LEI Code explained: Your key to global trade
Discover the importance of an LEI code and how it can be the key to navigating the complex world of global trade. Read on to learn how this unique identification code can ensure transparency and efficiency in your financial transactions.
What is an LEI code?
A Legal Entity Identifier (LEI) code is a globally unique 20-character identification code consisting of both digits and letters. The code is used to identify legal entities engaged in financial transactions such as shares, bonds and other securities. The codes are managed by international LEI registrars authorized by the Global Legal Entity Identifier Foundation (GLEIF). The LEI code was introduced in January 2018 when a new EU directive came into force.
Why are LEI codes important?
LEI codes are important because they provide transparency and efficiency in financial transactions. By having a globally unique identification code, different parties in a transaction can quickly and reliably identify each other and engage in trade.
LEI codes also help prevent financial crime. By having a clear identification of the legal entities involved in a transaction, it can be easier to detect and prevent illegal activities such as money laundering.
In addition, LEI codes are also important for regulatory compliance. Many countries have introduced requirements for the use of LEI codes when reporting financial transactions. Ved at have en LEI-kode kan virksomheder sikre, at de overholder de gældende regler og undgår bøder.
How do you get an LEI code?
To obtain an LEI, a legal entity/company must register with an authorized LEI registrar. Registratoren vil indsamle de nødvendige oplysninger om virksomheden og ansøge om en LEI-kode på dens vegne. Når registreringen er godkendt, vil virksomheden modtage sin unikke LEI-kode, som kan bruges i alle fremtidige finansielle transaktioner.
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It is important to note that LEI codes must be renewed every year to remain valid. If an LEI code expires or is not renewed on time, it can cause problems and delays in financial transactions.
Frequently asked questions about LEI codes
I just got my LEI code, can I trade immediately?
The GLEIF database is only updated once a day, so it is possible that your bank will not allow you to trade until they have confirmed it with the GLEIF database, even if the LEI is valid.
Is LEI data publicly available?
Yes, it is. GLEIF (Global Legal Entity Identifier Foundation) publishes the Global LEI Registry, which contains information on all LEI codes issued to date.
Is the LEI code the same for all types of assets?
A Legal Entity Identifier (LEI) is a unique code that identifies a specific legal entity. It is not a code that identifies financial instruments.