Legal Entity Identifiers: Does your organisation need to take action?

If your business, charity or trust needs access to financial markets (for example to manage investments, cash flow, or hedge risks like interest rates, exchange rates or commodities), you must obtain a Legal Entity Identifier (LEI).

Investment firms who are subject to new reporting obligations (specifically discretionary fund managers) will not be able to execute a trade on behalf of your business, charity or trust if it is eligible for an LEI and does not have one.

The trust definition also includes Small Self-Administered Schemes (SSAS), which are a type of employer pension scheme. So, if you’re an organisation with such a scheme, which is being invested in stocks and shares, you need an LEI.

The initial deadline was set for 3 January 2018. Therefore, if you have not obtained an LEI and you are required to have one, your financial service provider will not be able to complete transactions on your behalf.

LEIs are unique 20 digit codes assigned to organisations to help improve the measurement and monitoring of systemic risk, meaning in every transaction a legal entity can be identified. Essentially, LEIs help answer three basic questions: Who is who? Who owns whom? And who owns what?

If you are a corporate entity or charity you need to make arrangements to obtain an LEI should you want your financial service provider to continue to execute transactions on your behalf.

The obligation for legal entities to obtain an LEI was backed by the G20 in a global effort to help identify financial connections and monitor threats to financial stability.

The London Stock Exchange is registered to provide organisations with a Legal Entity Identifier should you need to obtain one (for more information click here).