EBF comments on the consultation on collecting data on parents of legal entities in the global LEI system
15 October 2015
EBF considers that accounting definitions, and in particular the definition of “ultimate accounting consolidating parent” provide the best basis for identifying data to support the purpose of the GLEIS.
The European Banking Fderation (EBF), therefore, agrees that, as a general rule, both the “ultimate accounting consolidated parent” and the “direct accounting consolidating unit” should be reported by entities applying or renewing an LEI in the first phase of level 2 data.
Accounting consolidation criteria are easy to implement and allow for risk aggregation, which is a key objective for setting up the GLEIS. Moreover, such an approach supports risk data aggregation including sorting, merging and breaking down sets of data, which is a key objective for BCBS 239 Principles for effective risk data aggregation and risk reporting required by G-SIBs and D-SIBs. It also support various other reporting requirements, including the Data Gap Templates initiative and Anti-Money Laundering prevention procedures.
However, using accounting consolidation criteria as a basis will result in potentially important relationships between entities which are not being included in the accounting consolidation framework not being captured. EBF's understanding is that the ROC intends to consider such other relationships at a future phase.
The consultation paper demonstrates that much uncertainty exists over the possible public sector and private needs which the GLEI is precisely expected to fulfill. Before moving forward on ways to include relationship information which would go beyond accounting definitions, it would be essential to gain more insight into the range of possible uses which the LEI might serve and, probably, to set priorities. In doing so, a careful distinction will probably need to be made between public sector and private uses.
At the same time, it would be helpful if all public authorities would contribute to taking stock of information on relationship information which is already being made available to
them today.
There may be a merit in examining to what extent the principle of subsidiarity may come into play.
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Adopting such a perspective, special attention would need to be given to the relationship between the GLEI and national business registers. Many existing business registers include information on group structures which has been validated by public authorities. Ideally, ways need to be found to allow such data to be integrated (and updated) in the GLEI in an automated way to avoid imposing an unnecessary additional administrative burden on reporting agents. One possible solution might be to provide the existing Local Operating Units (LOUs) with flexibility to decide how to deal with this.
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It seems highly likely that, in the future, to be useful, relationship information which is not based on accounting information will need to be based to a substantial extent on legal concepts of which the definition may vary across jurisdictions. As a consequence, thought may need to be given to organising subsets within the Global LEI System which would allow taking such differences into account. Adopting such an approach might also contribute to reducing complexity.
© EBF
