Do You Know About Legal Entity Identifier Or LEI?
Legal Entity Identifier of LEI is deemed as a unique universal identifier code of legal individuals or corporations or governments participating in any or all kind of transactions that involve money. This identifier is utilised in reporting the details to regulators of finances. Every financial firm and the fund needs to have the LEI with them to function as well as carry out the necessary business.
The LEI comes under Global Legal Entity Identifier System or GLEIS, which itself is comprised of 3 unique levels that may seem a bit confusing in the beginning. It was built by Global Legal Entity Identifier Foundation or GLEIF, which was constituted by the Financial Stability Board with a primary mission to make, develop and carefully manage the universal LEI system. GLEIF also happens to be the organisation covering the LEI registrar that stores all LEI data, while it is an NGO or Non-Profit Organisation that has its main office situated in the Basel area of Switzerland.
Who issues LEI?
Below are the organisation that create and issue the LEI Number.
- Local Operating Unit or LOU: This is accredited by the GLEIF, which is permitted to issue LEI to the selected applicants. LOU has to collect and verify the data to create LEI numbers in accordance with the set protocol. The LOU has to seek and get all relevant details from applicants and then confirm the data with relevant bodies of the country where the applicant is residing or his/her/their office is based. There are nearly 30 LOUs in the world right now.
- Registration Agent for LEI: The registration agents transfer the client data to the LOU in absolute accordance with the standards set by GLEIF. They may also seek extra information from the Business Registry of the locality for verifications. This concept was introduced by GLEIF in April 2017 to ensure the data quality of the different databases as well as to simplify the applying process for the LEI.
Renewal of LEI
Like other permits and licenses, LEI also needs to be renewed. Initially, it has a validity of only a year and then it has to be renewed every year. If done in a timely manner, there are no difficulties in trading safely. The Agents and LOU usually send a reminder to the entities, when the date of renewal comes closer.
For businesses, it is highly recommended to get the LEI and trade securities in the safest manner with other LEI holders.