Make sure your clients and trade counterparties obtain an LEI before the MiFID II start date in UK & Europe

What do you need to do?

You will need to ensure that any of your clients that are eligible for a Legal Entity Identifier (LEI) (e.g. companies, trusts, partnerships, governmental organisations, but generally not individuals) have been issued with one before the 3 January 2018 implementation date of MiFID II transaction reporting obligations.  Otherwise, you will not be able to execute a transaction on their behalf in a financial instrument.  Essentially – No LEI, no trade.

LEI requirement under MiFID II

LEIs are required for the purpose of identifying counterparties that are legal entities (including those in trusts) in MiFID II transaction reports.  ESMA has made it abundantly clear that investment firms must be able to identify a counterparty that is a legal entity in a transaction report by using an LEI and should not enter into a reportable transaction without one:

“Investment firms shall not provide a service that would trigger the obligation of an investment firm to submit a transaction report for a transaction entered into on behalf of a client who is eligible for the legal entity identifier code, prior to the legal entity identifier code being obtained from that client.”

Regulatory technical and implementing standards – Annex I; MiFID II / MiFIR RTS 22 Article 13

What are LEIs, anyway?

LEIs are identification codes that enable consistent and accurate identification of all legal entities that are parties to financial transactions, including non-financial institutions. LEIs are generated in accordance with the international standard document ISO 17442:2012 – Financial services — Legal Entity Identifier (LEI).

How to obtain an LEI

LEIs are issued by Local Operating Units (LOU) accredited by the Global LEI Foundation (GLEIF). A list of all Local Operating Units can be found on the GLEIF’s website.

 

If you have any questions around LEI requirements, feel free to contact us.