GLEIF launches LEI accreditation program

The Global Legal Entity Identifier Foundation (GLEIF) has launched an accreditation program designed to confirm the suitability of organizations issuing Legal Entity Identifiers (LEIs).

Any organization issuing an LEI, which enables the proper identification of legal entities engaging in financial transactions, must now be GLEIF accredited, and meet the requirements laid out in the Master Agreement, a contractual framework outlining the relationship between GLEIF and LEI issuers.

The master agreement was finalized following a review process involving GLEIF, representatives from LEI issuers and the LEI Regulatory Oversight Committee (ROC). Prior to the accreditation program, the LEI ROC was responsible for endorsing organizations as LEI issuers.

LEI issuers endorsed by LEI ROC must now apply to become GLEIF accredited although they will be permitted to continue issuing LEIs during the approval process. If an issuer is refused accreditation by GLEIF, pre-existing LEIs will remain valid, and transferred to a GLEIF-accredited issuer.

“With the conclusion of the Memorandum of Understanding between GLEIF and the LEI ROC, GLEIF has taken on greater responsibility for ensuring that the LEI becomes a broad public good. Use of the LEI increases transparency and stability of financial markets. It also generates tangible benefits for businesses including reduced counterparty risks,” said Gerard Hartsink, chairman at GLEIF.

In 2011, the G20 advised the Financial Stability Board (FSB) to provide recommendations for the creation of a global LEI. The introduction of a global LEI has not been without its difficulties, namely over the different reporting obligations and criteria laid out in global regulations. Furthermore, there have been disagreements over the type of information that should be included in the LEI, such as the status of the counterparty’s ownership structure. There have also been a number of data protection issues surrounding LEIs. These various arbitrages have stymied progress.