Who needs an LEI number?Who needs to have a Legal Entity Identifier?If you are transacting the global financial system there is a high possibility you are required to have an LEI.
Since the LEI was introduced, there have been many regulations that require certain entities to obtain an LEI across different jurisdictions and industries both municipally and commercially. Find out below if you fall into the category of requiring an LEI Code. |
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Why is there a need for the LEI?
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There has been a global need for an identifier such as the LEI for a very long time. As global trade increased at an exponential rate in the 1900's, a need arose for transparency in transactions, trust in who you are dealing with especially internationally.
There was no single identifier applicable to all legal entities from companies, to funds, to Special Purpose Vehicles and even Governments. This caused a lot of hassle with regards to identity in the modern corporate world. Companies owned companies that were owned by other companies and it caused a lot of confusion around who owned who, and it made it very hard in some cases to find out who you exactly were dealing with. This also made it difficult for banks and other institutions to onboard new clients as KYC practices were still primitive, and lacking a reliable, trustworthy identifier it could become laborious and costly (it is now estimated that the LEI could save banks up to 2-4 billion Dollars annually in KYC processes). |
Following the 2008 market crash, this lack of transparency caused disaster in the capital markets. When the stock market crashed, thousands of funds and trusts were unidentifiable and the fall out caused mass confusion. The lack of transparency put financial institutions in a vulnerable position.
This was addressed by the G20 Summit of June 2020, who created the concept of the LEI. The idea was to create a digital database, of all legal entities which was easily accessible, accurate and up to date. According to LEI ROC the LEI was conceived to be used by the private sector to support improved risk management, increased operational efficiency, more accurate calculation of exposures, and other needs. One centralized source of information, that contains vast amounts of attainable, high quality data. 
Image Source: GLEIF - The Global LEI System
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Who needs an LEI?
Any legal entity may apply for an LEI. A Limited Company, an association, a trust, a charity anything that is recognised by law to be an organisation.
However, in order to enhance transparency in the global financial ecosystem some forms of legal entities are required by law to have an LEI.
LEIs are required by any legal entity who is involved with financial transactions or operating within todays financial system. There are a number of mandates currently in existence which state "no LEI, no trade" meaning both reporting parties and traders require an LEI.
The LEI is mandated by a number of EU directives such as EMIR , MiFIR & MIFID II. The US also have similar requirements such as the Dodd Frank Act, the OFR, the Federal Reserve and the Securities & Exchange commission (SEC).
LEI requirements vary depending on the country, legal jurisdiction or industry. It is the prerogative of the authorities acting in individual jurisdictions to mandate the use of LEIs.
To find out if you need to have an LEI you can see this attachment which provides an overview of the official current and proposed regulatory activities which include the use of the LEI.
However, in order to enhance transparency in the global financial ecosystem some forms of legal entities are required by law to have an LEI.
LEIs are required by any legal entity who is involved with financial transactions or operating within todays financial system. There are a number of mandates currently in existence which state "no LEI, no trade" meaning both reporting parties and traders require an LEI.
The LEI is mandated by a number of EU directives such as EMIR , MiFIR & MIFID II. The US also have similar requirements such as the Dodd Frank Act, the OFR, the Federal Reserve and the Securities & Exchange commission (SEC).
LEI requirements vary depending on the country, legal jurisdiction or industry. It is the prerogative of the authorities acting in individual jurisdictions to mandate the use of LEIs.
To find out if you need to have an LEI you can see this attachment which provides an overview of the official current and proposed regulatory activities which include the use of the LEI.
To apply for your own LEI or on behalf of a legal entity, please select the option from the buttons below.
