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Legal Entity Identifier (LEI)

The Legal Entity Identifier (LEI) is a worldwide unique code that can be used to identify financial markets participants. This will help to manage financial risks more effectively, since supervisors can identify potential systemic risks and market abuse easily and in good time. The LEI has to be used to identify parties involved in a financial transaction.

Who needs an LEI?

The following parties need or will need an LEI:

  • investment firms
  • operators of trading venues
  • approved reporting mechanisms
  • issuing institutions
  • parties to a derivatives contract that are companies
  • clients of investment firms and banks who are legal entities and eligible for an LEI (for example companies or legal persons, foundations, church societies, sole traders or self-employed persons without personnel) if they buy or sell or obtain financial instruments (for instance, shares, bonds, futures or options).

The extension of an LEI is mandatory for companies that themselves have a reporting obligation. This includes investment firms, operators of trading venues, approved reporting mechanisms and parties to a derivatives contract that are companies.

Why is an LEI necessary?

It is or will be mandatory to state an LEI with reports in the following situations:

  1. Under the EMIR directive, every company that concludes a derivatives contract or has such a contract outstanding must report the details of this transaction to a Trade Repository. When doing this, they must state their LEI in their report.
  2. With the introduction of MiFID II, investment firms and operators of trading venues must state the LEIs of the legal entities involved in a financial transaction and report this to the AFM. In addition, trading venues must include the LEI of the issuing institution with the Instruments Reference Data that they send to the AFM.

Stating the LEI is expected to be mandatory in every new legislation and regulation, including for instance SFTR, for the identification of legal entities in situations where a reporting obligation applies.

How can you apply for an LEI?

You can apply for an LEI on the website of the Chamber of Commerce (Kamer van Koophandel, KvK). Only organisations entered in the Trade Register can apply for an LEI from the Chamber of Commerce.

It is also possible to apply for an LEI in another jurisdiction such as the United States (CICI) or Germany (WM Datenservices). If you have a pre-LEI, you can use this as an LEI code.

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