds, Legal Entity Events, Data History, and LEI Eligibility for General Government Entities have played a crucial role in increasing the maturity of the Global LEI System. These new data formats have expanded the scope of the data contained in the LEI records, creating more transparency in the global marketplace and broadening the utility of the Global LEI System for users everywhere.
Furthermore, GLEIF’s data quality management framework has been instrumental in stabilizing the data quality score within the Global LEI System, enhancing collective credibility and trust. LEI issuers' mechanisms to verify and validate the accuracy of Level 1 data, which includes basic entity information such as legal name, address, and registration details, are monitored daily by the GLEIF’s data quality checks. This increased focus on data quality ensures that reliable information is available for all users of the Global LEI Index.
Additionally, the recently updated Challenge Facility, a mechanism for resolving discrepancies or errors in LEI data, can be leveraged to foster collaboration. By encouraging active participation from all stakeholders, including financial institutions, vendors, digital identity providers, and regulators, challenges related to data accuracy can be addressed promptly.
New artificial intelligence (AI) developments can greatly benefit the Global LEI system. AI algorithms can help identify patterns and anomalies in LEI data, enabling quicker detection of potential errors or duplicates. Integrating AI technologies into the existing infrastructure will streamline the maintenance of the ROC Conformity Flag and support its implementation.
Recognizing Outstanding Performers
As we reflect on almost a decade of excellence made possible by broad collaboration, it is crucial to specifically acknowledge the significant contributions made by LEI issuing organizations. Their dedication to accuracy, data quality, and continuous improvement has paved the way for a more transparent and resilient financial ecosystem.
To recognize the exceptional work of LEI issuers in upholding data quality and service level agreements, GLEIF has established the GLEIF Awards. Introducing these dedicated awards intends to foster healthy competition and further bolster the Global LEI System's effectiveness in promoting transparency, enhanced risk management, and improved regulatory reporting.
Winners of the inaugural awards, announced at this week's annual GLEIS Forum Event, were:
Best-Performing LEI Issuer in the Large-Cap Category (more than 100,000 LEIs under management) - InfoCamere
Best-Performing LEI Issuer in the Mid-Cap Category (between 5,000 and 100,000 LEIs under management) - NordLEI
Best-Performing LEI Issuer in the Small-Cap Category (less than 5,000 LEIs under management) - Depozitarul Central Romania
The Global LEI System has revolutionized the identification of legal entities in financial transactions globally, and GLEIF plays a vital role in maintaining the system's operational integrity. By recognizing top-performing LEI issuers, GLEIF encourages continuous improvement in ensuring the highest data quality and governance standards. This reflects a wider commitment to providing open, standardized, and high-quality legal entity reference data to empower market participants.
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Stephan Wolf was the CEO of the Global Legal Entity Identifier Foundation (GLEIF) (2014 - 2024). Since March 2024, he has led the International Chamber of Commerce (ICC)’s Industry Advisory Board (IAB) of the Digital Standards Initiative, the global platform for digital trade standards alignment, adoption, and engagement. Before he was appointed as Chair, he had been serving as Vice-Chair of the IAB since 2023. In the same year, he was elected to the Board of the International Chamber of Commerce (ICC) Germany.
Between January 2017 and June 2020, Mr. Wolf was 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 strategies. 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. Mr. Wolf holds a university degree in business administration from J. W. Goethe University, Frankfurt am Main.
