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The Global Legal Entity Identifier Foundation (GLEIF) launched the GLEIF Blog and Discussion Board on 29 September 2015. This blog features information related to Legal Entity Identifier (LEI) rollout. If you would like to comment on a blog post, please identify yourself with your first and last name. Your name will appear next to your comment. Email addresses will not be published. Please note that by accessing or contributing to the discussion board you agree to abide by the terms of the GLEIF Blogging Policy, so please read them carefully.

Legal Entity Identifier News: The November 2015 Update

Global Legal Entity Identifier Foundation provides an overview of latest global regulatory developments relevant to Legal Entity Identifier adoption


Author: Stephan Wolf

  • Date: 2015-11-12
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  • Estimated Reading Time: 9 minutes

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More than 400,000 Legal Entity Identifiers (LEIs) have been issued to date. Given this impressive level of adoption so far and bearing in mind that all participants demand increased visibility, integrity and stability from the financial markets, the Global Legal Entity Identifier Foundation (GLEIF) is confident of widespread LEI adoption in due course.

This said, one must remember that global implementation of any new financial services standard does not happen overnight. It requires continued and prolonged advocacy, as well as cooperation between the public and private sectors.

It is the prerogative of the authorities acting in individual jurisdictions to mandate the use of LEIs. GLEIF therefore expects that regulation will continue to be one of the driving forces of LEI adoption. Consequently, GLEIF closely monitors initiatives relevant to legal entity identification in regulatory reporting and supervision.

Going forward, the GLEIF Blog will provide regular updates on related initiatives launched by public authorities around the globe. This blog post offers an overview of regulatory action relevant to LEI adoption initiated since August 2015.

Sources cited in this blog are included in the ‘related links’ below.

Australian Securities and Investments Commission: derivative transaction rules take effect

In October 2015, Finance Magnates Retail FX reiterated that under the Australian Securities and Investments Commission (ASIC) Derivative Transaction Rules (Reporting) 2013 as amended (the Reporting Rules), Australian issuers of over-the-counter (OTC) derivatives (with less than A$5 billion gross notional outstanding positions as at 30 June 2014) “will need to report for the first time from 12 October 2015 their reportable transactions, and from 18 April 2016 their reportable positions. Key for most reporting entities will be determining the data that is required to be reported, and developing IT systems which collect this data and submit it in a form acceptable to their relevant trade repository.”

The common data that must be reported in relation to reportable transactions and reportable positions includes LEIs for:

  • Counterparties.
  • Beneficiaries (if different to the counterparty).
  • The person making the report (if not the reporting counterparty).
  • The broker that executed the transaction – if any.
  • The clearing member that cleared the transaction – if any.

Canadian Securities Administrators proposes amendments to National Instrument 45-106 Prospectus Exemptions and its Companion Policy

As reported by Lexology, on 13 August 2015 the Canadian Securities Administrators (CSA) published for comment “proposed amendments to National Instrument 45-106 Prospectus Exemptions and its Companion Policy”. The proposed amendments “seek to harmonize the form of report for prospectus exempt distributions across Canada, while increasing the disclosure requirements”.

“Currently, issuers and underwriters are required to file a report on Form 45-106F1 following an exempt distribution in any Canadian jurisdiction other than British Columbia. Since 2011, British Columbia has required reporting of exempt distributions on its own, more comprehensive, Form 45-106F6. Under the proposed amendments there would once again be a single, national form of report (the Proposed Form), which would replace Form 45-106F1, and Form 45-106F6 would be rescinded.”

According to Lexology, the “main question being asked by the CSA is whether the Proposed Form strikes the appropriate balance between the benefits associated with greater public information and the associated cost and burden on issuers.” The Proposed Form would require disclosure of certain identifying numbers including the LEI, as applicable, for issuers. The CSA accepted comments on the proposed amendments until 13 October 2015.

Ontario Securities Commission seeks comment on proposed amendments to trade repositories rule

On 5 November 2015, the Ontario Securities Commission (OSC) published amendments to OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting (the TR Rule) and its companion policy for a 90-day comment period.

According to the OSC, the “proposed amendments would eliminate reporting obligations under the TR Rule for derivatives transactions between end-user local counterparties that are affiliated with each other. Further, the proposed amendments would alleviate certain reporting obligations for end-user local counterparties engaging in derivatives transactions with foreign affiliates where reporting is done in compliance with equivalent trade reporting laws. The proposed amendments would also modify existing LEI requirements in order to better promote data harmonization and introduce transparency to the Ontario derivatives market through public dissemination of transaction level data.”

“These amendments would increase transparency and efficiency in the over-the-counter derivatives market while aiming to preserve the anonymity of counterparties,” said Kevin Fine, Director of the Derivatives Branch at the OSC. The OSC worked with the CSA’s Over-the-Counter Derivatives Committee on the amendments, and securities regulators in Quebec and Manitoba are publishing similar amendments concurrently.

The TR Rule became effective on December 31, 2013. The most recent amendments to the TR Rule became effective on April 30, 2015.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in the capital markets.

For further information, refer also to the article entitled ‘Trade reporting rule amendments proposed in Manitoba, Ontario and Quebec’ published on Lexology included in the ‘related links’ below.

Committee on Payments and Market Infrastructures published its consultative report on correspondent banking

In October 2015, the Committee on Payments and Market Infrastructures (CPMI) published its consultative report on correspondent banking. As stated on the Bank for International Settlements’ website, correspondent banking “is an essential component of the global payment system, especially for cross-border transactions. Through correspondent banking relationships, banks can access financial services in different jurisdictions and provide cross-border payment services to their customers, supporting, inter alia, international trade and financial inclusion. Until recently, banks have maintained a broad network of correspondent relationships, but there are growing indications that this situation might be changing. In particular, some banks providing these services are cutting back the number of relationships they maintain.”

“The CPMI consultative report provides some basic definitions, outlines the main types of correspondent banking arrangement, summarizes recent developments and touches on the underlying drivers. The report reviews certain technical measures relating to: (i) know-your-customer (KYC) utilities; (ii) the increased use of the LEI; (iii) information-sharing mechanisms; and (iv) improvements in payment messages. Following a detailed assessment of the advantages and disadvantages of each of these technical measures, the report puts forward four recommendations for consideration by the industry and authorities.”

The report seeks comments on the recommended technical measures by 7 December 2015.

European Securities and Markets Authority issued an update of its Q&A on the implementation of the European Markets Infrastructure Regulation

On 1 October 2015, the European Securities and Markets Authority (ESMA) issued the 14th update of its questions and answers (Q&A) document on the implementation of the European Markets Infrastructure Regulation (EMIR). “This update includes guidance on a procedure to be followed by counterparties and trade repositories in order to update counterparty’s identifier in case where a counterparty obtains LEI or its LEI changes due to a merger or acquisition.”

US Federal Energy Regulatory Commission: notice of proposed rulemaking

As reported by the Energy Legal Blog, on 17 September 2015 the US Federal Energy Regulatory Commission (FERC) issued a notice of proposed rulemaking (NOPR) proposing to significantly expand the information that entities would be required to disclose in order to participate in the wholesale markets administered by Regional Transmission Organizations (RTO) and Independent System Operators (ISO). FERC’s proposal “would require market participants to provide additional information regarding a broad array of contractual, employee, and other business relationships”. Market participants would also be required to obtain an LEI.

The Energy Legal Blog points out: “FERC’s proposal, if approved, would require each market participant to report in their Connected Entity data filing their own LEI and the LEI of each of their Connected Entities (if known)”. FERC stated that “requiring market participants to disclose Connected Entity and LEI data will assist FERC and each market in screening and detecting anti-competitive and manipulative conduct.” FERC further stated that it currently lacks a “clear window into the relationships between market participants and other entities, which can be complex.” It added that it is also unable to “fully utilize this information in order to detect and deter market manipulation because of uncertainty regarding the identity of a given market participant, which may trade under different identifiers in different markets and venues”.

US Congress: introduction of new bill ‘Office of Financial Research Accountability Act of 2015’

The ‘Office of Financial Research Accountability Act of 2015’ was introduced into the US legislative process on 9 October 2015. This bill “amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to require the Office of Financial Research within the Department of the Treasury to publish annually a detailed work plan of the Office priorities for the upcoming fiscal year, including a detailed description of the progress made by primary financial regulatory agencies in adopting a unique alphanumeric system ("Legal Entity Identifier") to identify legally distinct entities that engage in financial transactions, as well as a list of regulations requiring the use of such a system and actions taken to ensure its adoption by those agencies. The bill requires the Office to develop and implement a cybersecurity plan using adequate safeguards to protect the integrity and confidentiality of the data in Office possession.” (Library of Congress Summary.)

US Consumer Financial Protection Bureau released a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act

As reported by Ballard Spahr LLP on 21 October 2015, the US Consumer Financial Protection Bureau (CFPB) has released a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). This requires most lenders to report certain information about mortgage applications and loans, in an effort to create transparency in the mortgage lending process.

The final rule reflects the CFPB’s belief “that the HMDA data must be updated to address the informational shortcomings exposed by the financial crisis and to meet the needs of homeowners, potential homeowners, and neighborhoods throughout the nation.”

The final rule “modifies the types of ‘Covered Institutions’ subject to Regulation C; the types of transactions subject to Regulation C; specific information that covered institutions are required to collect, record, and report; and processes for reporting and disclosing data. The majority of the provisions will be effective on January 1, 2018.  Covered institutions will collect the new HMDA information in 2018 and report it by March 1, 2019.”

Ballard Spahr LLP points out that after 1 January 2018, ‘Covered Institutions’ will be required to collect, record, and report additional information about originations of, purchases of, and applications for covered loans. The CFPB points out that this additional information will “enhance the ability to screen for possible fair lending problems, helping both institutions and regulators focus their attention on the riskiest areas where fair lending problems are most likely to exist.”

Ballard Spahr LLP further reports that “in an effort to align reporting requirements with well-established data standards and thereby lessen the reporting burden on lenders, the HMDA Rule modifies certain data points, including legal entity identifier, universal loan identifier, loan purpose, preapproval, construction method, occupancy type, loan amount, ethnicity, race, sex, type of purchaser, rate spread, lien status, and reason for denial.”

LEI Regulatory Oversight Committee published its progress report ‘The Global LEI System and regulatory uses of the LEI’

The LEI Regulatory Oversight Committee (ROC) is a group of over 60 public authorities from more than 40 countries established in January 2013 to coordinate and oversee a worldwide framework of legal entity identification, the Global LEI System. In its role as overseer of the GLEIF, the LEI ROC ensures that the GLEIF upholds the principles of the Global LEI System. On 5 November 2015, the LEI ROC published its progress report entitled ‘The Global LEI System and regulatory uses of the LEI’. Authorities in jurisdictions represented in the LEI ROC “have adopted at least 48 regulatory actions using the LEI, which are described in this report”. The report states that these uses of the LEI contribute to many Group of 20 (G 20) objectives, “in line with the intention expressed by the G20 that the LEI should support authorities and market participants in identifying and managing financial risks”.

For more information on regulatory initiatives relevant to LEI adoption, refer to the GLEIF website page ‘Rulemaking’ (see ‘related links’ below).


Read all previous GLEIF Blog posts
About the author:

Stephan Wolf is the CEO of the Global Legal Entity Identifier Foundation (GLEIF). Since January 2017, Mr. Wolf is Co-convener of the International Organization for Standardization Technical Committee 68 FinTech Technical Advisory Group (ISO TC 68 FinTech TAG). In January 2017, Mr. Wolf was named one of the Top 100 Leaders in Identity by One World Identity. He has extensive experience in establishing data operations and global implementation strategy. He has led the advancement of key business and product development strategies throughout his career. Mr. Wolf co-founded IS Innovative Software GmbH in 1989 and served first as its managing director. He was later named spokesman of the executive board of its successor IS.Teledata AG. This company ultimately became part of Interactive Data Corporation where Mr. Wolf held the role of CTO.


Tags for this article:
Legal Entity Identifier (LEI), Regulation, Compliance, Over-the-Counter (OTC) Derivatives, Correspondent Banking, LEI News
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