The rise of the LEI: Why the Legal Entity Identifier is becoming increasingly important

8 June 2023

The Legal Entity Identifier (LEI) plays a central role in identifying legal entities in the global financial world. This unique 20-digit alphanumeric code facilitates the tracking and management of basic information about companies, investment funds, government agencies, and other organisations. The assignment of this unique code improves transparency and consistency in the capital markets. The standard for this identifier is defined in ISO 17442.

What is an LEI (Legal Entity Identifier)?

An LEI is necessary for companies that participate in financial transactions. This code precisely identifies legal entities, improving the quality of financial data. The Legal Entity Identifier includes important company data, such as parent companies and significant corporate events.

Why is the LEI gaining in importance?

The increasing importance of the LEI system can be attributed to global regulations such as MiFID II, which make using an LEI mandatory for trading. Over 200 regulations worldwide either require or recommend the use of an LEI. Thanks to these regulations, there are now over 2.3 million LEI numbers worldwide. These regulations help companies simplify their compliance with global financial standards.

The growing importance of the LEI in financial transactions

The use of LEIs is expected to increase further, especially in cross-border transactions. The advantages are obvious: greater transparency and security for all parties involved. The LEI standard will continue to establish itself in the future as the requirements for global financial transactions are constantly increasing.

Conclusion: Legal Entity Identifier as an indispensable tool

The Legal Entity Identifier (LEI) is an indispensable tool for companies participating in the global financial markets. With its growing importance and numerous regulations, the LEI will certainly play an even greater role in the coming years. Companies should consider LEI registration at an early stage to benefit from greater transparency and better data quality.