Navigating the financial world with LEI: A new era of transparency and efficiency


Legal Entity Identifier (LEI) Worldwide recently took the opportunity to discuss its LEI and Global LEI System (GLEIS) in greater detail.

The creation of the Legal Entity Identifier (LEI) and Global LEI System (GLEIS) in response to the 2008 financial crisis marked a significant advancement in legal entity identity verification worldwide.

This development has substantially improved the measurement of systemic and emerging risks, enhancing trust, traceability, and transparency in global trade.

GLEIS serves as a comprehensive database offering unique identification details of legal entities engaged in global financial transactions. This publicly accessible, free-of-charge database assigns a unique 20-digit entity identifier code to each entity, facilitating transparency in business activities and transaction reporting. This system effectively maps the global financial ecosystem, clarifying corporate relationships and identities.

An LEI number is standardized and validated by local Registration Authorities, with annual renewal. This single identifier per legal entity significantly enhances trade trust and transparency.

The identifier’s utility in bolstering trust, efficiency, and clarity in trade is unparalleled. Easily accessible LEI data, once confined to local sources, now benefits global trade. The centralization of registry information, previously challenging to access, streamlines client onboarding and identity confirmation. Research by McKinsey suggests that LEIs could save banks up to $2-4bn annually in Know Your Customer (KYC) processes.

As of November 2023, over 2.5 million companies globally have acquired their LEIs, moving towards the goal of universal LEI adoption.

Driven predominantly by regulation, the identifier, an official ISO standard 17442, is accessible to any entity. The G20, in response to the Lehman Brothers crisis, advocated for a standardized, central system linking market participants to financial transactions, thereby enhancing visibility. The Financial Stability Board (FSB) was tasked with recommending and establishing a new organization to implement this system. Thus, in June 2014, the non-profit Global Legal Entity Identifier Foundation (GLEIF) was established to oversee the LEI system’s operational integrity.

LEI ROC envisions the identifier as a tool for the private sector to enhance risk management, operational efficiency, exposure calculations, and other functions. It offers a centralized information source, rich in high-quality data.

GLEIF compiles and publishes intuitive monthly LEI data reports, offering insights into global LEI trade. The GLEIF statistics page and LEILEX’s map provide detailed breakdowns of LEI issuance, aiding understanding of global financial trends.

In conclusion, GLEIF presents a free, open-access database that uniquely identifies legal entities in financial transactions worldwide. The 20-digit LEI is a digital identifier endorsed by G20 nations, the FSB, and institutions like the European Central Bank and the Bank of England. Expanding LEI adoption across various industries will enable a data-rich, transparent global economy.

Read the full post here.

Keep up with all the latest FinTech news here.

Copyright © 2023 FinTech Global

Enjoying the stories?

Subscribe to our daily FinTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.