What does LEI stand for in financial identification?

LEI stands for Legal Entity Identifier, which is a unique alphanumeric code assigned to a distinct legal entity participating in financial transactions. The purpose of the LEI is to enhance transparency and facilitate the identification of entities involved in these transactions, thereby improving the accuracy of financial data and reducing systemic risk in the financial system. The LEI enables regulators and market participants to better understand the relationships among various entities in the market.

The other options do not accurately reflect the correct definition of LEI. Limited Entity Identifier implies a restriction that does not exist in the context of LEI, while Local Enterprise Indicator and Legitimate Enterprise Index do not correspond to any recognized standards or practices in financial identification. The focus of the LEI is on legal entities on a global scale, ensuring that each one is uniquely identifiable, regardless of jurisdiction or financial market.