What is an LEI code?
An LEI code (Legal Entity Identifier) is a unique 20-character alphanumeric identifier established under the ISO 17442 standard by the International Organization for Standardization (ISO). It provides critical reference information, enhancing transparency for legal entities engaged in financial activities such as trading stocks, bonds, or foreign currencies.
What information does an LEI code provide?
LEI codes allow clear identification of legal entities and contribute to transparency in global markets. The data linked to an LEI is divided into two categories:
- Level 1 data – Identifying who is who
- The entity’s legal name
- The registry it is registered with and its registration number
- Legal jurisdiction
- Legal form and status
- Contact information, including the legal and headquarters addresses
- Parental (Level 2) data – Revealing ownership structures
- Information about the entity’s parent companies and subsidiaries
These details make understanding the relationships between entities easier, ensuring accountability. According to the Global Legal Entity Identifier Foundation (GLEIF), the LEI framework is designed to address three essential questions:
- Who is who?
- Who owns whom?
- Who owns what?
These questions are answered through the Level 1 and parental (Level 2) data available in LEI records, improving transparency for all market participants.
How is an LEI code structured?
An LEI code comprises 20 characters that are divided into three distinct sections:
- Characters 1–4: Identify the Local Operating Unit (LOU) that issued the code.
- Characters 5–18: A unique identifier assigned to the specific legal entity.
- Characters 19–20: Verification digits to ensure data integrity.
This standardized structure ensures every LEI code is globally unique and verifiable.
Who requires an LEI code?
LEI codes are mandatory for legal entities participating in financial transactions or trade in regulated markets, including stocks, bonds, derivatives, and other securities. Key industries requiring LEI codes include:
- Financial institutions such as banks, investment firms, insurance companies, and credit unions
- Brokerage firms and other regulated market participants
In the European Union, investment firms and their clients must have an LEI code to conduct transactions. Under EU regulations, trades are not permitted without an LEI.
Exemption: Natural persons are not required to obtain an LEI code.
Simplified explanation of the LEI code
- LEI code: A globally unique identifier for legal entities in financial markets.
- Purpose: Links transactions to legal entities, ensuring transparency and accountability.
- Issued by: GLEIF-accredited Local Operating Units (LOUs).
Renewing an LEI code
LEI codes must be renewed annually to remain active. For instance, an LEI code issued on 1 February 2024, will need renewal by 1 February 2025. Failure to renew will render the LEI inactive until updated.
LEI Lookup simplifies the renewal process, offering options for 1-, 3-, or 5-year renewals. Notifications are sent a month before expiration to ensure timely updates. For multiyear renewals, LEI Lookup manages periodic updates to keep your information accurate and your LEI active.
The global vision for LEI codes
The Global Legal Entity Identifier Foundation (GLEIF) envisions a unified system in which a single code identifies all legal entities worldwide. This system would provide consistent, high-quality data, fostering transparency in global markets.
How are LEI codes issued?
While the GLEIF oversees the LEI framework, it does not issue codes directly. Instead, GLEIF-accredited Local Operating Units (LOUs) handle the issuance and management of LEI codes. These LOUs act as the first point of contact for entities seeking to obtain an LEI.
LEI Lookup by LEI Register, as a Registration Agent, collaborates with LOUs to simplify the process of registering, renewing, and transferring LEI codes. The focus is on:
- Streamlined and user-friendly application processes
- Competitive pricing for all services
- Accurate and timely updates to entity information
LEI Lookup is committed to customer satisfaction and ensures a seamless experience for all legal entities managing their LEI codes.
Connecting the global financial ecosystem
LEI codes are vital in creating transparency and trust in financial markets. The LEI system supports a more accountable and integrated global financial marketplace by linking legal entities, regulators, and market participants.
Contact LEI Lookup today to learn more about registering, renewing, or transferring an LEI code!
