Do I need an LEI when selling shares?
When you’re looking to sell shares, a Legal Entity Identifier (LEI) is something you’ll need. In this article, we’ll discuss everything you need to know about this important identifier and how it benefits your business.
What is a Legal Entity Identifier (LEI)?
A Legal Entity Identifier (LEI) is a unique code required by any legal entity that invests in financial instruments through a regulated exchange (this includes shares, bonds, collective investment schemes, derivatives, and more). When the legal entity executes a transaction, this identifier is used to identify it.
How is a Legal Entity Identifier used in selling shares?
LEI code is needed for making transactions (purchase and sale, on and off trading venue) with instruments traded on a trading venue (shares, bonds, ETF-s, and derivatives).
An LEI code allows businesses to quickly and accurately identify one another for the purposes of financial transactions. It also makes it easier for regulators to track the financial activity of the market participants, minimize financial fraud and assess risk within the global financial system.
The LEI of legal entities is public and includes data about the company’s registered and trading names, company type, registered address, registration number, parent company information, and child company information. You’ll be able to access the LEI reference data publicly and for free via LEI Search.
Why does my business need a Legal Entity Identifier?
If you plan to sell shares or invest in any financial instruments through a regulated exchange, you will need to obtain an LEI code.
This requirement is in place to help ensure the stability of global markets and to protect investors from fraud and other risks.
Selling shares and investing as a business entity comes with a lot of responsibilities – and obtaining an LEI code is among the first priorities.
What is a regulated exchange?
A market that is regulated is one in which the government, industry, or labor organizations have a level of oversight and control. Market regulation is frequently handled by the government and includes determining who may enter the market and what prices they may charge.
Some examples of regulated exchanges include the New York Stock Exchange and the London Stock Exchange.
How do I get a Legal Entity Identifier for my business?
You can apply for an LEI code through any number of LEI issuers that are accredited by the Global Legal Entity Identifier Foundation (GLEIF). Once you have obtained your code, you will need to renew it every year.
What are the benefits of having a Legal Entity Identifier code?
There are many benefits to having a Legal Entity Identifier code, including:
– The ability to quickly and accurately identify other businesses for the purposes of financial transactions
– Makes it easier for regulators to track financial activity and assess risk
– Helps ensure the stability of global markets
– Protects investors from fraud and other risks.
Who issues LEI codes for legal entities?
In response to the 2008 Global Financial Crisis, in 2011, a Group of Twenty (G20) commissioned the Financial Stability Board (FSB) to provide recommendations for a worldwide Legal Entity Identifier (LEI) and governance structure.
This led to the creation of the Global LEI System (GLEIS), which through the issuance of LEIs, provides unique, standardized identification for every legal entity or structure that is a party to a financial transaction.
An LEI issuer is an organization that has been accredited by the Global Legal Entity Foundation (GLEIF) to issue Legal Entity Identifiers.
Regulatory Oversight Committee
The LEI Regulatory Oversight Committee (ROC) is a global group of public authorities formed in January 2013 to coordinate and oversee the Global LEI System, a worldwide legal entity identification framework. As the supervisor of the Global Legal Entity Identifier Foundation, the ROC ensures that GLEIF keeps to the principles of the Global LEI System as it exercises its
Global Legal Entity Foundation
A non-profit firm, the Global Legal Entity Identifier Foundation (GLEIF), was created to assist in the implementation and use of the LEI. GLEIF runs operations within the worldwide LEI System.
Local Operating Unit
The LEIs are assigned by authorized bodies known as Local Operating Units (LOUs). On the GLEIF website, you’ll find a list of LEI issuing organizations.
In order to further streamline the LEI issuance process, GLEIF developed the notion of the Registration Agent (RA). Their duty is to assist legal organizations like you in obtaining an LEI code. The effectiveness of RA’s systems is determined by how well they are able to make things easier for their customers while also simplifying and accommodating the LEI registration process.
LEI issuing organizations’ Registration Agents are listed under each LEI issuing organization’s basic information on the GLEIF website.
LEI Register – The Global Leading LEI Registration Agent
LEI Register has been an official Registration Agent since early 2018 when we started assisting legal entities in applying for new LEI codes or transferring and renewing existing ones.
We’ve successfully completed our mission of making LEI registration quick, efficient, and inexpensive.
By offering the lowest prices available and providing day and night customer support in a local language on 35 different continents, the LEI Register has cultivated a loyal client base.
We verify your registration information with our GLEIF-accredited partner LOU RapidLEI (Ubisecure Oy).
How much does an LEI cost?
The GLEIS has been set up in a way that LEI costs can vary depending on the service provider (LOU and RA). Because the number must be updated yearly – and these expenses will gradually accumulate – we recommend paying close attention to the price and prioritizing it when registering an LEI code.
Obtaining an LEI number cost can easily double between different service providers. Since the number needs to be updated yearly – the costs will start to add up. For this reason, we encourage you to pay close attention to the price and take it as the primary factor when registering an LEI code.