Reporting data integrity undermined by widespread LEI lapses
08 October 2020 London
Image: grejak / Adobestock.com
As much as 30 percent (500,000) of legal entity identifiers globally are out of date and in need of renewal, according to LEI Worldwide, a GLEIF-registration agent and LEI provider.
LEIs are a 20-character alphanumeric code that, as the name suggests, allows regulators to identify individual counterparties in a transaction.
They are currently required under several rules frameworks including the Securities Financing Transactions Regulation and the European Market Infrastructure Regulation, among others.
LEIs require annual renewal. When an LEI has been renewed within the last year the status shows as 鈥榓ctive鈥� if it has not been renewed it will show as 鈥榣apsed鈥�.
鈥淗aving a lapsed LEI can have profound consequences,鈥� explains LEI Worldwide director Darragh Hayes. 鈥淚t means the data may be out of date, and therefore cannot be relied upon by regulators.鈥�
With regulations in place, it should be standard procedure to check on the status of your LEI before submitting any transfers or purchases, he argues.
Hayes adds: 鈥淚n the event of a lapsed LEI intermediaries and regulators can block your transaction. This would cause unnecessary delays and unwanted disruption.鈥�
In response, LEI Worldwide has launched a new search tool to allow users to more-efficiently validate the LEIs of their firm and its counterparties.
The search tool is an application programming interface which feeds into a database housing more than 1.7 million LEIs and provides a real time searchable index for every entity.
LEI Worldwide has also implemented a programme that conducts a spell check upon search. This allows the programme to pick up on any spelling errors or typos and provide a list of suggested results which can allow you to find what you are looking for more easily.
With this tool, any company can search for their LEI and renew it immediately by clicking the renew button which appears in the search results, which is a unique feature, according to Hayes.
The LEI search tool is publicly available, and free to use, it is most commonly used by both regulators and the owners of LEIs, says Hayes.
Before the new LEI search tool, LEI Worldwide would manually respond to customers requests about an entity or an LEI.
It had a notification on its website that any LEI checks or entity checks could be conducted by contacting its support team who would look into it for them. They would also suggest renewing the LEI if needed.
Last week, the Commodity Futures Trading Commission for a range of swaps reporting failures between 2013 and 2018, including incomplete LEIs.
鈥淯pon further investigation, we realised that Morgan Stanley Capital Services had a lapsed LEI between 2013 and 2018. It is quite simple to renew the LEI, and it is possible they did not realise it had lapsed,鈥� says Hayes.
LEIs are a 20-character alphanumeric code that, as the name suggests, allows regulators to identify individual counterparties in a transaction.
They are currently required under several rules frameworks including the Securities Financing Transactions Regulation and the European Market Infrastructure Regulation, among others.
LEIs require annual renewal. When an LEI has been renewed within the last year the status shows as 鈥榓ctive鈥� if it has not been renewed it will show as 鈥榣apsed鈥�.
鈥淗aving a lapsed LEI can have profound consequences,鈥� explains LEI Worldwide director Darragh Hayes. 鈥淚t means the data may be out of date, and therefore cannot be relied upon by regulators.鈥�
With regulations in place, it should be standard procedure to check on the status of your LEI before submitting any transfers or purchases, he argues.
Hayes adds: 鈥淚n the event of a lapsed LEI intermediaries and regulators can block your transaction. This would cause unnecessary delays and unwanted disruption.鈥�
In response, LEI Worldwide has launched a new search tool to allow users to more-efficiently validate the LEIs of their firm and its counterparties.
The search tool is an application programming interface which feeds into a database housing more than 1.7 million LEIs and provides a real time searchable index for every entity.
LEI Worldwide has also implemented a programme that conducts a spell check upon search. This allows the programme to pick up on any spelling errors or typos and provide a list of suggested results which can allow you to find what you are looking for more easily.
With this tool, any company can search for their LEI and renew it immediately by clicking the renew button which appears in the search results, which is a unique feature, according to Hayes.
The LEI search tool is publicly available, and free to use, it is most commonly used by both regulators and the owners of LEIs, says Hayes.
Before the new LEI search tool, LEI Worldwide would manually respond to customers requests about an entity or an LEI.
It had a notification on its website that any LEI checks or entity checks could be conducted by contacting its support team who would look into it for them. They would also suggest renewing the LEI if needed.
Last week, the Commodity Futures Trading Commission for a range of swaps reporting failures between 2013 and 2018, including incomplete LEIs.
鈥淯pon further investigation, we realised that Morgan Stanley Capital Services had a lapsed LEI between 2013 and 2018. It is quite simple to renew the LEI, and it is possible they did not realise it had lapsed,鈥� says Hayes.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities 麻豆影视传媒 Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities 麻豆影视传媒 Times
