Q&A about LEI codes

I have a limited liability company and my bank has told me I need an LEI code to trade in shares. What does this mean?

Swedish banks and investment firms have an obligation to report transactions they execute in financial instruments (shares, bonds, derivatives, etc.) on their own behalf or on behalf of a client. Transaction data is a fundamental tool for enabling Finansinspektionen and other competent authorities to monitor the securities markets and, for example, investigate suspected market abuse. The purpose is to ensure fair and orderly trade.

As of 3 January 2018, new rules apply to the securities market (MiFID II/MiFIR): These entail that natural or legal persons who carry out transactions must be identified in the transaction reports.

To ensure harmonised transaction reporting within the EU, a global identification code (Legal Entity Identifier, LEI) is used to identify legal persons. All legal persons must obtain an LEI code in order to be allowed to trade in securities.

My undertaking does not hold any securities. Do I nonetheless need to obtain an LEI code?

No, if your undertaking does not hold nor trade in financial instruments, it is not necessary to obtain an LEI code. However, undertakings that conduct securities business or issue financial instruments for trading on a stock exchange or other trading venue, need an LEI code.

My undertaking holds securities in a custody account but has no intention of trading in the near future. Do I need to obtain an LEI code?

The LEI code is used when reporting securities transactions. However, your custodian may require you to obtain an LEI code to ensure that future transactions can be conducted.

I have a sole proprietorship. Do I need to obtain an LEI code?

Sole proprietorships that trade in financial instruments other than derivative instruments do not need to obtain an LEI code. However, in accordance with EMIR regulation, sole proprietorships that trade in derivative instruments must have an LEI code. (The EU's regulation regarding OTC derivatives, central counterparties and trade repositories ([EU] 648/2012), EMIR, entered into force on 16 August 2012.

According to EMIR (EU 638/2012), financial and non-financial counterparties (legal persons and sole proprietorships) that trade in derivatives are under obligation to report it to a trade repository. Not only do counterparties in a derivative transaction need to obtain their own LEI code but they also need to ensure that their counterparty in the transaction has an LEI code, provided that said counterparty is under a reporting obligation and authorised to obtain an LEI code.

Is LEI required to identify a legal person who trades in endowment insurance?

In order for Finansinspektionen to be able to use transaction data in an effective manner to conduct investigations into suspected market abuse, it must be possible to identify the end client in the transaction report.

If the client has not made the investment decision, it must also be possible to identify the decision-maker. This means that legal persons trading in endowment insurance need to be identified through LEI as the decision-maker for the transaction. The same applies to legal persons trading in pension insurance.

The insurance company is the official owner of the financial instruments invested in the endowment insurance, and the insurance company's LEI must still be provided to identify the buyer/seller in these reports.

How do I obtain an LEI code?

LEI codes are global ID numbers that are obtained through a number of independent web services, or local operating units (LOUs), that have been authorised by the LEI Regulatory Oversight Committee (LEI ROC). Generally, banks can assist in applying for LEI codes but you can also apply directly to the institutions that provide LEI codes. For a list of these institutions, see the Global Legal Entity Identifier Foundation (GLEIF). There are also actors, connected to LOUs, that administer LEI codes.

Does it matter where you obtain an LEI code?

No, provided that the LEI code is valid. You can obtain an LEI code from the institutions listed by the Global Legal Entity Identifier Foundation (GLEIF).

Other Q&As about LEI codes

The following organisations provide Q&As about LEI codes:

Last reviewed: 2023-10-10