A Legal Entity Identifier (LEI) is a unique 20-digit code that identifies a distinct legal entity that is counterparty to a derivatives (swaps) transaction in the financial markets.

Objective

Until a globally valid LEI system has been set up, entities can obtain a so-called pre-LEI.

The pre-LEI will cover the activities of the distinct legal entity and any branch offices that it may have. A Branch office cannot have its own LEI.

At a later date, once the final LEI system has been agreed to by the regulators, existing pre-LEIs will be converted into permanent LEIs.

Why do you need a LEI?

All counterparties to derivatives transactions in the European Union are expected to have a LEI for reporting to trade repositories under the European Market Infrastructure Regulation (EMIR). Likewise, the LEI can be used for trading and trade reporting purposes in the United States.

Whilst the LEI will clearly assist the regulatory authorities in monitoring and analysing threats to the stability of the financial markets, it can also be utilised by counterparties internally for risk
management purposes.

How to get a LEI?

To obtain a LEI you must register with an authorised LEI issuer. They will carry out a validation check on the information provided and, assuming validation is successful, issue a pre-LEI.

Time line

As the regulatory authorities have not yet agreed on a standard LEI that can be used globally, at the moment entities can only obtain what is being referred to as a pre-LEI.

LEI: the highlighted parts of the value chain are affected