Temporary Relief For MiFID II LEIs To End
The temporary period allowing for a smooth introduction of the use of Legal Identity Identifiers (LEIs), originally brought-in in December 2017, will not be further extended and cease in July 2018, the European Securities and Markets Authority (ESMA) confirmed today.
Reporting firms have to use LEIs to report trades under the Markets in Financial Instruments Regulation (MiFIR). The six months period was introduced due to the fact that not all firms succeeded in obtaining LEIs in time for the MiFID II start.
ESMA and National Competent Authorities (NCAs) have since observed a significant increase in the LEI coverage for both issuers and clients. Based on these observations, ESMA and NCAs have concluded that there is no need to extend the initial six month period granted to support the smooth introduction of the LEI requirements under MiFIR. The temporary period will last until the 2nd July 2018, including.
The end of the six month period means that NCAs’ activities with respect to the LEI requirements are now shifting from monitoring to ongoing supervisory actions. To ensure a high degree of supervisory convergence and the full application of MIFIR, ESMA and NCAs are coordinating the development of an appropriate and proportionate common supervisory action plan focused on compliance with the LEI reporting requirements under the respective MiFIR provisions.
Larry Thompson, vice chairman of DTCC , said in a statement: “ESMA’s announcement that no additional forbearance will be afforded to market participants means they need to make it a priority to apply for their LEIs ahead of the July 2 expiry date. Furthermore, if firms outside Europe which transact in European markets do not put the necessary measures in place to comply with the MiFID II LEI requirement by this time, they simply will not be able to trade with European counterparties.”
Virginie O’Shea, research director at consultancy Aite Group, said:
— Virginie O'Shea (@virginieoshea) June 20, 2018
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