Legal Entity Identifier (LEI) in KDPW_LOU. Marcin Wrona KDPW_TR Senior Specialist

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1 Legal Entity Identifier (LEI) in KDPW_LOU Marcin Wrona KDPW_TR Senior Specialist Bucharest

2 LEI legal conditions 2

3 LEI why and what for? Why LEI was established? The creation of the Global LEI System is a direct result of the recent financial crisis; To provide Regulators effective measurement and monitoring of systemic risk; To increase the transparency and safety of financial market; Other benefits LEI unicaly identifies legal person or structure that is organised under the laws of any jurisdiction; LEI enables unambiguous identification of entities; LEI provides recognition of given entity around the world; LEI authenticates entities as business partners. 3

4 Dictionary of Global LEI System ROC Regulatory Oversight Committee. Body established to oversee the GLEIS. ROC Members are: National Supervisory Authorities, Central Banks and Goverment Agency; GLEIF Global LEI Foundation which will accredit, coordinate and oversee the actions of LOU; LOU Local Operating Unit local agency authorised to issue LEIs within GLEIS and to maintain reference data of entities; GLEIS - Global LEI System - is a federated system based on cooperation between LOUs and GLEIF. GLEIS is supervised by ROC; CLR Central LEI Repository Database operated by the GLEIF containing all current LEIs and related reference data. CLR will provide central check facility; CF The Common Data File Format. XML file according to schema approved by ROC used for publishing and to exchange LEIs and entity reference data; MA - Master Agreement contract which will define the rules, licence fees, bilateral liability and technical standards between LOUs and the GLEIF; MoU Memorandum of Understanding agreement describing the expected transition of operational duties from ROC to the GLEIF. MoU also will establish the principles of cooperation between them. 4

5 Milestones to establish final GLEIS structure November The G20 instructs the Financial Stability Board (FSB) to prepare recommendations for an LEI governance and implementation framework; May ISO published final ISO LEI Standard; June The FSB published recommendations for a global LEI system; November The G20 and the FSB establish the ROC to oversee the GLEIS; July ROC published framework for organizations willing to become LOU; October December 2013 First eight pre-lou were endorsed by ROC, KDPW_LOU among them; June 2014 GLEIF - operational arm of the GLEIS - was established as Swiss non-profit organization (overseen by ROC); 2015/ estimated time of signing MA between LOUs and GLEI and MoU between GLEIF and ROC, which (with CLR establishing) will lead to final structure of GLEIS. 5

6 The final model of GLEIS LEI ROC GLEIF LEI5 CLR LEI6 LOUn LEI7 LEIn LEI1 LEI2 LEI3 LOUa LEI4 G L E I S 6

7 Regulations requiring LEI The LEI enables legal entities to meet current and future regulatory regime in Europe. Current Regime EMIR came into effect on 12th February 2014; Regime waiting for entry into force REMIT Regulation on wholesale Energy Market Integrity and Transparency - Rreporting obligation applies to any person and eny energy transactions. Coming into force on 16th October 2015 ; MiFID II Markets in Financial Instruments Directive / MiFIR - Markets in Financial Investments Regulation LEI will be required for Counterparties of transactions concluded on instrument listed in regulated markets. Regime come into force on 3rd January CSDR Central Securities Depositories Regulation. LEI will be obligatory for Issuers and account holders. Currently ESMA is finishing Technical Standards. Estimated time of coming into force - 1 Q 2017 r. Regime in advanced design phase SFTR Regulation on Securities Financing Transactions. The following kind of transactions will be covered: securities or commodities lending / borrowing; buy-sell back / sell-buy back transactions or collateral swap transactions. ESMA, PE and Council are going to indicate LEI as reguierd Counterparty identifier. 7

8 Who is allowed to apply for LEI codes? The range of entities requiring LEI codes is broad and includes the following: Non financial entities companies; Banks and credit institutions; Financial intermediaries; Other financial companies; Pension Funds; Investment Funds; Sub-funds under an umbrella. 8

9 LEI structure of code / reference data 9

10 LEI code structure LEI code is a 20-character alphanumeric identifier of entities; LEI is created in accordance with the international standard ISO 17442; Characters used to build LEI are not related with entity name or any id number like businesss register id or tax number. Characters 1-4 Characters 5-6 Characters 7-18 Characters L3KBYEVNHEJF 55 LOU prefix 2594 for KDPW Two reserved digits (null) Alphanumeric characters randomly assigned calculated check digits 10

11 LEI Reference data The reference data maintained in the KDPW database include all items specified in ISO L3KBYEVNHEJF55 Legal Name: Krajowy Depozyt Papierów Wartościowych SA Country: PL Poland Adress: ul. Książęca 4, Warszawa Entity Status: Active Legal Form: Joint Stock-Company Business Register Entity ID: Registration Status: ISSUED Initial Registration Date of LEI: Last update date of LEI: Anniversary date of LEI:

12 LEI validation Validation of reference data According to the ROC requirements for issuance of pre-leis Existence of the entity on the base of business register. In Romania it s the National Trade Register Office; The ability of the entity to have LEI; Correctness of reference data; Authorization of person requesting for LEI code; Rules for creating code Uniqueness given LEI can be issued only once; Exclusivity one entity can has only one LEI code no dupliaction; Compliance with ISO

13 Publication of reference data LOU and GLEIF publishes LEIs and reference data; Reference data between LOUs i GLEIF are exchanged via XML CF; The LEI is a public good. Critical software and other relevant elements must be defined and made publicly available without any licensing or restrictions; In practice LOUs and GLEIF provide a reference data via Internet; GLEIF currently downloads CFs from LOUs and provides for all Conncatenated file. The GLEIF does not modify any of the original source files and performs no data checks; In the future LOUs will deliver LEI reference data to CLR where central check facilities will be in place and Golden Copy will be generated. 13

14 KDPW_LOU service 14

15 KDPW adventages KDPW has long-time experience in the maintenance of reference databases for the capital market and the assignment of ISIN (ISO 6166) and CFI (ISO 10962) codes in accordance with international standards; KDPW participates in the Pre-LOU Group to Advise the Committee on Evaluation and Standards, which ensures harmonisation with all recommendations; KDPW is one of the key and independent institutions of the polish capital market, what enables effective implementation of standards for the entire market participants; KDPW to the extent of EMIR provides entities with comprehensive reporting services; Qualified team of KDPW experts and high level IT solutions; High professionalism and preparation for further development with the implementation of new international standards. 15

16 KDPW way to LOU On April 19, 2013 KDPW was assigned a prefix (2594) necessary to issue pre-leis to legal entities, which will in future become LEIs. The prefix was assigned by the ROC Secretariat. On November 29, 2013 KDPW launched the service of issuing KDPW Entity Identifiers (KEI) under ISO17442 in accordance with the LEI standard. On December 13, 2013 KDPW through Polish Financial Supervision Authority submited its application to the ROC; On December 27, 2013 KDPW was authorised (endorsed) by the ROC and became an authorised pre- LOU; June KDPW_LOU starts cooperation with GLEIF and other LOUs in order to establish and sign Master Agreement. Temporary relations between KDPW and GLEIF are regulated by Commitment Letter. 16

17 Advanced and simply service functionality Unlimited access to KDPW LEI Service, possible from every corner of the Europe via Internet; Easy interface to allocate and manage LEI; Interactivity each action (acceptance or rejection of requests) and live cicle events are automatically comunicated to user by ; Advanced search and filter helps to find the needed information quickly and in useful format XLS, XML; No cost for using service, like account maintenance or data downloading; Challenges assists with the proactive maintenance of entity data: ; Manual and FAQ are provided; Help desk for KDPW clients Telephone» »

18 KDPW_LOU - LEI code management Simple Interface to manage LEI: Self-registration - The entity interested in obtaining a pre-lei (expected authorised agent) may be the only one performing the application process; Agent role request can be submitted by an authorised agent upon receipt of a signed Registrant Authorisation third party assisted registration; Safety - users account secured by login and password; Redable service application is availeble in diffrennt language polish, english and romanian; Suported request: Assigning LEI; LEI renawal KDPW remind about the date of renewal of clients LEI, relevant request is generated few weeks before renewal date; Portability - Transfer of Pre-LEI data between LOUs is available wihout constraint; Update of reference data online through the application. It is entity obligation to keep data up to date. 18

19 KDPW_LOU Annual Fees KDPW_LOU charges fees on a cost recovery basis; Tabele of fees: For the assignment of an identifier at PLN 480 which also cover maintenance in first year (ca. EUR 120, ca. RON 525) Renawal fee PLN 240 (ca. EUR 60, ca. RON 262) paid yearly for maintanence in next year The fees for assigning and renewal includes a contribution fee in the amount of $20 paid yearly for each LEI code to the GLEIF. It s licence fee paid by LOUs. Form of payment Bank Transfer; All requests have unique cash account number indicated by KDPW; Currency of payment PLN. According to our reaserch conversion of transfer currency is a common service in European Banks; Other request processing and WEB Service are provided for free. 19

20 KDPW_LOU LEI registration 20

21 KDPW_LOU - LEI Assigning, 4 easy steps 1. REGISTRATION Registration and confirmation of User Account on 2. REQUEST Submit announcement Form User Account 3. PAYMENT Once announcement is accepted, the cash account id provided to User 4. ASSIGNING LEI is assigned at the moment of payment receiving, invoice is available in User Account 21

22 KDPW_LOU - Account register form 22

23 KDPW_LOU - LEI assignement validation Submmited announcement validation the existence of a legal entity relevant business registry for the given entity is checked as well as registration number in the registry. Bussines register confirmed by ROC in Romania is: National Trade Register Office (Oficiul National al Registrului de Comert); Corectness of reference data entered by the entity in the registration form Autorisation of person requested LEI. Two possiblity are accepted:» duly authorised representative of the entity entered in the business registry or other employee designated by entity on the base on internal power of attorney;» Third party person (LEI Agent) under notary powers of attorney signed by a duly authorised representative of the entity. In case of any doubt regarding the entity eligibility to obtain an LEI code, KDPW may request documents which confirm the entity s status or reference data. Validation with CLR (Concatenated File, in the future Golden Copy ) in order to assure: Exclusivity (no duplicate) verification is performed prior to the issuance of a new LEI Uniqueness Each LEI code may only be issued once globally and codes will not be recycled by any pre-lou 23

24 KDPW_LOU - Portability The maintenance of reference data for any LEI can be transferred without any constraint from one LOU to another LOU; In KDPW_LOU makes it easy and quick to port the LEI code in 3 easy steps: 1. Registration similar to assigning process; 2. Request User indicates LEI and previous LOU; 3. KDPW contacts previous LOU to:» pass transfer reguest;» finalise technical aspekts; All reference data are transfered; In KDPW portability is free of charge; LEI is transfered with orginal Registration Status and Renewal date; After the transfer given LEI is managed by KDPW_LOU. 24

25 KDPW_LOU in numbers 25

26 KDPW_LOU number of managed LEIs Year Number of assigned LEI Number of transfered LEI Number of managed LEIs at the end of quarter _Q4 14_Q1 14_Q2 14_Q3 14_Q4 13_Q4 14_Q1 14_Q2 14_Q3 14_Q4 15_Q1 15_Q2 Liczba 15_Q1 15_Q2 26

27 KDPW_LOU processing capacity KDPW is able to process a large number of applications in a short time without any delay or interruption of business activity. Most of codes were assigned in first quarter of This effect was strictly related with the entry into force of EMIR; Number of registered codes per Quarter 13_Q _Q1 14_Q _Q4 14_Q1 14_Q2 14_Q3 14_Q4 15_Q1 15_Q2 Liczba 14_Q3 14_Q4 15_Q1 15_Q2 KDPW expects the entry into force of MiFID II / MiFIR, CSDR, SFTR will also causes significant increase in number of assigned LEI codes. KDPW assures the capacity to process all requests promptly and effectively. 27

28 KDPW_LOU - other statistics Legal form of Enties for which LEI was assigned Companies 88 % ; Funds and sub-funds under umbrela 11 % ; Others (Associatiations, Soll traders, Colleges, etc.) 1%; Corporate sector of entity with LEI managed by KDPW Trades 24 %; Industry and Agriculture 19 %; Finance 18 %; Construction 9%; Foodstuffs and gastronomy 9 %; Automotive and Transportation - 6%; Other 15%; Renewal rate 88% Almost 90 % of entities pay maintenance fee extending LEI for next year. 28

29 29 KDPW_LOU - LEI for European Entities KDPW assigns identifiers to entities established in a European Economic Area; KDPW has assigned LEIs for entities from 20 Countries all marked in green; Majority of LEIs have been assigned for entities from Poland, Romania and Cyprus.

30 KDPW_LOU - percentage of LEI per country LEIs assigned for foreign entities in percentage SK 2% AT 1% BG 8% CH 2% ROMANIA 28% CYPRUS 19% NO 1% PT 8% NL 2% MT 1% LV 3% LU 3% LT 6% IT 1% HU 6% GB 6% GR 1% CZ 2% EE 2% 30

31 Thank you for your attention Marcin Wrona Senior Specialist KDPW_TR Contact: WEB: Telephone: KDPW_TR: ,