News: LEIs - Status update

23 October 2013 | Maria Leontiou

ESMA published yesterday an update of its Question and Answers (Q&A) on EMIR where amongst others it clarifies the use of Legal Entity Identifiers (LEI) for the purpose of trade reporting to trade repositories. In TR section, Question 10, ESMA clarifies that in order to identify counterparties "a pre-LEI issued by any of the endorsed pre-LOUs (Local Operating Units) of the Global Legal Entity Identifier System" can be used.

Currently there are 3 pre-LOUS that have been endorsed by ROC (WM Datenservice, INSEE and CICI utility) in order to provide pre -LEIs, which will be available for reporting to any regulator that has assented to the ROC charter and that provides for pre-LEIs in their own transaction reporting rules. This will include trade repositories registered with the Monetary Authority of Singapore, as well as trade repositories registered with the European Securities and Markets Authority, the Australian Securities & Investment Commission and various Canadian provincial regulators in 2014. Hong Kong’s trade repository will feature pre-LEIs in OTC derivatives trade reporting as well.

Especially in the case of CICI utility, its endorsement as a pre- LOU for issuing GLEIs, comes as a relief for many European based counterparties which already had an uncertified CICI number, as a result of a 3rd party registration and were waiting for European Regulators' decision as to whether they would accept CICI numbers as pre-LEIs for reporting under EMIR.

Not issued a LEI yet? You now have 3 (globally accepted) options available.....

Maria L.


Hi Maria,you are certainly correct in your assumption that EU banks will ask their counterparties around the world to get a LEI.And, working in an EMIR project in a big bank, I wish the LEI would already be well established around the globe.Nonetheless, there will situations were no LEI is available at the time reporting starts. Some counterparties might not event get on at all, e.g. natural persons or certain legal formations. In these cases it's allowable to use other identifying codes, such as a BIC code or even a client number.

The OTC Space: LEIs Status update

ESMA should outsource the Q & A to Maria.

Ha ha ha ha thank you Michael for the vote of confidence. After all, don't women know it all???? Regulation included!!!!!

Luis,In response to the later part of your question, LEI is currently only mandatory in the US, so not for you as a Swiss Bank. However, with the reporting obligation coming into force currently projected on 12th February 2014 (unless pushed back again), many companies start asking about delegated reporting. This is a service, which many of the investment banks are planning to offer to its clients as a way of obtaining competitive advantage. For this to work though, banks would require an LEI as a sure way to identify the counterparty as poor data quality has a crippling effect on operations and the regulatory consequences of misreporting would be huge.

Hi Maria,I'm part of Banking Relations dept at a swiss private bank.We are currently trying to get the LEI for our bank in Switzerland.But unfortunately no entity is playing the role of a LOU in our country.What is your feeling regarding this and do you think that this point (LEI) is mandatory for a swiss bank to get it now ?Many thx for your help

Luis hi,I guess obtaining a LEI will be more meaningful to your case when the regulation re OTC Derivatives is voted for Switzerland and you have more information available on clearing and reporting deadlines. As for your pre-LEI, are you sure you don't have a CICI number? If you have been reported in the past (CFTC reporting) as a swap counterparty by Swap Dealers, then you surely have a CICI number which if you certify will serve as a pre-LEI, which will be available for reporting to any regulators that have assented to the ROC charter and that provide for pre-LEIs in their own transaction reporting rules. So the question here is: Have your regulators assented to the ROC charter?If you wish to be on the safe side though, you had better escalate this issue to your local regulators, they should know better.....

According to the LEI-ROC Switzerland is up to now 'only' an observer, represented by the Federal Department of Finance:http://www.leiroc.org/about/membersandobservers/index.htmBut I would agree with Maria, that being a bank in Switzerland, most likely a CICI has been registered on your behalf by a 3rd party already. Please check on the CICI portal.https://www.ciciutility.org

Maria,The London Stock Exchange announced in June 2013 that the FCA had confirmed its sponsorship of the LSE as the UK's pre-LOU. As I'm sure you know, the LSE has been issuing pre-LEIs (IEIs), since August this year. As I understand it, IEIs are issued in compliance with the principles outlined by the ROC. However, the LSE is not listed in the ROC's published list of pre-LOUs (link in your post above).Do you know what status the LSE has as a pre-LEI issuer, in the eyes of the ROC? Further, do you know what implications there might be in respect of LSE-issued LEIs once the GLEIS has been implemente fully (i.e. will they continue to be globally recognised as meeting ROC standards and simply convert into "full" LEIs)?Your thoughts are much appreciated!

K.East hi, if you take a look at http://www.leiroc.org/publications/gls/lou_20130318.pdf you will see that the 3 pre-LOUs listed are the ones for which their ROC sponsors sought endorsement, on August 3rd. The sponsors represented that each candidate was willing to and capable of complying with general LEI ROC principles. ROC decided to endorse these 3 pre-LOUs so that the codes they issue or have issued (subject to conditions) may be used for reporting and other regulatory purposes in the various jurisdictions represented in the ROC. So what I understand from this document is that when FCA achieve endorsement for its candidate LSE, then their IEIs will be accepted by all jurisdictions represented in the ROC. I assume that until then, LSE's codes can only be used for EMIR reporting obligations and other local regulatory purposes. I guess that this is something you can confirm with LSE. Generally, this interim system of pre-LOUs and globally accepted pre-LEIs will continue until the COU is set up and the GLEIS becomes fully operational. At that point, pre-LOUs will convert to LOUs, pre-LEIs will convert to LEIs, and LOUs will begin issuing LEIs.

@ Maria and K.I contacted LSE on this very topic yesterday. As their answer does not contain any confidential information I believe it's ok to share their response here:Thank you for your enquiry, our endorsement was submitted to the ROC on the 15th October by the UK regulatory body and we have been advised that this process takes approximately twenty days and once we are endorsed we will publish this information accordingly.We will be offering our service to entities globally.@ GeorgiWhile the CFTC has authority only within the US, there are a number of scenarios possible where a Swiss bank would need to have a CICI already today, e.g.:a) They are counterparty to a tradeb) They are the underlying of a transactionAlso please note that in Switzerland EMIR does not apply, thus 12-Feb-2014 might be a regarded by a Swiss bank also as a non-event.

Robert thank you for your comment. With regards to Switzerland and EMIR, yes, EMIR does not affect a Swiss Bank directly (as they are not obliged to report under this regulation) but, to the best of my knowledge, if they do business with EU entities who will report on them starting February 2014, the Swiss Bank will be requested to provide their LEI to their counterparty, to ensure accurate identification of them.