LEI Strengthens Trust and Security in Financial Markets through Open and Transparent Data

Any legal entity operating within today's global financial ecosystem needs a legal entity identifier (LEI), a code consisting of 20 letters and numbers that allows each entity to be identified on a single, standardized database. LEI.netcan help any commercial participant obtain or renew their LEI number.

What is the purpose of LEI?

Each participant in a financial transaction requires a LEI number, as it confirms the entity's legal name, address, and overall identity. The collapse of Lehman Brothers in 2008 underlined the need for a global system to identify financial connections as regulators and firms were unable to fully and quickly assess the exposure of market participants and how they were all connected. Developing the global LEI system (GLEIS) created a more transparent financial system where regulators and risk managers can instantly identify the parties involved in financial transactions.

How to get an LEI number?

As an official registration agent, LEI.net provides companies, institutions, and foundations with quick and easy access to LEI registration. The online service can take care of the registration, administration, and renewal of clients' LEIs.

LEI.net demonstrates excellent customer service by handling the application and delivery of the LEI number within the same day. Once the form has been completed, its agents apply for the number at the cooperating local operating unit (LOU) and send the identification number via email within a few moments.

LOUs ensure the information of the legal entities applying for LEI is accurate and up-to-date, so the data quality and integrity of LEIs remain high. This increases transparency and efficiency in the global financial markets.

Who needs an LEI number?

Companies (including subsidiaries and branches), non-profit organizations, foundations and funds, government agencies, public institutions, and sole proprietorships need a LEI code to engage in financial market transactions. Obtaining an LEI number ensures the business complies with the regulations that mandate its use. There are over 150 mandates in the EU that require these legal entities to obtain their code. Several US regulations also mandate the LEI requirement, such as the MiFID II, EMIR, and the Dodd-Frank Act.

What are the advantages of an LEI code?

The concept of LEI numbering streamlines the process of capturing customer data. ID cards no longer have to be copied manually nor checked for accuracy. The updating, extension, and deletion of company data is also now subjected to a functional system that can keep up with the rapidly evolving international financial markets.

Each transaction carried out on the financial market can be monitored by regulators who can better analyze and monitor the threats to the financial system and its stability. Adopting the global LEI also allows companies to improve their internal management of operational risks.

Since a LEI record is accessible through a global database, anyone can check to see who the trading partners involved in a transaction are and what they represent. The LEI public database provides authenticated information like the official name, registered address, country of incorporation, the company's legal form, and whether it is a branch or owned by a parent company. This comprehensive information promotes transparency and ensures each party involved can be precisely identified and tracked in the global financial system.

The LEI number boosts transparency throughout the global financial system. Research conducted by McKinsey & Company discovered that this identification number can help banks save up to 4 billion dollars annually in Know Your Customer processes since they can verify the identity and onboard new clients quickly and efficiently.

LEI requirements vary depending on what country, legal jurisdiction, or industry a legal entity operates in. Obtaining and renewing the LEI certificate falls under the obligation of the individual market participants. Fortunately, LEI.net has the authority and experience to register over 2 million entities. The online LEI registration service provides a user-friendly platform to manage LEI requirements, ensuring regulatory compliance and increasing transparency in financial transactions.

Why choose LEI.net?

LET.net is an official registration agent of Bundesanzeiger Verlag GmbH. The online LEI service applies for the LEI certificate on behalf of its client at its cooperating LOU after collecting the information required for the LEI application and the payment. It also offers automatic renewal of existing LEI numbers and even helps transfer an LEI that is with another provider. It also has responsive customer support that can assist users with any issues related to obtaining an identification number, with free access to published LEIs and related business information through its LEI database.

LEI.net is also an official partner of the Global Legal Identifier Foundation (GLEIF), which authorizes approved LOU partners and registration agents to issue, modify, and renew LEI numbers according to a standard procedure, ensuring that data quality and integrity remain high. The foundation enables companies and authorities to access a reliable source of legal entity identification, leading to greater transparency and efficiency in the global financial markets.

What steps are involved during the LEI registration process?

Registration agents like LEI.net check the documents submitted by the registering identity to determine if they are current and official. These documents are compared with official commercial registers and other trustworthy sources to confirm their legal existence and accuracy. If the registration is carried out by a representative, a written power of attorney is required. This rigorous verification and validation process contributes to the integrity and transparency of the global financial system.

What happens if companies do not have a LEI number?

Without the identification number, companies cannot carry out certain financial transactions, leading to delays, higher costs, and even the rejection of transactions. Many regulatory provisions require legal entities to have a valid LEI number. Failing to renew can expose these entities to legal and financial risks.

Conclusion

LEI provides a clear and unique way to identify the legal entities participating in any transaction so users can make informed decisions based on accurate and up-to-date information about who to do business with, increase operational efficiency, and improve risk management. It strengthens trust and security in financial markets, cultivated by open and transparent data.

Need help with your LEI registration? Visit LEI.net now.