Who needs an LEI number?
All legal entities – companies, fonds, organizations, unions, banks and insurance companies, operating with financial transactions, stocks, bonds, and other securities, need an LEI number.
Your bank is obligated to register your LEI number, before they do any trading on your behalf, meaning that they probably already gave you notice, if you needed one in your previous actions.
Where do I get an LEI number?
You can order your LEI number at LEI Service. All our solutions come with free support, both by phone and by email. The price of LEI numbers often depends on whether we talk about registration of a new LEI number or a renewal of your existing LEI number. At LEI Service though, we have chosen to offer the same low price, both for renewal and registration of a new LEI number. Discover our prices here.
Do I need an LEI number in the USA?
In USA, you need an LEI number if you:
- Got a company or another legal entity with a VAT-number, trading with stocks, bonds, or other securities and the subject to either the Dodd Frank Act, the Commodity Exchange Act (CEA) and the MiFID II directive that includes US companies trading with the EU.
- Got a legal entity without a VAT-number, trading with stocks, bonds or other securities and subject to the above-mentioned regulations.
Physical people and companies with sole proprietorship do not need an LEI number at this point.
When do you need an LEI number?
The United States accounts for nearly 14% of the world’s LEIs and operates under several regulations that require the LEI number. Those regulations include the Dodd Frank Act, the Commodity Exchange Act (CEA) and the MiFID II directive.
The LEI system has been implemented in more than 40 countries, including the entire EU, UK, and parts of the USA.
If you have a US company trading with securities, both locally and globally, you therefore may need an LEI number. The amount or value of the securities does not have any influence.
LEI Numbers: the background
The system behind LEI numbers was invented due to a request from the G20-countries, with the purpose of strengthening the global overview and control with the financial markets. LEI was created as a common standard and system of reference, consisting of data, making it possible to track transactions globally.
An LEI number consist of two levels of data:
- Level 1: Who is who?
Information such as the legal name of the entity, registration number, legal address, e.g.
- Level 2: Who owns who?
Relevant information, like the ownership of the company and the owner’s structure.
“Legal entity” as a term includes but is not limited to parties that are uniquely identifiable and either financially or legally responsible for financial transactions or (in their jurisdiction) have legal right to enter independently into legal contracts. This is regardless of whether they may be constituted or incorporated in any other way (e.g. trusts). The term legal entity also includes supranationals and governmental organizations. Natural persons are not included in the term legal entity.
National financial regulators regulate the legal requirements to obtain an LEI. A full list of regulatory initiatives concerning LEI adoption can be found here.
Banks and similar institutions must report on parties participating in financial transactions. This is in accordance with the current regulations. It is therefore possible for the bank to demand that you obtain an LEI code if you want to trade.
The LEI number is a requirement for all legal entities subject to The Commodity Exchange Act (CEA) or MiFID II and participating in financial transactions with financial instruments (e.g. stocks, bonds, swaps or futures). Most banks or investments firms will not permit you to trade if you do not have a valid LEI.
Trusts and charities are required to get an LEI code like other legal entities. If your trust, charity or other entity does not have a registration number, LEI Service can help you obtain an LEI number. Contact us at email@example.com to hear more about how we can help you get an LEI.