What is an LEI number?
The LEI, or Legal Entity Identifier, is an international 20-character alphanumeric identifier that makes it possible to uniquely identify legal entities involved in financial transactions. An LEI number helps increase transparency in financial markets and improve the reliability of data.
LEI numbers are used by banks, brokers, in securities transactions and in financial market reporting. Put simply, it is a company’s international identifier in the financial world. Unlike a national registration number, an LEI number can be used worldwide and is linked to verified data in GLEIF’s public database.
Why was the LEI system created?
The idea for the LEI system arose in response to the 2008 global financial crisis. During the crisis, it was difficult for regulators and banks to accurately assess the extent to which financial institutions and companies were interconnected. This made assessing and managing risk difficult.
To solve this problem, the G20 countries supported the creation of a single global legal entity identification system. The result was the LEI system, which provides a standardised and transparent way of identifying counterparties around the world.
The LEI helps reduce confusion between similar business names, different countries’ registers and complex group structures. Instead of relying on a name or a local registration number alone, a counterparty can be identified by a single international identifier.
Who manages the LEI system?
The LEI system is coordinated by the Global Legal Entity Identifier Foundation, or GLEIF. GLEIF is an international non-profit foundation whose role is to maintain and develop the global LEI system.
GLEIF itself does not issue LEI numbers to companies. Numbers are issued by GLEIF-accredited LEI issuers, known as LOUs. They verify a company’s data, issue the LEI number and are responsible for renewing the data in the GLEIF database.
LEI Universal acts as a registration agent and helps companies apply for, renew or transfer an LEI number from another service provider.
Who needs an LEI number?
An LEI number is needed by a legal entity that participates in financial markets, or where a company must be uniquely identified in a financial transaction or in reporting.
An LEI number is needed, for example, in the following cases:
- Securities trading — the company buys or sells shares, bonds, exchange-traded funds or other financial instruments.
- Regulatory reporting — the company’s transactions must be reported to financial supervisors, for example under MiFID II, MiFIR or EMIR requirements.
- Derivatives transactions — the company uses swaps, futures, options or other derivatives.
- A financial institution’s requirement — a bank, broker or other financial service provider needs the LEI number to identify a client or counterparty.
An LEI number is not issued to private individuals. The LEI number is intended for legal entities and certain legal structures, such as companies, funds, foundations and non-profit associations.
If a company does not carry out securities transactions, does not trade in derivatives and is not subject to financial market reporting obligations, an LEI number may not be necessary.
Why is an LEI number important?
The main purpose of an LEI number is to improve the transparency and security of financial markets. Because the data associated with an LEI number can be verified in a public register, the parties to a financial transaction can be uniquely identified.
This helps banks, brokers, supervisory authorities and business partners understand which legal entity is involved. The LEI number also reduces the risk of the wrong company’s data being used in reporting or in a transaction.
For a company, an LEI number is also practical when establishing new client and partner relationships. A valid LEI number allows a bank or financial partner to check the company’s details quickly and can make dealings smoother.
As a result, an LEI number is not just a regulatory obligation. It is also an international mark of trust, showing that a company’s data has been verified and is publicly available.
What is the structure of an LEI number?
An LEI number consists of 20 characters. For example, an LEI number might look like this:
The LEI number itself does not reveal a company’s name, country or field of activity. That data is linked to the LEI record in GLEIF’s public database.
Applying for an LEI number
Applying for an LEI number through LEI Universal is done online and consists of a few simple steps.
- Fill in the application form. Enter the company name or registration number. In supported jurisdictions the core details are generally found automatically in the local business register.
- Check the company details. Review the business name, registration number, address and contact details. If necessary, add the parent company’s details or select a suitable exception reason.
- Choose a package and make the payment. Select a 1, 3 or 5-year package and make the payment.
- The LEI number is sent by email. Once the data has been checked, the LEI number is issued and sent to the email address given in the application.
With correct data, most LEI numbers are issued on the same business day. If the application requires the parent company’s details to be checked or additional documents to be requested, processing the order may take longer.
Read more: How to apply for an LEI number?
Renewing an LEI number
The data associated with an LEI number must be confirmed once a year. The purpose of renewal is to ensure that the company data in the GLEIF database is current and reliable.
If the LEI number is not renewed on time, its status becomes lapsed. The number itself stays the same and can be renewed later.
LEI Universal offers 1, 3 and 5-year packages. With a multi-year package, we manage the annual renewals throughout the chosen period.
We will notify you 60 days before your LEI number is due to expire.
Read more: Renewing your LEI number
Frequently asked questions
Can a company have more than one LEI number?
No. Each legal entity can have only one LEI number. If it already has an LEI number, the existing number can be renewed or transferred from another service provider.
Who needs an LEI number?
Legal entities need an LEI number when they carry out reportable financial transactions, for example when trading shares, bonds or derivatives.
Can a private individual apply for an LEI number?
No. LEI numbers are issued to legal entities and eligible legal structures, not private individuals.
What happens if my LEI has lapsed?
An active LEI is required for regulated financial transactions. If your LEI has lapsed, renew it before making the transaction. We send our customers a reminder 60 days before the renewal date.