The new LEI Conformity Flag will enhance universal trust in LEI data
The new LEI Conformity Flag was introduced during a webinar in April 2020. It is set to be implemented throughout 2021 and is still undergoing testing and prototyping.
The quality of LEI data is of critical importance to the integrity of the global LEI system. It remains the only global legal entity identifier that publicly shows a record of when the data was last updated. The Financial Stability Board (FSB) have stated that the LEI system should promote a “higher quality and accuracy of financial data overall”.
What is an LEI? The LEI is essentially an international business passport, which identifies your company and allows you to know for sure that your counterpart is who they say they are. This is why trust in the system is paramount.
Currently, in order for the LEI data to be deemed trustworthy it requires annual renewal. If an LEI is allowed to ‘Lapse’ it will be marked as lapsed on the public LEI database meaning the data has not been checked in the last 12 months rendering it outdated.
But if an LEI is active, how can we still be sure the data is accurate?
GLEIF report 99% LEI accuracy which leaves 1% of LEIs as unsure. This is thousands of LEIs. Soon we will have the Conformity Flag to give us a second layer of data quality assurance, along with the existing LEI Status.
For example the European Central Bank constantly evaluate the data quality of the LEI, and will welcome the addition of a conformity flag which will guarantee the data quality of any specific LEI code where a flag is present. If an entity has not been awarded a flag, perhaps the data source was not trusted, maybe there is another LEI for the same entity (duplicate) or the LEI data is not consistent with other records.
LEI data is public, and GLEIF issue monthly data quality reports which are generated based on 11 data quality metrics.
Here is the link to the data quality reports: https://www.gleif.org/en/lei-data/gleif-data-quality-management/about-the-data-quality-reports/download-data-quality-reports/download-global-lei-data-quality-report-october-2020
Here is the most recent October 2020 report:
LEI Worldwide fully support the conformity flag project and I personally believe that when users of the database see it on an LEI record they will have assurance and trust in the system making it the single most trusted identifier for companies globally.
LEI Worldwide work closely with the Ubisecure team to prioritise data quality for our clients so we expect 90%+ conformity on our clients LEIs when they are reviewed, and we will review the remaining LEIs on a continual basis to maximise conformity.
The views expressed in this blog belong to LEI Worldwide.