Budapest, 19 February 2018 – The Hungarian financial markets passed another regulatory milestone. Based on the requirements of the applicable EU regulation (MiFIR), as of 3 January 2018, EU investment firms are required to identify their legal person clients with Legal Entity Identifier (LEI) (including the natural persons acting for business purposes also), if the latter, among others, intend to trade in financial instruments listed on trading venues. Similarly, trading venues are required to identify each issuer with one LEI.
KELER Ltd. reported significantly increased interest and soaring application numbers related to the above changes.
The introduction of the LEI increases the effectiveness of market oversight, the transparency of money, capital and energy market trading, and eases the analysis of trade data. This was already visible in the case of the relevant trades and market participants upon the introduction of the EMIR regulation (European Market Infrastructure Regulation) in 2014. In line with the intention of the legislator, MiFIR (Markets in Financial Instruments Regulation), effective as of 3 January 2018, further expanded the group of participants concerned and the trades to be reported – highlighted Attila Mónus, CEO of KELER Ltd.
Based on Global Legal Entity Identifier Foundation (GLEIF) data, market participants in Hungary applied for nearly 6500 LEI codes until the end of 2017, and KELER anticipates that the several thousand new applications will be seen from Hungary in the first half of 2018. On the whole, the new regulatory framework increases market security for trading counterparties by making individually identifiable new groups of counterparties to securities and capital market transactions, regardless of their location.
As the central securities depository of Hungary, KELER Ltd. is the key infrastructure of the issue of Hungarian securities, the settlement of securities transactions. Services provided to entities trading in investment products on the money and capital markets and Hungarian securities issuers are of outstanding importance in the corporate strategy. As the partner of WM Datenservice, Germany, KELER acts as intermediary in the issue of LEI codes, but the strategic goal of the company is to provide code issue services on its own, independently, in the near future, with state-of-art online application and administration. Thus, the parties concerned will be able to use comprehensive local service, from application to renewal.
New applicants can contact KELER Ltd. and request information daily between 8:00 and 16:00 at the following dedicated phone number: +36 1 37 37 999.
What is the LEI?
The LEI is a unique international identifier of 20 characters to identify market participants accurately, in any country. The most important company data, such as year of foundation, ownership structure, date of registration can be checked based on the LEI.
Attila Mónus indicated that regulatory bodies pay particular attention to the use of the LEI code. Through the local regulators the European Securities and Markets Authority (ESMA) urges the market participants concerned to apply for LEI as soon as possible. In the first half of 2018, in light of the significant increase in applications and the resulting increase in processing time, a grace period of 6 months was introduced, during which period, until the actual code issue, the applicant is required to have a certificate confirming that the application documents were submitted and thus it is in compliance with the requirement.
The financial service providers concerned are required to renew LEI codes annually. If the LEI is no longer needed, the code continues to exist, but becomes inactive, and later can be activated any time.
As of July 2018, respective trade orders could be rejected by investment firms with inactive LEI or pending application process, i.e. if there is no LEI – reminded the KELER CEO.
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