Legal Entity Identifier is a global standard to identify distinct legal entities that engage in financial transactions.
What are the features of Legal Entity Identifier (LEI)?
Legal Entity Identifier is a key measure to improve the quality and accuracy of financial data systems. It was conceived for better risk management post Global Financial crisis. The data is non-proprietary and can be accessed by all interested parties. It is covered by International Organization for Standardization developed ISO 17442 standards.
LEI code is a 20 digit unique alphanumeric code that helps to identify parties to a financial transactions worldwide. LEI data pool can be regarded as a global directory that enhances transparency in the global marketplace. It is an identifier for the legal entity and not an identifier for a particular instruments or financial transaction by the entity. The legal entity has to pay a onetime registration fee and annual maintenance fee.
What is the role of GLEIF in the management LEI code?
Global Legal Entity Identifier Foundation (GLEIF) manages the various aspects related to LEI and ensures operational integrity. GLEIF is an initiative of regulatory authorities across the globe. It is a not-for-profit organization to support the implementation and use of LEI. It is headquartered in Basel, Switzerland. It was established in 2014 by the Financial Stability Board. Global Legal Entity Identifier Foundation is supervised by LEI Regulatory Oversight Committee made up of eminent representatives from various parts of the globe.
GLEIF provides technical infrastructure to provide, via an open data license, access to the full global LEI repository without any charge to various users. The foundation has published the Global LEI Index which is updated daily. It provides information on all LEIs issued to date. GLEIF website contains the data. Any interested party can search and extract the data by using the web-based LEI search tool provided by GLEIF.
Who issues LEI code?
LEI issuing organizations also known as Local Operating Units extend support for registration, renewal and other services. They act as contact point for entities to obtain LEI.
Which entities are required to have LEI code?
The term ‘legal entity’ includes, but is not limited to, unique parties that are
• Legally or financially responsible for the performance of financial transactions or
• Have the legal right in their jurisdiction to enter independently into legal contracts.
• It includes governmental organizations and supranationals but excludes natural persons. However, as per clarification provided by GLEIF, individuals acting in a business capacity are eligible to get LEI code.
Normally, the legal requirement to have an LEI code is announced by the national financial regulators.
What is the position in India in implementation of the LEI code?
In India, Legal Entity Identifier India Ltd.(LEIL), a subsidiary of Clearing Corporation of India has been recognised by the Reserve Bank as issuer of LEI under the Payment and Settlement Systems Act, 2007
LEI system for all participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India is already announced and is being implemented in a phased manner. All current and future participants are required to obtain the unique LEI code as per time lines announced. Entities without an LEI code would not be eligible to participate in the OTC derivative markets, after the cut off date.
Reserve Bank of India has now directed banks to advise their existing large corporate borrowers having total exposures of ₹ 50 crore and above to obtain LEI between March 31, 2018 and December 31, 2019. Different cut off dates are fixed based on the quantum of exposure.