GLEIS | Global LEI System
What is GLEIS?
The Global LEI System (GLEIS) was born out of the 2008 Global Financial Crisis (GFC), when it became apparent that there was a greater need for transparency and security.
GLEIS ensures straight forward, unambiguous identification of participants in financial transactions. The basis of GLEIS is ISO 17442, developed by the International Organization for Standardization (ISO). This standard defines the details of clear legal recognition (LEI) in identifying the relevant legal identities taking part in a financial transaction.
Samples of eligible legal entities, as listed on ISO.org:
- all financial intermediaries;
- banks and finance companies;
- all entities that issue equity, debt or other securities for other capital structures;
- all entities listed on an exchange;
- all entities that trade stock or debt; investment vehicles, including mutual funds, pension funds and alternative investment vehicles constituted as corporate entities or collective investment agreements (including umbrella funds as well as funds under an umbrella structure, hedge funds, private equity funds);
- all entities under the purview of a financial regulator and their affiliates, subsidiaries and holding companies;
- sole traders (as an example of individuals acting in a business capacity); counterparties to financial transactions.
An LEI data record consists of an ID and its associated data, each LEI therefore has a data record known as Legal Entity Record Data (LE-RD). When a legal entity that has a holding company wants to apply for an LEI, relevant data has to be provided. In that case it’ll be the LEI of a holding company – that way connections to parent companies are public and widely available through a global open LEI database.
The LEI public database
This global system has significant benefits to the economy by providing standardised data on companies trading all over the world. The best part is that the public database forms an index of legal entities, and is easily accessible to everyone as well as being free of charge. Consequently the GLEIS database has greatly simplified dealing with international clients as there’s no need for a time-consuming background check where previously the only information being relied upon was the company’s own internet presence and local registry listings; often leading to hours of translating and web browsing with little confidence of the authenticity.
Information found on the LEI database:
1. Registered and trading names
2. Company type (e.g. Fund, Trust, Limited Liability Company)
3. Registered address(es)
4. Company registration number
5. Parent company information
6. Child company information
Each entity in the database is assigned its own, unique 20 digit code by which it is identified in many business activities and transaction reporting systems.
Before the universal adoption of the open LEI system, there were many inefficient, predominantly proprietary identifiers that often provided false or outdated information. As information reliability is the foundation of trade, so any shortcoming affects everything from the ability to process transactions to the capacity to discern systematic risk automatically. The open LEI system solves this problem by providing permanent, IP-free, unique identifiers for all entities who undertake financial transactions.
Advanced development of the Global Legal Entity Identifier System, known as GLEIS is carried out by the Global Legal Entity Identifier Foundation (GLEIF), in partnership with the Local Operating Units (LOUs) – responsible for issuing LEI Codes. LOUs such as Ubisecures RapidLEI may then partner with an Official GLEIF Registration Agent (RA) such as LEI Register. Our role is to provide support and an efficient service to market participants who need an LEI for their organisation.
LEI Register has managed to become market leaders in the LEI obtaining process. In partnership with RapidLei we have optimised the LEI requiring process by making it easier, faster and more affordable, whilst providing excellent customer service, operating in more than 35 countries.
GLEIF’s role in the global LEI system
The Global Legal Entity Identifier Foundation (GLEIF), established in June 2014, by the Financial Stability Board. GLEIFs’ tasks in the system is to reinforce the implementation and use of the Legal Entity Identifier (LEI), as a supra-national not-for-profit organisation with its headquarters based in Switzerland.
The foundation is supported and supervised by the Regulatory Oversight Committee (LEI ROC), an organisation representing public authorities from around the world that have joined to drive forward transparency within the global financial markets. The LEI ROC was established on the recommendation of the Finance Stability Boards (FSB) to the G20.
GLEIF’s responsibilities as listed on GLEIF.org:
- Evaluating the suitability of organizations seeking to operate as issuers of LEIs.
- Providing expertise and reliability throughout the organization and management of the system.
- Ensuring access to the complete global LEI data pool, free of charge, to users.
- Continuously optimizing the quality of the LEI data pool.
- Making available comprehensive information on the LEI and the Global LEI System, as well as timely updates on related global developments and GLEIF activities.
To obtain an overview of the services GLEIF provides, refer to the GLEIF Service Catalog here.
Owing to the work of GLEIF, the LEI remains the industry standard as the best suited to providing trustful and public data for unique legal entity identification management.
“No LEI, No trade”
The LEI is authorized by a number of EU directives such as EMIR , MiFIR & MIFID II & SFTR. The US has similar requirements such as the Dodd Frank Act, the OFR, the Federal Reserve and the Securities & Exchange commission (SEC).
LEI will be assigned on application from the legal entity and after due validation of data.
For an organisation, LEI will be:
- Used as a means of identification for a financial entity
- Facilitate transaction reporting to Trade Repositories
- Ensure compliance with regulatory requirements
The advanced reporting requirements expand the information available, reduce the use of dark pools and over-the-counter trading. High-frequency-trading rules will force a strict set of organisational requirements on investment firms and trading venues. LEI requirements differ depending on the country, legal jurisdiction and industry. It is the prerogative of the authorities acting in individual jurisdictions that mandate the use of LEIs. You can find a list of LEI regulations by country here.