What is LEI?
Basic information
LEI – an identification number for legal entities (Legal Entity Identification number).A unique identification code for companies trading on financial markets (with shares, bonds, futures, foreign exchange, etc.).Each transaction carried out on the financial markets is linked to the trading partner via an LEI number.LEI codes are used by regulators to monitor financial markets.LEI codes link financial markets, companies and regulators.LEI numbers are issued by GLEIF-accredited LOUs.GLEIF – Global Legal Entity Identifier Foundation.NO TRADE WITHOUT LEI.
The advantages of an LEI code
The capture of customer data is probably the biggest advantage of the LEI number. Previously, ID cards had to be copied manually and checked for accuracy, which was a lengthy process considering the times. In addition, a lot of data was needed to ensure the secure path of a stock purchase. The concept of LEI numbering leads to an improvement of the process. With the help of digitization of the various steps, only a small online form is required today. Similarly, the updating, extension and deletion of company data are now subject to a functional system that can keep up well with the rapidly evolving international financial markets.
Open and transparent data minimizes the risk of an international financial transaction. This makes it easy to see who the trading partner is and what they represent. This provides security that did not exist in this form before the LEI number.
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Structure of a LEI code
An LEI number is standardized via ISO certificate 17442. It consists of a combination of 20 digits and letters
The digits 1-4 always indicate the ID of the LOU that issued the LEI.
The digits 5-6 always have the value 0.
Digits/letters 7-18 are unique for each entity.
The digits 19-20 are used for verification.