What Is An LEI Number?
What Is an LEI?
An LEI is a Legal Entity Identifier. It is a code that is 20 characters long, which is a unique global identifier used by legal entities taking part in financial transactions. The code is based on the ISO 17442 standard and is used as a reference to create transparency. The LEI number helps to make legal entities easily identifiable and provides key information on financial transactions. More than 1.8 million LEIs have been issued around the world, according to the Global Legal Entity Identifier Foundation.
Publicly available LEI data includes information such as the legal name of the entity, the legal jurisdiction, registration authority, LEI registration date, and the status of the entity, as well as contact details. This is all Level 1 data that can be found via an LEI search. There is also Level 2 data, which shows parent and child information for the company to identify the owner(s) of the entity and who the entity owns.
An LEI number consists of several parts. The first four digits identify the LOU that has issued the LEI, and the next two digits always have a value of 0. Characters 7-18 are unique to each entity and the remaining two digits are used for verification purposes.
What Is an LEI Number Used For?
An LEI number is used in financial transactions, such as trading stocks, bonds, or currency. LEIs are required by firms to fulfil their reporting obligations under financial regulations and objectives. They also help to match and aggregate market data for transparency and regulatory reasons. An LEI enables any legal entity carrying out financial transactions to be identified in any jurisdiction globally. The LEI system has helped to correct the vulnerabilities in the global financial system, many of which became apparent during and after the 2008 financial crash. A need for a global financial identifier has existed for decades, but it is only relatively recently that one has been established.
It provides benefits for both the public and private sectors. In the financial industry, data reported externally and used internally is more consistent and easier to use. Regulators can monitor and analyse threats to financial stability in an improved manner, while companies can improve their management of operational risks and reduce the cost of reporting data to regulators.
Who Needs an LEI Number?
Any entity that is considered a legal entity is able to apply for an LEI number. This might include a limited company, charity, trust, or other organisation. But do you need to get one? Some entities are required to have an LEI due to various regulations around the world. The EU has multiple regulations which pertain to the use of LEI codes and other global regulations mandate the use of LEI codes too.
LEI codes are usually required by legal entities carrying out financial transactions or operating within the financial system. In particular, legal entities in the UK, EU, and the US are likely to require an LEI. In many circumstances, a legal entity may be prevented from trading if it does not have an LEI. LEI numbers might be required by regulatory agencies but many companies also ask for an LEI.
Some of the legal entities that might be required to have an LEI include:
- Financial intermediaries
- Banks, investment companies, and lenders
- Trade OTC derivatives (except private individuals)
- Self Managed Superannuation Funds traders and trustees
- Investment Vehicles, mutual funds, hedge funds
- Pension schemes
- Commodities trading
- CFDs (Contract for Differences)
- Securities transactions, SFTR reporting
- Entities listed on a stock exchange
This is not a complete list but provides some of the entities that will need to check their requirements for an LEI.
Is LEI Mandatory?
An LEI can be mandatory for some entities. It's important for companies to check if they have mandatory LEI requirements because not every legal entity is required to have one. However, if there are regulations stipulating that you are required to have one, there could be consequences if you do not obtain one. One issue may simply be that you are unable to carry out many financial transactions because you will be blocked from doing so without an LEI. Another thing to consider is that although an LEI might not be mandatory, it is still possible to apply for one to obtain the benefits. Organisations that can still apply include charities and government bodies.
How to Obtain a Legal Entity Identifier
To obtain a legal entity identifier, you must complete an LEI application. An LEI can be obtained from a Local Operating Unit (LOU), which are the bodies that issue LEI codes or from a LEI registration agent, such as the LEI Lookup. They supply registration and renewal, as well as other services, and must be accredited by the Global Legal Entity Identifier Foundation (GLEIF) in order to be authorised to issue LEIs.
By becoming a member of the Global LEI system via GLEIF accreditation, LEI issuers show that they are committed to data quality and customer service. This is just one of the reasons why you should always be sure to check that any company offering LEI registration services has the correct accreditation to enable them to do so.
A legal entity is not limited to using an LEI issuer in their own country. They can access the services of any LOU that is accredited to issue LEI codes in its authorised jurisdictions. To find an issuer that is authorised for your jurisdiction, you can use GLEIF's search function on their website. Simply select the jurisdiction(s) that you want to find issuers before and it will show them in a table.
Once you have chosen an issuer, you will need to complete the application process. It is also necessary to renew your LEI number each year. It is often easy to register online by providing some key information and paying the necessary fees. Some of the information that you will need to provide includes:
- Entity name
- Company number or registration ID
- Applicant name and contact information
- Entity address
You might need to provide additional information, such as a Trust deed to confirm the address of a Trust or Pension. After sending the information and paying any required fees, the data will be validated. When your LEI number is issued, it can simply be emailed to you. The application process can be quick and simple, and you can even use a Registration Agent to handle the renewal of your LEI for you.
How Do I Find My LEI Number?
If you have applied for an LEI number and you know that your company has one but you don't know what it is, there are a few ways you might be able to find it. Firstly, look for any correspondence from the issuer or Registration Agent that you used to register for an LEI number. It might also be on official documents that relate to financial transactions or financial accounts.
Another quick way to find your LEI code is to use the LEI search function. This enables you to enter a company name and find the LEI number for that legal entity. Not only is it a useful way of finding data for other organisations but it also allows you to check your own if you are unsure about it. The search will show you the LEI for the entity, the entity status, and the registration status, so you can check to make sure your LEI number is still valid. It also shows the country, current data, and change history. Additionally, you can use the search function to search "who owns" and "who is owned by".
Who Issues LEI Code?
LEI codes are only issued by accredited issuers, otherwise known as Local Operating Units. You may also use a Registration Agent, such as LEI Lookup, to help you to access an LOU that will meet your needs. They can help to make the registration and renewal process easier.
How Much Does an LEI Cost?
The cost of registering for an LEI number can vary. LEI Lookup offers discounts if you choose a multi-year package. When you select an LEI number for two years or more, the LEI Lookup will automate the annual renewal process for you so that you don't need to take care of it each year.
Registration for a single year usually starts at a reasonable price, but you can save more by opting to register for multiple years. However, each issuer or agent will have different fees. Another factor that may affect the price is the speed of the service. Some issuers and Registration Agents may offer fast-track services, which enable you to speed up getting your code. This could mean the process is completed in just a few hours instead of days.