LEI in figures: How regulatory action is driving global adoption

8 május 2024

New regulatory initiatives that provide global stakeholders with a blueprint for promoting greater trust and transparency across the digital economy continue to fuel the adoption of the legal entity identifier (LEI). The Global LEI Foundation (GLEIF) is proud of its ongoing transparency initiatives, including its open approach to providing unrestricted access to the latest LEI data from around the world with the quarterly LEI System Annual Reports, made available to the public free of charge.

Growth figures and trends

With this ‘LEI in numbers’ blog series, GLEIF aims to highlight critical data from the latest report, explain trends and showcase successes in global LEI adoption. The latest report for Q1 2024 shows that over 66,000 LEIs were issued globally during the quarter. At the end of the quarter, the total number of active LEIs was over 2.46 million, representing a quarterly growth rate of 2.8%.

India’s leading role in LEI growth

In the first quarter, India recorded the highest LEI growth rate at the jurisdiction level at 9%. This development is part of the ongoing phased introduction of the LEI for all large corporate borrowers from banks. Corporates with a total exposure of 10 crore or more will require an LEI to obtain renewal or extension of credit facilities after 30 April 2024. The strong adoption of the LEI in the first quarter has made India the fifth largest country globally regarding LEI holdings. This reflects the cumulative impact of regulatory solid efforts in recent years and provides a compelling precedent for global stakeholders exploring the potential of the LEI to address new challenges in the digital economy.

Regulatory dynamics in other countries

Other countries have also recorded strong growth rates. Japan, with 5.5 %, is another example of regulatory initiatives driving the introduction of the LEI. On 1 April, the Financial Services Agency’s (FSA) revised reporting rules for over-the-counter (OTC) derivatives came into force, requiring all participants in an OTC derivatives transaction to have an LEI. The strong growth in Latvia (6.2 %), Lithuania (6.2 %) and Greece (5.8 %) was due to the market activities of the local LEI issuing organisations.

Increased transparency on the financial markets

The overall rate of LEI renewals in the 1st quarter was 55.5 %, a slight decrease compared to the previous quarter. This was again mainly due to reduced renewals in non-EU countries to 45.1%, while quarterly renewals in EU countries also fell slightly to 61.8%. Hungary again had the highest renewal rate (93.5 %), followed by Japan (91 %), Finland (84.1 %), India (79.1 %) and Germany (78.5 %). The rising renewal rates in countries such as Saudi Arabia have shown a positive influence on new business cases and market activities of local LEI issuing organisations.

The Policy Conformity Flag and Its Importance

The recent launch of the Policy Conformity Flag demonstrates the commitment of the Regulatory Oversight Committee (ROC) and GLEIF to promote renewal and support up-to-date, complete data reporting by legal entities. The new tool clarifies to global data users whether an LEI record is current and complete with relationship reports. By enabling organisations to demonstrate their commitment to transparency, global business communities can achieve several benefits – including supporting the international fight against financial crime, monitoring market risk and improving operational processes. The Policy Conformity Flag also provides organisations with an easy way to ensure technical compliance with around 200 regulations worldwide that reference the LEI, many of which require active LEIs.

Continuous development of new LEI data formats

Following the implementation of the ROC guidelines on new LEI data formats in March 2022, the sustained growth in reported data continued in the first quarter. Around 6,100 entities were identified as government entities and 44 as international organisations (compared to 6,000 and 38, respectively, in the fourth quarter of 2023). Approximately 134,000 legal entities reported fund relationship structures, an increase of around 3,000 compared to the previous quarter.

Conclusion

The full report with further details on the status of LEI issuance and growth potential, the level of competition between LEI issuing organisations in the Global LEI System and Level 1 and Level 2 reference data can be found on the Global LEI System’s Annual Reports page. The CDF formats were updated in March 2022 to fulfil new data requirements. For the latest daily LEI data and historical data, users can utilise the Global LEI System Statistics Dashboard to monitor transparency and progress of LEI adoption. GLEIF looks forward to providing quarterly updates on the progress of LEI adoption in 2024.