Legal Entity Identifier Regulatory Update - February 2020

There have been a number of developments across the global financial landscape in terms of regulations in recent months. With the dawn of a new decade, brings about a new era in terms financial regulations and compliance in the global market.
 
Below are a few of the most recent and notable developments watch as we move into Spring 2020.

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Reserve Bank of India (RBI) LEI Requirements

RBI LEI Deadline - 31st March 2020

The RBI considers the LEI a key measure to improving the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis. 
 
It has already mandated the use of the LEI for many transactions in India and India has one of the largest growing issuance rates of LEIs in the world with on average 300 LEIs being issued per week.

The RBI has now mandated that eligible participants are required to obtain Legal Entity Identifier by March 31, 2020.
 
In case of failure to obtain LEI within due date, the Bank shall not honour any kind of banking transactions of defaulting eligible participant.
 
This requirement refers to having an LEI in its ACTIVE state. Therefore, if you already have an LEI, you can ensure it never expires by subscribing to automatic renewals here.

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LEI Requirement for SFTR Reporting

SFTR LEI Deadline - 13th April 2020

Securities financing transactions (SFTs) are vehicles which allow investors and firms to use the assets they own, such as bond or shares, to secure funding for their activities.

For example, selling a security and agreeing to repurchase it in the future for the original sum of money plus a return for the use of that money

There has been a huge demand for measures to be taken to reduce risk and increase compliance requirements in this area. This stems from the need of transparency from the global financial crisis.
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Market participants will be required to provide an LEI in their reports from 13th April 2020.
 
Currently the European Securities and Markets Authority (ESMA) is allowing a grace period of 12 months for third country issuers, but for those in the EU must ensure their LEIs are active by April 13th.

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BE-10A LEI Requirement

In the United States, individuals, trusts, estates, or nonprofit organisations who own a foreign entity will have a BE-10A filing requirement. The 2020 updated BE-10A will now require the provision of the LEI code.
 
As an initiative to make the reporting process more efficient, foreign asset reporting requirements will include the use of the LEI.

Like many Americans, if you happen to have investments in the Associated States of the Marshall Islands, Palau, or Micronesia, then you will have a BE-10 filing requirement as these are considered foreign to the U.S, unlike the neighbouring Puerto Rico.

The BE-10A is not a long form but it captures some vital information. Now, in 2020, this form will require you to provide an LEI code.
 
Obtaining an LEI code is a simple matter and can be done in a few minutes. To obtain a new LEI please contact our team at [email protected] or click here.

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LEI Requirement for HMDA Reporting

HMDA data is a large source of publicly available information in the United States. This allows consumers to have visibility in the process ultimately protecting all parties involved.

The Home Mortgage Disclosure Act (HMDA) requires the financial institutions involved to maintain, report and control data regarding the information within mortgage transactions.

​This data has multiple functions in society, including showing patterns around lending processes, highlighting trends in the industry and also protect against fraud or discrimination.

If you are a Mortgage Originator in the United States you should by now be familiar with the LEI requirement for HMDA reporting as you will be requested to provide it on the HDMA platform. The HMDA reporting process requests the LEI of the mortgage originator.
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Please click here to obtain your LEI or find out more regarding the HMDA and LEI requirements here.