Who needs an LEI number?
Legal entities that participate in financial transactions and wish to trade in financial markets, such as buying stocks, bonds, or other securities, need an LEI. Many regulations (dependent on jurisdictions) also require obtaining an LEI.
Since the LEI scheme was created, many new regulations have been introduced worldwide. This means many entities in a range of industries now need to apply for an LEI, the details of which you can find below.
What is an LEI number?
An LEI, or Legal Entity Identifier, is a unique 20-digit alphanumeric code that provides regulated identification for legal entities such as businesses and organisations, especially those in the financial industry.
This aims to make holdings more transparent and the data on them more connected and easy to access. Thereby minimizing any financial risk involved in dealing with such entities across the globe. Read more about what an LEI is.
Financial institutions that always require an LEI number
Currently, legal entities that always require an LEI include financial institutions such as brokerages, banks, investment & insurance companies, and credit unions. LEI Register is dedicated to helping you through the LEI registration process.
However, individuals are not required to have an LEI to trade on the financial market. Therefore, if you are not a company or corporation, you will not, at this time, need an LEI.
Investment firms and their clients (EU)
Investment firms and their clients are another type of organization that requires an LEI, specifically within the EU. This is because of the MiFID II/MiFiR regulations that became law in January 2018.
This means that EU authorities must refuse trades between investment firms and their clients unless both sides have an LEI code. In fact, this situation is primarily known as – ‘no LEI, no trade.’ If your organization falls under these MiFID II/MiFiR requirements, you can apply for an LEI through LEI Register.
Government agencies (USA)
Other types of legal entities, including many US government financial agencies, will also need an LEI. This is primarily because the Office of Financial Research has made the LEI mandatory.
Such agencies include the Federal Reserve System (FED), the Commodity Futures Trading Commission (CFTC ), and the National Association of Insurance Commissioners (NAIC).
RTOs and ISOs
Additionally, since 2015, US government entities outside of the finance sector will require LEIs as well. The Federal Energy Regulatory Commission (FERC) mandates that all RTOs (Regional Transmission Organizations) and ISOs (Independent System Operators) have an LEI.
Those affected by the Financial Transparency Act
Finally, it is also prudent to mention that, while not currently the case, additional entities may be required to use LEIs in the near future.
The reason for this is the US Regtech Law and the Financial Transparency Act, which, if passed, will require all the data gained by such agencies to be unrestricted. The idea is to make transactions between such entities and the ability to regulate them much more reliable. LEIs are the perfect method of identification for such data.
LEI Register aims to help legal entities register their LEIs simply, securely, and cost-effectively. We make the process convenient by making it a simple two-minute process.
