Legal Entity Identifier (LEI) BIIA Asia Pacific Middle East Limited - - PowerPoint PPT Presentation

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Legal Entity Identifier (LEI) BIIA Asia Pacific Middle East Limited - - PowerPoint PPT Presentation

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Cross border sharing of credit reports and the Legal Entity Identifier (LEI) BIIA Asia Pacific Middle East Limited (Regional Meeting) Phnom Penh, Cambodia March 14th to 15th, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit

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Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the Regulatory Oversight Committee (ROC)

Cross border sharing of credit reports and the

Legal Entity Identifier (LEI)

BIIA Asia Pacific – Middle East Limited (Regional Meeting)

Phnom Penh, Cambodia – March 14th to 15th, 2018

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Agenda

  • 1. Cross border sharing of credit data
  • 2. The Legal Entity Identifier (LEI)
  • LEI code structure
  • LEI use cases
  • Recent regulatory adoptions (Asia Pacific)
  • Statistics Asia Pacific
  • 3. The Global Legal Entity Identifier System (GLEIS)
  • Architecture of the GLEIS

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC 2

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Cross border sharing of credit data – a challenging process

  • Ever more data on more and more entities / parties from various sources

worldwide

  • Most companies use multiple identifiers in multiple sytems
  • Corporate registers, industry associations and utilities, exchanges, credit bureaus,

customs and tax authorities and other market infrastructure players each maintain their own indentification numbers

  • Improve data on cross-border exposures
  • Customer Identification - Identification of parties is:
  • Time-consuming
  • Costly
  • Complex

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC 3

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What is the LEI?

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

The LEI is…

  • ... a 20 digit dump number to globally identify legal entities
  • … a global public good
  • … free of charge for data users

LEI data:

  • Level 1: who is who: reference data, business card information (done)
  • Level 2: who owns whom: relationship data (done)
  • Level 3: who owns what: financial data (a vision)

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The LEI is based on the ISO 17442 standard

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

  • Unique 20 digit alphanumeric code based on ISO 17442 standard

assigned to legal entities

  • LEIs are issued by Local Operating Units (LOUs)
  • LOUs supply registration, renewal and other services, and act as

the primary interface for registrants for LEIs

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LEI Use cases and benefits

*(source: McKinsey paper “The LEI: The value of the unique counterparty ID”

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

  • Capital markets
  • Reducing costs for onboarding clients and of middle- and back-office activities
  • LEI use throughout the lifecycle of the client relationship
  • Reducing time spent on data correction and reconciliation
  • Commercial credit
  • More robust and efficient “Know Your Customer” (KYC) diligence on borrowers
  • Traceability of information on borrowers from multiple sources
  • Commercial transactions (Trade finance and e-invoicing)
  • Faster processing of letters of credit (facilitate payments in cross-border

transactions)

  • Better identification of sellers on e-invoicing networks

McKinsey White Paper suggests combined potential savings of at least US$ 650m annually just in core banking!

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Benefits of LEI adoption for users in the private sector

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

  • LEI adoption responds to business needs with regard to

identification management in the following areas

  • Know your customer utilities (KYC)
  • Unified data management
  • Correspondent banking (buy side and sell side)
  • Trade finance
  • Cash management corporates
  • Distributed ledger solutions (e.g. Blockchain)
  • Standard Business Reporting
  • Asset management for (pension) funds
  • Payment schemes
  • Card payment schemes (merchant data)
  • E-invoicing schemes
  • Trading, clearing and settlement rulebooks
  • Collateral management
  • Credit rating
  • Market research

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Transparency of (financial) transactions as user requirement of the public sector

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

Required by public authorities in the following areas: (see also‘Rulemaking’initiatives page at www.gleif.org)

  • Risk assessment, market surveillance and enforcement
  • Reporting to derivatives regulators
  • Reporting to securities regulators
  • Reporting to insurance and pension funds regulators
  • Reporting to Banking Supervisors
  • Reporting to Central Banks, e.g. regarding

 Balance of payments reporting  AML (anti money laundering),  CFT (combating the financing of terrorism) and sanction regimes

  • Other needs of the public sector
  • Credit Reporting
  • Reporting for statistical market research
  • Collateral assessment and management in Central Banks
  • Public procurement

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Recent adoptions – Regulatory use of the LEI

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

  • India
  • Introduction of the LEI for the OTC derivatives market (required since 2017)
  • LEI mandated for large corporate borrowers of banks having total exposure
  • f Rs 500 million and above through Directive under Banking Regulation Act

(Implementation in Phases)

Corporate with Total Exposure to SCB Target date for obtaining LEI Rs 10000 mn and above Mar 31, 2018 Between Rs 5000 mn and Rs 10000 mn Jun 30, 2018 Between Rs 1000 mn and Rs 5000 mn Mar 31, 2019 Between Rs 500 mn and Rs 1000 mn Dec 31, 2019

  • Separate roadmap to be put in place for exposures between Rs 50 million

and up to Rs 500 million

  • Malaysia
  • Adoption (required 2018) of the LEI in the large value payment system

(Real-time Electronic Transfer of Funds and Securities System - RENTAS)

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LEI Statistics – India

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

Total No. of LEI issued by LEIL India - 2993 *(27th Feb 2018)

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200 400 600 800 1000 1200 First Quarter 2017(Q1) Second Quarter 2017 (Q2) Third Quarter 2017(Q3) Fourth Quarter 2017 (Q4) 10 18 824 1172

LEI Issued

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LEI Statistics – Asia Pacific

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC 11

Issued LEIs by Country

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14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

Current GLEIS architecture and governance

GLOBAL LEI SYSTEM HIGH LEVEL PRINCIPLES GLOBAL REGULATORY OVERSIGHT COMMITTEE CHARTER Regulatory Oversight Committee (ROC)

Chair Michael Ritter, Vice-Chairs Joseph Tracy, Nanda S. Dave Secretariat Stéphane Mahieu

ROC PLENARY ROC EXECUTIVE COMMITTEE GLOBAL LEI FOUNDATION (GLEIF) operating CENTRAL OPERATING UNIT (COU) BOARD OF DIRECTORS (BoD)

Chair Gerard Hartsink

LOCAL OPERATING UNIT (LOU) 1 LOCAL OPERATING UNIT (LOU) 2 LOCAL OPERATING UNIT (LOU) N COMMITTEE ON EVALUATION AND STANDARDS (CES) CEO and staff

CEO Stephan Wolf MoU, ROC Chairs observers on GLEIF Board Master Agreement setting GLEIF accreditation and oversight role towards LOUs

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LEI Governance – the Regulatory Oversight Committee (ROC)

  • 72 members and 18 observers from over 50 jurisdictions
  • Open to any public sector authority, international financial institutions,

international public sector bodies (e.g. Central Banks, Regulators)

  • Chair, two Vice-Chairs and Executive Committee (regionally balanced)
  • ROC supported by an advisory technical committee, the Committee on

Evaluation and Standards (CES)

  • Task Forces, Working Groups, Study Groups
  • LEI Private Sector Preparatory Group
  • Website: www.leiroc.org

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC 13

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LEI Governance - the Global LEI Foundation (GLEIF)

  • GLEIF is a Swiss foundation (non-for-profit) inaugurated in June 2014 in

Basel (Switzerland) and founded by the Financial Stability Board (FSB)

  • Statutes and business plan approved by the ROC and FSB
  • GLEIF Board (BoD) of 18 independent directors of 14 jurisdictions (balanced

representation of industry participants from different geographic areas and sectors of the economy)

  • Chair and one Vice-Chair
  • CEO of the GLEIF appointed by the BoD

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC 14

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LEI Governance - the Local Operating Unit (LOU)

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

  • Currently 30 accredited LOUs by the GLEIF:
  • Various types:

 Business registries  Stock exchanges  Trade repositories  Custodians of financial instruments  Central banks  Numbering agencies issuing e.g. International Securities Identification

Numbers

  • Some serve a given country, others offer services to entities worldwide

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Useful links for up-to-date information

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

1) http://www.leiroc.org/index.htm 2) https://www.gleif.org/en/about

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Thank you for your attention!

14 March, 2018 Michael Ritter, Deutsche Bundesbank, Head of Central Credit Register, Chair of the LEI ROC

Michael Ritter Deutsche Bundesbank Head of Central Credit Register Tel: +49 69 9566 5400 email: michael.ritter@bundesbank.de

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