What is LEI code? How to get LEI code? Why do companies need LEI number? We answer these and other questions in this educational article.
AtoZForex – If you are familiar with some of the financial world’s acronyms, you will have to learn a whole bunch of new ones. Ahead of the Markets in Financial Instruments Directive II implementation, the EU authorities have released a group of new acronyms for financial market participants to take note of.
What is LEI code?
One of such – the LEI number. In the past months, industry participants started to often talk about the 'LEI number'. However, what is LEI code? How to get LEI code? Why do companies need LEI number? We will answer these and other questions in this article.
The LEI stands for the Legal Entity Identifier. It is related to the requirements embedded in the upcoming MiFID II Directive. The LEI number is a unique identifier for persons that are legal entities or structures that include companies, trusts, and charities. The LEI number consists of 20 characters – it is a numeric code. The key aim of the LEI number is to legally distinct entities that operate in the financial market.
As a part of the upcoming unified MIFID II regulations, all legal entities that engage in trading with EU-licensed brokers will need to have their own LEI. The official excerpt from directive states:
“In order to facilitate market surveillance, client identification should be consistent, unique and robust. Transaction reports should, therefore, include the full name and date of birth of clients that are natural persons and should identify clients that are legal entities by their LEIs.“
Why do companies need LEI number?
In case a person is a corporate trader or his/her company is trading with an EU licensed broker, they need to submit the LEI number. The firms need to do so to be properly identified in transactions reports that are further being submitted to the regulator.
How to get LEI code?
The Global Legal Entity Identifier Foundation (GLEIF) is a non-profit organization that operates to support the implementation and use of the LEI. Moreover, the GLEIF is responsible for supervising and providing the high-quality LEI data.
The Local Operating Units (LOUs) of the Global LEI System are issuing LEIs.Specifically, the LOUs present the LEIs and the reference data to the public and regulators free of charge.
Which information is included in LEI code reference data?
LEI codes contain the following information about the entity:
- The official name of the legal entity as recorded in the official registers
- The registered address of that legal entity
- The country of formation
- The codes for the representation of names of countries and their subdivisions
- The date of the first LEI assignment; the date of the last update of the LEI information; and the date of expiry, if applicable.
Presently, there are 530,940 LEI numbers issued in the world.
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