By Chris Donohoe, CEO, APIR Systems

As we head into 2026, Australia stands at a pivotal juncture in the evolution of corporate identity standards. The Legal Entity Identifier (LEI), a tool conceived in the aftermath of the global financial crisis to shine a light on previously opaque financial markets, is no longer a niche regulatory requirement but is a core piece of financial infrastructure.

The LEI’s core purpose is simple but powerful - it uniquely identifies legal entities in a standardised, globally recognised format, capturing not just the entity’s name and registration details but also its ownership hierarchy, answering the critical questions of “who is who” and “who owns whom.” This capability is essential for risk oversight, counterparty identification, and the kind of data integrity that modern markets demand in Australia and globally.

Its value now extends well beyond compliance, supporting clearer data, more efficient operations and stronger connections between Australian markets and the rest of the world.

The LEI is set to play a central role in Australia’s financial ecosystem, but there are still questions around how broadly and effectively it will be embraced across both mandated and voluntary use-cases.

Rather than viewing it solely through a regulatory lens, there is an opportunity to position the LEI as a foundational identifier across a myriad of functions including payments, onboarding, risk management and digital identity frameworks.

Regulatory harmonisation milestones

ASIC has mandated the use of LEIs in over-the-counter (OTC) derivative transactions in Australia since October 2024. At the time this was a major step towards global regulatory harmonisation and the change brought Australia into alignment with the European Union, United States and United Kingdom frameworks.

That alignment matters. Markets are global, capital is mobile, and regulatory systems that speak different “languages” create avoidable friction. By standardising around the LEI for critical transaction reporting, Australia has acknowledged that greater interoperability strengthens both our transparency and cross-border competitiveness.

Growth and adoption - momentum is building

This shift is clearly reflected in industry behaviour. LEI uptake has accelerated markedly, with APIR Systems alone recently exceeding 12,000 LEIs across Australian entities and their international subsidiaries. This reflects not only compliance with regulatory mandates but also increasing recognition of the LEI as a strategic identifier for business operations.

Importantly, this growth is not confined to large financial institutions. In Australia, small and medium enterprises, including self-managed superannuation funds (SMSFs) and investment managers, have been impacted by the LEI regulatory trigger that mandates its use, as have trusts and some non-financial entities that are subject to trade reporting requirements.

However, there is still work to be done to ensure there widespread understanding and adoption of the LEI framework across enterprises that may not yet appreciate its relevance to their business activities.

Mandating the LEI annual renewal is a crucial next step that needs to be adopted by both global and Australian regulatory authorities to ensure that information remains up to date, accurate, and achieves the purposes envisaged by the G20 and the Financial Stability Board (FSB). Not doing so risks seeing Australia’s strides in global regulatory harmony slipping backwards.

Looking ahead - unlocking value

While mandates in derivative reporting were a necessary catalyst, the true potential of the LEI extends well beyond this. The Global Legal Entity Identifier Foundation (GLEIF), which oversees the LEI system globally, has identified expanding use-cases such as cross-border payments, anti-money-laundering checks, know your customer (KYC) processes, and digital identity verification. These are not distant possibilities but are initiatives already being piloted or discussed, and in some cases already introduced, in jurisdictions around the world.

For Australia, the hope is that 2026 is the year we move from complying with LEI requirements, to driving strategic adoption. The benefits are multiple and include:

• Improved transparency and trust: A universal identifier strengthens confidence in market participants and supports more effective risk monitoring
• Operational efficiencies: Standardised entity identifiers reduce discrepancies in data reporting, reconciliation and administrative processes
• Improved digital identity infrastructure: As businesses and regulators invest in digital transformation, the LEI offers a global and a trusted reference point for entity authentication across private and public sectors.

Challenges worth addressing

Despite these opportunities, hurdles remain.

One clear area for improvement is LEI renewal and the ongoing maintenance of LEI records. Without consistent renewal, even the most robust identifier framework risks losing its effectiveness. A stronger focus from regulators on renewal is needed to help ensure LEI data remains current, reliable and fit for purpose. Without this, the progress Australia has made toward global regulatory consistency may stall, and it could weaken the very transparency the LEI is designed to deliver.

Encouraging stronger renewal practices, either through regulatory reinforcement or industry education, must be a priority.

Additionally, we should be wary of siloed thinking. Too often, the LEI is treated as a compliance obligation rather than a foundational asset. Broader industry engagement, particularly among corporate entities that are not traditionally embedded in regulated financial markets, will help the LEI reach its full potential as a global identifier.

My hope for 2026 is that the LEI begins to evolve from a regulatory checkbox into a strategic business standard with Australia taking the opportunity to be a leading proponent of the regime

In a world increasingly driven by data, the LEI stands out as a global standard with genuine impact. Maintaining the momentum achieved globally and in Australia with LEI adoption is critical to building financial markets that are more transparent, resilient and globally connected.