ESRB Recommends Framework for Identification of Legal Entities in EU
ESRB published a recommendation regarding identification of legal entities (ESRB/2020/12). The recommendation seeks the introduction of an EU legal framework to uniquely identify legal entities engaged in financial transactions by legal entity identifiers (LEIs) and to make the use of the LEI more systematic in respect of supervisory reporting and public disclosure. Taking into account the timeframe for the adoption of such a framework, ESRB recommends that relevant authorities pursue and systematize their efforts to promote the adoption and use of the LEI by making use of the various regulatory or supervisory powers that they have been granted by national or EU law.
The recommendation is intended to contribute to the prevention and mitigation of systemic risks to financial stability through the establishment of systematic use of the LEI by entities engaged in financial transactions. Toward the introduction of a framework on the use of the legal entity identifier, EC is recommended to propose that EU legislation:
- Incorporate a common Union legal framework governing the identification of legal entities established in the Union that are involved in financial transactions by way of a LEI, paying due regard to the principle of proportionality
- Impose an obligation on legal entities to report financial information include the obligation to identify by way of an LEI the legal entity subject to the reporting obligation and any other legal entity about which information must be reported and which has an LEI.
- Incorporate an obligation on authorities to identify by way of its LEI any legal entity about which they publicly disclose information and which has an LEI, paying due regard to the principle of proportionality
For the use of LEI until the possible introduction of EU legislation, the recommendation is for the relevant authorities to:
- Require or, where applicable, continue to require, all legal entities involved in financial transactions under their supervisory remit to have an LEI
- Continue to include, an obligation (when drafting, imposing, or amending financial reporting obligations, or where applicable) to identify by way of a LEI the legal entity subject to the reporting obligation and any other legal entity about which information must be reported and which has an LEI
- Identify or, where applicable, continue to identify, by way of its LEI, any legal entity about which they publicly disclose information and which has an LEI
Related Link: Recommendation (PDF)
Keywords: Europe, EU, Banking, Insurance, Securities, PMI, LEI, Legal Framework, Reporting Disclosure, Systemic Risk, ESRB
Featured Experts

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Blake Coules
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous Article
BoM Revises Guidelines on Liquidity Risk and Dividend PaymentsRelated Articles
EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
EP Reaches Agreement on Corporate Sustainability Reporting Directive
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
PRA Consults on Model Risk Management Principles for Banks
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
EC Regulation Amends Standards for Calculating Credit Risk Adjustments
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
HKMA Announces Launch of Data Repository on Sustainable Finance
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
BIS Hub Updates Work Program for 2022, Announces New Projects
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
NGFS Report on Integration of G-Cubed Model into NGFS Scenarios
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
EIOPA Consults on Review of Securitization Framework in Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.