Golden Copy: Identification and Verification

This week, Richard Berner, director of the Office of Financial Research (OFR), the unit of the US Treasury that promotes adoption of standards in the financial industry, including the legal entity identifier (LEI), made a statement that the LEI is an example of how public-private cooperation produces better standards.

To that end, the Global Legal Entity Identifier Foundation (GLEIF), the body that administers LEIs worldwide, has just launched a data challenge facility that lets interested parties verify, and, when needed, update LEI records and their related reference data.

GLEIF's action shows it is listening to the methods Berner and his colleagues at the OFR are advocating, or at least using these methods of its own volition. Although the OFR has been supportive of GLEIF's efforts, with its chief counsel serving as GLEIF's first chairman, and continued participation in GLEIF's executive committee, a paper by Berner's colleague, Cornelius Crowley, chief data officer at OFR, notes that LEI adoption is still uneven, more so in markets where the LEI is not required.

For instance, from the total of 451,850 LEIs registered as of July 15, about 130,000 are from the US and Canada, about 154,000 collectively from the UK, France, Germany, Italy and Sweden; and about 12,000 collectively from Japan, Australia and Singapore. The other 155,000 or so LEIs are spread out worldwide in pockets of double- or even single-digit numbers in numerous countries, some countries with 100 to 300 each, and a few others with several hundred each, namely the BRIC countries (Brazil, Russia, India and China).

Crowley writes that the quality of existing LEI data is high, so while a data challenge facility designed to raise the quality of LEI data can't hurt, the GLEIF's cause might be better served by promoting more registrations, to exponentially raise the numbers across the board, whether that's in highly developed markets with multiple thousands of registrations, or small markets with just hundreds or less.

GLEIF's verification effort can have value, however, if it succeeds in addressing a gap, pointed out by consultant Allan Grody of Financial InterGroup, between the registered LEIs and LEIs that have actually been validated, which are only about 70% of the registrations, depending on the market.