Safety first. That is precisely why LEI codes (Legal Entity Identifiers) were established—to protect financial operations related, for example, to trading securities such as shares. These are alphanumeric codes consisting of both digits and letters, which every entity involved in investments must obtain. The codes are assigned individually, and each new code is recorded in a register, ensuring that entities engaged in broadly understood financial activities are deemed safe and trustworthy.
What is an LEI code?
The abbreviation LEI comes from the English phrase “Legal Entity Identifier,” which, when translated into Polish, means “Identyfikator Osoby Prawnej” (Legal Entity Identifier). LEI codes are assigned in accordance with legal regulations in force, among other places, in Europe. Only 30 institutions worldwide can grant LEI codes. However, entities applying for a code may turn to any of these institutions. The application process involves certain fees, which may vary depending on who carries out the procedure. The annual registration fee for an LEI code starts at $58.75 net, and for longer registration periods the cost decreases to $48.96 net per year. Institutions such as banks, stockbrokers, brokers, as well as investment and pension funds are required to obtain an LEI code.
What does an LEI code look like?
As mentioned before, an LEI code consists of 20 characters, including both digits and letters. Each code is unique and never repeats. The company or institution applying for it will receive an individual code that is required whenever various types of financial operations are conducted on regulated markets. In addition to the aforementioned institutions, such as banks or brokerage firms, credit institutions, insurance companies, and investment enterprises must also apply for an LEI code. It is advisable to thoroughly check legal regulations to determine whether you need an LEI code if, for example, you run a sole proprietorship. In some cases, obtaining it is necessary, although it does not apply to all business owners.
What are the benefits of having an LEI code?
Code holders can participate in various types of financial transactions, including those on international markets. The LEI code literally serves to track these transactions conducted by a company or institution, all to make the flow of money more transparent and thus compliant with the law. The purpose of introducing LEI codes is therefore to increase security during financial transactions. If you do not have an LEI code, you cannot participate in trading shares or bonds. Any entity that has not obtained an individual LEI code will not be able to conduct such financial operations. An individual investor who buys and sells shares or bonds without running any business activity naturally does not have to apply for a code. This requirement applies exclusively to companies and institutions, as well as self-employed individuals whose main activity involves investing. It is worth noting that the LEI code is public information, accessible to everyone. Information about the LEI code is therefore not classified. To begin the application process, you simply select the relevant option and then follow the instructions provided in the registration form.
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