ESMA delays LEI requirements for MiFID II 22 December 2017Paris Reporter: Becky Butcher
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The European Markets and Securities Authority (ESMA) has issued a delay to the enforcement of the legal entity identifier (LEI) requirements for the second Markets in Financial Instruments Directive (MiFID II).
In a statement, ESMA explained that over the last weeks it has learnt that not all investment firms will succeed in obtaining LEI codes from all their clients ahead of the deadline.
To allow for a “smooth introduction” of the LEI requirements, the temporary introduction period will allow investment firms may provide a service triggering the obligation to submit a transaction report to the client, from which it did not previously obtain an LEI code under the condition that before providing such service the investment firm obtains the necessary documentation from this client to apply for an LEI code on his behalf.
In addition, trading venues will report their own LEI codes instead of LEI codes of non-EU issuers currently not having their own LEI codes.
Part of EU legislation, MiFID II, due to come into effect 3 January 2018, all legal entities involved in a trade are required to include their LEIs in European trade reporting.
Tony Freeman, executive director of industry relations at DTCC, said: “The news that ESMA has granted a six-month extension for LEI applications will be welcomed by those market participants who have struggled to be ready for the 3 January deadline.”
“Industry preparations for MiFID II have been fraught and in spite of the reprieve on LEIs, there are other requirements of the regulation which market participants are still grappling with.”
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