Legal Entity Identifier

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A Legal Entity Identifier ( acronym : LEI ; German: Legal entity identifier ) is a globally unique identifier for legal entities in the financial market , which was introduced in 2012.

According to the European Financial Market Regulation MiFIR (Markets in Financial Instruments Regulation), investment firms that conduct transactions in financial instruments must report every transaction in financial instruments to the supervisory authority responsible for them, regardless of whether or not it was concluded on a trading venue. In particular, the reports must contain the name and number of the financial instruments acquired or sold, the volume, the date and time of the transaction, the price and information to identify the clients on whose behalf the investment firm concluded the transaction. With regard to customer identification information, investment firms use a Legal Entity Identifier (LEI), which was introduced to identify customers who are legal entities .

This means that every form of organization that is entered in the commercial, association or foundation register and that buys, sells or issues financial instruments (i.e. shares , bonds, etc.) is obliged to have an LEI, even if trading in these financial instruments is not the actual business of the organization, it is all about parking excess cash.

Criticism of the implementation in practice

Banks clearly distinguish between private and business customers when it comes to account management, but for business customers there is no clear note in the customer master data of a number of institutes as to whether the business customer is also a legal entity. For this reason, partnerships that are not registered in the commercial register are often required to report an LEI as a prerequisite for keeping a securities account, although the ordinance does not actually require this.

Another point of criticism relates to the costs associated with the LEI registration, which are not only charged for the first application, but as an annually recurring fee. Already now there is a duplication of effort and costs for practically all companies, since the disclosure obligation and the obligation to submit an electronic balance sheet cannot be satisfied in the form of a joint report. With the annual fee for maintaining the LEI registration, there is now a third cost item. This is all the more absurd since the processing in all three cases is the same company, e.g. B. the Bundesanzeiger GmbH, can be commissioned, so there is actually no reason from the distribution of responsibilities to require three reports to be submitted separately each year.

Structure of the LEI

An LEI entry must contain at least:

  • Company / name of the legal entity in official notation,
  • Address of the main office ,
  • Address at establishment,
  • Date of the first LEI issue,
  • Date of the last change to the LEI entry,
  • Date of the expiry of the LEI entry (if no longer valid),
  • Reference to the identifier in the commercial register (if applicable),
  • LEI code: a twenty-digit, alphanumeric code
Structure of the LEI code
1 2 3 4th 5 6th 7th 8th 9 ... 18th 19th 20th
LOU
code 		separation
voltage 		Entity
identification 		test
total
RWE AG (CICI, awarded before November 30, 2012)
M07J9MTYHFCSVRBV26 31
GE Financing GmbH (CICI, award after November 30, 2012)
5493 00 84UKLVMY22DS 16
Sparkasse Bremen AG (GEI, award after November 30, 2012)
5299 00 9D9BIL4D4UHT 93
City of Cologne (LEIReg, award after November 30, 2012)
3912 00 01LYGX6JEVCV 44

The twenty-digit LEI code is the legal entity identifier in the narrower sense. This code must be globally unique and is assigned without speaking parts . For example, LEI codes issued in Germany deliberately do not contain the ISO country code "DE" in order not to make the code invalid if the company moves. The last two digits of the LEI code are check digits . The LEI code is composed as follows and described in the table:

Prior to November 30, 2012, codes based on this model were only issued as CICI ( CFTC Interim Compliant Identifiers ). The codes assigned there have the following structure:

  • 18-digit identification of the legal entity, unique within the CICI (consisting of capital letters and / or numbers)
  • 2-digit checksum , which is formed according to ISO 7064 (Modulo 97-10).

Since December 1, 2012, different approved Pre Local Operating Units (Pre-LOUs) have issued Pre-LEI codes in the following structure:

  • 4-digit code for Local Operating Units (LOUs) that are regionally responsible for the allocation (consisting of digits, e.g. 5493 for the CICI, 5299 for the GEI portal or 3912 for the LEIReg portal)
  • 2-digit separation, temporarily reserved (currently consisting of zeros)
  • 12-digit identification of the legal entity, unique within the LOU (consisting of capital letters and / or numbers)
  • 2-digit checksum , which is formed according to ISO 7064 (Modulo 97-10).

Award

The LEI is issued by a Local Operating Unit (LOU), i.e. a registration organization that has been approved by the Global Legal Entity Identifier Foundation GLEIF. GLEIF was in turn founded by the Financial Stability Board to regulate the issuance of LEIs. The current status of the registration organizations approved for a country can be found in a table that can be downloaded from the GLEIF website.

In Germany, Austria and Switzerland (as of March 22, 2018) the following organizations are approved for issuing LEIs to companies based in these countries:

LOU service Award for
Germany Austria Switzerland
LEI register LEI register X X X
Bloomberg Finance LP Blomberg LEI X X X
Bundesanzeiger Verlag LEIReg X X X
Business Entity Data BV GMEI utility X X X
Central Securities Depositary Prague CSD CSD LEI ​​service X X X
EQS Group AG LEI MANAGER X X X
GS1 Germany GmbH LEI direct X X X
Irish Stock Exchange Plc LEI services X X
Krajowy Depozyt Papierów Wartościowych SA (KDPW) KDPW / LEI X X X
Swiss Confederation - Federal Statistical Office LEI Switzerland X
London Stock Exchange LEI Limited LSE LEI Services X X X
WM data service WM LEI portal X X X

history

Before 2012 there were no Legal Entity Identifiers (also known as LEI codes or numbers, or simply LEIs). Instead, each country used its own codes and systems to track financial transactions. As a result, it was hardly possible to identify commercial transactions on the world market. It was therefore very difficult for market participants and private consultants to assess risks and dangers both for individual companies and for the entire market.

In September 2008, Lehman Brothers filed for bankruptcy, exacerbating the global financial crisis . At the G20 summit in Pittsburgh in September 2009, the heads of state and government of the leading industrial nations decided, among other things, to strengthen the structures for regulating the financial market and to standardize them internationally. The Financial Stability Board (FSB) was entrusted with the implementation .

In January 2012, the Regulatory Oversight Committee (ROC) for the Global Legal Entity Identifier System (GLEIS) held its founding meeting. The members of the ROC are seconded by regulators and other qualified organizations. A total of 70 organizations from different countries are represented among the members and observers. The ROC meets at intervals, in between the work is driven forward by the permanent Committee on Evaluation and Standards . The ROC secretariat is located in Basel . In November 2012 the FSB published the charter for the ROC.

In May 2012, the LEI structure was published as the ISO 17442: 2012 standard (“Financial Services - Legal Entity Identifier (LEI)”).

The final system of LEI allocation will consist of a multi-stage process, with various organizations of regional and global responsibility. Until this system has been established, the LEIROC has decided that so-called preliminary issuing bodies (pre-LOUs) will be responsible for issuing LEIs. There are a number of different issuing offices, which can be accessed on the LEIROC website.

Web links

Individual evidence

  1. ↑ Art. 26, Paragraph 1 of Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No. 648/2012
  2. ↑ ibid .: definition in Art 26, Paragraph 2 a) -c) .
  3. ↑ ibid .: Art 26, Paragraph 2, last sentence .
  4. ↑ ibid .: Art. 26 para. 3 .
  5. ↑ ibid .: Art. 26 Paragraph 6 .
  6. ↑ Financial Stability Board (Ed.): A Global Legal Entity Identifier for Financial Markets, June 8, 2012.
  7. ↑ CICI factsheet at the CFTC
  8. ↑ a b LEI ROC (Ed.): Endorsed Pre-LOUs of the Interim Global Legal Entity Identifier System (GLEIS) on the LEI ROC website . (Accessed January 20, 2015)
  9. ↑ Explanation of the calculation of the checksum
  10. ↑ GLEIF website
  11. ↑ GLEIF - approved registration organizations ( Memento of the original from March 22, 2018 in the Internet Archive ) Info: The archive link has been inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (LOU) @1@ 2Template: Webachiv / IABot / www.gleif.org
  12. ↑ LEIRegister website
  13. ↑ The History of the Legal Entity Identifier System and the LEI ROC. German LEI, accessed June 2, 2020 .
  14. ↑ G20 Leaders Statement: The Pittsburgh Summit , September 24-25, 2009, Pittsburgh.
  15. ^ Inaugural meeting of the Global Legal Entity Identifier (LEI) Regulatory Oversight Committee (ROC) . January 28, 2013.
  16. ↑ LEI-ROC website (accessed January 2013)
  17. ^ Financial Stability Board (Ed.): Charter of the Regulatory Oversight Committee for the Global Legal Entity Identifier System . 5th November 2012.
  18. ↑ ISO 17442: 2012 on the ISO website