The Legal Entity Identifier, also known as the LEI number, is essentially a unique reference code comprised of 20 characters, which is meant to identify and categorize legally distinct entities for financial transactions. An LEI number can be acquired by any organization or business that conducts trades in the financial markets. It has two fundamental characteristics:
1.Unique: Each individual legal entity must have an LEI code that is completely unique and easily distinguishable from all others. Once an LEI number has been assigned to one entity, it will never be re-assigned to another, even after the original entity has ceased to exist.
2. Exclusive: An LEI code is exclusive, which is to say that if you’ve already obtained one LEI number, you can never obtain another one for the same legal entity. Your LEI number will remain unchanged regardless of any changes that the organization or business might undergo.
LEI Number for Trading and Regulation
Companies which trade in stocks, forex, futures, and bonds typically need to apply for an LEI code. Every deal that the business entity is involved in will be connected to its LEI number for easy tracking and reference. The LEI code is used by market regulators for the purpose of overseeing the financial markets.
Thus, the legal entity identifier plays a crucial role in connecting the regulators, companies, and the financial markets in a seamless manner. GLEIF-accredited LOUs conduct and oversee the issuing of LEI codes to trading companies. The GLEIF stands for Global Legal Entity Identifier Foundation, which is responsible for the process of issuing unique LEI codes to legal entities.
Without a valid LEI number, a company cannot trade freely in the financial markets.
Applying for an LEI Code in India
Acquiring a legal entity number in India is not difficult. In the LEI number registration application form, you need to fill in all the relevant information. After filling the form, you can choose a renewal period of one, three, or five years, depending on your requirements. After this, you simply need to submit your registration form and make the payment via Paypal or credit card.
Within a few minutes of submission and payment, your data will be validated. Following this, you will receive an email within the next twenty-four hours, containing the confirmation of your request along with your new LEI number. Typically, LEI numbers are set within 3-4 hours of a form being submitted along with the payment.
After receiving the confirmation certificate along with the LEI code, you will need to go to the LEI search page in order to confirm that the number is indeed valid. In the top right corner of the home page, you can enter the name of your company or your LEI number into the search bar. Just type in the code and press enter in order to make sure that it’s been registered.
By following these few easy steps, you can obtain your LEI code and start trading in a matter of hours. Ideally, you should submit your application before 6PM in order to get the legal entity identifier on the same day.