Legal Entity Identifier Data Available Via NorthRow
We have recently added Legal Entity Identifier (LEI) data to the NorthRow platform. All investment and trading firms subject to MiFID II will now be able to access LEI data through NorthRow's Single API as part of a Know Your Business check (KYB), helping regulated firms to streamline client and entity onboarding.
What is a Legal Entity Identifier (LEI) Code?
The Legal Entity Identifier (LEI) initiative was designed to establish a global reference system that uniquely identifies every legal entity or structure, in any jurisdiction, that is party to a financial transaction.
An LEI is a 20-character, alphanumeric code based on the ISO 17442 standard developed by the International Organization for Standardization (ISO) that enables clear and unique identification of an entity that is issued with an LEI participating in financial transactions. Source: The Global Legal Entity Identifier Foundation (GLEIF).
Two integral principles of the LEI code are:
Uniqueness: an LEI code is assigned to a unique entity. Once assigned to an entity it should never be designated to another entity, even if an entity is no longer in operation.
Exclusivity: a legal entity that has obtained an LEI code cannot obtain another one. While entities may port the maintenance of their LEI from one operator to another, the LEI remains unchanged in the process.
The Importance of Legal Entity Identifier (LEI) Data to MiFID II
After the financial crisis of 2008, there is an increasing need for transparency in financial markets and it is now a major objective of regulatory reform around the world. MiFID II is one of the fundamentals to the financial reform for the EU financial markets and its purpose is to improve transparency for both the investors and regulators.
To increase transparency, MiFID II established the requirement for persons that are legal entities or structures including companies, charities and trusts to have a unique LEI code.
As a result, LEI has been mandated by the European Securities and Markets Authority (ESMA) for the reporting of derivative transactions to Trade Repositories under European Market Infrastructure Regulation (EMIR). LEI data is thus crucial for supporting regulators’ activities in the area of market abuse supervision.
Under MiFID II and the Market Abuse Regulation (MAR), all market operators are required to collect an LEI code for each issuer with securities admitted to trading. London Stock Exchange is accredited by the Global Legal Entity Identifier Foundation (GLEIF) as an authorised Local Operating Unit (LOU) for the global allocation of Legal Entity Identifiers (LEI) in the UK.
All investment firms subject to MiFID II will be mandated to retain a valid LEI. Firms subject to the MiFID II transaction reporting obligations will not be able to execute a trade on behalf of a client who is eligible for an LEI and does not have one.
Watch Matt Law, NorthRow’s CTO, explain more on the importance of LEI data to MiFID II.