Of Relevance to:
Most investment firms
The concept of the need for, and the use of, a Legal Entity Identifier (“LEI”) for financial transactions was first proposed by the Financial Stability Board (“FSB”) in June 2012. Since that time, the regulatory use of LEIs has grown.
A table produced by the Global Legal Entity Identifier Foundation on the use of LEIs – whether ‘required’, ‘requested’ or ‘recommended’ (see link provided) – demonstrates the growth.
The growth in the need for an LEI (as in ‘required’) will continue – see e.g. Regulatory Roundup 85 and the need for an LEI under the revised technical standards for reporting under EMIR which will apply from 1 November this year.
The MiFID II regime will also increase the need for an LEI for other reasons such as transaction reporting.
Regulatory Technical Standard 22 (2017/590) makes it clear that clients that are legal entities should be identified by their LEIs (recital 8) and, furthermore, “Investment firms should obtain LEIs from their clients before providing services which would trigger reporting obligations in respect of transactions carried out on behalf of those clients and use those LEIs in their transaction reports” (recital 14 and Article 13).
To make sure that the message is brought home, Table 2 in Annex I of 2017/590 (mandatory details to be reported in transaction reports) requires the use of LEIs.
Should any firms, particularly those subject to EMIR and MiFID II, not yet have acquired an LEI (and, of course, considered the need for their clients to have an LEI) then the Legal Entity Identifier Regulatory Oversight Committee (“LEI ROC”), being the body referenced in Article 13 of 2017/590, provides the necessary links and further information.
The London Stock Exchange is one entity authorised for the global allocation of LEIs (at a cost of £115 plus VAT and an annual fee of £70 plus VAT per LEI, although bulk discounts are available for firms requiring more than 10 LEIs), but is not the only issuing organisation (see appropriate link)