Legal Entity Identifiers (LEI) are unique codes assigned to companies during financial transactions. Similar to blockchain technology, LEIs would allow for greater analysis for historical transactions. These identifiers were first used in 2012 and have reached over 480,000 participants. However, it is important to note that the number of new registrations have dropped exponentially. In 2016, there was a net loss of 12,000 identifiers. There is no incentive to renew because lapsed identifiers can be reported in financial transactions under current regulations in the EU. And in the US, lawmakers are opposed to making LEIs mandatory in anything other than the swap market.
LEIs have become irrelevant in business because of its loopholes. In an ideal world, companies would use them to maintain financial integrity. I believe that lawmakers should rethink their view on LEIs. After all the financial crises in the last decade, it would make sense to have an extra checks and balances. It works well with swaps. CUSIP numbers allow for secure and legit transactions. This can be easily translated to other markets as well. The idea of LEI sounds good on paper, but will only come to fruition if practiced by all.
Link: https://www.finextra.com/newsarticle/30117/global-lei-initiative-struggles-for-momentum