Security and credibility on the Internet has never been so important as it is nowadays. Companies try to increase their credibility in many ways in order to gain the trust of potential customers. Likewise, many companies try to verify their potential contractors in terms of their credibility. In many of these respects, companies and individuals relied on their own sources of verification. There was no unified standard that would guarantee the possibility of verifying the company and its actual existence. For this purpose, a global standard was created, known as the LEI. LEI (Legal Entity Identifier) is a 20-character alphanumeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO). This code contains key reference information that allows the clear and unambiguous identification of the legal entities involved in financial transactions. Each LEI code contains information about the entity’s ownership structure and who manages or owns the entity. In other words, publicly available LEI data can be thought of as a global directory of company information, which greatly increases transparency in the global marketplace. LEI is a guarantee of the company’s credibility and transparency in financial processes.
As of 2018, the LEI code is required for transactions on financial markets. This applies to both trading in shares (buy/sell) as well as in the case of dealing with bonds, guarantees/government bonds and other derivatives. In many cases, the lack of an LEI prevents this type of transaction and reporting activities.
The LEI code is mandatory for:
- banks,
- brokers,
- financial and credit institutions,
- financial intermediaries,
- investment funds,
- pension funds,
- and for any other institution, entity and persons required to have an LEI code.
Having an LEI code also speeds up the generation of SSL certificates in OV and EV validation due to the lack of the need for additional verification.
