ISIN-LEI Mapping for Transparency in the Financial Market

ISIN-LEI Mapping for Transparency in the Financial Market

February 14, 2024·Makhmud Efendi
Makhmud Efendi
The introduction of LEIs alongside existing ISINs is going to revolutionize transparency and standardization. This dynamic duo maps out the global financial landscape in real time, empowering informed decision-making and minimizing risk exposure for all participants.
ISIN-LEI Mapping for Transparency in the Financial Market

Financial markets operate on a massive scale, involving countless companies, financial instruments, and transactions. To navigate this complexity, standardized identifiers play a crucial role (read here about six common organizational identifiers), and two key players are the ISIN (International Securities Identification Number) and the LEI (Legal Entity Identifier).

ISIN to LEI Mapping

The International Securities Identification Number (ISIN)

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The International Securities Identification Number (ISIN)
Established in 1981, ISIN uniquely identifies financial instruments like stocks, bonds, and derivatives. Think of it as a passport for securities.

The International Securities Identification Number (ISIN) is a unique code that is used to identify specific securities. Established in 1981 and fully adopted a decade later, the ISIN is recognized globally under the ISO 6166 standard. It serves as a universal identifier for financial instruments such as stocks, bonds, futures, and other securities. The purpose of the ISIN is to facilitate a standardized identification of securities, helping to reduce confusion and improve clarity in financial transactions across international borders.

Securities are often traded on multiple exchanges and in various countries, each with its local identification systems. The ISIN helps to bridge these differences by providing a single, standardized code that can be recognized internationally. This makes it easier for investors, traders, and regulators to identify and track securities, enhancing the efficiency and safety of global financial markets.

The structure of an ISIN includes an alphanumeric format, consisting of a two-letter country code, a nine-character national security identifier, and a single check digit. This structure allows the ISIN to encapsulate essential information about the security, including its country of issue.

ISIN number definition, what is ISIN, how and why it is used
ISIN number definition. Source: LEIpapa.

ISINs are issued by National Numbering Agencies (NNAs) in each country, with the Association of National Numbering Agencies (ANNA) serving as the global authority that oversees the ISIN system. ANNA’s role is to promote and ensure the adoption and use of the ISIN standard across more than 200 jurisdictions, aiming to make the financial world more efficient, safer, and stable for investors and the institutions that serve them.

The Association of National Numbering Agencies (ANNA) is a global member association of National Numbering Agencies (NNAs), seeking to foster standardization within the financial industry by upholding the International Organization for Standardization (ISO) principles, and by promoting International Securities Identification Numbers (ISIN), Financial Instrument Short Name (FISN), and Classification of Financial Instruments (CFI) codes for financial instruments.

In summary, the ISIN is a critical tool for achieving transparency and standardization in the global financial marketplace, enabling precise identification of securities and reducing the risk of misidentification and fraud.

The Legal Entity Identifier (LEI)

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The Legal Entity Identifier (LEI)
Introduced in 2011, the LEI identifies the legal entities involved in financial transactions, similar to how a national ID identifies individuals. This helps trace ownership and accountability.

To identify legal entities involved in financial transactions and other valued transactions between corporations or legal entities, a Legal Entity Identifier (LEI) global standard was designed and defined by ISO 17442, in the spirit of public and private partnership to improve transparency in the marketplace for entities and regulators alike and to collate financial transaction information into a freely accessible Global LEI System. In June 2012 at the Los Cabos Summit, the G20 Leaders endorsed the Financial Stability Board (FSB) report “A Global Legal Entity Identifier for Financial Markets”, and encouraged “global adoption of the LEI to support authorities and market participants in identifying and managing financial risks”. Regulated by the Regulatory Oversight Committee (ROC) through the Global Legal Entity Identifier Foundation (GLEIF), LEI is a 20-character identifier that represents a distinct legal entity engaged in financial transactions and the purpose of LEI is to be the single organization identity behind every business.

The LEI code specifies the minimum reference data, which must be supplied for each LEI, such as the official name of the legal entity as recorded in the official registers, the registered address of that legal entity, the country of formation, the codes for the representation of names of countries and their subdivisions. The information stating the date of the first LEI assignment, the date of the last update of the LEI information, and the date of expiry (when applicable) is also stored in the global database.

The meaning of the digits in the Legal Entity Identifier (LEI) code
The meaning of the digits in the Legal Entity Identifier (LEI) code. Source: LEIpapa.

Each LEI contains information about an entity’s ownership structure (direct and ultimate parent entities) and therefore answers the questions of “who is who” and “who owns whom” for each particular entity. Every single LEI code is unique and shall be issued only once for a specific legal entity; the same LEI code cannot be issued to another legal entity. The LEI code does not replace the registry code (registration number of the entity) of the commercial register, which is still used to identify a legal entity.

Moreover, LEI codes are used for reporting as of 3 January 2018. Under the MiFIR and MiFID II regulations, transaction reports shall, among other things, also be used for investigating market abuse. The total amount of LEI codes issued worldwide by February 2024 corresponds to more than two million codes.

More information regarding the LEI is available in our knowledge base.

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What is ISIN-to-LEI Mapping?
ISIN-to-LEI Mapping links the International Securities Identification Number (ISIN) of a financial instrument to the Legal Entity Identifier (LEI) of the company that issued it. This improves transparency and risk management in the financial system by allowing regulators and market participants to easily identify who is involved in each transaction.

While both (ISIN and LEI) serve distinct purposes, their synergy unlocks significant benefits through ISIN-LEI Mapping. This process links these identifiers, creating a clearer picture of who owns and trades what.

Source: GLEIF

Benefits of ISIN-to-LEI Mapping

Benefit Description
Enhanced Transparency By connecting issuers (LEIs) to their issued securities (ISINs), the financial landscape becomes more transparent, reducing information asymmetry and potential misconduct.
Improved Risk Management Mapping allows for better risk assessment by pinpointing ownership structures and potential exposures across different instruments and entities.
Streamlined Compliance Regulatory requirements like SFTR (Securities Financing Transactions Regulation) mandate LEI usage. Mapping simplifies compliance by readily linking relevant entities and instruments.
Reduced Fraud & Money Laundering Clearer identification makes it harder for bad actors to hide their activities, deterring fraud and money laundering attempts.
Real-time Identity Checks Instant verification of entities involved in transactions, further enhancing security and efficiency
Automated Processes Linking multiple ID platforms through standardized mapping could pave the way for automated compliance and risk management procedures.

BIC-to-LEI Mapping

In February 2018, a significant advancement in financial data transparency and efficiency was achieved through the collaboration between the Global Legal Entity Identifier Foundation (GLEIF) and SWIFT. They released the first-ever open source file that aligns a Business Identifier Code (BIC), allocated to organizations, with their corresponding Legal Entity Identifier (LEI).

What is a Business Identifier Code (BIC)?

The Business Identifier Code (BIC), also known as ISO 9362, is a globally recognized standard formulated by the International Organization for Standardization (ISO). It plays a crucial role in identifying entities within the financial services sector.

What is SWIFT?

SWIFT is a global member-owned cooperative and the world’s leading provider of secure financial messaging services. SWIFT is committed to providing actionable global ID and reference data services and products, like the business identifier code (BIC), to global market participants, including regulators and the financial services industry to uniquely identify, classify and describe entities and financial instruments. SWIFT is the registration authority for the ISO 9362 (BIC) standard appointed by ISO. In this role, SWIFT receives BIC registration requests, assigns a BIC, and publishes the related BIC Data Record as defined in and under the requirements set out in ISO 9362.

How is BIC-to-LEI mapping implemented?

This innovative BIC-to-LEI mapping initiative is based on a methodology certified by GLEIF and implemented by SWIFT. The relationship file, available in CSV format and refreshed monthly, facilitates the linkage of these pivotal entity identifiers at no cost. The file is available available for download at GLEIF’s official website.

The unveiling of this open-source BIC-to-LEI file marks a groundbreaking collaboration between GLEIF and SWIFT. It offers a novel approach for market players to effortlessly connect and reference essential entity identifiers without incurring expenses. This development is particularly advantageous for entities engaged in the payments and over-the-counter (OTC) derivatives markets, streamlining processes like counterparty information collection, aggregation, and reconciliation, as well as enhancing due diligence for Know Your Customer (KYC) and Know Your Supplier (KYS) practices.

The launch of the BIC-to-LEI relationship file represents a significant step towards unifying and streamlining entity verification processes, ultimately reducing the financial and operational burdens associated with these tasks.

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GLEIF’s complimentary Certification of LEI Mapping service guarantees that organizations mapping the LEI to their identifiers employ cutting-edge methods and processes for precise mapping, ensuring data accuracy and reliability.

For more detailed information on BIC and LEI, you can visit the official websites of the International Organization for Standardization (ISO) at ISO’s official website and the Global Legal Entity Identifier Foundation (GLEIF) at GLEIF’s official website.

Conclusion

While significant progress has been made, not all instruments are fully mapped yet. Ongoing efforts by organizations like ANNA, GLEIF, and data mapping companies are continuously improving coverage and accuracy.

If your organization deals with financial instruments, consider obtaining an LEI and exploring ISIN-LEI mapping solutions. LEIpapa encourages entities to register an LEI to not only comply with global financial standards but also to contribute to a more secure and transparent financial ecosystem.

By working together and embracing standardized identifiers, we can build a more transparent and resilient financial future.

FAQ

What is ISIN-to-LEI Mapping?

ISIN-to-LEI Mapping links the International Securities Identification Number (ISIN) of a financial instrument to the Legal Entity Identifier (LEI) of the company that issued it. This improves transparency and risk management in the financial system by allowing regulators and market participants to easily identify who is involved in each transaction. ISIN-to-LEI relationship files are available to download at GLEIF’s official website.

What is BIC-to-LEI Mapping?

This innovative BIC-to-LEI mapping initiative is based on a methodology certified by GLEIF and implemented by SWIFT. The relationship file, available in CSV format and refreshed monthly, facilitates the linkage of these pivotal entity identifiers at no cost. The file is available available for download at GLEIF’s official website.

What is G20 Group of Twenty 2012?

The Group of 20 (G20) Summit of the world’s twenty major economies took place in Los Cabos, Mexico, and was the first such summit for Latin America. In its G20 Presidency role in 2012, Mexico has prioritized: economic stability and structural reform for growth and employment; strengthening of financial systems and procurement of financial inclusion for economic growth; improving international financial architecture in an interconnected global economy; mitigating negative effects on price level and volatility of commodities, in particular those affecting food security; and promoting sustainable development with a focus on infrastructure, energy efficiency, green growth and financing the fight against climate change.
More info on G20 Group of Twenty…

Who needs an LEI?

In general, an LEI number is required by any legal entity whose activities incorporate financial transactions. All legal entities, other than natural persons are eligible for LEI number obtaining.
More info…

Who can apply for an LEI?

As defined in ISO standard 17442, any legal entity that enters into a financial transaction is eligible for an LEI.
More info…

Who may NOT apply for an LEI?

An LEI may not be requested by any of the following:

  • Individuals;
  • Unregistered businesses and entities;
  • Operating divisions;
  • Branch offices within the same country as a head office with an existing registered LEI.
    More info…

How to search LEI codes?

LEIpapa has developed a free LEI Search application, so users can search within the whole LEI database.
More info…

Is the LEI data publicly available?

Yes. The Global Legal Entity Identifier Foundation (GLEIF) has published the Global LEI Index. It provides information, updated daily, on all LEIs issued to date. Any interested party can easily access and search the complete LEI data pool free of charge using LEIpapa LEI Search application or on the GLEIF website.

Will an LEI be the same for all classes of assets (bonds, mortgages, etc.)?

Yes. The LEI is a unique identifier for any given legal entity. It is not an identifier for instruments. As a result, that legal entity will use its LEI for reporting of any type of financial transaction it enters into regardless of the asset class or when the particular asset was issued.
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LEIpapa is an Official LEI Registration Agent and a partner of Ubisecure RapidLEI. We build the most reliable and transparent corporate data registry on Global LEI system.

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