What is a Legal Entity Identifier (LEI)
The Legal Entity Identifier (LEI) is a 20-character alphanumeric code that is based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). It is created on the basis of reference information that provides the ability to clearly and uniquely identify legal entities involved in financial transactions. Each LEI contains information about the ownership structure of legal entities and thus answers the questions of “who is who” and “who owns whom”. Simply put, this public LEI database can be considered an international reference that significantly increases transparency in the global marketplace.
The Financial Stability Board (FSB) emphasized that the global distribution of LEIs contributes to “a range of financial stability objectives”, such as improving the effectiveness of risk management and streamlining the assessment of economic micro and macro risks. As a result, this work will increase the integrity of the market and, at the same time, will discourage market fraud and financial fraud. Last but not least, the deployment of the LEI system “serves an overall improvement in the quality and accuracy of financial data.”
The public LEI database is a unique source of standardized information about legal entities around the world. Data is recorded and regularly reviewed in accordance with the protocols and procedures established by the LEI Regulatory Oversight Committee.
In collaboration with its partners in the Global LEI System, the Global Legal Entity Identifier Foundation (GLEIF) is committed to further optimizing the quality, reliability and usability of LEI data to enable market participants to benefit from the richness of information available with LEIs.
The promoters of the LEI implementation program, ie the G20, the Financial Stability Board and numerous regulators around the world, have repeatedly stressed the need to make LEI data public. The Global LEI, made available through GLEIF, is a big step towards that goal. Any interested party can obtain complete LEI data free of charge and in a convenient form.
The benefits for all new business sectors that will be created by using the Global LEI Index increase in proportion to the spread of LEIs. To maximize the benefits of legal entity identification in and outside the financial markets, firms are encouraged to participate in this process and obtain their own LEI.
The cost of the service is 500 Euro.