LEI stands for Legal Entity Identifier and is used to identify companies that are active on financial markets. It is an alphanumeric code consisting of 20 characters and guaranteeing transparency and security between the various financial parties, thus enabling traceability of the transactions. More information about the LEI on the GLEIF website.
GS1 Belgium & Luxembourg
The issuing of an LEI is subject to strict regulations. Only organizations having successfully passed an accreditation process of the Global Legal Entity Identifier Foundation (GLEIF), are entitled to issue LEIs. These parties are called Local Operating Units (LOUs). GS1 Germany obtained the status of LOU in February 2017. All requests are sent to them and they will assign the LEI.
For companies who are trading in derivatives and who are requested to notify this activity in compliance with the EMIR (European Market Infrastructure Regulation) the LEI is mandatory since 12th February 2014.
Starting 3rd January 2018 the application area of the LEI will however largely expand in conformity with the new European MiFID II/MiFIR regulation (Art.26 of Regulation nr.600/2014).
As off the beginning of next year, European financial institutions must indeed notify their supervisor of all transactions carried out by their customers-legal entities involving specific financial instruments. For the Belgian banks this supervisor is the FSMA, the Authority for Financial Markets and Services.
As a result, Europe had developed new identification requirements. These apply to each legal entity active in trade of financial instruments being offered on a trading platform (or underlying products being exchanged on a platform), such as shares, bonds, warrants, state loans, warrants, state loans and state notes. This new measure does not apply to some investments, investment insurances, term deposits, deposits and savings certificates.
This compulsory identification applies to purchase and selling transactions (including beyond stock exchange), some specific transfers, voluntary corporate actions and donations.
What does this imply for you as a company ?
All legal entities wishing to purchase or sell one of the abovementioned financial instruments, is required to identify itself by an LEI. The legal entity is in charge of obtaining its own LEI.
Individuals and company departments without legal autonomy do not require an LEI.