ESMA provides temporary relief from the MiFID II/MiFIR requirement to obtain client LEIs: how will this affect CFD/FX brokers?


ESMA has issued a statement announcing that for six months from the implementation of MiFID II/ MiFIR on 3 January 2018 (i.e. until 4 July 2018), investment firms may provide a service which is subject to MiFIR transaction reporting requirements to a client who has not been issued a Legal Entity Identifier (LEI).

To be eligible for relief, the investment firm must obtain all the necessary information from the client to apply on its behalf for an LEI code.  The LEI application must be made immediately and the relevant transaction report should be submitted once the LEI has been issued.

After 4 July 2018, investment firms will not be able to provide services triggering transaction reporting obligations to clients who do not have an LEI.

While the statement from ESMA specifies that the requirement to report client LEIs and the relief granted applies to “legal persons”, Article 26(3) of MiFIR states that the reports shall include “a designation to identify the clients” and Article 6 of RTS 22 provides that a natural person shall be identified using the CONCAT code and client identifier.  Therefore, the requirement to report the LEI of a client and the corresponding relief should in general only apply to corporate counterparties.

While most of the client base of retail CFD and FX brokers is likely to be natural persons, you should ensure you screen for any clients that are legal entities and start the LEI application process for them where they have not been issued with an LEI.

If you would like to understand more about the client identification requirements or learn how we can assist you with your reporting obligations, please contact TRAction on +44 20 8050 1317.

Share this Post:

Stay in the Know

Recent Articles:

Do crypto-asset service providers have MiFIR reporting obligations?

Do crypto-asset service providers have MiFIR reporting obligations?

To address the Money Laundering/Terrorism Financing (ML/TF) risks emanating from crypto-assets, the Cyprus Securities and Exchange Commission (CySEC) published a policy statement (PS) on 13 September 2021 to outline its approach to the registration and operations of Crypto Asset Services Providers (CASPs).