LSE Goes Live with Pre-LOU

The London Stock Exchange (LSE) has launched its legal entity identifier (LEI) pre-Local Operating Unit (pre-LOU), including a portal with a consolidated view of data from the three other pre-LOUs currently issuing pre-LEIs.

The LSE pre-LOU was launched August 5. It will allocate pre-LEIs called Interim Entity Identifiers (IEIs) and include a process of entity validation, duplication prevention and entity eligibility checks.

When the LSE receives a request for an IEI, it will first check whether the requestor's details are the same as those of the entity that requires the IEI. If the details do not match, it will check the requestor has the entity's permission to seek an IEI on its behalf.

All requests for an IEI will be checked against a consolidated view of data from the three other operational pre-LOUs – the CFTC Interim Compliant Identifier utility, the Germany Entity Identifier utility, and the LEI France utility – to ensure the entity has not already been registered with another pre-LOU.

"We will [also] do a real-time duplication check against those operational pre-LOUs, because currently the data files that are available [in the consolidated view of pre-LEI data] are just on an end-of-day basis," says Emma Kalliomäki, the LSE's London-based head of SEDOL masterfile.

After the duplication check, the utility will ensure the entity is eligible for an IEI. "Where you have collective schemes, trust partnerships, funds, especially pension and life funds, we need to be satisfied that the nature of the fund is at the level where an LEI is required," says Kalliomäki. "We will be using scheme particulars and documentation to ensure we are allocating our IEI to the actual legal entity, and not just a pool of assets that are being used internally."

The LSE will not allocate an IEI until all these validation steps have been completed. Kalliomäki says the LSE intends to respond to requests for an IEI within three working days.

Like other pre-LOUs, the IEI utility will be operated on a cost recovery basis. There is an initial allocation cost of £100 plus value-added tax (VAT) and annual maintenance cost of £55 plus VAT per IEI.

The portal is currently accepting single request submissions but plans to launch bulk submission functionality within a fortnight.

Kalliomäki says she believes the IEI utility complies with the detailed principles for pre-LOUs recently published by the LEI Regulatory Oversight Committee, but she says the LSE will continue to work on its portability functionality, which allows entities to move their pre-LEI records between pre-LOUs.

Kalliomäki denies the LSE is at a disadvantage because there are already three other pre-LOUs in operation today. She believes the consolidated view of pre-LEI data provided by the IEI utility will be particularly attractive. "There are still a lot of entities across Europe and the US, but more so in Europe, that require a pre-LEI to be allocated," says Kalliomäki.

Kalliomaki says the LSE has received a lot of interest in its IEI utility from non-financial corporates and from the fund industry. She says the interest from non-financial corporates is unexpected, but is a reminder that it is not only financial institutions that are parties to financial transactions, and that the scope of the LEI project is broader than some people think. She says interest from funds is a result of the volume of entities in that industry and uncertainty about how it will be impacted by LEI eligibility criteria.