The Legal Entity Identifier (LEI) is a globally verifiable identity code that contains a combination of twenty letters and numbers. It is unique to every legal entity. The LEI contains a record of an entity with its identity and group structure, name, address and where it is registered, as well as whether the entity has branches or is owned by another company.
The LEI allows such entities to be identified on a global database searchable by numbers instead of by name. It is a way of identifying market participants on a single, standardised database and offers accurate data about a company that is accessible and completely free of charge to use.
To date, there have been over 1.6 million LEIs created globally, and it is quickly being adopted as a global standard in business transactions. For many companies within the global financial system, it is now also a legal requirement.
One of the main benefits of having an LEI number is that it provides international recognition and enhances trading credibility. With this, the investors, customers and potential stakeholders can locate essential data in real time. Furthermore, the entity would know exactly who it is dealing with.
Who Needs to Obtain an LEI
The use of an LEI is required by Maltese entities when trading within the EU, USA or a few other countries.
The Mifid II directive was introduced for European entities that trade in securities along with EMIR. These regulations stipulate that the EU, including Maltese registered businesses, will be required to report an LEI when trading abroad.
In general, it is a requirement for the below entities. The list, In general, is a requirement for the below entities. The list, however, is not exhaustive.
- Entities involved with financial transactions
- Financial intermediaries
- Funds and trusts
- Banking institutions and financial institutions
- Any legal entity that is listed on a stock exchange
- Entities that trade derivatives; that issue or trade debt, securities or equities; trading in pension schemes, commodities, contracts for differences, securities transactions, investment vehicles, mutual and hedge funds
- Entities that trade with an EU licensed broker
- Entities that are supervised by a financial regulator and their affiliates, subsidiaries and holding companies
The LEI numbers are becoming more popular and entities are realising what benefits they can offer (such as streamlining banking processes and making them more efficient). A number of entities now choose to obtain an LEI even if this is not a legal requirement in their country.
Obtaining an LEI
Whether you are a financial institution acting on behalf of your clients or require an LEI for your company, you can obtain an LEI at www.lei-worldwide.com. The process is very simple and if you require any advice, please do not hesitate to contact Integritas for help and assistance, according to your specific needs.