====== Global LEI Foundation (GLEIF) ====== The Global LEI Foundation (GLEIF) is the international, not-for-profit organization responsible for supporting the implementation and use of the [[Legal Entity Identifier]] (LEI). Established in 2014 by the [[Financial Stability Board]] (FSB) at the behest of the [[G20]], GLEIF's core mission is to manage the [[Global LEI System]]. This system is designed to answer two fundamental questions in any financial transaction: "who is who?" and "who owns whom?". By providing a single, universal standard for identifying legal entities, the LEI helps create a more transparent and stable global financial marketplace. GLEIF does not issue LEIs directly; instead, it acts as the central oversight body, accrediting a network of public and private organizations—known as [[Local Operating Units]] (LOUs)—to issue the codes and manage the associated data. Think of GLEIF as the global regulator for corporate ID cards, ensuring that every card is unique, reliable, and part of a publicly accessible database. ===== A Lesson from 2008: Why GLEIF Was Born ===== To understand why GLEIF exists, we need to rewind to the 2008 financial crisis. When [[Lehman Brothers]] collapsed, a shockwave of panic ripped through the markets. A huge part of the problem was that regulators and even other financial institutions couldn't quickly or accurately determine who was exposed to Lehman and by how much. The bank was a tangled web of thousands of subsidiaries, special purpose vehicles, and affiliates spread across the globe, with no common identifier. It was impossible to map the financial network and see where the dominoes would fall next. This catastrophic failure of transparency led the world's major economies to demand a solution. The answer was the LEI: a simple, 20-character code that acts like a global passport number for any legal entity. GLEIF was created to be the neutral, trusted guardian of this system, ensuring it remains a public good, free from any single country's or company's control. Its goal is to prevent a repeat of the 2008 chaos by making financial connections visible //before// a crisis hits. ===== How It Works: A Federation of Trust ===== GLEIF sits at the top of a federated system built on partnership and trust. Its operational model is quite clever: * **The Overseer:** GLEIF sets the standards, policies, and technical protocols for the entire Global LEI System. It ensures the data quality is high and consistent everywhere. * **The Issuers:** GLEIF accredits a network of Local Operating Units (LOUs) to handle the front-line work. These LOUs are responsible for registering entities in their jurisdiction and issuing the LEIs after verifying the entity's information against official sources, like a national business registry. * **The Public Database:** All this data flows into a single, open, and free-to-access database called the [[Global LEI Index]]. This index is the definitive source for anyone wanting to verify the identity and basic structural information of a legal entity. This structure allows the system to have global reach and consistency while leveraging local expertise for verification, creating a robust and reliable identification network. ===== The Value Investor's Angle: A Tool for Due Diligence ===== For a value investor, information is power, and transparency is gold. While the LEI system was designed for regulators to manage [[Systemic Risk]], it's an incredibly useful—and often overlooked—tool for everyday investors conducting their [[due diligence]]. ==== Know Exactly Who You're Investing In ==== A company's marketing materials and its legal reality can be two different things. An LEI allows you to cut through the noise. By looking up a company's LEI in the Global LEI Index, you can instantly verify its official legal name, registered address, and legal form. More importantly, the system records "Level 2" data, which shows direct and ultimate parent companies. This helps you untangle complex corporate structures and understand precisely what you are buying into. ==== Assessing Hidden Risks ==== Great businesses can be hobbled by weak partners. The LEI system helps you investigate a company's ecosystem. Does it rely heavily on a single supplier? Who are its major financial backers? If those related entities also have LEIs, you can start to map the network and assess potential [[Counterparty Risk]]. For example, you might discover that a key supplier to your target company is owned by a financially distressed conglomerate—a major red flag that wouldn't appear on a standard balance sheet. ==== A Signal of Good Governance ==== In investing, what isn't said is often as important as what is. A company's participation in the LEI system is a voluntary signal of its commitment to transparency. While required for many financial firms, its adoption by non-financial corporations shows a willingness to operate in the open. Conversely, an international company with a complex structure that //lacks// an LEI might warrant deeper investigation. It's another piece of the puzzle that helps you build a complete mosaic of a potential investment, perfectly aligning with the value investor's creed: **know what you own.**