The legal entity identifier (LEI) code is a reference code used across markets and jurisdictions to uniquely identify a legally distinct entity that engages in a financial transaction. The LEI is designed to be a linchpin for financial data — the first global and unique entity identifier enabling risk managers and regulators to identify parties to financial transactions instantly and precisely. The LEI number is based on the ISO 17442 standard and each LEI is assigned only to a single Legal Entity on a global basis.
LEI code in Simple Terms
● LEI code – Legal entity identifier code.
● A unique identification code for entities that trade in financial markets (stocks, bonds, futures, forex, etc.)
● Every deal conducted in the markets will connect to the other counterpart with an LEI.
● Used for regulators to oversee financial markets.
● LEI connects financial markets, companies, and regulators.
● The issuing of an LEI code is conducted under GLEIF-accredited LOUs.
● GLEIF – Global Legal Entity Identifier Foundation
Renewal of an LEI code
A legal entity identifier code (LEI code) number needs annual renewal. This means that an LEI code issued on 02.01.2018 will have to be renewed before 02.01.2019. If the deadline has passed, your LEI will become inactive until renewed again. This renewal process is necessary to ensure the data in the Global LEI Pool is relevant and up to date.
Structure of an LEI code
An LEI code or number is standardized with ISO certificate 17442. This consists of a combination of 20 numbers and letters.
- Numbers 1-4 always show the ID of the LOU which has issued the LEI.
- Numbers 5-6 have always a value of 0.
- Numbers/Letters 7-18 are unique to each entity.
- Numbers 19-20 are for verification purposes.
Role of GLIEF in LEI code
The vision of GLEIF is to have one universal registration number for all entities around the globe. This is an identifier that would provide standardized and high-quality reference data.
GLEIF believes that ultimately there should be one identity behind every business. Having an LEI will help to achieve this objective.
Who can issue the Legal Entity Identifier code?
The issuance of LEI is governed by GLEIF. The GLEIF is the foundation that controls the issuance of LEIs. The GLEIF does not itself issue LEIs, they are instead issued through a network of public and private companies acting as LOUs. Their purpose is to supply registration, the renewal of LEIs, and act as a gateway for organizations that wish to obtain an LEI. A list of LOUs can be found here.
The LEI Service is not an LOU. Instead, the LEI Service acts as Registration Agent. Our task is to help companies and public entities obtain reliable information about an LEI, and manage communication between LOUs and entities wishing to apply for an LEI. We validate data provided with publically available services such as the National Business Register, etc. More information about Registration Agents can be found on the internet.
Final Thoughts
Having an LEI code can attract many benefits for your business and ease your international operations. This article has briefly discussed the LEI Codes and what they tell us about a business.