GLEIF Welcomes ECON Report on Draft Revised EU Prospectus Rules with Regard to the Use of LEIs
On 30 November 2015, the European Commission introduced its proposal for a ‘Regulation of the European Parliament and of the Council [of the European Union] on the prospectus to be published when securities are offered to the public or admitted to trading’.
The European Union (EU) executive body stated that the proposed overhaul of the prospectus rules “will enable investors to make informed investment decisions, simplify the rules for companies that wish to issue shares or debt and foster cross-border investments in the [EU] Single Market. (…) A prospectus is a legal document that describes the company, its main line of business, its finances and shareholding structure. It contains the information an investor needs to have before making a decision whether to invest in the company.”
On 19 July 2016, the European Parliament’s Economic and Monetary Affairs (ECON) Committee published its report on the revised new EU prospectus rules, which details the amendments proposed by the ECON to the draft regulation tabled by the European Commission.
The ECON report includes principal amendments, proposed by the European Central Bank (ECB) to the draft regulation regarding the use of the Legal Entity Identifier (LEI) under the forthcoming new EU prospectus regime.
The ECB opinion on the draft revised EU prospectus rules, published on 17 March 2016, states: “The proposed regulation aims to ensure investor protection and market efficiency while enhancing the single market for capital. To that end, information made available to investors should be ‘sufficient and objective’ and presented in ‘an easily analysable, succinct and comprehensible form’. This information should include unique identifiers for both the security and the issuer.”
The ECB “strongly supports the use of internationally agreed standards”, such as the International Securities Identification Number (ISIN) and the LEI and states in its opinion: “The unique identification of issuers, offerors and guarantors and of securities offered to the public or admitted to trading on regulated financial markets can only be successful if international standards such as the global LEI and the ISIN are used.”
The ECB points out that the “global LEI allows the issuers, offerors and guarantors of the security to be uniquely identified, thus providing key information to the investor. Furthermore, the use of the global LEI is growing rapidly with regard to the identification of legal persons and structures and therefore the ECB sees merit in expanding its use by making it compulsory to include the global LEI in prospectuses or registration documents for securities covered by the proposed regulation.”
The Global Legal Entity Identifier Foundation (GLEIF) very much welcomes the amendments to the draft new EU prospectus rules as reflected in the ECON report relevant to the LEI as an important step to increase transparency and mitigate risk.
GLEIF therefore, calls on the EU co-legislators, i.e. the European Parliament and the Council of the EU representing EU member states, to establish the obligation to report the LEI in the proposed new EU prospectus regulation and in any related European Commission delegated acts implementing the proposed regulation.
How an LEI can help your business get fit for the future
- Improved risk management.
- Increased operational efficiency.
- More accurate calculation of exposures.
- Simplified regulatory reporting.
- Ensured counterparties for any business process.
- Unique counterparty identification globally.
Follow five easy steps to apply for an LEI number
- Review your LEI requirements.
- Explore your LEI issuer's website of choice.
- Provide your 'business card' information.
- Verify and submit your LEI request.
- Make payment.