LEI is mandatory for transactions in financial instruments
As of 3 January 2018, the EU demands that companies (legal entities) must have a LEI in order to buy and sell financial instruments such as shares, bonds, derivatives and a LEI in the event of Corporate Actions. A few unlisted instruments are exempt from the rule, and for OTC derivatives the rules apply as of 1 November 2017.
A LEI is an international registration number that can be compared with a business registration number. It is used for reporting purposes and for ensuring that the supervisory authorities can monitor financial transactions and hence help prevent financial crises, secure economic growth and disclose financial crime (LEI is short for Legal Entity Identifier).
Read more at the website of the Danish Financial Supervisory Authority
NOTE: The Danish Financial Supervisory Authority ("FSA") has decided that sole proprietorships are no longer subject to the requirement of a legal entity identifier ("LEI") when trading in securities. However, the LEI requirement still applies to trading in financial derivatives.
Example A:
A parent company and a subsidiary are both independent entities since they have their own Business Registration Number (CVR). The parent company and the subsidiary both trade financial instruments and must hence both have a LEI.
Example B:
A company's various departments are not independent legal entities since they do not have their own business registration number. The company and its departments are both trading financial instruments but must not have their own LEI.
No transactions without a LEI
According to the new rules, Jyske Bank is not allowed to execute transactions for legal entities whose LEI has not been registered with Jyske Bank. The demand for a LEI applies to the decision-maker as well as the custody-account holder.
Which clients are affected?
The LEI requirement applies to all corporate clients, public-sector clients, and quasi-corporate associations wanting to trade in financial instruments, but not private individuals. Nor do they apply to sole proprietorships which exclusively trade in securities. However, trading in OTC derivatives still requires an LEI.
The demand for a LEI applies to legal entities wanting to execute transactions and for whom transactions are executed.
Financial instruments cover a wide range of instruments including shares, bonds, derivatives etc. The main rule is that all financial instruments traded in a regulated market place are comprised. The market place may be situated all over the world and includes, among others, execution venues in the EU, EEA, USA, Japan, China and Brazil.
Two of the investment solutions through Jyske Bank are not comprised by the rules on LEIs:
- Jyske Investering
- Jyske Private Banking Investering
Drawdown, redemption and refinancing of mortgage credit loans with the Jyske Bank Group being in charge of buying and selling the bonds on behalf of the client are not comprised.
Ordering LEI
Choose an issuer
A LEI can be ordered from one or more issuers. The issuer will charge an initial registration fee and an annual maintenance fee. Further information about the fees of the individual LEI issuers appears from their websites.
If you want a Danish website and Danish support, you can use NordLEI (da.nordlei.org), FinReg (www.leinummer.dk), Leikode (www.leikode.dk) or Dansk LEI (www.dansklei.dk). The usual execution time is typically 3-5 business days.
There are several other issuers of LEIs, for instance:
The full list of issuers appears from www.gleif.org.www.nordlei.org
Information that is to be given when ordering a LEI is typically the same as is available in the Danish Register of Companies.
State your business registration number
When ordering a LEI, some issuers demand that the company states a VAT No. In these instances, the company's business registration number (CVR) must be stated.
In some instances, the business registration number (CVR) must be stated as DK followed by the 8-digit business registration number (CVR), i.e.: "DK 12345678".
Registration with Jyske Bank
Registration of LEI with Jyske Bank takes place by sending an email to [email protected] stating information about company name, address and LEI.