Why the Global LEI System Was Created
The 2008 global financial crisis exposed a critical problem: financial markets lacked a single international method to identify legal entities participating in transactions. One company could appear under different names or local identifiers across various countries, registries, and financial systems. This complexity made it difficult to understand which companies conducted business together, how different enterprises related to one another, and what actual financial risk a single company or group represented.
After the crisis, governments and regulators recognized an urgent need. They prioritized creating a global system for identifying legal entities. This demand led to the development of the Legal Entity Identifier (LEI), a 20-character standardized code that enables unique identification of any legal entity engaging in financial transactions worldwide.
G20: The Political Driver
The G20 (Group of Twenty) represents a forum for cooperation among the world's largest economies. Its members account for the vast majority of global economic output and international trade.
Following the 2008 financial crisis, the G20 backed the creation of a global system that would enable unique identification of legal entities in financial transactions. In 2011, the G20 tasked the Financial Stability Board (FSB) with developing the principles and governance structure for a global LEI system. Subsequently, the G20 approved the FSB's recommendations in 2012, forming the foundation for the Global Legal Entity Identifier System (GLEIS).
FSB: The Framework Architect
The Financial Stability Board (FSB) is an international organization that promotes the stability of the global financial system. The FSB developed the LEI system's governance model and principles under G20 mandate.
This work produced an international framework that guides how LEI Regulatory Oversight Committee (ROC), GLEIF, and LEI issuers operate today. The FSB itself does not issue LEI codes or handle company LEI applications—instead, it set the standards that other institutions follow. This separation ensures independence and prevents conflicts of interest in the system's governance.
BIS: International Central Bank Coordination
The BIS (Bank for International Settlements), also known as the Banque des Règlements Internationaux, is the central organization for international cooperation among central banks. It is headquartered in Basel, Switzerland.
The BIS supports central bank cooperation and provides international financial organizations with a venue for coordinating knowledge, analysis, and policy matters. The BIS has close ties to the Financial Stability Board: the FSB secretariat operates within BIS premises in Basel. This connection places the LEI system within the broader international financial architecture that emerged after the 2008 crisis.
The LEI Infrastructure: Key Organizations
LEI ROC: International Oversight
The Regulatory Oversight Committee (ROC) supervises the Global LEI System at the international level. Its members include public sector authorities worldwide, such as central banks, financial regulators, and other regulatory institutions.
The ROC ensures the LEI system operates in the public interest and adheres to internationally agreed principles. Like the FSB, the ROC does not issue LEI codes or process company applications. Instead, it oversees GLEIF, the system's central organization, to maintain standards and prevent conflicts of interest.
GLEIF: The Global LEI System's Central Hub
The Global Legal Entity Identifier Foundation (GLEIF) was founded in 2014 under FSB leadership. This Swiss-based nonprofit organization develops the Global LEI System while ensuring its reliability, accessibility, and data quality.
GLEIF accredits LEI issuers, known as Local Operating Units (LOUs), and monitors their compliance with common technical standards and data quality requirements. Additionally, GLEIF maintains the Global LEI Index, a worldwide public database where users search for legal entities and view their associated LEI information.
GLEIF's responsibilities extend far beyond managing the existing system. Importantly, the organization collaborates with regulators, public sector institutions, and private companies globally to expand LEI adoption. It demonstrates how a single global legal entity identifier simplifies entity identification, data exchange, and regulatory processes. Furthermore, GLEIF actively participates in regulatory consultations and proposes new applications for LEI within emerging regulatory frameworks. However, the decision to adopt or mandate LEI in a specific jurisdiction remains with that jurisdiction's regulators and legislators.
LOU: Official LEI Issuers
A Local Operating Unit (LOU) represents a GLEIF-accredited organization authorized to issue and manage LEI codes. Each LOU verifies that the legal entity data submitted in an LEI application matches official records.
To validate data, LOUs consult authoritative registration sources such as national business registries and official registration bodies that GLEIF recognizes. Specifically, GLEIF identifies these sources in its Registration Authority List. Notable examples include the UK Companies House, Germany's Handelsregister, and similar official databases in major markets.
Each LOU assumes responsibility for LEI issuance, data validation, renewal, and data quality. RapidLEI by Ubisecure serves as one accredited LOU, and LEI System partners with this LOU to serve clients.
Registration Agent: Your Gateway to LEI Issuers
A Registration Agent (RA) helps companies access the network of GLEIF-accredited LEI issuers (LOUs). Through an RA, companies request, renew, and manage LEI codes. Additionally, they can transfer existing LEIs to another service provider if needed.
GLEIF introduced the Registration Agent model to make LEI services more accessible to businesses. Importantly, an RA is much more than a simple intermediary between client and LOU—it represents a core component of making LEI services available to companies globally.
The value of a Registration Agent centers on the infrastructure and service it provides to clients. An RA delivers a web platform where clients conveniently request and manage LEIs, collect and submit required application data, automate processes, offer local payment methods and customer support, and help organizations manage their LEIs throughout their entire lifecycle.
This division of labor produces clear benefits. The LOU focuses on official data validation and LEI issuance while ensuring compliance with the Global LEI System's requirements. Meanwhile, the Registration Agent makes LEI services simple and usable for companies.
LEI System operates as a Registration Agent, providing companies with a technical platform and customer support for LEI applications, renewals, transfers, and management. Ultimately, GLEIF's accredited LOU remains the official LEI issuer.
How LEI Registration Works in Practice
When a company requests an LEI code through LEI System, the process typically follows these steps:
The company submits an LEI application to LEI System.
LEI System forwards the application to its partner LOU.
The LOU verifies the submitted data against authoritative registration sources in the relevant jurisdiction.
Once the LOU validates the data, it issues the LEI code.
LEI System transmits LEI data to the Global LEI System.
The LEI record becomes publicly discoverable worldwide through GLEIF's Global LEI Index.
The LEI code itself remains permanent. The 20-character LEI issued to a company does not change even if the company switches LEI service providers or LOUs.
However, associated LEI data requires regular updates. Companies must revalidate LEI data at least once annually to ensure its currency and reliability. This annual renewal process is standard across all jurisdictions and LEI service providers.
How the System Connects
The LEI ecosystem can be visualized as an interconnected chain:
G20 → FSB → LEI ROC → GLEIF → LOU → Registration Agent → Company
The G20 provided the political impetus to create the LEI system. Subsequently, the FSB developed its international framework, and FSB activities connect closely to international central bank cooperation organized around the BIS in Basel. The LEI ROC then provides regulatory oversight of the system. Furthermore, GLEIF develops and coordinates the Global LEI System while working to expand LEI adoption. Concurrently, LOUs verify data and issue LEI codes. Finally, Registration Agents like LEI System build infrastructure and services that make requesting, renewing, and managing LEIs straightforward for companies.
Why LEI Matters
The LEI enables unique identification of legal entities across different countries, registries, and financial systems using a single global identifier. Importantly, this capability has transformed financial transparency globally.
Banks, investment firms, regulators, and other financial market participants now understand which legal entities participate in transactions and how different companies relate to one another. This clarity delivers better risk assessment and regulatory oversight across international markets.
Significantly, over the years, LEI usage has become incorporated into numerous financial market regulations worldwide. For instance, the European Union requires LEI for transaction reporting under MiFID II and MiFIR and in several other regulatory processes.
In the United States, the Commodity Futures Trading Commission (CFTC) became the world's first regulator to mandate LEI use in derivative transaction reporting in 2012. Moreover, today LEI appears in many U.S. regulatory frameworks. The Foreign Direct Investment Risk Review Modernization Act (FDTA) exemplifies one such recent mandate.
In India, the Reserve Bank of India (RBI) has progressively expanded LEI requirements across multiple sectors, including derivatives, securities, money and forex markets, large corporate loans, and high-value domestic and cross-border payments. Additionally, India also uses LEI to identify foreign portfolio investors.
LEI requirements extend across regulatory contexts in countries including Australia, Canada, Japan, Singapore, and many other jurisdictions. This global adoption demonstrates how the identifier created after the 2008 financial crisis has become a worldwide standard for identifying legal entities within the financial system.
The LEI's original purpose was to make the global financial system more transparent and help identify risks more effectively. Today, it has certainly become a widely used international standard for legal entity identification.
Frequently Asked Questions
Can only banks and financial institutions obtain an LEI?
No. The LEI was not designed exclusively for banks. Various types of legal entities can obtain an LEI, including businesses, banks, investment funds, insurance companies, foundations, and other organizations that meet LEI issuance conditions.
Whether an LEI is mandatory for a specific organization depends on its activities, transactions, and applicable regulations. If you are uncertain whether your organization needs an LEI, consult your industry regulator or contact LEI System to discuss your situation.
What happens if an LEI is not renewed?
Companies must update LEI data at least once per year. During renewal, the LOU revalidates the LEI-associated company data against official registration sources to ensure its accuracy and reliability.
If a company does not renew an LEI by its expiration date, its registration status changes to LAPSED. Essentially, this status means the associated LEI data has not been revalidated within the required timeframe. However, the LEI code itself does not disappear or change, and the LEI record remains publicly visible in the Global LEI Index.
A LAPSED LEI can create problems when a bank, broker, investment firm, or other financial market participant requires a current LEI. Fortunately, a LAPSED LEI can be renewed, and once the company revalidates data, its active status returns. The company retains the same LEI code.
Is there a fee for obtaining an LEI code?
Yes. LEI issuance and renewal represent paid services. Importantly, GLEIF itself does not sell LEI codes to companies. Instead, GLEIF-accredited LOUs bear responsibility for LEI issuance and official data validation. Furthermore, Registration Agents, such as LEI System, provide LEI services directly to companies and connect clients with GLEIF's network of accredited LEI issuers.
A Registration Agent delivers clients with infrastructure and services for requesting, renewing, transferring, and managing LEIs. Meanwhile, the LOU that partners with the Registration Agent handles official LEI issuance and validation.
Each service provider sets LEI issuance and renewal fees independently. Consequently, the Global LEI System enables service providers to compete, allowing companies to select an LEI provider that meets their needs and budget. Start your LEI registration today or renew an existing LEI with LEI System.