Daily management

8 June 2018

Legal Entity Identifier mandatory for investing companies as from 2018

Karine DHaenens

Karine DHaenens

Legal Advisor ING

Legal Advisor ING Belgium

As of 1 January 2018 all legal entities which perform transactions in certain financial instruments must apply for an LEI code. This is required by the European MiFID II directive. Do you want to invest or sell investments with your company? Then it is best to apply for the LEI or Legal Entity Identifier as soon as possible. Discover why and how.

Transparency, risk management and risk assessment are becoming increasingly important on financial markets. As of 2018, the legislator will therefore impose an additional obligation for better identification on all legal entities. LEI, or Legal Entity Identifier, means that all legal entities worldwide are identified by a unique alphanumeric code.* This happens when they perform transactions in financial instruments.

Fast detection of system risks

The advantage? Thanks to the global identification of all contractual parties, system risks can be detected early. The Global Legal Entity Identifier Foundation, or GLEIF contributes by making the global LEI Index available. This way, the parties involved can consult all LEI data free of charge.

In 2013, the LEI was introduced for all legal entities which trade in derivative financial instruments, so-called derivatives**. As of 1 January 2018, all legal entities which perform transactions in some other financial instruments must also apply for the LEI code***.

This concerns transactions and listed financial instruments (purchases, sales and transfers) such as shares, bonds, warrants and trackers (listed index funds). Even if they are traded outside the exchange, or if they are an underlying product of an unlisted financial instrument. Financial institutions which perform these transactions for their customers are subject to the MiFID II reporting obligation which requires the LEI code****.

An example? Structured notes which might not be listed, but have underlying shares which are listed – for example from the telecommunications industry or the BEL 20 Index.

Legal Entity Identifier for your company

Is your company a legal entity (Ltd., plc, etc.)? And do you want to invest or sell an existing investment after 1 January 2018? Then you will have to apply for an LEI. Without an LEI, you will no longer be able to trade as of 2018, at least as far as the above-mentioned financial instruments are concerned.

How do you apply for an LEI? For the time being, it is possible via a Local Operating Unit (LOU). Belgium has no recognised LOU. However a single Registration Agent is active: GSI Belgium & Luxembourg. Any Belgian company can apply for an LEI* via this organisation's website.

The costs for applying for an LEI differ for each LOU. The best thing to do is to compare the possibilities. Be aware that the LOUs in the Netherlands and France only serve companies in their own countries. They are therefore not an option for Belgian companies.

The costs vary between 79 and 89 euros for the first registration, with an additional fee of 17 to 19 euros for the GLEIF. Each renewal costs between 49 and 59 euros.

You can apply for an LEI as a Belgian company via these sites
Apply for your Legal Entity Identifier in due time

Do you want to be ready to continue your securities activities as from 2018? Arrange for the registration of your LEI code as quickly as possible, and definitely by December 2017.

Once you have a validly registered LEI code, forward it to your ING contact. They will register your codes in the ING database, ensuring that you are ready to perform impacted transactions as of January 2018.

More info?

Do you want to know more about the Legal Entity Identifier (LEI)?

Are you interested in investing? It is possible to match your investments to the needs of your company.