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Reminder: Failure to Obtain an LEI (by the Firm or its Client) will Prevent Firms from Being Able to Comply with the Reporting Requirements under MiFIR, Applicable from January 2018
The concept of the ‘Registration Agent’, introduced by GLEIF, allows firms to help their clients to access the network of LEI issuing organizations
Author: Stephan Wolf
Estimated Reading Time: 4 minutes
The Global Legal Entity Identifier Foundation (GLEIF) again calls on market participants that will have to comply with the forthcoming European Union (EU) revised Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR) to obtain a Legal Entity Identifier (LEI) as soon as possible. Failure to obtain an LEI (by the firm or its client) in time will prevent firms from being able to comply with the reporting requirements applicable in the EU as of 3 January 2018. To further streamline the issuance of LEIs, GLEIF has introduced the concept of the ‘Registration Agent’, which allows organizations to help their clients to access the network of LEI issuing organizations.
MiFID II and MiFIR, which cover trading venues, investment firms and intermediaries, will take effect on 3 January 2018. The MiFID II/MiFIR implementing legislative acts require a significant number of actors to obtain an LEI that are under no such obligation to date. With regard to transaction reporting under MiFIR, the European Securities and Markets Authority (ESMA) has clarified that investment firms should obtain LEIs from their clients before providing services which would trigger reporting obligations in respect of transactions carried out on behalf of those clients.
The concept of the Registration Agent, introduced by GLEIF, helps investment firms, e.g. larger banks, brokers, insurances and multinationals, and their clients to comply with reporting requirements in general. The Registration Agent’s role in the Global LEI System is directly connected to the LEI issuing organization. LEI issuing organizations – also referenced as Local Operating Units – supply registration, renewal and other services, and act as the primary interface for legal entities wishing to obtain an LEI. The Registration Agent may choose to partner with one or more LEI issuing organizations to ensure its clients’ needs for LEI services are met. The LEI issuing organizations are standing ready to assist legal entities to obtain an LEI as well as to collaborate with firms interested in acting as a Registration Agent.
However, we cannot guarantee that LEIs will be issued in time for MiFID II/MiFIR to apply if registration is delayed until the fourth quarter of 2017.
Possible tasks performed by a Registration Agent include:
Publish information on its website to help a legal entity apply for an LEI with an LEI issuing organization.
Manage communications with the legal entity.
Process or receive secure payment for the issuance or renewal of an LEI.
Provide data collection or aggregation services from the relevant authoritative sources. (Reference data provided by the legal entity wishing to obtain an LEI is validated with a local authoritative source – a national Business Register, for example – prior to issuing an LEI compliant with the LEI standard.)
Validate the legal entity reference data provided by a legal entity that wishes to obtain an LEI.
Possible tasks performed by the LEI issuing organization include:
Issue the LEI in compliance with the ISO 17442:2012 standard along with the pertaining legal entity reference data (LE-RD).
Upload to GLEIF the new LEI and all LE-RD.
Review and respond to LEI or LE-RD challenges transmitted by GLEIF. (The centralized challenge facility made available by GLEIF extends the ability to trigger updates of LEI data to all interested parties. For more information, refer to the ‘related links’ below.)
Registration Agents will neither be responsible for issuing LEIs nor will they have editorial access to LEI data.
The full duties of an LEI issuing organization are specified in the Service Level Agreement, i.e. Appendix 6 to the Master Agreement (see ‘related links’ below). The Master Agreement is the contractual framework governing the relationship between GLEIF and LEI issuing organizations. It will always be the LEI issuing organization that remains fully responsible and liable to GLEIF for the execution of its duties.
Compliance with MiFIR requires investment firms to maintain its own LEI duly renewed
As previously reported, ESMA has also confirmed to GLEIF that compliance with MiFIR requires investment firms to maintain its own LEI duly renewed. This means that the reference data, i.e. the publicly available information on legal entities identifiable with an LEI, is re-validated annually by the managing LEI issuer against a third party source. An investment firm should therefore ensure that its LEI is renewed by the date stated with its LEI record.
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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), Global Legal Entity Identifier Foundation (GLEIF), Policy Requirements, Standards, Regulation, Compliance, MiFID II / MiFIR, Registration Agent