LEI monitoring is the automated surveilling of the global legal entity identifier system for data updates that impact your firm. For example, when a client changes its legal name or jurisdiction, an LEI monitoring solution alerts systems and staff of the change. In my extensive discussions on LEI data, I’ve encountered four misconceptions about monitoring which I list and rebut below.
After an LEI is issued, the data associated with it can change. A counterparty could amend its legal name or change jurisdiction. Or, a corporate action might result in a new LEI for a client. These sorts of updates are more varied and frequent than is generally recognized. Failing to update in-house data to reflect these changes can result in a hefty fine, trade breaks, or unrecognized risk exposures.
A legal entity has an official legal name, and it may also be identified by other names such as a trade name. This is why the LEI common data format requires every LEI to have a legal name and supports other name types. You can use this name data to find the LEI of a party, such as a client, or as a data source for in-house databases. This post provides some tips for using LEI name data.
Every LEI has not one, but two statuses associated with it. These statuses change over a legal entity’s lifecycle and often have critical implications for regulatory compliance and risk management. To appreciate these implications, you need to understand the different status values. In this post we define each status, describe the values each can assume and provide stats on the current distribution of these values across the LEI universe. We discuss the relationship between the two statuses and list the reasons a status can change.
On December 20th, 2017 ESMA issued a statement announcing steps intended to smooth the introduction of MiFID II’s legal entity identifier (LEI) requirements. Some of the news headlines regarding the statement might lead you to believe that all of MiFID II’s LEI requirements have been delayed six months, but that’s not the case. Additionally, the delayed requirements have conditions attached. If you are actively involved in LEI data management or are working on MiFID II implementation, it’s worth reading ESMA’s brief, two-page statement.