ISIN, LEI, Notarization (& Blockchain!)
How Notarization and Blockchain supports digital applications processes for ISIN and LEI issuance.
Notarisation (Notarization) in the real world allows us to have a document verified by a trusted third party; a Notary Public. The Notary confirms, for example, that I am the person who is signing a document that confirms the price I am quoting in a proposal. It’s a means of verifying my signature and as such my word.
Digital Notarisation works similarly by confirming a digital event in a manner that is irrefutable. When I click to accept a condition or upload a document, digital notarisation confirms this event and shares the digital keys necessary to verify the notarisation. The event is recorded by a digital stamp that is unique and can not be broken or altered. If the event is a document upload then the notarisation ensures that whoever receives the upload can not alter it because I have the corresponding digital key.
If I wish to prove to a third party that the document I have is the same as the one uploaded then the third party can use the key to confirm that the document I present to them is the same, unaltered in any way, as the one I uploaded. In the real world we rely on the integrity of the Notary Public, a known person of legal standing; in the digital world our trust in the upload/notarisation site authority is more difficult to assure.
That’s where Blockchain comes in. By storing the digital notarisation keys in Blockchain we immediately distribute the trust. Even if the bank, or the regulator or government department is hacked the keys that authenticate the event or document to a third party are distributed across the Blockchain network.
In processing ISIN and LEI applications the need for trust between the applicant and the issuer is essential and is made good by a range of different aspects that establish identity and confirm authenticity. The need for trust between these two parties is paramount and without that trust no ISIN or LEI number can be regarded as rightfully supporting the security or the entity it claims to represent. For this reason ISIN and LEI issuers take great efforts to guarantee trust and to the mitigate risk associated with fraudulent applications.
For ISIN issuers there are long established methods of authenticating securities applications and although LEI issuers and the regulator GLEIF are by comparison relatively new, they too must make significant efforts underpin trust in the emerging LEI process. This is particularly the case as LEI moves beyond its initial cohort of companies in international financial services in North America and Europe.
Importantly Notarisation re-enforces the trust between ISIN and LEI issuers and applicants, and in the unlikely event that either of these two trusted parties becomes compromised in terms of data integrity, then Blockchain provides a final definition of the true nature of the digital relationship.
In the end we won’t need to know that ‘you know that we know that you know that we know the detail of the application for the ISIN or LEI number, because we will all know the necessary detail is stored independently in Blockchain distributed across multiple nodes.
This means that the trust element, is distributed. There is no reliance on trust in one source of verification (one Notary in the real world analogy) but instead that trust is spread across tens (or thousands) of Blockchain nodes/servers at the same time. Trust is distributed digitally so that there is no need to trust one source.
For ISIN and LEI issuers, Digital Notarization with all its attendant protocols will be the standard for digital interactions and transactions. Digital Notarisation is one of the core pillars of pTools software and solutions.
For more see www.pTools.com or email [email protected]