When do you need a Legal Entity Identifier?
Legal Entity Identifiers (LEIs) are now required for all companies that wish to trade on the financial markets in the UK or within the European Union. These changes occurred on 3 January 2018 when the Markets in Financial Instruments Directive and Regulation took effect.
Whilst individuals are not affected by these changes, entities such as trusts, companies, pension funds, charities, academy schools, partnerships, and some unincorporated societies may be. LEIs are designed to identify the legal entity that is entering into financial transactions, not the financial instrument, so the process for applying for an LEI is the same for all legal entities, regardless of what instrument they will be trading.
LEIs should not be requested for individuals or for divisions of a company. If an operating division of a company requires an LEI, they should use the LEI obtained by their parent company. Separate branches of a legal entity are eligible to obtain a separate LEI if they are situated in different countries. Branches within the same country are only eligible to receive one LEI, so careful consideration should be given to which branch acquires the LEI. Moreover, the validity of the branch’s LEI is linked to that of the main branch. As such, it will be deemed to be invalid in circumstances where the main branch’s LEI is invalid (ie. If the LEI isn’t renewed). Needless to say, it is also not possible for a branch of a company to apply for an LEI if the main branch does not yet have one.
Individual jurisdictions determine whether they require an LEI to be held by entities operating within that jurisdiction. A detailed list which sets out the status of LEIs in a number of global jurisdictions is available here: https://www.gleif.org/en/about-lei/regulatory-use-of-the-lei. You will note that LEIs are now required by the Central Banks of Argentina, Mexico, Russia, and India, as well as for certain transactions in Canada, the EU, Russia, Singapore, the US, the UK, Switzerland, South Africa and Malaysia, amongst others.
Other jurisdictions, like Australia, may request that a Legal Entity Identifier be provided, but do not yet require them.