On the 18th of March 2024, the European Securities and Markets
Authority (ESMA) published a survey on legal entities identifiers
(LEI). The objective of the survey was to collect feedback from
market participants on the opportunities and challenges, as well as
costs and benefits, of using different identifiers (other than the
LEI) more broadly in future financial reporting.
The results of the survey were published on the 3rd of February
2025, having managed to gather evidence on the impacts of including
alternatives for reporting, disclosure or record keeping
requirements.
What is a legal entity identifier (LEI)?
A LEI is a 20-character alpha-numeric code which allows for clear
and unique identification of legal entities participating in
transactions within the global financial system. Each LEI code
contains information about a company, including their group
structure and identity, allowing for increased transparency within
capital markets amongst other benefits. As an ISO standard, it is a
legal requirement for many companies and is mandated by several EU
Directives such as MiFIR & MIFID II.
In Cyprus, the LEI codes are issued by the Cyprus Stock
Exchange.
Survey Results:
With diverse representation from 26 different countries, 136
respondents participated in the survey, showcasing some interesting
results.
The respondents highlighted that while specific cost estimates for
implementing or changing legal identifiers (LEIs and alternatives)
were difficult to provide, they acknowledged that these efforts
would involve significant costs. They also acknowledged that
introducing new identifiers would increase operational complexity,
requiring additional efforts in data management, integration, and
ongoing verification of identifiers.
Overall, the LEI was the overwhelmingly preferred identifier, with
over 86% survey participants selecting it over the European Unified
ID (EUID).
According to ESMA, a follow up workshop will be organized with the
participants and other key stakeholders to further discuss the
results and possible future actions around them.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
