ISIN-LEI Mapping for Transparency in the Financial Market (2024)

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.

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)

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.

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)

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.

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.

Source: GLEIF

Benefits of ISIN-to-LEI Mapping

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.

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.

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