Since the dawning of the Blockchain era in recent years, many use cases for the disruptive technology have been considered, some revolutionary and some not so much. It is clear however, that some industries can hugely benefit from the technology, which has it roots in cryptocurrencies such as Bitcoin. For example the introduction of smart contracts, distributed storage and data protection are proving to be invaluable use cases to companies in the global financial industry and beyond.
According to Investopedia, a blockchain is a digitized, decentralized ledger. Immutable by nature, and incorruptable, it was valued as an means of accounting for previously easily hacked digital assets.
GLEIF (Global Legal Entity Identifier Federation) recently published an article on its website stating "Integrating the LEI into other entity verification methods, including solutions based on digital certificates and blockchain technology, will allow anyone to easily connect all records associated with an organization, and identify who owns whom. By becoming the common link, the LEI will provide certainty of identity in any online interaction, making it easier for everyone to participate in the global digital marketplace." Anyone who is familiar with the technology will know that this is not merely a buzzword, but in fact a potentially applicable use case for the LEI in coming years, and it is one that has echoed around the community for a while now with a vision to making the LEI more efficient.
That being said, potential cases for the Blockchain to be incorporated in the Global LEI system are merely speculative at this stage, but nevertheless an interesting topic worth exploring. For example, there are several sources currently within which LEI data is stored. When an entity is registered with an LOU, there is often a short waiting period before it appears on various search tools online. Given that the very nature of the LEI is that it is a digital product, all of the data is stored online between separate entities, and the information may not match at times, and may be inconsistent across search tools. It may be the case that all data can now become decentralised by way of a Blockchain, and any changes made on one system will auto correct on the others in real time.
By uploading new registrations to a Blockchain, Local Operating Units can rest in the knowledge that reconcilement would be agreed between all participants. Any further updates to LE-RD (Legal Entity Reference Data) would have to be fully corroborated by all participants before validation was permitted. This would result in increased efficiency, congruency and speed, from which the consumer of the LEI would benefit, such as Banks, Investors and the regulators themselves.
This use case is merely an initial introduction into one of the more obvious applications, however this may never occur, or if it does it may take an entirely different approach.
If you are familiar with this topic, and would like to share your ideas, please feel free to like, share, leave a comment or get in touch with a member of our team at firstname.lastname@example.org.
With the passing of the original deadline in January, The European Securities & Markets Authority (ESMA) have granted a 6 month grace period to allow market participants another opportunity to become compliant with one of the most important aspects of the Mifid II regulation, to obtain a Legal Entity Identifier number.
The deadline extension allows banks to conduct reportable transactions without an LEI, however other legal forms have also been using this as a means of performing transactions. This of course, is a temporary fix. One thing we learned here at Global LEI last January was the number of legal entities applying for an LEI number rose dramatically. In the ten days in the lead up to January 2018, Global LEI saw a 62% increase in orders, compared to the final ten days of November 2017.
Contracting authorities such as The London Stock Exchange, and Bloomberg notified entities applying that they were not guaranteed to make the deadline if they did not complete the application process from the 13th December 2017. Nevertheless, the number of applications continued to pile up. Contracting authorities such as GMEI Utility and EQS made a ‘SAME DAY’ registration option possible, which guaranteed you application would be complete within 24 hours.
With well over 1 million LEI Numbers now issued, and with Summer just around the corner, it is advised that if you require an LEI Number you register as soon as possible. It is not likely that the deadline will be extended again, and ESMA may not show the same grace to non-compliant entities, who will face a “no LEI, no trade” ruling. If you require an LEI number in a hurry, contact one of our experts for advice on a SAME DAY LEI, to receive you LEI number within 24 hours.
Alternatively, register your legal entity today and become MifiD II compliant by filling out our LEI registration form here. One of the benefits of registering with Global LEI is that you can register an entity from any country in the world and your LEI number will be globally recognised, fully active and MifiD II compliant within 24 hours.
To find out more information, or if you require an LEI Number, please contact our registration team at email@example.com.
The Global Legal Entity Identitifier (LEI) index can now be considered a success with over one million registrations under its belt. Still in its early days of formation, the initiative has thus far taken a large step towards attaining its primary objective, with the Global Legal Entity Identifier Foundation (GLEIF) - the LEI ‘overlords’ playing a key role in it’s success.
As with any overarching regulation, early fears of disruption were put to bed once the January deadline rolled around and Banks and Brokers were granted an extra 6 moths to become compliant with the MifiD II regulation and possibly the industry’s biggest game changer in the last ten years.
The Financial Times reported that as many as 20% of banks clients had still not registered a few days before the deadline. As expected, this was the result of a long global queue to obtain the license, and a deadline day crush that was certainly felt by us here at Global LEI as we did our part to assist in the allocation of LEI’s to legal entities in over twenty five countries as we entered 2018.
However, the pragmatism, and sensibility shown by European Securities and Markets Authority (ESMA) in extending the LEI deadline for the regulation was welcomed by those who feared a “No LEI, No Trade” ruling. At this point in time, it is difficult to estimate how many entities are still to register, and whether or not there will be another high pressure lead in to July, 2018.
With roughly 1,002,900 legal entities currently registered, investors are finding solace in the extra security and transparency this comes with this welcome change. With markets now more competitive and legitimate legal data available at the touch of a keypad, it is easier to see who is owned by whom, and where they doing the owning from.
It is incremental that everybody buys into this. In order for the LEI to achieve its aim and manifest the benefits stated above, the rule must be adhered to as its success is completely dependent on the network of universal adoption. Thus, deadlines and penalties are necessary.
It is unclear what the ramifications for non-compliance will be, exactly, and whether or not they will be enforced. The common phrase being bandied about is “No LEI No Trade”, but it still remains to be seen whether the relevant authorities will cut off their nose to spite their face, and risk slowing down large arteries of international trade and finance, should non-compliancy be an genuine issue. Do not be the one to find out!
As it stands, January 2018 is the perfect time get your clients registered. You can avail of a 10% discount if you wish to make a bulk registration with Global LEI by clicking on the link below:
Global LEI Bulk Upload Form
For more information, or any other questions regarding LEI registration, please contact firstname.lastname@example.org.
LOU map of the world
The process of obtaining an LEI number has never been more complicated, but also has never been made more simple. With a lot of options, you may be wondering which LOU you should register your number with.
GLEIF CEO, Stephan Wolf has said “we urge impacted market participants to get an LEI as soon as possible”. There is no guarantee that all entities affected will have procured an LEI number by January, which means some firms will be unable to execute trades.
Global LEI provide a service by which we collate the required information on behalf of our clients, and act as their LEI partner. Working in collaboration with the LEI number issuers (LOU’s), and effectively streamlining the entire process.
Having your LEI number registered on the global database means your organisation is searchable and certain pertaining to your legal entity is visible to the public domain.
But what exactly can they see? For one, the Local Operating Unit from which you have obtained your number is visible. This means if you are a company based in Switzerland but have received an LEI from the XYZ stock exchange, it will be visible.
“A legal entity is not limited to using an LEI issuer in its own country; instead it can use registration services of any LOU that is accredited and qualified to validate LEI regitrations”
This is in the interest of fair play, as there are only a small number of issuers in the world e.g South America has only one – in Argentina.
Global competition means LOU’s must price competitively and there are no monopolies within any given jurisdictions.
But that prompts the question, is it better to get an LEI from a particular country? If so, which country is the best one?
To answer that question, we must first ask what benefits there are to the LEI system for the organisations n question. Firstly, increased transparency will provide more accurate identification. Risk management and operational efficiency will be increased by more simplified regulatory reporting, and the overall record keeping of Global trading will become more visible, to you, and the governing bodies.
One LEI does not provide more benefits than another, but reputation matters. If your organisation is trading under the issuance of an LOU that has been internationally red flagged, that stigma may be associated with you.
Global LEI provide the option to receive an LEI number from all 30 LOU’s, but here are a few pointers to keep in mind when selecting yours, regardless of where in the world you may be.
Your first filter should be geographical location.
Yes, it is probably most common to register with your jurisdictional LOU, for example The London Stock exchange if you are based in the EU. BY registering via Global LEI, you can register your LEI with any of the LOU’s in the world and then port your LEI at any time. The benefit of this is that you may conduct business or dealings in another country – or continent, and having your LEI from that region helps you to leverage yourself as an entity within that region.
Other filter to consider before you choose an LOU, may be the reputation of the LOU in question.
Ask yourself, is this a stock exchange, or well known organisation that has been red flagged? Do you already have a working relationship with them? And are they the organisation you want to be associated with? Finally, each LOU may have their own pricing structure, and a small bit of research may be required to source the least expensive, or reasonably priced.
To get your LEI number and choose an LOU click here.