ID requirements for trading - LEI
According to new rules within the EU all legal entities that enter into financial transactions will need a global code of identification. The purpose is to increase investor protection.
From January 3rd 2018 more information about financial transactions will be reported to Finansinspektionen (Swedish Financial Supervisory Authority). In order to perform financial transactions after this date all legal entities will need a global code of identification, called Legal Entity Identifier (LEI). This regulation is not applicable for trading in fund units.
Why do we need a global code of identification?
The requirement for a LEI code has been in the derivatives market since 2014 in order to increase safety and transparency in derivatives transactions. Now, by means of MIFIR (the Markets in Financial Instruments Regulation), the EU has extended the rules to apply to all types of securities, both on regulated and unregulated marketplaces.
The purpose of the regulation is to enable competent authorities, regardless of country, to trace and identify who are buyers and sellers as well as those who make decisions in a securities transaction. In Sweden, it means that we report all parties involved in securities transactions to Finansinspektionen.
What do I need to do?
To be able to trade in securities even after January 3, 2018 your company needs a LEI. If you already have a LEI code you only need to register your LEI at SEB. If you are unsure if you have a LEI you can search for your company name at GLEIF (Global Legal Entity Identifier Foundation), which provides a register of all LEI´s. You do not need a LEI to trade fund units.
Those who trade need a personal identification code:
The requirement for identification also applies to persons who trade with securities or make decisions in securities transactions. The identification code for individuals is based on citizenship. When you trade securities professionally or privately after January 3, 2018, you will therefore be asked about your citizenship.
How do a get a LEI code?
You can apply for a LEI code directly from an issuer of LEI codes or via a broker. You will find a list of approved issuers of LEI ROC (Legal Entity Identifier Regulatory Oversight Committee).
Approved issuer at LEI ROC
We do not recommend any special issuer or broker, but here you will find some intermediaries that are commonly used in the Nordic countries:
Apply for LEI code
Select an issuer and create an account on their site. Have the following information available when you apply:
- Full name of the company
- Corporate form (eg limited liability company or trading company)
- Company status (for example, active or dormant)
- Address of the company and, if applicable, the headquarters
- Country where the company is registered
- Where the company is registered (eg at the Swedish Companies Registration Office)
- Organization/company registration number.
Submit your application and pay the registration fee. Once your application is approved, you will receive an email confirmation.
What does a LEI code cost and how long does it take to get it?
The cost of a LEI code varies between different issuers and intermediaries. At the moment, the cost is about 65-200 euros. Thereafter an annual fee of approximately 50-100 euros will be charged. Delivery time to get a LEI code is usually up to seven business days, but by the end of 2017/2018 the waiting time might be significantly longer.