Importance of LEI

Importance of LEI

LEI refers to a Legal Entity Identifier and is a unique identifier for any legal entity, like a trust, fundor limited company, or association. The LEI code is a combination of 20 numbers and 20 letters that is an alpha-numeric number. The code is used to determine the identity of the entity on an international database of entities. The entities are searchable by numbers instead of names, as several entities might be similar or have the same names. This LEI code is provided according to ISO (International Organisation of Standardization) benchmarks. The LEI number is now an official requirement in the global financial systems of several businesses. Today, many businesses trade in the world’s financial market.

The LEI document for the business must contain public information such as address, name and the location where they are registered, as well as information on the branch, if it has one or if it’s owned by a different parent company. As of now, over 1.8 million LEIs are made available worldwide. The technology is growing as a standard worldwide to conduct a business transactions at a global scale.

Market players of different sizes are recognized through the LEI code that is stored in one database that is standardized. This allows accurate data for an organization to be available and is free of cost.

What is the importance Legal Entity Identifiers (LEI):

Aids in avoiding problems prior to identifying the counterparty that has no digital presence. Digital absence was extremely difficult during the global financial crisis of a decade ago.

With the advent of the LEI code Financial institutions now have the position of determining huge amounts of funds and entities. In addition the code, they have solved the complexities of the assessment of risk and transparency.

The G20 has established an LEI codes system during 2011, and has made sure that it will not be a burden for the people who were prevalent in the past.

LEI code is helpful in creating an electronic database where every legal entity is readily accessible, accurate and up-to-date. It is an information centralized resource and is capable of obtaining high-quality information. The database is accessible through LEI, the LEI Search tool.

The LEIs code assists companies to link data sets and enhancing their analysis.

It is also required to create an accurate picture of the business by connecting the data, since it can help small businesses to get access to finance.

Who oversees this system?

Identification of legal entities is governed by ROC by GLEIF. GLEIF i.e it is known as the Global Legal Entity Identifier Foundation. Even the use for regulatory purposes of LEI codes is mostly managed by the local and the jurisdictional authorities.

Different benefits of getting the LEI technology:

Uniqueness and Singleness

This LEI code system recognizes that for an entity that is legal, only one identifier for a legal entity is able to be assigned. Furthermore, the LEIs are not able to be operated more than one time.


It is the Legal Entity Identifier system is insensitive to the changes that occur during the course of the life of an entity. If the company entity is completely dissolved by closing or merger or totally subsumed in another business entity, the original identification code must remain in its current position.

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