On June 20, 2018, the European Securities and Markets Authority published a statement on the requirements under the Markets in Financial Instruments Regulation for a Legal Entity Identifier. In response to concerns that institutions would not all be able to obtain LEI codes in time for MiFIR's effective date, January 3, 2018, ESMA had issued a statement in December 2017 providing temporary concessions for a period of six months. Those temporary concessions permitted investment firms to provide a service triggering the obligation to submit a transaction report to a client from which they had not obtained an LEI code, provided that, before providing the service, they obtain the necessary documentation from the client to apply for an LEI code on the client's behalf. Trading venues were also permitted to report their own LEI codes instead of LEI codes of non-EU issuers while reaching out to those non-EU issuers.

ESMA and national regulators have closely monitored the use of LEIs since the publication of ESMA's December 2017 statement and note a significant increase in the LEI coverage for both issuers and clients. ESMA and national regulators have concluded that there is no need for the six-month period to be extended and it will therefore expire on July 2, 2018.

During the six-month period, national regulators were required to amend temporarily a validation rule in their transaction reporting systems. ESMA has confirmed that this amendment will be reversed for transactions executed after the six-month period. In response to ESMA's statement, the U.K. Financial Conduct Authority has separately confirmed that it will be implementing the LEI validation rule change from July 3, 2018.

To achieve supervisory convergence and the full application of MiFIR, ESMA and national regulators are now engaged in the development of an appropriate and proportionate common supervisory action plan which focuses on compliance with the LEI reporting requirements under MiFIR.

The ESMA statement is available at: https://www.esma.europa.eu/sites/default/files/library/esma70-145-872_public_statement_on_lei.pdf and the FCA LEI update is available at: https://www.fca.org.uk/markets/mifid-ii/legal-entity-identifier-lei-update.

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