LEI compliance is non-negotiable, says ESMA
20 October 2017 Paris
Image: Shutterstock
Securities lending industry participants must not neglect to find a viable method to comply with the fast-approaching legal entity identifiers (LEI) requirement, according to the European Securities and Markets Authority (ESMA).
The LEI is a 20-digit, alpha-numeric code that enables clear and unique identification of legal
entities participating in financial transactions.
ESMA stated that the introduction of LEIs under the second Markets in Financial Instruments Directive (MiFID II) will improving market surveillance and transparency and play a key role in the new harmonised data-reporting regime.
In a statement on the LEI requirement, Steven Maijoor, chair of ESMA, stated that there is no room for negotiation where LEIs are concerned under the incoming MiFID II rules.
He said: “LEIs play a key role under the new MiFID data-reporting regime as well as being essential in supporting regulators work on transparency and market surveillance. It is vital that investment firms and trading venues make the necessary efforts to obtain their LEIs in good time.”
Maijoor’s warning comes just three months before the implementation of MiFID II on 3 January 2018.
At this year’s IMN Beneficial Owners' Securities Lending Conference in London, Andy Dyson, CEO of the International Securities Lending Association, told delegates how regulatory requirements for new technology implementation, such as LEIs, will require more resources and bring additional costs to market participants, but audience members were assured these would be minimal.
“It has proven to be the most robust identification method for legal entities and as a result has been widely used by regulators in the European Union (EU) and globally,” said ESMA in a statement.
ESMA stated that sourcing and LEI provider is “straightforward” and that a legal entity is not obliged to use an LEI issuer from its own country.
The use of an LEI is already required under a number of EU regulations and directives such
as European Markets Infrastructure Regulation, Alternative Investment Funds Directive, Central Securities Depositories Regulation and Securities Financing Transactions Regulation.
It was developed following the financial crisis of 2007-8 and ESMA states it's a system that works best for identifying legal entities.
The LEI is a 20-digit, alpha-numeric code that enables clear and unique identification of legal
entities participating in financial transactions.
ESMA stated that the introduction of LEIs under the second Markets in Financial Instruments Directive (MiFID II) will improving market surveillance and transparency and play a key role in the new harmonised data-reporting regime.
In a statement on the LEI requirement, Steven Maijoor, chair of ESMA, stated that there is no room for negotiation where LEIs are concerned under the incoming MiFID II rules.
He said: “LEIs play a key role under the new MiFID data-reporting regime as well as being essential in supporting regulators work on transparency and market surveillance. It is vital that investment firms and trading venues make the necessary efforts to obtain their LEIs in good time.”
Maijoor’s warning comes just three months before the implementation of MiFID II on 3 January 2018.
At this year’s IMN Beneficial Owners' Securities Lending Conference in London, Andy Dyson, CEO of the International Securities Lending Association, told delegates how regulatory requirements for new technology implementation, such as LEIs, will require more resources and bring additional costs to market participants, but audience members were assured these would be minimal.
“It has proven to be the most robust identification method for legal entities and as a result has been widely used by regulators in the European Union (EU) and globally,” said ESMA in a statement.
ESMA stated that sourcing and LEI provider is “straightforward” and that a legal entity is not obliged to use an LEI issuer from its own country.
The use of an LEI is already required under a number of EU regulations and directives such
as European Markets Infrastructure Regulation, Alternative Investment Funds Directive, Central Securities Depositories Regulation and Securities Financing Transactions Regulation.
It was developed following the financial crisis of 2007-8 and ESMA states it's a system that works best for identifying legal entities.
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