The Legal Entity Identifier (LEI) is a globally recognised reference number that is used to identify each and every legal entity or structure that engages in financial transactions. LEI helps identify all the legal entities that take part in the transaction.
When a legal identity is assigned a LEI by the LEIL, it includes but is not restricted to all intermediary institutions, banks and mutual funds as well as trusts, holdings, asset management companies and any other institutions that are parties to financial transactions.
The LEI is issued upon receipt of an application from the legal entity and after proper confirmation of the data. It serves as a proof of identification for a financial entity for the organisation and aids in the business’s compliance with regulatory obligations. It also enables transaction disclosure to Trade Repositories.
LEIs assist firms in linking data sets together, hence boosting analysis. Building a comprehensive picture of a company by integrating its data might also make it easier for small enterprises to get financing.
What are the advantages of having a LEI?
Having a LEI number or LEI certificate instantly increases your worldwide reputation and trade credibility, which is beneficial in a variety of ways. Interested parties like investors, consumers, and future stakeholders may access critical LEI information in real time. The extra degree of protection that comes with knowing precisely who you are working with might also be advantageous to you.
Having a LEI will help you guarantee that your company complies with the 184 international legislation that require the use of a Legal Entity Identifier in various jurisdictions across the globe. The LEI may assist financial institutions in streamlining their onboarding processes.
The acquisition of a LEI may also be beneficial to organisations with several branches, since it helps them to identify between their various branches located across the globe. As one of the few identifiers that may reveal organisational structure inside a firm or group of organisations, the LEI provides us with the answers to the questions “Who is who, and who owns whom.”
Why companies should apply for a LEI?
- This ensures your continued existence as a legally recognised organisation.
- Compliant with LEI requirements on an international level.
- Passport for international business travel
- Improvements in the onboarding process for financial institutions
- LEI Certification is acquired.
- Transparency in the financial markets has been improved.
- Brand identity has been established.
- Requirements for submitting regulatory reports
- Digital Certificates may be customised to incorporate specific information.
Conclusion
Simply said, those who utilise the LEI number can be followed down and monitored by regulatory organisations, proving that they are legal, hence increasing openness between businesses. It also enables suppliers, stakeholders, and businesses to find their potential customers and assist them in confirming their real-time data via the platform.
If your organisation possesses an International Securities Identification Number (ISIN), you may now connect your LEI and ISIN codes together via a procedure called LEI to ISIN Mapping. You can find out more information on leiservice.com