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EMIR, Mifid, Uncategorized

LEI use – speech by ESMA

Yesterday Verena Ross, ESMA Executive Director gave this speech on the use of Legal Entity Identifiers(LEI), in particular with reference to MiFID II. This follows the announcement last week that LEIs must be used for all reporting from 3rd July, the 6 month anniversary of the start of MiFID II, following an initial extension (see here). By implication, Investment Firms will need to require that counterparties and issuers have an LEI, no matter where in the world they are located.

The speech discusses the basis of the global LEI project, not only in general terms around the reduction in systemic risk, but also specifically how LEIs can be used by National Competent Authorities(NCAs), who receive transaction reports, and ESMA, who receive reference data, to establish the identity of parties, transparency requirements and other prices of information. It also discusses the process of registration over the past months, and the volume of new entries. The speech ends off reminding that ESMA will now move from “monitoring” to “supervision” and suggests that LEIs will be in wider use in future.

Many in energy and commodities are not Investment Firms and therefore are not subject to the requirements to the same degree, although most will at least have an LEI of their own and use it for EMIR reporting. Never the less, it is likely that any counterparty not registered so far will need to obtain an LEI in the near future. However, those within energy will need to keep using other entity identifiers, such as the ACER code, and EIC code. The task of reference data management thus continues to be challenging.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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