Why Register for an LEI? A Guide

The LEI is a unique 20-character alphanumeric code that identifies legal entities participating in financial transactions worldwide. It helps enhance transparency and reduce risk in the financial markets.

Every legal entity that trades in the UK will need to register for a LEI, whether it is a company, trust or a fund. This guide will help simplify the process and get you on your way to getting an LEI quickly.

Identifying your company

The process of registering for a Legal Entity Identifier is a simple, yet important step for companies to take. The LEI is a global code that identifies the legal entities participating in financial transactions. It helps to improve transparency in the global markets, and is essential for complying with regulations such as MiFID II transaction reporting.

The code consists of 20 letters and numbers that are unique to the company. The process is similar to registering for a tax number or an ID card. Companies are required to provide a variety of documentation including business registration documents, legal records and bank references. This information is verified by the GLEIF and an LEI is issued to the company.

Once the application has been successful, the LEI is published to the GLEIF database and a notification is sent to the customer. In most cases, the LEI can be obtained within a few hours. If there are issues with the verification of the data, the process may be delayed.

After the LEI is issued, it can be used to identify the company in various databases around the world. The LEI is also useful for the exchange of financial transactions. It can help with transparency and reduce the cost of doing business by eliminating duplicated data. It can also be used to help with AML (Anti Money Laundering) and KYC (Know Your Customer) compliance.

You can find an existing LEI by searching the Global LEI System or RapidLEI’s free LEI search tool. This search tool connects directly to the GLEIF database, which is updated on a daily basis. The search results can reveal a variety of information, such as the status of the LEI, whether it is active or not, and who owns it.

It is important to note that the LEI can only be assigned to a legally recognised entity. This includes, for example, a limited company or trust. In some countries, it is mandatory to obtain an LEI to trade on the financial markets. This is mainly because of the requirements under regulation such as MiFID II, SFTR and EMIR in Europe or Dodd-Frank in the US.

Requirements for a LEI

The LEI is used to identify legally distinct entities operating within the global financial markets. It’s a linchpin for the global data standard, designed to be unique and consistent across markets, jurisdictions, legal systems and reporting regimes. It enables the identification of any legal entity anywhere in the world, instantly and accurately. It’s also a key component of many compliance and transaction reporting requirements in today’s regulatory environment.

Currently, over 144 pieces of legislation globally mandate the use of LEIs. For example, in the UK, any firm that wants to trade must have an LEI number or face a no-trade ruling and potential financial penalties under the MiFID II transaction reporting regime. Other European regulations including EMIR, SFTR and AIFMD stipulate that an LEI must be presented where relevant. In addition, an LEI is required for derivatives trading in Hong Kong under the State Administration of Foreign Exchange (SAFE) regulation.

Once an LEI is obtained, it must be retained and renewed annually. The cost for obtaining and maintaining an LEI can vary depending on the provider. Some provide a single-year registration fee while others offer multiple-year packages. It’s important to check the terms and conditions carefully before selecting a service provider. The GLEIF does not issue LEIs directly but rather delegate this responsibility to accredited Local Operating Units (LOUs).

LEI reference data is publicly available and includes information such as the legal name, the jurisdiction in which the legal entity is registered, the registration authority, the LEI status and the managing LOU. It also includes Level 2 data describing parental relationships in corporate structures answering the question ‘Who owns who?’

In the past, there was a need for a global identifier to mitigate risk at all levels – firm, country and industry. The LEI was created to meet this need, following the 2008 market crash when it became clear that there were serious issues with transparency in the marketplace. The G20 and the FSB were among the driving forces behind the development of the LEI system. Since its introduction, it has become an integral part of the global financial system.

Obtaining an LEI

Legal entities needing an LEI code should register with a local operating unit (LOU) or registration agent that is accredited by the Global LEI Foundation. The LOU will collect a set of reference data about the entity and provide an LEI code to that legal entity. This unique identifier is used to identify financial counterparties in transactions, to reduce operational risk and support compliance with regulations.

The LEI code is composed of 20 letters and numbers that are assigned to a legal entity by a LOU or its designated Registration Agent. Each LEI is assigned based on the data provided by the registrant and can be used to identify that legal entity worldwide. The information included in the LEI system is updated on a daily basis and can be accessed by anyone with internet access.

A legal entity can obtain an LEI by submitting a complete and accurate application form with the LOU. The application process is simple and can be completed online or offline. A number of providers offer services to help businesses get their LEIs, but it is important to choose a reputable provider with a proven track record, and pursuant to that, see the following for the latest updates on LEI registration requirements.

Once an LEI is issued, it will need to be renewed annually. A lapsed LEI code may cause delays in transactions or can lead to fines from regulators. To avoid this, it is best to renew an LEI 60 days in advance of its expiration date.

Generally, any company that trades shares or securities, conducts derivative transactions, issues debt, or operates in heavily regulated industries will require a LEI code. However, more and more private companies such as Limited Companies and Sole Traders are registering for an LEI even though they may not be required to do so by law.

To avoid any delays, it is a good idea to apply for an LEI with a reliable provider, such as RapidLEI. The company offers a user-friendly online application and supports the autofill of data from existing company records, making it easier for businesses to submit their information. The company also has competitive pricing and fast turnaround times.

Renewing your LEI

As the LEI system becomes more widely used, companies must take care to ensure their LEI remains active. Otherwise, they may be subject to a trade halt or non-compliance fine by their financial institutions and banks. To avoid this, it is essential to understand how LEI renewal works and how to do so seamlessly.

The Global LEI system is an international framework for identifying legal entities operating in financial markets. It is based on an internationally consistent and up to date dataset. It is vital to make sure the data is updated on a regular basis. To do this, the system requires a re-validation of the reference data on an annual basis. If an LEI is not renewed by the re-validation deadline, it will become ‘Lapsed’.

It is important to monitor the re-validation date and initiate the LEI renewal process in advance of the expiry date. Many financial market participants will only do business with a company that has an active LEI. Keeping your LEI active also contributes to greater transparency and trust in the global financial system.

In addition, some financial market regulators have mandated that their constituents must have an LEI. A lapsed LEI can cause significant operational disruptions, including the inability to participate in transactions and the inability to report to regulatory bodies.

If you are unsure whether your LEI is up to date, you can check by using the GLEIF lookup tool. You can also get in touch with your local LEI issuer (LOU) to confirm the status of your LEI.

LEIpapa places a high importance on the LEI renewal process and proactively reaches out to customers to initiate the process in a timely manner. This commitment to keeping LEIs active saves our customers the hassle of possible trade halts and non-compliance fines.

Our customer service team is available to help you with any questions you have about the LEI registration and renewal process. You can reach us via email, phone or chat and we can offer you a variety of payment options such as card or invoice. Alternatively, you can choose to register for a multiyear package with LEIpapa and we will take care of the annual renewals for you.