MiFID II / MiFIR regulation establishes an obligation to report all transactions with investment instruments to regulatory authorities. For the purposes of reporting, all legal entities and natural persons - entrepreneurs acting on behalf of their business activity must be identifiable by a so-called LEI code. LEI (Legal Entity Identifier) is a unique international identification code in a twenty-character alphanumeric form.
MiFID II reporting is not performed by clients but by securities dealers. The client has an obligation to have valid LEI code.
All legal entities and natural persons (entrepreneurs) must have LEI in case they trade in:
- Financial derivatives (e.g. forwards, swaps or options) - as soon as possible because obligatory reporting according EMIR regulation also applies,
- Investment instruments traded on trading venue or outside a trading venue, starting from January 3, 2018, according to MiFID II reporting requirements.
This obligation does not apply to:
- Natural persons,
- Natural persons - entrepreneurs for activities unrelated to their business (the contract is based on birth number not an identification number),
- Spot FX transactions, deposits and loans, as these are not investment instruments,
- Trades in shares of open investment funds as these are not traded on a trading venue,
- Transfers or holdings of securities.
The validity period of LEI is one year. After that it is necessary to renew it. The LEI code remains the same when renewed. The issuance of LEI as well as annual renewal is subject to fees.
How to obtain LEI:
LEI is provided by authorised institutions – in the Czech Republic, it is Central Securities Depository Prague (hereinafter as “CSDP”). The list of other issuers abroad is available at https://www.leiroc.org/lei/how.htm.
You can easily apply for LEI at CSDP (www.cdcp.cz) by filling in an online form followed by payment of the fee. You will receive LEI within few days. You will be reminded every year by the CSDP when the renewal fee is due.
More information on LEI provision is available at https://www.cdcp.cz/index.php/en/lei-code-assignment.
How to communicate LEI to KB?
If you are a local legal entity with ICO or a natural person – entrepreneur, you do not have to notify KB about your LEI. We will find your LEI automatically in the public register. If you are a foreign legal entity, please send your LEI to your relationship manager.
If you trade in derivatives, please send your LEI to firstname.lastname@example.org.
It will not be possible to trade without LEI
We would like to inform you that starting from January 3, 2018, KB may decline trading in derivatives and securities with legal entities as well as to natural persons – entrepreneurs without a valid LEI.