What is a Legal Entity Identifier (LEI) Code?

A Legal Entity Identifier (LEI) is a unique 20-character alphanumeric code assigned to businesses and organizations involved in financial transactions. It is designed to provide clear, standardized identification to legal entities, ensuring that each one can be accurately identified in the global financial markets.

The LEI code was introduced by the Global Legal Entity Identifier Foundation (GLEIF) as a global standard to enhance transparency in financial transactions and to comply with regulatory requirements set by financial authorities around the world.

Why Do You Need an LEI Code?

1. Global Standardization: The LEI code standardizes the identification of legal entities across borders, ensuring consistency in global financial transactions.
2. Regulatory Compliance: Many financial authorities and regulators require businesses to have an LEI code for trading, especially in areas like securities, derivatives, and banking.
3. Transparency and Accountability: The LEI improves transparency in financial transactions by clearly linking organizations to their financial activities, reducing the risks of fraud and misreporting.
4. Cross-Border Transactions: Having an LEI code is mandatory for cross-border financial transactions in certain jurisdictions and helps streamline trade between different countries.
5. Enhanced Data Quality: The LEI code provides a reliable, easy-to-access source of information about legal entities, improving the quality of data used by regulatory bodies, financial institutions, and investors.

Who Needs an LEI Code?

The following types of businesses and entities are generally required to have an LEI code:

1. Financial Institutions: Banks, investment firms, insurance companies, and any other entities involved in financial markets.
2. Corporations and Companies: Businesses involved in trading securities, derivatives, and other financial instruments.
3. Government and Non-Governmental Organizations: Entities that are involved in public sector finance or capital markets.
4. Investment Funds and Hedge Funds: Funds that manage investments on behalf of others may need to register for an LEI.
5. Market Participants: Any business entity engaged in international financial markets, including exchanges, brokers, and mutual funds.

How to Obtain an LEI Code?

Getting an LEI code involves a simple registration process, which can be completed through accredited LEI Issuers. Here’s a step-by-step guide:

Step 1: Find an Accredited LEI Issuer

The LEI must be obtained through an official and accredited LEI Issuer. A list of authorized issuers is available through the Global Legal Entity Identifier Foundation (GLEIF) website.

Step 2: Submit Required Information

You will need to provide information about your business, such as:

• Business Name: The legal name of the entity.
• Business Address: The official address of the business.
• Registration Details: Information like the company’s registration number or certificate of incorporation.
• Legal Structure: The type of entity (LLC, partnership, corporation, etc.).
• Details of Parent Company (if applicable): If your company is part of a larger corporate structure, parent company details may also be required.

Step 3: Verify and Pay the Fee

After submitting the required details, you will need to verify the information and make the necessary payment for registration. The fees for obtaining an LEI code vary depending on the issuing agency.

Step 4: Receive Your LEI Code

Once your application is processed and verified, you will receive your unique 20-character LEI code. The LEI code will remain valid for a period of one year, after which it needs to be renewed.