Working in foreign currency risk management, our world became a little more regulated recently. Starting on October 31st 2014, all Canadian companies that want to trade OTC Derivatives products, including foreign currency forwards, need to register with the GMEI to obtain an LEI.
What’s an LEI?
An LEI is a Legal Entity Identifier, a 20-character code that allows global reporting bodies to better track your OTC trades. It’s an initiative that was created to tighten regulations affecting the derivatives markets following the 2008 crisis and it’s supported by the G20.
How to get an LEI?
To get an LEI, you need to go on the GMEI Utility website and create an account. Once your account is created and verified, you’ll then need to register your legal entity and process your payment. 5 to 10 business days later, you’ll get your LEI number. Once you obtain this number, it has to be communicated with your broker.
How much does it cost?
The initial cost of an LEI number is $200 USD. There is an annual fee of $120 that needs to be paid in order to keep it active.
Who needs an LEI?
In Canada, all companies from small to multinational need an LEI to trade OTC Derivatives. For every legal entity trading, a unique LEI should be requested.