If you work within the finance sector it is likely you will have heard of a Legal Entity Identifier (LEI) and that it will be needed if an entity wants to enter into a transaction relating to a financial instrument. If not, "Don't panic". This advice is found on the cover of The Hitchhiker's Guide to the Galaxy. This was partly because the device "looked insanely complicated" to operate, and partly to keep intergalactic travellers from panicking. Hopefully LEIs will not be insanely complicated.

LEIs were created in response to the inability of financial institutions to identify organisations uniquely, so that their financial transactions in different national jurisdictions could be fully tracked.

The Society of Trust and Estate Practitioners (STEP) has prepared the following helpful summary:

"The Global Legal Entity Identification Foundation (GLEIF) has designed a system where every 'legal entity' will need to register and obtain a unique identification number – a Legal Entity Identifier (LEI) - before it can trade on financial markets in the UK after 3 January 2018. Investors who are deemed to be legal entities [are required] to obtain an LEI, which is a 20-character alphanumeric reference code that is unique to the legal entity. Legal entities include trusts (but not bare trusts), companies (public and private), pension funds (but not self-invested personal pensions), charities and unincorporated bodies that are parties to financial transactions."

Alison MacKrill's full article can be found using the link below.

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Article first published in Business Brief in September 2017

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.