Investment platforms as regulated financial institutions
Investment platforms, including brokers, trading platforms, and investment-focused fintech companies, provide access to financial markets and enable trading in instruments such as shares, bonds, funds, and derivatives. When these platforms serve corporate clients, they operate as regulated financial institutions rather than simple technology providers.
In the European Union and many other jurisdictions, investment platforms are subject to financial supervision and licensing requirements. Their regulatory status obliges them to identify clients, monitor trading activity, and report certain transactions to supervisory authorities. This applies regardless of whether the platform operates traditionally as a broker or through a digital investment interface.
Because investment platforms form part of the regulated financial system, their onboarding and compliance processes are designed to meet regulatory reporting and transparency requirements, not only internal business needs.
Why legal entities require a different identification standard
Legal entities cannot be identified in the same way as natural persons. Company names are not globally unique, legal forms differ between jurisdictions, and corporate structures may include subsidiaries, branches, or cross-border entities operating under similar names.
For regulators and financial institutions, this creates a challenge. Without a standardised identifier, it would be impossible to reliably determine which legal entity is involved in a specific financial transaction.
The Legal Entity Identifier was created to solve this problem. An LEI provides a globally recognised, standardised identifier that uniquely identifies a legal entity participating in financial transactions. More information about the Legal Entity Identifier (LEI) is available on the official GLEIF website.
It allows regulators and market participants to identify companies consistently across borders, languages, and legal systems.
For this reason, LEIs are required for legal entities and are not used for individuals, as explained in more detail in our overview of what an LEI code is.
Regulatory obligations behind the LEI requirement
Investment platforms do not request LEIs based on internal policy or preference. The requirement arises from regulatory obligations imposed on them as supervised financial institutions operating within regulated financial markets.
Within the European Union, regulatory frameworks such as the MiFID II regulatory framework require investment firms to report transactions involving legal entities in a standardised manner.
These reporting obligations are designed to ensure transparency and regulatory oversight of financial markets. Transaction reports must include accurate and unambiguous identification of the legal entities executing trades and, where applicable, their counterparties. This requirement applies across investment platforms that provide services to corporate clients.
Without a valid LEI, a legal entity cannot be properly identified in regulatory transaction reports. As a result, an investment platform cannot fulfil its reporting obligations if it allows a company to trade without an LEI. This is why LEI validation is typically required before trading is enabled for corporate accounts.
The requirement is therefore systemic and regulatory in nature, not platform-specific.
How LEI codes are used in transaction reporting
Once an LEI is provided, it becomes an integral part of transaction reporting. The LEI is used to identify the legal entity executing a trade and, in certain cases, the counterparty involved in the transaction.
Investment platforms submit transaction data to national regulators or authorised reporting mechanisms. LEIs allow supervisory authorities to aggregate transaction data across markets and jurisdictions, enabling oversight of trading activity, exposure analysis, and systemic risk monitoring.
This standardised identification framework supports transparency in financial markets and allows regulators to detect patterns, concentrations of risk, and interconnected entities that could otherwise remain obscured.
Examples of investment platforms where LEIs are required
Many companies encounter the LEI requirement for the first time when opening an account on an international investment platform. This is particularly common with platforms that provide services to corporate clients and operate across multiple jurisdictions.
Examples of investment platforms where legal entities are typically required to provide an LEI include Freedom24, Interactive Brokers, Saxo Bank, and other regulated European and international investment platforms. In all cases, the LEI requirement results from the same regulatory principles rather than from individual platform policies.
Consequences of not providing a valid LEI
If a company does not provide a valid LEI, or if its LEI has expired, an investment platform may be required to restrict the account. This can include preventing new trades from being executed or limiting access to regulated financial instruments.
These restrictions are not penalties imposed by the platform. They are compliance measures designed to ensure that the platform does not breach its regulatory reporting obligations. Once a valid LEI is provided or renewed, normal trading access can typically be restored.
For companies planning to trade on investment platforms, it is also useful to understand the cost of obtaining and renewing an LEI, as pricing may vary depending on the registration period and service model.
How companies obtain and maintain an LEI
LEIs are issued within the Global LEI System coordinated by GLEIF. Legal entities obtain an LEI through accredited organisations, including LEI Issuers and Registration Agents, which manage the application, validation, and renewal process. Companies that do not yet have an LEI can start the process by completing a new LEI registration before trading on investment platforms.
An LEI must be renewed periodically to remain valid. This ensures that the reference data associated with the legal entity remains accurate and reflects any changes to the entity’s legal status or structure.
Maintaining an active LEI is therefore an ongoing compliance requirement for companies that participate in regulated financial markets.
Why LEIs matter for companies using investment platforms
The LEI requirement reflects a broader objective of financial regulation: ensuring transparency, accountability, and stability in global financial markets. By requiring standardised identification of legal entities, regulators can oversee market activity more effectively and reduce systemic risk.
For companies, understanding why an LEI is required helps avoid onboarding delays, trading restrictions, and unexpected compliance issues. Rather than being a formality, the LEI plays a central role in how investment platforms and regulators manage and supervise market activity.