​​​​​​​​​​​​​​​​​​​​​There’s an emerging theme coming out of the European Union and from the wider world of financial regulation. This is the use of Legal Entity Identifiers (LEI) as a tool to aid the transparency and harmonisation of financial transactions and record keeping. 

What is a LEI? 
​A LEI is a 20 character code issued by one of a number of globally located Local Operating Units. Examples include the London Stock Exchange (LSE) and Irish Stock Exchange (ISE) who issue LEIs in the UK and Ireland respectively. A LEI is used to identify every legal entity or structure, in any jurisdiction, that is part of a financial transaction. An Issuer’s LEI will need to be renewed every year and any changes must be communicated to Euroclear.​

Issuers outside of Europe have already been required to get a LEI
Within the EU, Issuers are being required to obtain a LEI as a result of legislations which are either already in force or on the horizon: 

  • European Market Infrastructure Regulation (EMIR)
  • Markets in Financial Instruments Directive (MiFID II)
  • Market Abuse Regulation (MAR)
  • EU Transparency Directive, and
  • Central Securit​ies Depositaries Regulation (CSDR)

With recent amendments to the EU Transparency Directive effecting all Issuers on a regulated market (e.g. London Stock Exchange Main Market), they'll need a LEI and should be applying it to their Regulatory News Service (RNS) Announcements from January 2017. 

Issuers with stock held ​in the UK or Ireland will now need to apply for a LEI​
The requirement for Issuers to have a LEI is not limited to those on a regulated market. If you’re an Issuer with stock held in the UK or Ireland and CREST, you’ll need to supply your LEI to Euroclear who operate the clearing system. From Euroclear's perspective, they need these LEIs to stay compliant with the Central Securities Depositories Regulation (CDSR) articles on record keeping, and to comply with any license they're granted as a Central Securities Depositary by their appropriate authority (i.e. the Bank of England or the Central Bank of Ireland). 

Looking ahead to the implementation of M​iFID II in January 2018, all trading venues within Europe will require the Issuer's LEI regardless of their market. This ensures compliance with transaction reporting requirements, as the European Securities and Markets Authority (ESMA) guidance points out:

​LEIs are required in advance of trading: no LEI; no trade. 

How do I get a LEI? ​
To register for a LEI you must apply to any Local Operating Unit, which include the LSE and ISE​. There are initial costs for the application and an annual maintenance cost, details of which can be obtained from the Local Operating Unit.  

We’ve been in touch with our clients​
Issuers were asked to respond by the 24 January 2017 so we could submit this information to Euroclear. The survey will be left open for a few more weeks to allow for late submissions. 

If you think you’ll be unable to obtain or provide a LEI in the coming weeks please contact your Client Manager.