Published by James Jones-Tinsley on
The Markets in Financial Instruments Directive and Regulation, (otherwise known as “MiFID II”), takes effect in the UK from 3 January 2018, at which point a pension scheme must have a Legal Entity Identifier (LEI) if it is to continue to receive investment services.
An LEI is a 20-character alphanumeric reference code that will be unique to the pension scheme.
The LEI is used as the identifier whenever the pension scheme undertakes investment activity - or an investment firm undertakes investment activity on its behalf - in a “reportable financial instrument”, which includes equities and bonds.
The LEI enables regulatory authorities in the UK and the rest of Europe to monitor trading activity, with specific emphasis on market abuse and market manipulation.
The pension scheme trustees are responsible for obtaining an LEI, although some investment firms may agree to apply for the LEI on the pension scheme’s behalf and may charge a fee for doing so - in addition to the cost of the LEI itself.
If the pension scheme invests in reportable financial instruments, it must obtain an LEI by the deadline of 3 January 2018. If the pension scheme fails to obtain an LEI by this date, investment firms will not be able to provide investment services; that is, they will not be able to execute trades on behalf of the pension scheme.
The initial cost of an LEI from the London Stock Exchange is £115 plus VAT. LEIs also have to be renewed on an annual basis, at a cost of around £70 plus VAT per year.
Please note that Barnett Waddingham can obtain an LEI for its SSAS and FURBS clients. If you require this service, please email email@example.com by 27 October 2017.
Therefore, if your scheme needs an LEI, you should arrange this directly - or via your stockbroker - as soon as possible, and then let your usual Client Manager have a note of the unique identifier, as soon as you receive it.