LEI is mandatory for transactions in financial instruments

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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.

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.

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.

See more about how to order LEIs here

What do I do if I do not have a LEI?

  • You must buy a LEI if you still want to trade financial instruments as of 3 January 2018.
  • If you do not want to buy a LEI, you must stop trading financial instruments before 3 January 2018 and consider selling your holding before 3 January 2018.

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.

 Client types Trading in securities Trading in OTC derivatives
Yes No Yes No
Corporate clients/funds x   x  
Sole proprietorships   x x  
Associations with business registration nos (CVR) x   x  
Private individuals   x   x

Which financial instruments are comprised?

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.

Which financial instruments are NOT comprised?

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.