Saturday, 23 September 2023 13:33

Who needs an LEI code?

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What is an LEI and why is it important for legal entities dealing with financial transactions, shares, bonds and other securities to have one? In this article, we will explore who should have an LEI and why it is essential to fulfill regulatory requirements and ensure transparency in the financial markets.

 

What is an LEI code?

An LEI, or Legal Entity Identifier, is a global standard code that identifies legal entities that participate in financial transactions. The code consists of 20 alphanumeric characters and serves as a unique identification number for companies and organizations. The LEI code is used to improve transparency and monitoring of financial markets and helps identify risks and potential conflicts.

Who is required to have an LEI code?

All legal entities that engage in financial transactions, shares, bonds and other securities are required to have an LEI code. This includes, for example:

  • Companies
  • Funds
  • Organizations
  • Associations
  • Banks
  • Insurance companies

When was an LEI required?

Since January 2018, all companies in the EU have been required to have an LEI in order to buy or sell shares and bonds. An LEI has been required for derivatives trading since November 2017. The LEI system is implemented in more than 40 countries, including the entire EU and part of the US.

When to apply for an LEI code?

It is important to apply for an LEI before you engage in any financial transactions, shares, bonds or other securities. You must have a valid LEI to comply with the laws and regulations in this area. It is recommended to apply for an LEI as early as possible to avoid delays or problems with your financial activities.

Remember that your LEI must be active and up to date. You must renew your LEI code annually to ensure it remains valid and correct. If there are any changes to your company information, you will also need to update your LEI.

6 benefits of having an LEI code

  1. Global identification: An LEI code gives you a global identification, making it easier for other companies and institutions to identify and trade with your company in the global financial market.
  2. Regulatory compliance: Many laws and regulations now require the mandatory use of LEI codes as a step towards greater transparency and risk management within the financial sector. By having an LEI code, you ensure that your business complies with these legal requirements.
  3. Better risk management: An LEI code helps improve risk management within the financial sector. By identifying and tracking companies and institutions through LEI codes, you can better understand and assess the risk in financial transactions.
  4. Efficient trading: With an LEI code, your company can easily and efficiently trade with other companies and institutions in the global financial market. An LEI code ensures a quick and reliable identification of your company, which can help facilitate trade and transactions.
  5. Increased trust and credibility: By having an LEI code, your company shows that it is serious and professional in financial transactions. This can increase trust and credibility with your business partners and customers.
  6. Easy access to information: An LEI code gives you easy access to important information about other companies and institutions in the global financial market. Using an LEI code, you can quickly and easily access information about the company's legal structure, ownership and other relevant information.
 
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