Lapsed LEI – Why should you keep your LEI active?

Your Legal Entity Identifier (LEI) must be renewed annually. Failure to renew the LEI will change it from an active status into a lapsed status in the Global LEI System index. A lapsed LEI can cause major inconveniences, as your trades will be blocked, and as a financial institution, you even face a risk of non-compliance fines.

What is a lapsed LEI?

A lapsed LEI means that your annual renewal deadline has passed. To maintain high-quality and reliable data, the LEI code needs to be renewed annually, or your registration status will change from issued to lapsed. Forgetting to renew your LEI can cause major inconveniences, as your trades will be blocked, and non-compliance fines are risky.

The LEI renewal process is an update of the registration data, related to a Legal Entity in the GLEIF database. This must be done with a chosen service provider one year after initial registration.

You’ll be able to find information about a company’s LEI status under the “Reg Status” on LEI search.

 

Morgan Stanley was fined $5m for LEI and swaps reporting failures

The Commodity Futures Trading Commission (CFTC) has settled charges against Morgan Stanley Capital Services, a provisionally registered swap dealer, for failing to comply with swap data reporting obligations.

The errors included failures to report accurate primary economic terms data fields, including Legal Entity Identifier (LEI), unique swap identifier, notional amount, execution venue LEI, and price notation.

 

Morgan Stanley fined $5m for LEI and swaps reporting failures (2020) [online].
Available at: https://www.securitiesfinancetimes.com/securitieslendingnews/ [Accessed 22nd March 2022].

What happens if I don’t renew my LEI?

Legal entities behind with their LEI renewals risk losing business since market participants nowadays often refuse to engage in business with an entity that has a lapsed LEI. You’ll also face being sanctioned for non-compliance under LEI regulations.

In 2018, funds and trusts were also required to obtain an LEI. In this case, the LEI might only be needed to begin trading or conduct a single transaction. Because the LEI might have registered to fulfill a single-use purpose, you’ll often see these entities with a lapsed LEI status.

While some regulations may be relaxed about the LEI annual renewals, the ESMA confirmed that EU Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) both require market participants and investment firms to maintain an active LEI by conducting annual LEI Renewals.

To stay active in the global financial market, you must keep your LEI active. A lapsed LEI can cause major inconveniences, as your trades will be blocked, and renewing your LEI at the last minute can lose precious trading time. 

RENEW YOUR LEI NOW

What do you do when your LEI has lapsed?

Once your LEI has lapsed, you’ll need to renew it either with your previous service provider or transfer your LEI to a new chosen partner. Since the Global LEI System is designed to encourage competition between LEI issuers and registrators, you can transfer your LEI from one service provider to another anytime.

In most cases, people choose to transfer their LEI after finding out that the fees charged for the issuance and maintenance of an LEI are entirely a matter of the service provider and have nothing to do with the quality of the LEI code itself.

Remember that you can’t apply for a new LEI; the lapsed LEI has to be renewed. Once the LEI code has been assigned to a Legal Entity, it cannot be changed. LEI is a unique identifier; each company can only have one LEI code.

How to renew the Legal Entity Identifier number?

The LEI code renewal process is simple:

  1. Enter your LEI code or company name into the application form.
  2. The form will be completed automatically with the current data from the GLEIF database.
    (You can modify the data if it has been changed during the year).
  3. Submit the LEI renewal application form.
  4. We will take care of the renewal.

Multiyear renewals

This is a concept that LEI Register introduced in 2018, and has now become a standard among many service providers.

Multiyear renewals are designed to help you save time and money. LEI Register will be responsible for renewing your LEI before the annual expiry date, which will help avoid unpleasant scenarios like your transactions being blocked due to a lapsed LEI.

Not only does it work out to be more cost-efficient, but we’ll take on the responsibility of renewing the data of your LEI code seamlessly, using an official company registry.

Key takeaways 

  • A lapsed LEI means that your annual renewal deadline has passed.
  • Your LEI code needs to be renewed annually, or your registration status will change from issued to lapsed.
  • With a lapsed LEI, trades will be blocked by your financial institution.
  • Fees charged for issuing and maintaining an LEI are entirely a matter of the service provider.
  • Since the Global LEI System is designed to encourage competition between LEI issuers and registrators, you can transfer your LEI from one service provider to another anytime.
  • LEI Register is the fastest service provider with the cheapest prices on the market.