An LEI for all eventualities
Banks, investment companies and societies conducting derivative transactions have been already requiring a Legal Entity Identifier (LEI) for years. According to the new EU legislations, the worldwide-standardized identification number will become mandatory as of January 2018 for all transactions subject to disclosure obligation. Investors can rejoice in an increased transparence.
That the financial crisis ten years ago could propagate into the entire world was greatly due to numerous obscure company networks and international capital flows, which no one was able to clarify anymore.
The G20, the group of the twenty most important industrial and emerging countries, drew the conclusions of the lack of transparence on the financial market and decided to establish a system, which reliably identifies the legal entities and their worldwide, respective financial transactions: the Legal Entity Identifier (LEI). The 20-digit, alphanumeric code based on the ISO standard 17442 aims to disclose the most important data of legal entities. Similarly to the tax identification number for private individual, the LEI is assigned “for life”, however it has to be reactivated each year.