Supervision
As a supervised institution, it is important to be aware of the division of responsibilities between the Dutch Authority for the Financial Markets (AFM) and De Nederlandsche Bank (DNB) regarding the reporting obligations of EMIR (European Market Infrastructure Regulation).
The division of powers between AFM and DNB distinguishes between two categories of counterparties. Category (a) includes banks, insurers, reinsurers and pension funds, which are supervised by DNB. Category (b) includes other counterparties, which are supervised by the AFM. Until recently, supervision of compliance with reporting obligations was also divided in the same way.
On 23 January 2018, a change was implemented in which supervision of compliance with reporting obligations was transferred from DNB to the AFM. This change is based on the AFM's more intensive involvement in the reporting compared to DNB. This is reflected, among other things, in the fact that the AFM participates on behalf of the Dutch supervisors in the European Securities and Market Authority (ESMA) Implementation Task Force for Article 9 of EMIR.
It is important to note that this division of tasks does not affect which competent authorities have access to the reports. Access to the reports remains unchanged. DNB still retains access to the reports received by the AFM under Article 4 of the SFTR and Article 9 of EMIR to the extent necessary for the performance of their tasks. In addition, DNB retains the ability to independently enter into consultations with a prudentially supervised financial company regarding reporting issues.
Legal Entity Identifier (LEI)
The Legal Entity Identifier (LEI) is a globally unique code with which parties in financial markets can be identified. This helps to better manage financial risks because supervisors can easily identify potential systemic risks and market abuse in a timely manner. The LEI must be used to identify parties involved in a financial transaction.
What is an LEI needed for?
The use of an LEI is already required under a number of EU regulations and directives, such as European Market Infrastructure Regulation (EMIR), Securities Financing Transactions Regulation (SFTR), and Markets in Financial Instruments Directive II (MiFID II)/Markets in Financial Instruments Regulation (MiFIR).Who can apply for an LEI?
Any legal entity can apply for an LEI. It excludes natural persons, but includes individuals acting in a business capacity. It also includes government and supranational organisations.How can you apply for an LEI?
To obtain an LEI, an entity must contact the desired LEI issuer, also known as the Local Operating Unit (LOU). The list of LEI issuers can be found on the Global LEI Foundation (GLEIF) website. LEI data are recorded and regularly verified according to protocols and procedures established by the LEI Regulatory Oversight Committee (LEI ROC). This committee, composed of public authorities around the world, was established in January 2013 to coordinate and monitor the framework for the identification of legal entities.The GLEIF acts as the operational arm of the LEI ROC and provides a free global online resource containing the reference data of the legal entities. A search function is available on the website where users can check whether an entity has an LEI and access the associated reference data. It is important to note that a legal entity is not obliged to choose an LEI issuer from its own country. Entities have the freedom to choose their preferred LEI issuer based on their specific needs and cost considerations. In the Netherlands, the Chamber of Commerce acts as the issuing authority for LEIs.
What happens if I do not renew my LEI?
EMIR and SFTR regulations require reporting institutions to have an active LEI to remain compliant with their reporting obligation. Each LEI is valid for 1 year. You must therefore renew your LEI annually to ensure that it remains current. If you do not renew your LEI, it will be marked as lapsed. A lapsed LEI may result in non-compliance with the reporting obligations under these regulations.More information about the LEI can be found on the websites of GLEIF and LEI ROC.