ESMA Dithers Over Mandatory LEIs for Repo Collateral

ESMA Dithers Over Mandatory LEIs for Repo Collateral

By Samuel Wilkes
March 26, 2021, Risk

Repo and securities lending participants are currently living with a veiled threat issued by the European Union’s markets regulator. If carried out, the threat would prevent traders from using securities collateral issued by entities that do not have legal entity identifier (LEI) codes, from April 13 this year.

In January 2020, the European Securities and Markets Authority published forbearance that exempted market participants from submitting LEI codes for issuers in repo and securities lending trade reports, where the securities collateral is issued outside the European Economic Area (the EU plus Norway, Iceland and Liechtenstein). Reporting under the Securities Financing Transactions Regulation (SFTR) began in July last year for banks, central counterparties and non-bank firms regulated under the second Markets in Financial Instruments Directive. Fund managers not authorised under Mifid II and corporates began reporting in October 2020 and January 2021, respectively.

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