About LEI

The Legal Entity Identifier (LEI) has become an indispensable tool in the context of global financial market regulation. The LEI enables the transparent identification of legal entities and thus contributes significantly to the stability and integrity of the financial system. On this page, you will learn what exactly an LEI is, how it is structured, and how the LEI system works.

What is an LEI Number?

LEI stands for Legal Entity Identifier and is a 20-character alphanumeric code. This code was developed in accordance with ISO standard 17442. Each LEI is issued only once and therefore must be unique. The individual code is linked to key reference data that allows companies and legal entities in the global financial system to be clearly identified.
An LEI also provides information about ownership structures and answers the questions: "Who is who?" and "Who owns whom?"

While an international VAT number, which is used for global trade, is issued once and free of charge, an LEI must be renewed annually for a fee.
The LEI database is publicly accessible and serves as a global directory to increase market transparency.

Who Needs an LEI?

All companies that engage in certain types of financial transactions – particularly in the derivatives market – are required to obtain an LEI. This primarily affects companies and financial institutions active in the financial markets. These include:

• Banks and credit institutions, which use the LEI to identify parties in financial transactions.
• Investment funds: Asset management companies and fund managers must have an LEI for each fund.
• Insurance companies, which regularly trade financial instruments and must report their transactions.
• Investment service providers (brokers, dealers, and asset managers involved in securities trading): Reporting counterparties cannot trade listed securities without a valid LEI.

An LEI may also be required by non-financial companies, for example those entering into derivatives contracts to hedge currency or commodity risks. Export-oriented companies that work with international trading partners and need to meet transparency requirements may also need an LEI.

In general, obtaining an LEI is advisable for any company wishing to operate without restrictions in the global financial market.

How an LEI Works and Its Structure

The structure of the LEI ensures that each code issued is unique worldwide. This makes it a reliable tool for identifying legal entities.
The LEI is standardised under ISO 17442, giving it a uniform and globally recognised format.

Structure of the LEI Code

The LEI consists of 20 alphanumeric characters, including both letters and numbers. It follows a three-part structure:

• Characters 1 to 4: Identify the Local Operating Unit (LOU) – the issuing organisation that assigned the LEI.
• Characters 5 to 18: Unique identifier for the legal entity that received the LEI. These characters make the code unique to each company.
• Characters 19 to 20: Checksum digits used for validation and security, ensuring error-free identification.

The structure of an LEI looks like this:

What Information Does an LEI Contain?

The LEI code provides insight into two distinct levels of information about legal entities:

• Level 1: “Who is who?”
• Level 2: “Who owns whom?”

Level 1 Data
Level 1 data provides information about the identity of a legal entity. It includes the following key details:

• Official name of the company or organisation
• Registered business address
• Country of registration
• Legal form (e.g. GmbH, AG, Ltd.)
• Registration number (e.g. commercial register entry)
• Date of LEI issuance and expiry
• Issuing authority (Local Operating Unit - LOU)

Level 2 Data
Level 2 data answers the question “Who owns whom?” and offers insight into ownership structures. This helps in understanding economic dependencies and provides transparency around corporate structures and fund relationships. The data includes:

• Information about ownership and parent structures of legal entities
• Details of parent or subsidiary companies
• Information about umbrella funds and their sub-funds

Not all companies are required to submit Level 2 data. For instance, if a company has no parent entity or legal constraints exist, this obligation may not apply.

Origin and Development of the LEI System

The LEI system originated in response to the financial crisis of 2007–2008, which led to a significant loss of trust in global financial markets. At the time, one of the key issues was the lack of transparency regarding relationships and risks between market participants. As a result, systemic risks could not be identified in time, and effective responses to problems were delayed.

In response to the crisis, the G20 called for comprehensive reform of the global financial system. Two major objectives emerged: greater transparency and stronger oversight mechanisms.

In 2009, the Financial Stability Board (FSB) was established to monitor the stability of the global financial system and provide guidance. One of its initiatives was the introduction of the Global LEI System, allowing for the clear identification of legal entities. To manage and implement this system, the Global Legal Entity Identifier Foundation (GLEIF) was created.

How Is the LEI System Organised?

The Global LEI System was developed to enable transparent and standardised identification of legal entities worldwide. It supports early detection of financial risks, helps organisations meet regulatory requirements, and strengthens security in global trade. The system consists of three main components:

1. Regulatory Oversight Committee (ROC)
2. Global Legal Entity Identifier Foundation (GLEIF)
3. Local Operating Units (LOUs)

Regulatory Oversight Committee (LEIROC)
The Legal Entity Identifier Regulatory Oversight Committee (LEIROC) is an international body composed of representatives from financial supervisory authorities around the world. Its task is to establish regulatory standards and ensure that the LEI system complies with global financial oversight requirements.

Global Legal Entity Identifier Foundation (GLEIF)
The GLEIF is responsible for ensuring the operational stability, efficiency and transparency of the LEI system. It guarantees access to reliable data for both businesses and regulators, enforces global data quality standards, and continuously improves the system. Supervised by LEIROC, the GLEIF ensures that the LEI system is free from commercial influence and remains focused on global financial stability.

LEI Issuing Organisations: Local Operating Units (LOUs)
Local Operating Units serve as the main contact points for companies wishing to apply for or renew an LEI. Their services include:

• Registration of new LEIs
• Annual renewal of existing LEIs
• Updating and managing LEI-related information

Only organisations accredited by GLEIF are authorised to issue LEIs. To receive accreditation, LOUs must pass a strict review process assessing their capabilities.
Companies and organisations can apply for an LEI with any accredited LOU worldwide, regardless of the country in which they are based. The LOU must, however, be authorised to validate LEIs for the relevant jurisdiction.

Why Do I Need an LEI? Benefits for Companies and Regulators

The introduction of the LEI system has significantly enhanced both transparency and security in the financial sector. But what are the practical advantages of using an LEI? And how does it support day-to-day operations and trading?

Benefits for Companies

➤ Greater Transparency in Financial Transactions
With an LEI, companies can clearly identify their counterparties and avoid risky or fraudulent transactions. Partner information can be easily verified through the publicly accessible LEI database, increasing trust in financial dealings.

➤ Easier Compliance with Regulatory Requirements
Various financial regulations, such as MiFID II, EMIR, or the Dodd-Frank Act, require a valid LEI for entities operating in the financial markets. LEIs enable the automation of regulatory reporting processes, reducing administrative burdens.

➤ Reduced Risk of Fraud and Identity Theft
The LEI reveals a company’s ownership structure, making identity fraud more difficult. Businesses can ensure that their partners are genuine legal entities. GLEIF provides up-to-date, verified data to support informed decision-making.

➤ Support for Global Expansion
LEIs are internationally standardised, allowing companies to benefit from a consistent identification method worldwide. This facilitates cross-border business relationships.

Benefits for Regulatory Authorities

➤ Global Standardised Database for Market Surveillance
The LEI system offers a standardised global database accessible by regulators at any time. Authorities can compare and analyse company data internationally, helping to detect suspicious or illegal financial activities more quickly.

➤ Faster Detection of Systemic Risks
Because ownership structures are publicly available, regulators can identify systemic risks at an early stage. Complex corporate structures can be analysed more efficiently, and illicit activities like tax evasion or money laundering can be mitigated.

➤ Improved Enforcement of Sanctions and Regulations
The LEI system supports monitoring of companies under sanctions or regulatory scrutiny. With global entity identification, regulators can more effectively track non-compliant behaviour and implement targeted sanctions or penalties.

Apply for an LEI with LEIReg

An LEI enables your company to operate without restrictions in global financial markets.
LEIReg is an accredited LOU by GLEIF and guarantees fast, reliable LEI issuance. Register with LEIReg today and apply for a new LEI in just a few steps.

Apply for your LEI now