On 20 December 2017, the European Securities and Markets Authority (ESMA) issued a statement granting six months of forbearance from the MiFID II client LEI requirements, provided that:

1. investment firms providing client services that would otherwise trigger the obligation to submit a transaction report and which do not have an LEI code from their client must, ex ante, obtain the relevant documentation necessary from the client to apply for an LEI code on their behalf, and to immediately apply for the issuance of the LEI on behalf of the client. Once obtained, the firm should then submit its transaction report; and
2. trading venues report their own LEI codes, instead of the LEI codes of non-EU issuers, while reaching out to non-EU issuers to obtain an LEI.

Separately the FCA also issued a statement in response to the ESMA statement, noting that the ESMA approach will require a temporary amendment of the FCA’s Market Data Processor (MDP) which will not be able to be done by 3 January. The FCA states that firms should not send reports to the MDP that would not pass the relevant validation rule (for having a valid LEI) until the amendment has been made. In any case, the FCA expects investment firms to make every effort to secure a client’s LEI before trading on their behalf.

If members have any questions, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.