Taking a hard position, annual renewal of your Legal Entity Identifier is required. By the GLEIF. They bake it into the LEI record. A red or green dot indicates whether the LEI has been renewed within the required time frame. Why demand renewals? So data can be self-attested. The registrant accounts for changes in company name, address, ownership structure, and officer roles. Or simply affirms nothing has changed. Anything can be challenged by an outside party.
Red LAPSED -- ༼ つ ◕_◕ ༽つ
When looking at a LEI record, a red dot next to the word Lapsed under Registration Status shows the entity has failed to renew.
Globally, 30.8% of LEIs are Lapsed. Let's consider some factors for why this might be:
Enforceability: Implementation occurs on a jurisdictional basis. The GLEIF works very hard as a non-profit to promote best practices surrounding LEI data quality, but enforcement is left to regulatory bodies overseeing areas where LEI usage has been implemented. View a comprehensive list here. Firms are required or requested to have a LEI; whether the annual renewal standard is met is often inconsequential.
Cost: Renewing a LEI costs money. Generally, the cost of renewal will be less than registration. But what reason is there spend money less any material penalty?
Awareness: Firms deal with an array of mental burdens. Renewing a LEI costs time. Employees charged with management may be unaware of the requirement or prioritize other duties. Outsourcing to a dedicated provider could help solve this issue.
Green ISSUED -- (￣︶￣*))
Still, the necessity is obvious for some. Those subject to MiFID II operate under a strict no-LEI-no-TRADE rule. This policy demands fresh data yearly. But that's not everyone. Why else would doing annual LEI renewals be beneficial?
- Public Image: As a primary record bearing essential details, an out-of-date Registration Status can reduce trust. LEI records are 100% open-source and viewable to the public. Make transparency foundational for your company.
The strength of brand loyalty begins with how your product makes people feel. - Jay Samit
Conformity Flag: Besides the green or red dot, look for a holistic compliance indicator to appear on all LEI records in 2021. GLEIF CEO Stephen Wolf referenced roll-out of the Conformity Flag feature during a recent webinar. Registration Status will contribute to entities being deemed in alignment with LEI ROC policy, and thus suitable for receiving the binary indicator.
Improved KYC/KYB: Further expedite on-boarding, KYC, and any other validation process which uses the LEI. Applications built on a Lapsed Registration Status suffer. Reconciliation against other data sources will take longer. Staying current means checks are more likely to be validated. Less work keeps everyone happy.
Solution: Extend, Extend, Extend
We call it Extension because the LEI can always be renewed. Falling into a Lapsed status doesn't mean your company will suffer any penalties, unless mandated so by a specific piece of reporting. The GLEIF will never stand in the way of a business wanting to self-attest fresh, up-to-date data. This is essential for maintaining the LEI system's integrity as a whole. Extend before or after your renewal date.
The renewal date will be set exactly 1-year from the date the LEI was issued. Not when you payed for it. Obtain the date from the LEI record. A subscription-based service automates payment, making LEI renewal a set-it-and-forget-it business process. Outsourcing management can also be beneficial to companies with large portfolios. Otherwise, stay Issued through internal due diligence.
Your 20-digit code will never change; not if renewed, not if management transfers from one LOU to another. The LEI encapsulates one legal entity forever within its alphanumeric code. Choose a dedicated provider and automated payment to assure your LEI never slips through the compliance cracks. As a living business record, promote the ultimate in corporate-facing trust.