If your company is involved with financial transactions, having an LEI number is essential. In short, an LEI (or Legal Entity Identifier) is a code that identifies companies that are active in the European financial markets. According to the EU directives MiFID II, MiFIR and EMIR, all companies that are involved in financial transactions are now required to have a valid LEI number.

Why your company needs an LEI number

An LEI number is a unique 20-digit code used to identify legal entities that are active in the financial markets. The Global Legal Entity Identifier Foundation, or GLEIF for short, is the organization behind the system. All registered LEI codes can be accessed in the GLEIF database at GLEIF.org.

The LEI system allows relevant authorities to track and follow companies and organizations that trade in stocks, bonds, and derivatives. The authorities are able to track all the parts involved in each transaction, allowing for more transparency and security in the financial markets. If your company or organization engages in any type of transaction, you need to register an LEI code for the reasons below.

Compliance: According to MiFiD II and MiFiR, which went into effect in January 2018, any company or organization that is active in the financial markets is required to have a valid LEI. If your organization does not have a valid LEI number at the moment, EU national authorities can – and most likely will – reject your transactions.

Transparency and legitimacy: In today’s global world, it is important to be able to be identified. When you have a Legal Entity Identifier number, anyone can identify and confirm that your organization is real and legit. Before the LEI system was introduced, it was much harder to identify organizations, and the level of transparency has improved significantly because of it. All LEI numbers can be found in the GLEIF database, which is open and available for anyone to use.

If you are looking for registering an LEI, the process is quick and easy. You can obtain an LEI number online on sites such as LEI Certificate Germany, and it will be active within a few days. Additionally, the cost attached to obtaining and keeping an LEI number is low. The price for registering an LEI code can vary depending on the registration agent you choose, and the only fixed fee is an annual GLEIF fee of $11 a year.

Your LEI number is a 20-character, alpha-numeric number that is unique to your company or organization, based on the global ISO 17442 standard. Once you have registered and obtained your LEI number, your legal entity will be registered in the GLEIF database.

If you haven’t registered an LEI number yet, you should consider doing it as soon as possible. According to the new EU regulation, you are not allowed to participate in financial transactions in the European markets until you have one.