European regulations will require all companies that have a business ID and own financial instruments to obtain an LEI code in the near future. An LEI code, or a Legal Entity Identifier, is a global identifier intended to uniquely identify legal entities that engage in transactions on the financial market. LEI codes will be used to improve the transparency of financial markets. The requirement to use LEI codes is based on EU legislation. In Finland, LEI codes are used under the supervision of the Finnish Financial Supervisory Authority.
What are LEI codes needed for?
The LEI code will be mandatory for all legal entities (companies, associations, foundations) who give banks and other investment service providers orders related to the following:
– derivatives (including, e.g., options, forward transactions)
– publicly traded financial instruments (including, e.g., listed securities, bonds, exchange-traded funds).
Such orders may regard purchases or sales, for instance.
LEI codes are not needed for redeeming or subscribing for units of other investment funds or for trading in unlisted shares.
What is the deadline for obtaining an LEI code?
An LEI code will be required for derivative trading from 1 November 2017 (EMIR*). Orders regarding publicly traded financial derivatives will require an LEI code from 3 January 2018 (MiFID II**, MiFIR***).
Who can obtain an LEI code?
LEI codes are available for companies and other legal entities who have a business ID. In addition to companies and corporations, it is needed by all legal entities that issue financial orders, such as registered associations and foundations. A company or a legal entity is only permitted one LEI code, as branch offices are not able to obtain their own LEI code from the Finnish Patent and Registration Office (PRH) for the time being. Likewise, LEI codes are not available for private individuals.
How and where to apply for an LEI code?
You can apply for an LEI code at the Finnish Patent and Registration Office (PRH). PRH issues LEI codes that are valid for one year at a time, and thus you will have to renew your code every year. PRH does not take a stance on whether a company or legal entity needs the code.
The application has to be signed by a person in a position of responsibility in the company or legal entity (a board member, the managing director or a partner), a person entitled to sign for the company (the authorisation to sign for the company or the procuration rights must have been registered in the Trade Register), an investment fund manager or a person authorised by the legal entity.
TietoAkseli can apply for the LEI code on behalf of a customer when appropriately authorised by the customer. Please contact your own account manager to talk about this. We can also help you to evaluate whether your company needs an LEI code or not.
More information on LEI codes is available on PRH’s website.
EU regulation terms and concepts:
* EMIR = (European Market Infrastructure Regulation), a regulation on OTC derivatives, central counterparties and trade repositories.
** MiFID II = (Markets in Financial Instruments Directive), a directive on markets in financial instruments.
*** MiFIR = (Markets in Financial Instruments Regulation), a regulation on markets in financial instruments