While we are waiting for the LEI

As told in the post Business Entity Identifiers there has been a new global numbering system for business entities on the way for some time. The wonder is called LEI (Legal Entity Identifier).

fsb-leiThe implementation work has been adapted by the Financial Stability Board. The latest developments are reported in a publication called Fifth progress note on the Global LEI Initiative.

Surely, while the implementations may be in good hands, the set up doesn’t give hope for a speedy process where every legal entity in the world in a short time will have a LEI.

And then the next question will be how long it will take before organizations will have enriched existing databases with that LEI and implemented on-boarding processes where a LEI is captured with every new insertion of party master data describing a legal entity.

A good way to start to be prepared will be to implement features in on-boarding business processes where available external reference data are captured when new party entities are added to your databases. Having best available information about names, addresses and business entity identifiers available today and a culture of capturing such information will be a great starting point.

And oh, the instant Data Quality concept is precisely all about doing that.

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4 thoughts on “While we are waiting for the LEI

  1. John Owens 16th January 2013 / 00:22

    Hi Henrik

    On the surface the LEI would appear to be an excellent means of removing duplication from party identifiers. Perversely, in practice it is highly likely that this LEI will actually result in more duplication.

    The primary reason for this is that numbering systems and codes are never identifiers, they are simply a numeric (or coded) means of referring to an entity. I explain this apparent paradox in Unique Keys are the Primary Cause of Duplication in Databases.

    Unless the body who are issuing the LEI operate an effective vetting process, whereby they uniquely identify the legal entity in question before the issue it with this unique code, they will simply be issuing unique codes to legal entities that may or may not be unique.

    It’s back to Data Quality 101: Codes are not identifiers and, because of this, can never be unique identifiers.

    Regards
    John

    • Henrik Liliendahl Sørensen 16th January 2013 / 09:12

      Thanks for commenting John. I have been working intensively with external business directories over the last +30 years. They do generally provide uniqueness, but surely there are issues.

      First of all your definition of uniqueness doesn’t necessarily match the definition of uniqueness in say a public registry. (Partly) transition of ownership is for example an area of trouble here.

      Another area is bodies within government and local authorities. The perceptions from privately owned companies don’t fit here.

      So all in all you still have to master hierarchical data management when relying on such identifiers.

  2. Andrew Delaney 16th January 2013 / 08:28

    We have been covering development of the LEI in unparalleled detail since its inception, at http://www.ReferenceDataReview.com. Register for free access to news, analysis, research reports and webinars relating to implementation of the LEI and CICI in global financial markets.

    Andrew Delaney
    Editor

    • Henrik Liliendahl Sørensen 16th January 2013 / 09:20

      Andrew, thanks a lot for sharing.

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