Companies currently require an LEI to:
- participate in derivatives trading.
- register financial derivatives to a transactions register, which is mandatory since the February 12, 2014 roll-out of Article 9 of EMIR (the European Market Infrastructure Regulation).
- complete direct reporting by national register (e.g. voting rights declarations).
- fulfill mandatory disclosure requirements according to Article 26 of the European Financial Market Regulations (MiFIR, MiFID II).
Key groups that are affected by LEI legislation are: banks, credit intuitions, insurance companies, securities service companies and investment funds. Corporations, associations, commercial companies, joint ventures and registered merchants may also be affected.
In view of the growing regulation of financial markets, it is anticipated that the use of LEIs will be adopted by many authorities and institutions worldwide. Subsequently, many non-financial counterparties that may be involved in derivative contracts will also be required to obtain and use LEIs. Individuals and legally-dependent companies are currently not required to use an LEI.