How to Become an LOU - The GLEIF Accreditation Process
In order to be qualified to start issuing legal entities a Legal Entity Identifier (LEI), organizations first need to qualify as a Local Operating Unit (LOU). Luckily, this process is something that can be done fairly easily and only requires the organization to go through two different phases.
The only institution that is capable of qualifying an organization to be an LOU is the Global Legal Entity Identifier Foundation (GLEIF). As such, every LOU must have first gone through the GLEIF accreditation process. Here are the various steps involved in becoming an LOU through the GLEIF accreditation process.
The First Phase
The first phase involved in the GLEIF accreditation process is what takes place when the organization is still classified as an Applicant LOU. This means that the organization needs to develop an accreditation plan, which then gets submitted to GLEIF once it is done.
The accreditation plan is something that puts the goals, objectives, and capabilities of the applicant into writing. They need to explain how they see themselves becoming a part of the Global LEI System and what they hope to do with their LOU status. It essentially acts as a letter of intent letting GLEIF know exactly what it would mean for them to grant this applicant organization LOU status.
If everything within the document has met the requirements listed in the accreditation plan checklist, which is provided by GLEIF, then the accreditation plan can move forward. Once it has been received by GLEIF, they begin to review it and make sure that all of the information regarding the organization’s goals and objectives aligns with that of GLEIF itself.
Once an agreement has been reached with the accreditation plan, the organization is then required to sign a document known as the Master Agreement. This document acts as an official contract between GLEIF and the organization and states what both organizations are obligated to do for one another as part of the process of being an LOU.
The Master Agreement is also what officially converts the organization from an Applicant LOU to a Candidate LOU. This transition officially marks the end of the first phase of the GLEIF accreditation process.
The Second Phase
After the first phase has been completed, the real work needs to be done with the second phase. The steps required during this part of the GLEIF accreditation process involve completing the Accreditation Checklist.
As previously mentioned, this is a document that is provided by GLEIF and needs to be submitted as part of the application process. Included in the checklist is a variety of questions that look to explore the organization's knowledge of what operating as an LOU really requires and their ability to meet these requirements. The completion and submission of this checklist is something that needs to be done within six months after the Master Agreement has been signed.
In order to answer the detailed questions included in the checklist, the organization will need to prepare a variety of supporting documentation to include as part of the questionnaire submittal process. Once everything has been completely answered and looked over, it is sent off to GLEIF so that they can review it.
The final step involved after this is the review period, which lasts 90 days or less, and involves GLEIF carefully scrutinizing whether or not the application meets all of their requirements to become an LOU. There is occasionally some back and forth during this process where GLEIF might ask the organization for some additional information to help provide clarity to some areas.
If GLEIF declares that the organization has passed all of the requirements, then they will be awarded an Accreditation Certificate and will officially be designated as an LOU. The other possible outcomes are that the organization is rejected and not able to operate as an LOU, or they could also be given the status of a provisional LOU. This would mean that the organization has the ability to complete some tasks of an LOU but not others. If GLEIF gives an organization this status, then they will also inform them of what needs to be done in order for them to receive full accreditation.