The LEI system is the global standard when it comes to the identification of legal entities and their financial transactions.
In the past, it has been both difficult and time-consuming to identify and validate companies that trade on the financial markets. But with the LEI system, a new standard now exists that makes it possible to verify all legal entities through global LEI codes.
All LEI codes can be accessed in a register on GLEIF's website. The database is open and searchable for everyone, and as a company, you can rest assured that you know exactly who you are dealing with.
The global LEI system operates at four levels
There are four basic organizational concepts that one should know in order to understand the global LEI system.
GLEIF - 'Global Legal Entity Identifier Foundation'
GLEIF stands for 'Global Legal Entity Identifier Foundation' and is the organization behind the LEI system. The organization was founded in 2014 and was tasked with implementing a global system that could be used to identify the movements of legal entities in the financial markets.
GLEIF is a non-profit organization and has its headquarters in Basel, Switzerland. GLEIF is behind the global database where all LEI codes can be searched by the public. GLEIF's index is the only official database in the world that offers an open and standardized index for the identification of legal entities that have an LEI code.
GLEIF themselves formulate their vision on their website in the following way:
"The Global Legal Entity Identifier Foundation (GLEIF) enables smarter, less costly and more reliable decisions about who to do business with."
GLEIF's database is updated once a day. This means that you can register and receive your LEI code today and that it will be visible on GLEIF's website tomorrow at 15:00.
You can order**, **renew or move your LEI code here.
LEI ROC - 'Regulatory Oversight Committee'
GLEIF is regulated by LEI ROC, which stands for Regulatory Oversight Committee. LEI ROC consists of a group of public authorities from around the world. Their task is to check that GLEIF follows the guidelines and principles established for the system as a whole.
LEI ROC was founded in January 2013. You can read more about their work on their website www.leiroc.org.
LOU - 'Local Operating Units'
Local Operating Units (LOUs), which are the issuing organizations, operate under GLEIF. The LOUs must be certified by GLEIF to be allowed to issue LEI codes, and thus meet certain standards in relation to quality and service. GLEIF validates, for example, how suitable the organization is to operate within the LEI system.
If you as an organization want to act as an LOU, you must go through a targeted program at GLEIF in order to be accredited as an LEI issuer.
The LOUs' task is to register, update and renew LEI codes in GLEIF's database. They act as the primary organization for all legal entities required to have an LEI code. The LOUs are continuously quality-checked using data reports which are delivered to GLEIF. This ensures, among other things, that the quality of the data processing meets the standard.
LEI registration agencies
The LOUs cooperate with LEI registration agents, which is the category to which Global Finreg belongs.
You typically contact a registration agent if you want to buy an LEI code. The registration agents help all legal entities, such as companies, enterprises, foundations, endowments, etc., to apply for LEI codes - as well as to maintain and renew them.
The most important role of the registration agents is to ensure that the companies' wishes are met by the LOUs, as well as to make the process as simple and accurate as possible for the legal entities. This is done by ensuring a good and user-friendly platform, facilitating secure payment, and providing clear communication and good customer service, as well as helping to validate all necessary information in order to create a new LEI.
ISO - International Organization for Standardization
To ensure that the LEI system always meets the users' requirements and at the same time continues to develop, GLEIF has assembled stakeholders from various market segments who continuously contribute information from the market.
The LEI system is based on the ISO 17442 standard, with four underlying key principles:
· It is a global standard
· Each legal entity can be assigned a maximum of one unique identification code
· The code is supported by high-quality data
· The system is open to the public and accessible to all, and free to use
The ISO 17442 standard also states which type of data must appear as a minimum from the LEI code. You can read more about this in this article, 'What is an LEI code'. Here you can also find information about the 20-digit code that is part of this standard.
To ensure that the company’s data is always up to date, an LEI code must be renewed once a year, where all data is updated or confirmed. This means that even if you order a 5-year validity period on an LEI code via a registration agent, it will still appear in GLEIF's database that your LEI code expires within 1 year.
You can read more about the different validity periods here.
The registration agents are obligated to update your data when your LEI code is renewed once a year.
However, at Global FinReg, we have decided to do continuous updating throughout your validity period. This means that we ensure that your data will always be correct in the global database at GLEIF. This eliminates the risk of potential delays in your financial transactions if, for instance, there are changes to the name of the legal entity or the classification of the business.
You can read more about the importance of accurate LEI code data here.