A committee of global regulators, The Regulatory Oversight Committee (ROC), has endorsed Strate to offer Legal Entity Identifier (LEI) services to entities in South Africa. Strate is a licenced Central Securities Depository (CSD) that provides post-trade products and services to the financial markets.
As of February 2016, companies will be able to make use of Strate as a local provider of LEI services. To date, over 390,000 entities from 195 counties have obtained LEI codes. In South Africa, approximately 150 companies have functioning LEI codes (granted through international providers).
During the financial crisis and collapse of Lehman Brothers in 2008, it became evident that regulators and private sector managers were unable to readily identify the full extent of the market participants’ exposure to Lehman and the interconnectedness of financial institutions. This gave rise to the Regulatory Oversight Committee (ROC), which was founded by the G20’s Financial Stability Board, establishing what is called the Legal Entity Identifier (LEI) system. The system is governed by a committee of 50 global regulators who recognise the importance of the LEI as a key component of the financial markets which aims to reduce systemic risk and increase transparency.
An LEI is a unique numbering system (code) which allows for the identification of legally independent entities across the global financial markets. It has two fundamental characteristics, namely a uniqueness whereby once a code is assigned, it cannot be reassigned to another company (even if the company ceases to exist) and exclusivity whereby once a company has obtained a code, they cannot obtain another one.
In order to be endorsed as an issuer of LEIs, Strate was required to meet a set of stringent qualifying criteria set by the Regulatory Oversight Committee. Strate’s LEI services include the ability to register, view, search, update, renew, challenge and port LEI codes for companies
Importantly, the LEI system assists regulators in monitoring and analysing threats to financial stability. By obtaining an LEI code, companies can expect better risk management and improved transparency. It also helps companies to improve internal management of their operational risks and to create efficiencies in collecting, cleaning, aggregating and reporting data to regulators.
Global regulatory reporting is likely to become stricter in future and companies are encouraged and will benefit by obtaining an LEI code as soon as possible. Any legal entity that enters into a financial transaction is eligible to register for an LEI. However, single individuals (natural persons) are not eligible.
Strate’s CEO Monica Singer: “Strate is honoured to have been endorsed as an issuer of LEIs. With this new offering, we are able to expand our product base to the market by providing the local market with the much needed LEI services.”
Strate worked closely with the Financial Services Board to receive this endorsement from the ROC and is grateful for the support.