Why do banks ask for LEI
All legal entities carrying out transactions in financial markets require an LEI code. When you try to carry out such transactions, your bank will ask for the LEI number of your company or organization. It doesn’t matter which bank you choose. All banks, whether it is SBI, ICICI, or HDFC, will ask for an LEI code. Even online brokers such as 5paisa or Angel Broking will ask for your LEI number.
Since 2018, it has become mandatory for companies and other legal entities to have a registered global identification. This is what Legal Entity Identifier or LEI codes are used for.
Requirements for securities trading
If you are buying or selling an existing holding in the securities market, you need to have a valid and active LEI code. Securities refer to shares, derivatives, bonds, exchange traded funds and interest rate swaps. All require an LEI code.
However, if you are doing any transaction in endowment insurance, you don’t need this number. If you are an individual and not a legal entity (such as a company or organization), you are not required to have an LEI number for carrying out transactions in the securities market.
The LEI system creates transparency in the financial markets since it is possible to easily identify the buyer and seller involved in any transaction. It also becomes easier for the authorities to gain a clear understanding of the transaction and the parties involved in it.
Notify the bank of your LEI number
If your company or organization is involved in securities trading in the global market, your bank or online broker will ask for your LEI number. Your bank or online broker will not be able to complete the transaction without a valid and active LEI code.
The best thing to do will be to get an LEI number and provide it to your bank or online broker as soon as possible. There may also be a provision of entering your LEI code in the settings of your internet banking account or your account at, for example, Angel Broking. Some banks even update your LEI code automatically, when it is registered with GLEIF, the organization responsible for operating the LEI system.
If you would like to manually enter your LEI code into the bank’s system, keep in mind that it may take a day or two after receiving your LEI number to add it to your bank or trading account. Once you register your LEI code, it would be advisable to wait for 1-2 bank days before you enter it in the bank’s system.
How to register for LEI
If your company or organization is planning to trade in securities, register for your LEI code immediately. If you have an LEI code, but it has expired, you need to renew it as soon as possible.
At LEI Certificate, we offer LEI registration and renewal services at the lowest prices in the market. Compare our prices with other service providers and you will know the difference. Check out full price list here.
If you already have an LEI number, but it has expired or is about to expire soon, you will need to renew it. This is necessary to keep it active and valid. You can renew your LEI code here.
When you renew your LEI code, the number will remain the same. Your Legal Entity Identifier or LEI code is valid for a year. You can check the GLEIF website to find out when it expires and when you need to renew it. Just submit the form available at our website and you can renew your LEI code at the lowest available price.
MiFID 2
MiFID 2 stands for Markets in Financial Instrument Directive 2 and LEI codes are regulated by this directive. MiFID 2 has been active since January 3rd, 2018. Since then, all companies and other legal entities must have active LEI codes if they are interested in carrying out financial transactions. Without a valid LEI code, all transactions that involve securities will be denied. The purpose of MiFID 2 is to create transparency in the financial market and protect the parties involved in trading.