LEI (Legal Entity Identifier) – Definition & Meaning

LEI (Legal Entity Identifier) is a 20-character, alpha-numeric code that uniquely identifies legal entities participating in financial transactions worldwide. Created under ISO 17442, LEIs improve transparency, enable accurate counterparty identification, and support regulatory reporting across jurisdictions.

Key Takeaways

• LEI in one sentence: A global, standardized ID that uniquely identifies companies and organizations in financial markets.
• Why it matters: Reduces counterparty ambiguity, strengthens risk management, and simplifies multi-jurisdictional reporting.
• Context/usage: Required or recommended in many regimes (e.g., trade reporting, prospectuses, onboarding, KYC/KYB).
• Governance: Coordinated by the Global Legal Entity Identifier Foundation (GLEIF) and issued through Local Operating Units (LOUs).

What Is LEI?

The LEI is a reference identifier for legal entities-corporations, funds, SPVs, trusts (where recognized), and other organizations-engaged in financial transactions. Each LEI maps to validated reference data (official name, registered address, registration authority, ownership where available), enabling reliable linkage across data vendors, venues, and regulators.

How LEI Works (Structure, Issuance & Validation)

LEIs follow ISO 17442 and have a consistent 20-character structure:

• Characters 1–4: LOU prefix (issuer identifier)
• Characters 5–6: Reserved
• Characters 7–18: Entity-specific identifier
• Characters 19–20: Check digits

Check-digit concept: Calculate check digits using the ISO/IEC 7064 Mod 97-10 algorithm so that the full 20-character LEI validates with a remainder of 1 under the mod-97 check.

Lifecycle & data quality

• Entities apply through an accredited LOU (directly or via a Registration Agent).
• Annual renewal keeps reference data current (lapsed LEIs remain visible but are flagged).
• GLEIF publishes open data and quality reports, enabling industry-wide reconciliation.

Example in Practice

A fund manager opens accounts at multiple brokers and trade repositories. Using the same LEI across all venues ensures consistent counterparty records, reduces onboarding frictions, and satisfies reporting rules that mandate LEIs for executing entities and, in many regions, for clients.

Benefits and Considerations

• Benefits: Single global identifier; cleaner security master & CRM mapping; faster KYC/KYB; fewer breaks in post-trade and reporting.
• Considerations: Annual renewal is required; some entity types or jurisdictions may have edge-case eligibility; ensure parent relationships (if applicable) are reported accurately.

Related Terms

• ISIN – securities identifier that labels instruments, not entities.
• BIC (SWIFT) – bank identifier code for payment/settlement messaging.
• CUSIP – North American securities identifier used alongside ISIN.
• SEDOL – UK/IE-centric securities identifier used by data vendors.