ESMA Warns Grace Period for Firms to Meet LEI Obligations Will End in July

The European Securities and Markets Authority (ESMA) said in a statement on Wednesday that it will not extend its transition period to allow investment firms to implement Legal Entity Identifiers (LEIs) when reporting trades under the Markets in Financial Instruments Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term (MiFIR).

According to the statement, since the grace period began in December 2017, the ESMA and National Competent Authorities (NCAs) have seen a significant increase in the LEI coverage for issuers and clients. Therefore, investment firms now have until July 2, 2018, to meet their obligations under the MiFIR.

The temporary period was initially introduced as many investment firms were not able to meet their obligations. This was despite the ESMA consistently urging EU companies to maintain full compliance before the MiFID II came into effect on January 3, 2018. The regulation introduced many obligations for investment firms, including the enhanced and expanded transaction reporting requirement.

Once the six month transition period ends in July, the NCAs’ role in respect to the LEI requirements will shift from monitoring to ongoing supervisory actions. The ESMA and NCAs are currently coordinating the development of a joint supervisory action plan. This will focus on ensuring investment firms comply with the LEI reporting requirements under the MiFIR provisions.

Importance of LEIs

An LEI is a 20-character identification code that enables consistent and accurate identification of legal entities that engage in financial transactions, including non-financial institutions. Under the MiFIR, investment firms within the EU are required to identify their clients that are legal persons with LEIs for MiFID II transaction reporting.

The LEI is an incredibly important piece of the MiFIR, as it is crucial for matching and aggregating data for both MiFIR regulatory and transparency reporting. The code is essential to transparency and market surveillance, including the detection of market abuse.

Many regulators around the world have stressed that LEIs need to be made a global public good, as a common framework is paramount for regulators to clearly identify each exposure for the Risk Management Risk Management One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, One of the most common terms utilized by brokers, risk management refers to the practice of identifying potential risks in advance. Most commonly, this also involves the analysis of risk and the undertaking of precautionary steps to both mitigate and prevent for such risk.Such efforts are essential for brokers and venues in the finance industry, given the potential for fallout in the face of unforeseen events or crises. Given a more tightly regulated environment across nearly every asset class, Read this Term of financial transactions.