In 2011 the LEI system was developed by a request from G20 with the purpose to create a greater transparency in the global financial system. Since then, a lot have happened and today there is a requirement for LEI in 45 jurisdictions. LEI stands for Legal Entity Identifier which is a unique code that identify legal entities that are involved in financial transactions. The code is universal and based on the ISO 17442 Standard. Today LEI numbers are regulated by several directives such as MIFID II, EMIR and MiFIR. If your company does not have a valid LEI code there is a great risk that you will be denied making financial transactions on global transaction markets.
When an LEI code is needed
If you have a company that is about to make transactions in European transactional markets you need to register an LEI code. At least if the transaction involve any kind of securities or derivates. The same applies for foundations, legends and associations. All legal entities are affected by the requirements from the European Market Infrastructure Regulation. There is also similar requirements for other parts of the world such as US. These regulations has applied since 3 January 2018.
Example of securities are bonds, options or stocks. If your company is about to buy or sell such kind of securities a valid LEI number is required. If you don’t have a valid LEI code the transaction will be denied by the bank or stock broker.
What’s the price for an LEI code?
There is no general price for an LEI code. The price for an LEI number varies depending on the issuer. The only fixed cost is the fee from GLEIF which at some registration agents are included in the price. The price for an LEI code could be anything from $50 per year to $110 per year. Make sure you compare registration agents and LOU:s (Local Operation Units) before register your LEI number. This can save you both time and money.
The validity of an Legal Entity Identifier
An LEI number is valid for one year. When the year has passed you need to renewal the code in order to make transactions in European transactional markets again. A month before the Legal Entity Identifier is about to expire you will receive a reminder from the registration agent. You can then renew the code or let it expire if you know your company will not be involved with any financial transactions anymore. You also have the opportunity to transfer your LEI code to a different registration agent or LOU. This is something you can do for free. Transferal of a Legal Entity Identifier takes about a week. You are always able to check the status of your LEI number in GLEIF:s database.