The Legal Entity Identifier (or LEI) is an alphanumeric code composed of 20 characters, based on the international standard ISO 17442, which allows the unique identification of legal entities (Legal Entities) that operate in financial markets worldwide. The LEI number contains some basic information on the legal entity of the applicant (data level 1), such as fiscal code, denomination, address of legal headquarters, and legal form. In addition, it also contains information relative to the structure of the society of the applicant, for example, regarding who possesses it (level 2 data), which is particularly useful for rebuilding the society’s ramifications. All these data are published in the LEI database, updated daily, and available on the site of GLEIF (Global Legal Entity Identifier Foundation). This non-profit organization coordinates the global LEI system and can be consulted freely by anyone interested through the appropriate website functionality of research.
The Goal of LEI Number Registration
The LEI number is used to identify the counterparties in financial transactions subject to reporting obligations in a simple, fast, and standardized way. The LEI code is uniquely associated with each applicant and cannot be transferred from one legal entity to another. The LEI number is mandatory for legal entities that carry out transactions in financial instruments (such as the purchase and sale of shares, bonds, warrants, government bonds, and derivatives).
The LEI system was initiated in response to the financial crisis and aimed to improve transparency in financial data systems. There are currently several methods for identifying companies in different markets and countries. However, the Global LEI System (GLEIS) wants to simplify this situation and ensure that only one standard system is used worldwide. There are numerous regulations in various jurisdictions as to when to use LEIs. However, the main benefit of Global Legal Entity Identifiers is that any legal entity worldwide can be identified easily and in a standardized way.
The Use of LEIs in Financial Regulation
LEIs are used in various legal areas around the world. The US and the European Union (EU) were the first to use LEI numbers for financial reporting. Although the LEI application remains inconsistent even within each jurisdiction and its use is concentrated in Canada, the EU, and the US, more and more countries are beginning to mandate LEI number registration applications. For example, the Royal Bank of India has decided to use LEIs in the OTC derivatives market, in foreign exchange transactions, and for large corporate borrowers. The Australian Securities and Investments Commission also followed this approach and ordered the use of LEIs for derivative transactions.
How do I get an LEI number?
You can obtain an LEI from a Local Operating Unit (LOU) or from LEI – Legal Entity Identifier Registration Agency. Legal entities must apply for their LEI through a service provider (either an LOU or another LEI service provider) by completing a registration form. The lei number renewal process is even easier, and you can do it in a few steps.
Lei Number Registration Agent offers a simple and convenient LEI number registration through a special form, requiring no account opening. This allows the customer to fill out the form quickly and easily, either manually or via the autofill option. The latter option to automatically fill in company data increases the user-friendliness and speeds up the filling out of the LEI application form.
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