03 Dec All you need to know about LEI
The International Organisation for Standardisation(ISO) developed a twenty digit, alpha-numeric code to provide the ownership structure and help participants in a financial transaction with a company understand the structure of the organisation and if the entity is still active or not.
3rd January 2018, saw a major step in the digital business as the European Union made it mandatory for investment firms to obtain LEIs from their clients. This move has given immense importance to LEI database search for this is the first step for any investor to check the credibility before investing.
Why is an LEI (Legal Entity Identifier) vital?
- LEI provides an idea about a company in terms of authenticity, thus giving credibility.
- LEI give you an idea of whether financial investments can be done or not.
- LEI data gives you information all legal information about the company helping you from avoiding being duped financially.
- The cost to individual companies is reduced as this regulated method reduces the costs for data cleaning and maintenance, additionally in reporting to regulatory authorities.
Why is an LEI search important?
- The publicly available LEI data is a global directory with all the information enhancing transparency in the global market.
- With information on LEI at tips of your hand, fraudulent activities can be curbed to a great extent.
- The rollout of LEI supports higher quality and accuracy of overall financial data.
- The database search is user-friendly and hassle-free.
- The LEI search is similar to Google search and is quick in producing the correct results.
The LEI database a global database linked to multiple regional databases and is constantly monitored by experts. It is ensured that the data is regularly updated and is authentic. Adopting LEI helps the business community a lot in terms of investment and profits.
There are many certified websites that help in indexing and provide investors with an updated database for indexing and searching the LEIs.
How to Search for an LEI?
- Enter the name or code of the company you want to information on.
- The online tool/website will search its database and will display a list of matching results.
- These results are also downloadable in excel, csv or pdf format.
Who needs LEI?
- It is a global identification number and the ones who trade globally and wants to build trust with their customers and their funders should have LEI.
- An LEI can and should not be requested for individuals or operating divisions.
- Banks and financial institutions
- Investment funds
- Insurance companies
- Securities service providers
Structure of LEI
In the following ways a 20 digit alphanumeric LEI is formed:
- The first four digits identify the Local Operating Unit (LOU) that issued the LEI.
- The fifth and sixth characters are always set to 0. They are reserved characters.
- The next 12 characters consist of both digits and letters. The combination is unique and assigned by LOU according to transparent and robust allocation policies.
- The last two digits are check digits as described in the ISO 17442.
How do you get an LEIs?
- LEI’s are issued by Local Operating Units (LOU). There are a lot of LOUs and they provide an easy 3 step registration process.
- The LEI data is registered and regularly verified according to protocols and procedures established by the LEI Regulatory Oversight Committee (LEI ROC).
- A search function is available where users can check if an entity has LEI.
- After choosing an LEI issuer, the applying entity should submit a request to that issuer; provide the legal entity reference data, address, name, legal form and parent owner of the entity.
- Then verify the submission and pay for the LEI code.
- After the above procedure is finished and duly verified an LEI number is released.
Conclusion
Given that the world is transitioning into a digital era and more tools are being developed to avoid financial fraudulence, to bring in transparency and slowly move into a phase that provides better global business in a secured financial environment which is economical and environment free. LEI is one such move towards digitalisation, financial transparency and security.
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