Data is more and more available, and thus financial transparency is at a favorable level. With this, we can say that the world of finance is more accessible, and therefore the Legal Entity Identifier (LEI) remains the main supporter of the identification of entities involved in financial operations.
The year 2024 was predicted as a year of changes and improvements, and that alone meant changes in the financial market. With that, we can see changes in regulations related to LEIs. Let’s see together what are the changes that every company dealing with finance, buying and selling financial products needs to know, as well as tips that are of crucial help. Let’s get started!
Let’s clarify at the beginning – what is LEI?
For all those who are not familiar with this term or never knew what the term LEI means, we bring a brief explanation. LEI or Legal Entity Identifier is a unique global identifier for legal entities participating in financial transactions. Every company that works with financial transactions and instruments receives its own official LEI number through which the company itself is identified before the institutions as an entity that participates in financial transactions.
Changes in data reporting
In 2024, something very crucial changes. What is it you ask? These are the changes in data reporting. Regulators are ready and committed to the bigger picture of legal ownership structures. This means the need to provide additional data:
1. Ultimate Owning Entities (UOEs)
The more details, the clearer the work and the clearer the activities. Identifying the entities that ultimately control the LEI holder will be crucial. This could involve disclosing details of parent companies, trusts, or other ownership structures. Details can make all actions and steps clearer, which is why these changes happen.
2. Beneficial Ownership
A company can be composed of several smaller entities, and several owners, and therefore the ownership and construction of the company is different from others. Increased focus on transparency extends to beneficial owners, those who hold significant control or economic interest in the entity. Depending on the jurisdiction, specific thresholds for ownership percentages might trigger the need to report beneficial owner information.
2024 also brings technological improvements
The LEI system is constantly innovating and bringing changes. Thus, this system in 2024 could see a rise and improvement from the most important aspect – the technological one. This year we have a large number of novelties that are technology-driven solutions to streamline LEI management. Potential advancements include:
1. Frequent and helpful updates – Integration with corporate registries or internal systems could allow for automatic updates to LEI. All data upon ownership changes can be entered here, minimizing manual intervention, which would lead to clearer data.
2. LEI data enrichment is approaching in 2024 – Look for the possibility of enriching LEI data with additional financial or business information, creating a more comprehensive entity profile. The importance of data is crucial, large, and brings more opportunities, but also a clearer view of what the company is.
Apart from the novelties, it is also important to be regularly up to date and to be informed in an accurate way about all changes. This is the only way you will be able to keep up with the changes in 2024, but also with all the changes that will follow in the years after that.
