What is LEI?

If your business participates in financial trades or transactions, perhaps you have heard the term ‘LEI.’ But what is LEI? And what purpose does the LEI serve?

An LEI number (Legal Entity Identifier) is a 20-character code which functions as an international company or entity registration number. By connecting to key reference information, the LEI number is used to identify legal entities participating in financial transactions such as trading shares, bonds or derivatives.

If your company trades securities, you will generally need an LEI.

In this article, we will answer the following and much more:

• What is an LEI number?
• Who needs a Legal Entity Identifier in the UK?
• How do I apply for an LEI number?

Do you need an LEI number? View our LEI prices here.

Written by:
Mads Bjerggaard  

Mads holds a bachelor’s in Business Administration and Computer Science from Copenhagen Business School.
Mads has worked with complex IT systems for more than 20 years.
Mads is also co-founder of a legal-tech company (with the same owners as LEI Service).

What is an LEI number?

LEI stands for Legal Entity Identifier. The LEI number, or LEI code, functions as an international business or entity registration number. It is used by companies and banks to identify legal entities (e.g. other companies and organisations) when taking part in financial transactions such as trading shares, bonds or derivatives.

In many jurisdictions, including the UK and the EU, legal entities need an LEI to trade financial instruments.

The LEI number consists of 20 characters and can be broken into three parts:

• Characters 1-4: identification of the LOU (Local Operating Unit)
• Characters 5-18: identification of the legal entity
• Characters 19-20: check digits used to validate the code

This 20-character, alphanumeric code is based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). It offers transparency by enabling identification of legal entities on an international scale as well as confirmation of their identity.

The LEI is linked to two levels of data which provide answers to critical questions:

• Level 1: who is who?
  Information about the entity’s legal name, registration number, legal address, and more.
• Level 2: who owns whom?
  Relevant information concerning the entity’s ownership and ownership structure.

An LEI is not free. There is a fee for the initial registration and for each annual renewal. The fee covers the LOU’s validation of the data, the GLEIF fee and the running of the Global LEI System.

What is LEI: the purpose

Now that we have answered the question, ‘What is LEI,’ you may wonder: what is an LEI meant for?

The LEI system provides standardised information as well as a global reference system. This enables the global tracing of financial transactions, allowing you to easily identify legal entities and their owners.

Endorsed by the G20 in 2012, the LEI system is a product of the global financial crisis of 2007-2008. Its purpose is to provide transparency within financial systems and transactions. This helps prevent money laundering and financial fraud.

Regulators in many jurisdictions use the LEI in their supervision of financial markets. The aim is for the global system to become a standard system which can be used across markets and countries.

To ensure the credibility, transparency, and reliability of the LEI, the system is organised in three levels:

• ROC (Regulatory Oversight Committee): a committee comprised of supervisory authorities which uphold the governance principles of and oversee the Global LEI System
• GLEIF (Global Legal Entity Identifier Foundation): a non-profit organisation responsible for the coordination and management of LEI numbers
• LOU (Local Operating Unit): an LEI-issuing organisation which issues LEI numbers to legal entities

For an illustration of the LEI system, click here.

Who needs a Legal Entity Identifier in the UK?

Legal entities – including companies, charities and trusts – need an LEI before a UK investment firm can execute a trade in shares, bonds or other financial instruments on their behalf (UK MiFIR).

Since Brexit, the EU rules on LEIs have been kept in UK law as UK MiFIR and UK EMIR, supervised by the Financial Conduct Authority (FCA).

As the LEI system is quickly being adopted as a global standard, it is a good idea to obtain an LEI number before you need it.

Read more about how to obtain an LEI number here.

The price of an LEI varies depending on whether you require a new LEI code or an LEI renewal. Through LEI Service, a new LEI and a renewal cost the same.

How do I apply for an LEI number?

Although the LEI is steeped in legal requirements and regulations, obtaining an LEI number need not be a complicated affair. At LEI Service, we have made the process easy for you.

Apply for a new LEI number here.

All you need to do is enter your company number here. Our system will collect your data automatically from Companies House, and we will request your confirmation of the data provided. Then we will handle the application process for you. Your LEI number will normally be issued within 10 minutes to 48 hours.

How do I renew my LEI number?

The LEI data must be confirmed every year to stay up to date. Depending on your chosen solution, LEI Service can submit your renewal automatically to RapidLEI each year, based on the information in the official register. In the event that changes are made to a client’s legal entity, the client is obligated to keep us updated.

You can renew your existing LEI number here.

When will my LEI be issued and ready to use?

If you have applied before 3pm (UK time) on weekdays, your LEI is normally issued within two hours (applies to new LEI codes only) of your purchase. If you provide additional information about the ownership structure, the application takes a little longer. The LEI issuer can always request additional information that we must obtain from the applicant in our capacity as registration agent, so we can never guarantee when an LEI code will be issued.

The Global LEI Index is only updated a few times a day, so it can take several hours before your LEI is publicly visible. Please also note that many banks only retrieve LEI information once a day. It may therefore take up to 24 hours before you can use your LEI with your bank.

How do I search for LEI numbers? (LEI lookup)

Do you need to look up the LEI number of a legal entity? Or would you like to check that your LEI number is registered correctly in the global LEI system?

Search the Global LEI Index here.