The LEI's Next Frontier: Quality

In Inside Reference Data's ongoing coverage of the legal entity identifier (LEI), we have seen the organization and administration of LEI registrations get sorted out, and then increasing growth in the numbers of LEIs being established—with a lot more projected to come.

But we haven't seen very much yet about whether the quality of LEI data is a concern, or will become a concern. This is an issue that Bill Hodash, managing director of business development at DTCC, is pointing to as the most important for the whole global LEI system now. (DTCC, with Swift, operates the Global Markets Entity Identifier utility that has administered about half of the 340,000 LEI registrations completed to date.)

While data quality concerns have been baked in to the design of the global LEI system (GLEIS), with the industry including data quality as a goal for the Global LEI Foundation (GLEIF) now operating LEI registration, the process still relies on self-registration of the LEIs, as Hodash describes.

"It's public data coming into a public database, and then we use publicly available authoritative sources all around the world to corroborate the accuracy of that reference data that the registrant self-registered," he says. "Those registrants then maintain that data over time. Many of the rules require them to come back to the LOUs [local operating units] and let them know any changes to the data. Even if there is no change, they must come back annually and maintain that record."

With LEI registrations likely to eventually reach 1 million or possibly even 1.5 million, maintaining accuracy is going to become a challenge greater than just getting registrations done. Continual scrutiny by market participants is going to be necessary to maintain accuracy as LEIs grow in number.