A Legal Entity Identifier is referred to as an LEI, LEI Code or LEI Number. An LEI is designed to uniquely represent a Legal Entity such as company, organization, firm, government body, trust, or fund across different markets, industries and geographies.
Legal Entity Identifier reference data can be used to provide identity assurance in financial transactions, KYC (Know Your Customer), client onboarding and other organization identity use cases. It tells you “who is who” and “who owns whom”. Many regulations name mandate the use of LEIs in transactions, and many organizations now benefit from the transparency and efficiency of understanding “who you are doing business with”.
How is an LEI code structured?
The LEI code is based on the ISO 17442 standard and each LEI is assigned only to a single Legal Entity, even across different geographical jurisdictions. Each LEI is a unique 20-character alphanumeric string – for example 529900T8BM49AURSDO55.
Where is the LEI published?
Each unique LEI Code is published in the Global LEI System (GLEIS) database – essentially a public global directory of millions of organizations. LEI Search services access the database to lookup the LEI and link to identity reference data about the organization. An LEI record contains information such as the company name, address, incorporation status, and whether they are owned by, or own, other organizations. The meaning of an LEI code is to provide reliable identification of legal entities on a global scale, across borders.
The GLEIS – the open, globally online source for Legal Entity data
The Legal Entity Identifier ecosystem, known as the Global Legal Entity Identifier System or GLEIS, is maintained and operated by the Global LEI Foundation (GLEIF). The GLEIF was established by the Financial Stability Board (FSB) under direction of the G20 after the 2008 financial crisis to drive transparency within the global markets.
In almost all cases now, the Legal Entity has been verified, as such the LEI provides accurate and up to date identity information about the organization.
More: What is the GLEIF?
Who can issue LEI Codes?
The ability to issue Legal Entity Identifiers is only awarded to a limited number of institutions. After passing and maintaining a stringent accreditation process who then become formally known as LOUs – Legal Operating Units, or more commonly LEI Issuers.
Ubisecure RapidLEI is a GLEIF accredited LEI Issuer and since launching in 2018, RapidLEI has become the largest LEI Issuer worldwide. RapidLEI is approved to register LEI in a wide range of jurisdictions around the world and can issue LEIs to organizations, funds, and trusts.
Ubisecure RapidLEI offer LEIs directly to organizations, and focused on helping enterprises, banks and other financial institutions manage large numbers of LEI codes for group companies and clients. RapidLEI also operates via a global network of local LEI Partners referred to as Registration Agents. Registration Agents offer vertical and local expertise and partner with LEI Issuers to help end customers access the LEI issuing network.
More: Register LEI
More: Find local Registration Authority
Why the LEI is essential now
In the aftermath of the 2008 financial crisis, there was a concerted effort by influential entities such as the Group of 20, the Financial Stability Board (FSB), and regulatory bodies worldwide to introduce a system of Legal Entity Identifiers (LEIs) that would provide greater transparency in the financial markets. The successful implementation of the LEI by the Global LEI Foundation (GLEIF) is evidenced by the widespread adoption of the system, with authorities in various jurisdictions relying on the LEI reference data to assess risk, implement corrective measures, and prevent market manipulation. By using the LEI, financial data accuracy has improved, and measures have been put in place to minimize market abuse.
Are Legal Entity Identifiers mandatory for regulation?
LEIs are global and are recognized on a worldwide basis. They provide a publicly available verifiable source of ‘who is who’ (organization identity) and ‘who owns whom’ (organization group structures). Financial regulators require or request the LEI is used in over 300 regulations to identify transacting parties, or counter parties, within financial systems and filing. Regulations that
Examples of regulations and standards naming the use of Legal Entity Identifiers includes:
- US: The Commodity Futures Trading Commission (CFTC, part of the Dodd-Frank Act), SEC Securities Exchange Act, Paperwork Reduction Act, U.S. Customs and Border Protection (CBP)
- EU: Crypto-asset filing requirements, Markets in Financial Instruments Regulation (MiFIR), European Securities and Markets Authority (ESMA), European Market Infrastructure Regulation (EMIR)
- Asia: Securities and Exchange Board of India (SEBI), People’s Bank of China: Five-Year Plan for Financial Standardization, Financial Investment Services and Capital Markets Act (FSCMA) of Korea,
- Standards: ISO20022 – Open Global Standard for Financial Information (including Bank of England’s adoption of LEI in CHAPS see Bank of England eBook), ISO 17422 Application in Digital Certificates for Trust Service Providers.
What is the future for the LEI?
As intended, the use-cases for Legal Entity Identifiers has grown. The GLEIF summarizes a number of “featuring the LEI” pillars beyond the existing regulation that will deliver significant efficiency and transparency to the market: Cross-Border Payments, Global Supply Chain, Digital Organizational Identity, Sustainability Reporting and Environmental, Social and Governance (ESG) and Artificial Intelligence (AI). Ubisecure RapidLEI also sees growing use cases in paperless trade (see Trade goes digital), digital signing, PKI, and crypto-currency transaction transparency.
Learn more about Legal Entity Identifiers
Watch this short video to learn more about LEIs and see how RapidLEI can help your organization register and manage LEIs:
