LEI codes are used to identify legal entities on a global basis. They are similar to barcodes or digital passports and help regulated financial institutions meet KYC (Know Your Customer) standards.
They also enable greater transparency in financial markets, standardisation and improved risk control. Many regulators are now requiring or strongly encouraging companies to use them.
1. What is an LEI?
An LEI is a unique alpha-numeric code that identifies legal entities (such as companies, funds or trusts) worldwide. It is used to identify those entities on a global database, so they can be easily identified and located. You can also Compare LEI codes on lei-code.co.uk.
It is used by financial institutions and regulators to comply with various regulations around the world (depending on the jurisdiction). In America, there are several regulations including Mifid II, EMIR, SFTR and CSDR that request an LEI for transaction reporting.
The LEI is a free-of-charge number that can be obtained by any legally established company, fund or other entity. It was born out of the need for a standard globally recognised identification system, following the collapse of Lehman Brothers and subsequent global financial crisis. With an LEI, the world can better understand who is involved in each financial transaction. This has helped reduce fraud and money laundering activities as well as creating transparency in the global marketplace.
2. What is an LEI number?
An LEI number is a unique 20 digit alpha-numeric code that identifies legal entities on a global basis. It is similar to a company registration number but has the added benefit of being able to identify the legal entity across borders and industry sectors.
LEIs are mandatory for any legal entity that regularly incorporates financial transactions and operates within the global financial system. This includes all financial intermediaries, funds and trusts, as well as banks and other financial institutions. It is also required for investment firms and their clients where the firm trades with a client that has not obtained an LEI.
The first four digits of an LEI refer to the LOU that issued it, while characters 7 through 18 are unique to the legal entity. The final two digits are reserved for verification purposes. LEI reference data is available publicly and consists of Level 1 (legal name, jurisdiction, registration authority, and LEI registration date) and Level 2 (parental relationships, answering the question “Who owns who?”). The issuing of LEIs is conducted by GLEIF-accredited LOUs.
3. How do I get an LEI?
In general, applying for an LEI is fairly simple. First, you will need to find a service provider that is authorized to issue LEIs. There are many different providers, so you will want to take the time to compare prices and service quality.
Once you have found a service provider, you will need to complete an application form for the legal entity you are registering. The process is typically straightforward and requires basic information about the company, including its name and address.
Once you have completed the application, your LEI will be issued within a few days. You will need to renew your LEI annually.
4. What are the benefits of getting an LEI?
Having an LEI will make you easier to identify in the global financial ecosystem. It will also help you to reduce duplicated efforts in data collection, management and reporting. This will save costs and improve efficiency. The LEI system also provides a framework for openly challenging identity data, which reduces risk.
Many international regulations (such as MiFID II, EMIR, SFTR and CSDR) now require or recommend that market participants have an LEI code. It is the key to ensuring compliance with these regulations, and also helps to streamline onboarding for many institutions.
The LEI also enables companies to easily link their LEI with their International Securities Identification Number (ISIN) through a process called LEI to ISIN Mapping. This will help to further improve data quality and transparency in the global marketplace. An LEI is a unique, internationally recognized code that identifies legal entities participating in the financial markets. Its reference data contains basic ‘business card’ information that answers the question: “who is who?”.
5. What are the requirements for getting an LEI?
The LEI is a 20-character alphanumeric code that uniquely identifies a legal entity. It also contains a set of reference data that provides clear and authoritative information about the entity, including its structure and ownership. This information is made available to the public through the GLEIF public data sets.
Almost every legal entity that engages in financial transactions should get an LEI. This includes companies, funds, and even some government entities. Getting an LEI helps you stay compliant with local reporting regulations such as Mifid II and EMIR.
When applying for an LEI, you need to provide the legal name of the entity, its head office address, and its legal jurisdiction. You should also make sure to update the LEI when the entity changes its name, head office, or legal jurisdiction. Additionally, you should update the LEI when the entity merges or dissolves. This will ensure that the new LEI matches the correct legal entity in the market.
6. What is an LEI transfer?
An LEI transfer is the process of moving an existing LEI from one LEI Issuer (LOU) to another. This can be done to change provider, or to renew an LEI that has lapsed.
LEIs are used to identify legal entities across global financial markets and drive transparency in highly-regulated industries. They have replaced traditional KYS (Know Your Customer) standards, which are expensive, time-consuming and potentially inaccurate.
Only legal entities are eligible to register for an LEI, and individuals cannot apply for an LEI. Each LEI has associated reference data that explains its ownership structure and provides other relevant information. This data is made public and is divided into two levels – Level 1 and Level 2. Level 1 data answers the question ‘Who is who?’ and includes details such as the legal name, jurisdiction, registered ID and legal and headquarters addresses. Level 2 data provides a breakdown of parent-child relationships in corporate structures and aims to answer the question ‘who owns whom?’.
7. What is an LEI renewal?
An LEI renewal is the process of updating an existing LEI code and associated information. The renewal fee is charged as part of the overall cost to perform the necessary checks and verifications to update the information on an LEI record. The requirement to renew an LEI is unique to the Global LEI System and ensures that the LEI reference data (Level 1 and Level 2) remains current and reliable for all users of the data.
An LEI is a globally unique, non-repeating identifier for legal entities. It is similar to a company number issued by the national business registrar such as Company House in the UK, CVR-register in Denmark or Bronnoysundregistrene in Norway but is designed to promote transparency across the global financial markets. Issuance of LEI codes is governed by the GLEIF (Global Legal Entity Identifier Foundation) who also hosts the main LEI database. The GLEIF acts as the foundation for a network of Local Operating Units (LOU) that manage LEI registration and renewal in their jurisdictions.
8. What is an LEI LoA?
A LEI LoA is an official document that outlines the corporate structure of a legal entity. It contains information such as the legal name, country of origin, registered ID, legal and head office addresses, as well as details of the managing LOU (Local Operating Unit).
The LEI is a unique global identifier for all legally identified entities that participate in financial transactions. Regulated financial institutions are required to have an LEI, but all companies and funds can get one if they want.
The LEI is managed by the GLEIF, a not-for-profit organisation that oversees implementations and registrations. It also hosts the main database that holds all the LEI codes and information related to them. The LEI system is aimed at creating transparency within financial systems and making it easier to identify legal entities. It does this by providing a unique global reference code and associated data that are easily searchable. This allows for increased transparency in financial markets, standardisation and more efficient risk management.
