Today, there are quite a few LEI code providers on the global market. All providers are similar in that they have to be approved by GLEIF, they have to offer a platform to register, renew and move LEI codes, and they are responsible for obtaining and validating company data for their customers. But that’s where the similarities end. There are major differences between LEI code providers and what they offer you as a customer.
You may question whether it’s worthwhile thinking about what you get when you buy an LEI code. As a business owner, you are required by law to acquire an LEI code if you trade in securities. In Denmark, it has been mandatory for all companies to have an LEI code since 2018. Most people consider it to be a necessary evil, and they go for the cheapest LEI code on the market.
However, take a moment to think about this: if you are required by law to renew your LEI code every single year - and you are as long as you have a business dealing in securities - then you’re forced to spend time and money on it. Why not choose a provider where you get a little more for your money than just an LEI code? Why not choose a provider that makes it as easy and convenient for you as possible?
The quality of LEI providers
If you just want a cheap LEI code and you’re fine to renew it yourself once a year, there are plenty of providers out there to choose from. They have neither the technical capabilities nor the ambition to offer you any other services, which is fair enough as long as you’re okay with it.
But maybe you’re looking for a bit more than that. There are LEI providers around that offer you more than just an LEI code. Their service includes ongoing automatic updating of your LEI code once they obtain your company information through the local business registries. This means that you don't have to worry about updating your information in multiple places yourself. They also remind you when it's time to renew your LEI code and offer to do it for you at no expense to you.
This way, you save time and effort. If you choose a validity period of 3 or 5 years, you can also save money. But check your provider's financials before you buy a long validity period. A provider with poor financials may be in imminent danger of bankruptcy and contemplate selling your LEI code to a third party.
Long story short, what separates a good LEI code provider from a bad one is the service they offer you in addition to the LEI code itself.
Checklist for choosing an LEI code provider
Before picking an LEI code provider, you should consider asking the following questions:
- Is my provider registered through GLEIF?
- Does the price of my LEI code include all GLEIF fees and charges, so I don't get unexpected extra bills?
- What do I get for the money? (For instance, is native speaking customer service a priority?)
- Do I get a service that benefits me and my business - e.g., do I save time and trouble by buying my LEI code from this provider?
- Is my provider familiar with company legislation and structure in my jurisdiction?
- Does my provider have a profitable and stable business (how long have they been around, are they sticking around for the long term, and are the company finances in order)?
If you get an eery feeling that your LEI code provider regards you as a commodity that they can possibly resell to a third party, then you should look for a different provider.
Why you shouldn’t go for the cheapest LEI code
It's tempting to go for the cheapest LEI code you can find. But there are several reasons why this is not a good idea: some providers offer cheap LEI codes to attract new customers, and then increase their prices significantly. They may also resell your LEI code to another LEI provider.
It is very important that you ensure that you do not pay for a longer validity period with a cheap LEI code provider that suddenly folds or goes bankrupt, and that your LEI provider does not resell your information to a third party.
Beware of offers of cheap or free LEI numbers
How do you know if an LEI code provider is in imminent danger of going bankrupt? You can check this by looking up the company in your local business register (e.g., U.S. SECURITIES AND EXCHANGE COMMISSION in US or GOV.UK in the UK). But there are other, less time-consuming ways of feeling out a provider. If you are offered an LEI code at a price that is significantly below the average market price, then this in itself is a red flag. And if a provider starts offering free LEI codes - as we have recently seen examples of - then you really need to watch out.
There is only ONE reason why a provider would dump prices or offer free LEIs: the business is not profitable, and they are in imminent danger of shutting down. In a last-ditch effort to attract a buyer to their business, they try to increase the number of customers so that the evaluation of their company increases. This means that your LEI code, which contains your company information, may end up in the hands of a third party, potentially outside of your jurisdiction.