If you are responsible for managing your firm’s legal entity data, make a new year’s resolution to get an LEI audit in 2020. This post is a quick take on what an LEI audit is and why all firms can benefit from one. An LEI audit is an annual checkup for your data Just like a yearly physical checkup provides insights into your health, an LEI audit offers insights into the health (i.
LEI monitoring is the automated surveilling of the global legal entity identifier system for data updates that impact your firm. For example, when a client changes its legal name or jurisdiction, an LEI monitoring solution alerts systems and staff of the change. In my extensive discussions on LEI data, I’ve encountered four misconceptions about monitoring which I list and rebut below.
After an LEI is issued, the data associated with it can change. A counterparty could amend its legal name or change jurisdiction. Or, a corporate action might result in a new LEI for a client. These sorts of updates are more varied and frequent than is generally recognized. Failing to update in-house data to reflect these changes can result in a hefty fine, trade breaks, or unrecognized risk exposures.
A legal entity has an official legal name, and it may also be identified by other names such as a trade name. This is why the LEI common data format requires every LEI to have a legal name and supports other name types. You can use this name data to find the LEI of a party, such as a client, or as a data source for in-house databases. This post provides some tips for using LEI name data.
Every LEI has not one, but two statuses associated with it. These statuses change over a legal entity’s lifecycle and often have critical implications for regulatory compliance and risk management. To appreciate these implications, you need to understand the different status values. In this post we define each status, describe the values each can assume and provide stats on the current distribution of these values across the LEI universe. We discuss the relationship between the two statuses and list the reasons a status can change.
How many LEIs have been issued due to MiFID II? Has LEI issuance crested, and if so, when? Did many wait until the end of the year to apply for an LEI? Is MiFID II-related LEI issuance still occurring? At LEI Smart we’re naturally interested in these questions. That interest was further piqued by ESMA’s last-minute delay to some of MiFID II’s LEI related requirements. We’ve analyzed LEI issuance data to come up with answers to these questions.
On December 20th, 2017 ESMA issued a statement announcing steps intended to smooth the introduction of MiFID II’s legal entity identifier (LEI) requirements. Some of the news headlines regarding the statement might lead you to believe that all of MiFID II’s LEI requirements have been delayed six months, but that’s not the case. Additionally, the delayed requirements have conditions attached. If you are actively involved in LEI data management or are working on MiFID II implementation, it’s worth reading ESMA’s brief, two-page statement.
“No LEI, No Trade” means investment firms must know their client’s LEI before entering a trade. Without the client’s correct LEI, the trade is not allowed. This rule is part of MiFID II’s transaction reporting requirements. This post reviews the LEI-related specifics of these requirements. This is our second in a series of posts on MiFID II and the LEI. If you are brand new to the LEI or MiFID II, the first post introduces both.
Seventeen different types of corporate actions trigger LEI data updates, according to a consultative paper published in late July by the LEI Regulatory Oversight Committee (ROC). The paper proposes data model and process enhancements to make these updates easier to track and timely. We’ve reviewed the thirty-page paper and provide a summary and some comments. Corporate Actions Resulting in LEI Updates These are the corporate actions that trigger LEI data updates:
“No LEI, No Trade” captures the essence of MiFID II’s legal entity identifier (LEI) requirements. You may have seen this phrase in a financial markets publication or blog post. Its use is invariably accompanied by a call for European market participants to apply for a legal entity identifier in advance of the January 3rd go-live. Please heed this call. If your firm or fund doesn’t have an LEI by that date, you won’t be able to trade in European markets.
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