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
Previous ArticleBoM Revises Guidelines on Liquidity Risk and Dividend Payments
BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting