Requirement to use LEI code is extended in securities trading

​Revised EU securities regulations (MiFID II, MiFIR and EMIR) will require, in the future, that legal entity customers are identified with an international LEI code (Legal Entity Identifier) in transaction reporting of financial instruments to the Financial Supervisory Authority and in EMIR reporting related to derivatives trading. In transaction reporting, private customers will be identified with a Finnish personal identification number or corresponding foreign identification number.

Typically, such financial instruments include, for example, shares and bonds quoted on a stock exchange. The size or nature of the transaction is not significant; all transactions within the scope of the reporting requirement will be reported so that the entities involved in the transaction are identifiable with an LEI code.

The transaction reporting requirement will not apply to subscription and redemption of investment fund shares, so an LEI code will not be needed in this context. On the other hand, trading of listed investment fund (ETF) shares will fall within the scope of transaction reporting, in which case an LEI code will be needed.

Legal entity customers must have an LEI code

  • in EMIR reporting related to derivatives trading of financial instruments from 1 November 2017 and
  • in transaction reporting of financial instruments to the Financial Supervisory Authority from 3 January 2018 .

If an entity does not obtain an LEI code, it will not, in the future, be able to execute financial instrument transactions or derivative contracts. Without an LEI code, investment service providers and trading parties in derivative contracts will not be able to report entities’ securities transactions. Entities will not, in the future, be able to use an identifier other than an LEI code.

Investment service providers will also be able to demand an LEI code from their legal entity customers merely on the basis of a customer relationship associated with a service package. This is a contractual matter between service providers and legal entity customers, where service providers must assess what information in total the services in question require the legal entity customers to provide.

In Finland, an LEI code can be obtained from the Finnish Patent and Registration Office (PRH) by

  • an entity (e.g. limited company or limited partnership) entered in the Trade Register
  • a foundation entered in the Foundation Register or
  • some other entity (e.g. investment fund or public law entity) that has a Business ID.

Further information about obtaining an LEI code is available on the PRH website

See also

LEI code compulsory in transaction reporting from 3 January 2018

If an entity does not have an LEI code, it will not, in the future, be able to execute financial instrument transactions or derivative contracts, because investment service providers and trading parties in derivative contracts will not be able to report transactions without an LEI code. Entities will not, in the future, be able to use an identifier other than an LEI code in reporting transactions.

The investment service providers’ transaction reporting requirement will apply to all financial instruments that are admitted to trading in a regulated market or, in Finland, in a multilateral trading facility (MTF, defined by the MiFID). In the future, the MiFIR will also require reporting of transactions with financial instruments admitted to an organised trading facility (OTF, defined by the MiFID II).

The transaction reporting requirement will not apply to subscription and redemption of investment fund shares, so an LEI code will not be needed in this context. On the other hand, trading of listed investment fund (ETF) shares will fall within the scope of transaction reporting, in which case legal entity customers will need an LEI code.

 

16 October 2017

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