What is an LEI?
A Legal Entity Identifier (LEI) is a 20-digit alpha-numeric code representing a unique business entity participating in financial transactions. LEI Numbers are characterised by an ISO 17442 standard and represented in an open database managed by the Global Legal Entity Identifier Foundation (GLEIF).
LEIs also have an important role to play in digital transactions. For example, in client onboarding and KYC, B2B digital signing and B2B payments industries.
In client onboarding alone, the McKinsey institute discovered that global adoption of Legal Entity Identifiers (LEIs) could save the banking industry between $2-4 billion USD annually in onboarding costs alone.
Who Needs an LEI Number?
Currently, Legal Entity Identifier numbers are required for organisations trading on the financial market. Since this regulation came into effect in 2018 it altered the way trading venues, investment firms and their intermediaries operate, in order to give transparent trading reporting requirements.
Why do I need to renew my LEI?
In order to maintain trustworthy and high-quality data, an LEI must be renewed annually. Lapsed LEIs are represented with a status of ‘LAPSED’ in the LEI database managed by the Global Legal Entity Identifier Foundation (GLEIF).
A ‘LAPSED’ status in the GLEIF database reflects against your company name and will prevent you from successful trade reporting. If you’re in a jurisdiction where the use of LEI is required, this could mark your organisation for non-compliance, leading to a possible fine.
Did you know, you don’t have to renew your LEI Number every year? If you want to avoid the risk of a lapsed LEI or reduce the burden of managing large LEI portfolios, ManagedLEI offers multi-year LEIs and ManagedLEI Pro Services.
EDI is proud to be able to offer LEI management in affiliation with ManagedLEI.