Companies that trade shares in companies are required to register an LEI code. But what does it mean more specifically?
An LEI code, or a Legal Entity Identifier, is a global identification code in securities markets for companies and other organizations. All LEI codes are registered in a global register administered by the Global Legal Entity Identifier Foundation, GLEIF.
Companies, organizations and companies that trade shares and derivatives have an obligation to report this and must therefore have an LEI code, something you register to receive.
EU regulation behind transaction reporting
Since 3 January 2018, it is required that companies that also trade in shares in companies have an LEI code in order to be identified in the transaction reporting. The reason for this is that the EU, through the MiFID II / MiFIR regulation, wants to increase the requirements for the already existing transaction reporting that investment firms and credit institutions must perform to regulatory authorities within the EU. However, an LEI code is not required for trading in fund units.
Note that the requirements also apply to both legal entities to which investment firms have performed transactions, as well as to issuers of financial instruments.