Who needs a LEI code and for which transactions will it be required?

If your company carries out financial transactions, it is likely that you have already been asked for a LEI code. But is it mandatory in your case? In which specific situations is it required?

So, who needs a LEI and for which transactions is it actually required? In this article, we answer these questions clearly and directly.

Who is required to have a LEI?

The obligation to obtain a LEI code does not apply to all legal entities, but specifically to those participating in financial markets.

This requirement mainly derives from European regulations such as Regulation (EU) No. 648/2012 (EMIR) on derivatives, and the MiFID II Directive, which regulates financial instrument markets.

In practice, the following entities must obtain and maintain an active LEI code:

• Commercial companies: Limited liability companies (SL), public limited companies (SA), and other corporate entities carrying out financial transactions.
• Collective Investment Institutions (CIIs): Investment funds, SICAVs, etc.
• Pension funds.
• Credit institutions and investment service firms.
• Insurance and reinsurance companies.
• Spanish branches of foreign entities operating in financial markets.
• Other legal entities (such as foundations or joint ownership entities) carrying out transactions involving financial instruments.

Natural persons are exempt from this obligation, as they identify themselves using their personal identification documents.

If you would like to better understand what a LEI is, you can start with our main article: LEI Code: what it is, when it is mandatory and how to manage it.

 

I want more information

 

The key principle: “no LEI, no trade”

This is the fundamental principle that summarises the importance of the code. Investment firms and credit institutions are under a legal obligation to identify their clients (legal entities) with a valid LEI code before executing any reportable transaction.

If your company does not have an active LEI, the financial intermediary will not be able to execute new purchase orders or financial contracts on your behalf. This affects not only new investments, but also treasury management and risk hedging strategies.

A LEI that has not been renewed annually is considered “inactive”, which in practice is equivalent to not having one and will cause the same operational blockage for new transactions.

For which transactions will you be asked for a LEI?

The LEI code is essential for a wide range of transactions. The most common include:

Transactions involving transferable securities:

• Purchase and sale of shares, bonds, debentures, commercial paper, or government debt.
• Subscription or redemption of investment fund units (CIIs).
• Acquisition of ETFs and other listed products.

Financial derivatives transactions (under the EMIR Regulation):

• Futures and options used to hedge risks related to commodities or interest rates.
• Swaps or financial exchange agreements.
• Foreign exchange hedging (FX Forwards): A very common case among exporting or importing SMEs that need protection against currency fluctuations. To formalise a currency hedge, the bank will require the company’s LEI.

Securities financing transactions (SFTR):

• Repos (repurchase agreements).
• Securities lending.

Compliance with reporting obligations:

The LEI is the identifier used by entities to report transactions to supervisory authorities such as the CNMV, ensuring effective market supervision.

Who does NOT need a LEI?

• Natural persons (in general).
• Self-employed individuals without complex financial operations.

How can you avoid problems?

Many companies discover the LEI requirement only when they urgently need it. The consequences may include:

• Transaction delays.
• Blocked investments.
• Lack of planning.

What should you do to avoid these issues?

• Assess whether your company needs a LEI.
• Apply for it in advance.
• Keep it active at all times.

How we can help you

The LEI code is no longer merely a recommendation; it has become an essential regulatory requirement for any legal entity participating in financial markets.

A proactive approach, including obtaining the LEI in advance and renewing it annually, is essential to avoid operational blockages, ensure regulatory compliance, and contribute to a more transparent and secure financial system.

Contact the Adlanter corporate legal team so we can analyse your operations and manage your LEI as part of your company’s ongoing corporate compliance support.