LEI of the Issuer in Securities Financing Transaction Regulation

In 27 days, non-European issuer’s Legal Entity Identifiers (LEIs) of International Securities Identification Numbers (ISINs) will become mandatory for Securities Financing Transaction Regulation.

ESMA relaxed the initial validation rules last January 2020 to allow participants to only report LEIs of EEA-based issuers considering the unsatisfactory level of LEI coverage for third-countries [1]. However the temporary relief is due to end on 13 April 2021.

Regarding that upcoming deadline, ISLA, ICMA, AFME and AMAFI trade associations sent on 8 March 2021 a joint communication to ESMA, multiple EU National Competent Authorities and the FCA [2]: the joint letter asks for an extension of the grace period to ‘allow significantly more time for non-EEA issuers to register their LEIs’ and seeks additional guidance on SFTR reporting in case no further leniency is granted. The letter refers to a survey result launched in November 2020 showing persistent gaps on issuer LEI coverage for some non-EEA countries and security types despite huge efforts having been made [3].

IHS Markit participated to the analysis [4]. Here are some highlights.

Of the 47 570 unique records for which survey respondents did not find issuer LEI, there were 10 177 securities where an LEI was found, leaving 37 207 securities missing LEI issuer, a third of which related exclusively to trade or both trade/collateral.

47% of securities missing LEI issuer were US-issued securities (17 563), 50% issued outside US and outside EEA (18 944 ISINs).

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87% of the US securities missing issuer LEI related to collateral while 73.7% related to trade or trade/collateral for securities issued outside US.

9.3% were Japan-issued of which 95% involve trade/collateral, 9% are China-issued of which 82 % concern only trade.

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EEA countries represented 1.8% of the ISINs missing issuer LEI, 0.02% in terms of loan value, mainly for Luxembourg, Ireland, then Germany and Denmark.

The analysis in value shows principal is more impacted overall.

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As for the main types of securities missing LEI of the issuer, equity (‘others’ category/non main index) represented nearly 40 % of missing LEIs with Japan and US representing 36 % of that equity category, 70 % in terms of lendable value.

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Korea, China, Taiwan, Australia, Hong Kong, Canada represent 50 % of the rest of securities missing issuer LEIs for ‘equities others’.

Government bonds category include national mortgage bonds in the US, Ginnie Mae and Fannie Mae (48.75%) and Emerging Markets government bonds (40%).

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In order to make the SFTR fields 2.54 and 2.93 ‘LEI of the issuer’ mandatory, ESMA validation rules would still have to be amended which would now prove quite challenging for the industry to test and implement on time for the 13 April 2021. In case of fallback solutions should there be no leniency, consistent agreed approaches would be key.

The joint trade association letter encouraged ESMA to raise the problem in the relevant international regulatory forums and invite regulators in the relevant jurisdictions to promote a broader adoption of the LEI code. Unlike counterparty LEIs, issuer LEIs are not part of firms Know-Your-Customer KYC processes.

The survey will be repeated in Q3 2021 and regularly as necessary to monitor the situation.

IHS Markit is happy to help frame and support industry efforts dealing with the challenges of LEI of issuer however ESMA proceeds.


[1] In their statement of 6 January 2020, ESMA and the NCAs were ‘to monitor closely (i) the evolution of the issuance of LEI for third-country issuers, as well as (ii) the population of the field “LEI of the issuer” for third-country entities, in order to better assess the results of this measure as well as the appropriate way forward’.

[2] Joint letter https://www.islaemea.org/, https://www.icmagroup.org/, https://www.afme.eu/, https://www.amafi.fr/

[3] The Global Legal Entity Identifier Foundation (GLEIF) publishes monthly reports showing the LEI Total Data Quality Score of the LEI issuing organization for the reporting period for individual LEI issuing organizations. ANNA and GLEIF initiative to link International Securities Identification Numbers (ISINs) and Legal Entity Identifiers (LEIs) has helped improve the transparency of exposure by linking the issuer and issuance of securities with a daily downloadable ISIN-to-LEI mapping table

[4] Stats presentation of IHS Markit shared along with https://www.islaemea.org/wp-content/uploads/2021/03/Joint-Letter-to-ESMA-regarding-LEI-of-Issuer.pdf

Que-Phuong Dufournet-Tran
About the author: Que-Phuong Dufournet-Tran
Que-Phuong is a Senior Regulatory Affairs Director in Trading Services & Analytics at IHS Markit, leading regulatory topics in relation with regulators and industry associations based in Paris, France. She is specialized in data management and previously worked in regulatory projects implementation with several financial institutions in Paris, Hong-Kong and London on SFTR, EMIR, MIFID, MAR. She is a member of the European Commission European financial data space expert group , the consultative group to the ESMA Secondary Markets Standing Committee and the ISO 20022 Derivatives SubSEG.