ESMA blinks first on LEIs for transaction reporting two weeks before the MiFID II deadline

20 December 2017

ESMA

ESMA published a statement in late December 2017 temporarily easing the requirement for LEIs during the initial six month period after the 3 January MiFID II deadline.

1)    Firms will be able to trade for a client without an LEI, so long as they have first obtained the documentation necessary for the firm to apply for an LEI on the client’s behalf.

2)    Trading venues will be able to trade for non-EU issuer clients that don’t have an LEI by using their own LEI codes

This decision is designed to head off market disruption and damage to investors from an inability to trade given that, despite their best efforts, many investment firms have not been able to obtain an LEI from all of their legal entity clients who need one.

The FCA’s response to the ESMA statement notes that, in order to accommodate ESMA’s transitional arrangements, it will need to amend a data validation rule in its transaction reporting system, but it won’t be able to do this in time for 3 January. In the meantime, the FCA says firms should delay submitting transaction reports for clients who need LEIs, but don’t yet have them, until it has amended the relevant data validation rule.

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