On 20 December, ESMA issued a public statement to support the smooth introduction of the Legal Entity Identifier (LEI) requirements for MiFID II implementation.
This statement outlines temporary measures in respect of LEI for clients that are legal persons, and LEI for issuers.
The FCA recognises the importance of LEIs to deliver safer and cleaner markets, but also the need that ESMA has identified for a smooth introduction to the new regime.
LEI for clients as Legal Persons
The temporary process outlined in ESMA’s statement for LEIs of legal persons will last for six months from 3 January 2018.
As ESMA’s statement notes, this approach requires the FCA to temporarily amend a validation rule in our transaction reporting system, the Market Data Processor (MDP). We will do this as soon as possible, but that change will not be made by 3 January.
We will communicate further with executing firms and Approved Reporting Mechanisms (ARMs) on this issue, including the date when we intend to make the change to the validation rule related to the LEI issuance date. Until then, executing firms should not seek to submit reports that would not normally pass that validation. We will have the facility to accept these reports when the validation rule change has been made.
We continue to expect firms to make every effort to secure a clients’ LEI before trading on their behalf. Our analysis shows that trading with missing LEI is likely to represent a very small fraction of total trading volumes.
LEI for Issuers
The FCA notes the ESMA statement on LEI for Issuers, which allows venues, for a period of six months, to use their own LEI in place of missing issuer LEIs in respect of non-EEA issuers.
Venues should continue their efforts to populate missing LEI data for issuers. Supervisors will be in contact with venues to discuss their progress in reducing the number of missing LEIs.