Topic Information obligations for issuers Legal Entity Identifier (LEI)
Reporting obligation under MiFIR, MAR and EMIR: Legal Entity Identifier (LEI) will be compulsory from 2018 onwards
I. Reporting obligation under Art. 26 of the MiFIR for transactions in financial instruments
From 3 January 2018 onwards a legal entity identifier (LEI) will be necessary for reportable transactions pursuant to Article 26 of the Markets in Financial Instruments Regulation (MiFIR).
Investment firms subject to the reporting obligation for such transactions, as well as branches located inside the European Economic Area (EEA) whose head office is based in a third country, must then ensure before executing the transaction that their clients have an LEI in order to be able to correctly identify them in the reports. Otherwise, the institution cannot execute the reportable transactions. The customers are therefore required to apply for an LEI.
II. Reporting obligation under Art. 27 of the MiFIR / Art. 4 of the MAR for reference data of financial instruments
Trading venues and systematic internalisers are also obliged to use the LEI to identify the issuer of the reported financial instruments when reporting reference data under Article 27 MiFIR / Article 4 of the European Market Abuse Regulation (MAR). All issuers of financial instruments who are eligible for an LEI (e.g. including municipalities and firms based outside the union) should therefore apply for an LEI in advance of 3 January 2018 in order to enable the trading venue or systematic internaliser subject to the reporting requirement to identify the issuer correctly and thereby comply with its reporting obligation.
III. Reporting obligation under Art. 9 of the EMIR
From 1 November 2017 onwards the LEI will also be mandatory in reports under Article 9 of the European Regulation on OTC derivatives, central counterparties and trade repositories (EMIR) in order to identify counterparties, brokers and clearing members that are part of the reported transaction and that are eligible for an LEI. All such entities should therefore apply for an LEI in advance of 1 November 2017 in order to allow their proper identification in derivative reporting.
The LEI is a globally valid identification number which uniquely identifies the companies involved in a transaction. Its use was expedited at the behest of the G20 countries after the emergence of the financial crisis and it is already being actively used, amongst other things, for the reporting of derivatives transactions pursuant to Article 9 of the European Market Infrastructure Regulation (EMIR) (see BaFinJournal of August 2014 – only available in German).
The global framework for use of the LEI is coordinated by the Legal Entity Identifier Regulatory Oversight Committee (LEI ROC). LEIs are allocated by Local Operating Units (LOUs). Fees are levied for issuing an LEI and after each yearly certification. These fees can be viewed in the terms and conditions of the respective LOU. Companies which use an LEI must update their reference data every year and transmit these to the LOU.
A list of all LOUs as well as further information on the subject can be found on the website of the Global LEI Foundation (GLEIF). Amongst other things, the site includes information on registration agents who can provide help when making an application. BaFin will answer any questions you may have on using an LEI. Please e-mail P9WPHG@bafin.de.