The potential regulatory benefits associated with a global framework for financial transactions was recognised as early as 20 years prior to the 2008 financial crisis. Prior to the implementation of the Global Legal Entity Identifier (LEI) System, each country was responsible for implementing their own framework to track financial transactions. The ad hoc nature of the previous system (or lack thereof) meant that international transactions were basically impossible to track. Ultimately, this meant that policy makers and private parties were unable to adequately or accurately assess risk and exposure. These shortcomings were addressed by the introduction of the LEIs in late 2012. The LEI Regulatory Oversight Committee (LEI ROC) was established shortly thereafter in January 2013.
Briefly, the objectives of the LEI ROC are:
- To ensure access to publicly available data;
- To facilitate access for entities hoping to acquire an LEI;
- To ensure that there is no exploitation that is contrary to the broader public interest within the global LEI framework; and
- To ensure the global LEI system meets broad public and private requirements.
Broadly speaking, the LEI ROC is also the authority who oversees the LEI system and who creates and upholds its strict standards and general policies.
The LEI ROC has worked tirelessly since its conception to improve transparency, stability, and efficiently within the global financial market. In 2014, it announced that it would endeavour to list the relationships between various entities which hold LEIs in an effort to increase transparency. On 1 May 2017, the LEI ROC commenced collecting data regarding the direct and ultimate parent companies for legal entities seeking an LEI and has made this data available via the GLEIF website at: https://www.gleif.org/en/lei-data/gleif-concatenated-file/download-the-concatenated-file.
From a global policy perspective, the establishment of the global LEI system will assist governments, private advisers, and financial institutions, amongst others, to more accurately gauge the level of risk and exposure within the global market. As the number of entities who are using LEIs increases, the amount of data available will increase in both volume and reliability.
The need for transparency and accuracy is the reason that each entity is only eligible to receive one LEI.