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The European Securities and Markets Authority (ESMA) issues a third statement on Legal Entity Identifier (LEI) requirements for third-country issuers under the Securities Financing Transactions Regulation (SFTR) reporting regime.
Recognising a potential reporting implementation issue with SFTs, ESMA explains that LEIs are not widely mandated beyond dealers of derivatives in third-country jurisdictions. Therefore, a significant number of issuers do not currently have an LEI.
ESMA expects counterparties, in addition to other entities participating in SFTs, to liaise with issuers with a view to ensuring that they are aware of the requirements under SFTR.
The Authority invites entities, which take part in SFTs reportable under SFTR, to make use of the solutions put in place by the Global Legal Entity Identifier Foundation (GLEIF), to facilitate LEI coverage including the use of LEI validation agents.
The organisation recently announced the creation of a qualification programme for verifiable Legal Entity Identifier (vLEI) issuers, extending its efforts to provide regulated and standardised global identities for legal entities globally.
In terms of changes to the application of EU rules, neither ESMA nor national competent authorities (NCAs) possess any formal power to dis-apply a directly applicable EU legal text. This would need to be implemented through EU legislation.
ESMA will give at least six months’ notice to market participants regarding its position on the reporting of LEI for third-country issuers, ahead of the date of application of this requirement in the SFTR validation rules.
GLEIF has created a universal project to onboard validation agents in preparing for upcoming legislation. For further details of this initiative and steps to promote LEI adoption, refer to SFT Issue 300, page 20.
