LEI numbers (also known as LEI codes) are required for businesses that participate in the financial sector. While not exclusive to big corporations, LEIs are largely designed to help keep track of the money trails formed by global financial institutions.
What is an LEI?
A Legal Entity Identifier (LEI) is a unique, globally recognized, alphanumeric code issued to legally distinct entities that engage in financial transactions. This doesn’t refer to the buying and selling of goods, but the buying and selling of securities like stocks, equity and debt.
Why are global businesses required to obtain LEIs?
The foundation for the LEI system was created by the G20 in the wake of the 2008 financial crisis. After the collapse of some of the world’s largest financial institutions, regulators and private-sector firms were unable to fully track the web of financial transactions created by their companies. LEIs were thus created to give financial institutions—some of which operate under the same name—unique identifying codes.
Who needs an LEI?
Entities that operates in the financial sector—like companies, funds, and even governments—are required to obtain an LEI. In terms of financial institutions, this includes brokerages, banks, investment companies, insurance companies, and credit unions. Individuals who participate in the global financial market are not required to have an LEI.
How can I obtain an LEI for my business?
The LEI system is supported by an organization known as GLEIF (Global Legal Entity Identifier Foundation), but GLEIF itself does not issue LEIs. Instead, you’ll need to reach out to a Local Operating Unit (LOU), which is an organization approved by GLEIF to issue LEIs. (LOUs, and LEIs, and GLEIF—oh my!)
Basically, you can find an LEI issuer through the Global Legal Entity Identifier Foundation.