Who needs an LEI number?
Who needs an LEI number? LEI is needed by legal entities that take part in financial transactions and who wish to trade in financial markets, such as buying stocks, bonds, or other securities. There are also many regulations (dependent on jurisdictions) that require obtaining an LEI.
Since the LEI scheme was created, many new regulations across the globe have been introduced. A situation that means many entities in various 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. Its purpose is to provide regulated identification for legal entities such as businesses and organisations, especially those in the financial industry.
The aim of this is to make holdings more transparent, and the data on them more connected and easy to access. Thereby minimising any financial risk involved in dealing with such entities across the globe.
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)
Another type of organisation that requires an LEI, specifically within the EU, are investment firms and their clients. This is because of the MiFID II/MiFiR regulations that became law in January 2018.
EU authorities must refuse trades between investment firms and their clients unless both sides have an LEI number. This situation is primarily known as – ‘no LEI, no trade.’ If your organisation falls under these MiFID II/MiFiR requirements, you can apply for an LEI through LEI Register.
Government agencies (USA)
Other types of legal entities will need an LEI, too, including many US government financial agencies. 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 there are US government entities that exist outside of the finance sector that 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, there will be additional entities that may be required to use LEIs in the near future.
The reason for this is the U.S. Regtech Law, the Financial Transparency Act. Something that, 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. Therefore, any entity that is dealing with the regulatory agencies listed here is likely to require an LEI soon.
LEI Register’s goal is to help legal entities register their LEIs, securely and cost-effectively. It is a simple 2-minute process made convenient by us.