Financial Stability Board Thematic Review on Implementation of the Legal Entity Identifier- An Overview

Financial Stability Board Thematic Review on Implementation of the Legal Entity Identifier- An Overview

By TC68 SG 4 Communications sub-group



FSB Thematic Review on Implementation of the Legal Entity Identifier

January 2020 




"On May 28, 2019, the Financial Stability Board (FSB) published a Thematic Review on Implementation of the Legal Entity Identifier (LEI). The LEI is an ISO standard, specifically, ISO 17442.  It is a 20-character, alpha-numeric code that was introduced following the financial crisis to be adopted globally, to uniquely identify legally distinct entities that engage in financial transactions.  The FSB paper states that “since its endorsement by the G20 in 2012, the Global LEI System has been successfully brought into operation, with over 1.4 million entities uniquely identified by an LEI in more than 200 countries.”  Widespread coverage of legal entities with LEIs has already been achieved in over-the-counter (OTC) derivatives (nearly 100% coverage) and securities markets (78% coverage). In these areas, the LEI has come the closest to meeting the G20’s objective to “encourage global adoption of the LEI to support authorities and market participants in identifying and managing financial risks."


  • The key aspect of the LEI that allows for significant benefits to be achieved in financial markets is the ability to use the LEI to quickly and unambiguously identify a legal entity.  For the regulatory community, the paper states that, “the regulatory uses of the LEI are multiple and the benefits can be substantial. The LEI standardizes identification of legal entities at the global level, to support the management and analysis of large datasets. Implementation of the LEI enhances regulators’ surveillance by tracking market abuse across institutions, products and jurisdictions. The LEI can also assist regulators’ and market participants’ aggregation and more flexible retrieval of granular data on entities from multiple sources, as well as the analysis of counterparty risks, interconnectedness and complex group structures.”


  • Similar benefits can be achieved by the private sector.  The unambiguous identification of legal entities through the LEI makes it a valuable tool for customer onboarding and credit approval processes; and for smoothing the way through the multiple checkpoints that occur during the typical lifecycle of most financial and real economy transactions. The LEI allows firms to be able to link across internal and external systems, databases, and service providers using the unique LEI to gain richer data and information about entities quickly and accurately. All of this substantially increases  efficiency for market participants.

There is work to be done, however.  The report observes, “Notwithstanding this progress, the LEI has far to go to meet the G20’s objective. Coverage is too low outside securities and derivatives markets to effectively support new industry or regulatory uses, or to reach a tipping point where voluntary take-up by market participants would suffice to propel further adoption. LEI adoption also remains uneven across jurisdictions, with coverage concentrated in Canada, the EU and the United States. Several FSB jurisdictions – particularly in Asia and emerging economies – have not yet taken steps to mandate use of the LEI in any area.”


The FSB report sets a clear path for the way forward with four sets of recommendations to address the issues identified in the peer review and promote broader LEI adoption:

  • FSB member jurisdictions to mandate the use of the LEI
  • The FSB to explore the use of the LEI in its other works on Resolution, Payments, CCPs
  • Relevant standard-setting bodies and international organisations (BCBS, CPMI, IAIS, IOSCO, IMF, OECD, World Bank) to embed the LEI in other rulemaking and policymaking
  • The LEI Regulatory Oversight Committee (ROC) and the Global LEI Foundation (GLEIF) to re-assess the business model (fees and ease of obtaining an LEI), as well as other services and data quality


There is a role for ISO/TC 68 membership to play in continuing the advancement of this critically important data standard.   Developing global standards and achieving consensus among both public and private sector stakeholders is a unique process requiring creativity and energy that the members of ISO/TC 68 are very familiar with.  The Peer review urges FSB jurisdictions and other relevant standard-setting bodies and international organizations to embed the LEI in their rulemaking and policymaking work, for example, providing guidance on the inclusion of the LEI in disclosures of data on entities as well as promoting LEI use in securities transactions and cross-border payments.  Members of ISO/TC 68 can work with their national regulators, trade associations and peers to raise awareness about the LEI and promote its use in regulatory rulemaking and private sector processes wherever legal entity identification is needed.


Ubiquitous adoption of the LEI would allow the industry and regulatory community to operate more effectively and efficiently in today’s environment and would facilitate the adoption of new and innovative technologies like artificial intelligence and digital data models. Progress has clearly been made. The ISO/TC 68 membership, working with the broader financial community, could greatly help to continue this progress and drive further and full adoption of this important ISO standard going forward.