OSC provides update on Legal Entity Identifier Requirement

TORONTO – The Ontario Securities Commission (OSC) reminds derivatives market participants about the requirement to obtain a Legal Entity Identifier (LEI) under OSC Rule 91-507 Trade Repositories and Derivatives Data Reporting.

This news release replaces the news release issued by the OSC on October 29, 2014.

OSC Rule 91-507 requires that reporting counterparties and designated trade repositories (DTRs) identify all counterparties to a transaction by reference to an LEI (or an alternate identifier in the circumstances described in section 28 of the rule). This requirement took effect on October 31, 2014 and applies to all over-the-counter derivatives transactions that are reportable under the rule. Non-reporting counterparties should give reporting counterparties all relevant information required under OSC Rule 91-507, including their LEI, in order to assist reporting counterparties with meeting their obligations under the rule.

Obtaining and Renewing an LEI

Each local counterparty to a transaction required to be reported under OSC Rule 91-507 must obtain an LEI, if eligible, in accordance with the standards set by the Global Legal Entity Identifier System. Instructions on how to obtain an LEI from one of the accredited local operating units (LOUs) can be found at: https://www.gleif.org/en/about-lei/how-to-get-an-lei-find-lei-issuing-organizations. Once an LEI is allocated to a party, it must be renewed annually to ensure the data is accurate. Any LEI that is not actively renewed within one year of its creation will lapse.

Impediments to Data Reporting

The OSC is aware that legal barriers to reporting counterparty information to DTRs may still exist in a number of foreign jurisdictions, including data protection laws, blocking statutes, state secrecy laws, and bank secrecy laws. Reporting counterparties faced with these legal impediments should apply for exemptive relief from the OSC if they have not already done so. The OSC expects that the operational challenges to obtaining counterparty LEIs that existed following initial implementation of the rule have been minimized and no longer present a significant barrier to reporting this information.

OSC’s Compliance Focus

The OSC continues to monitor progress in the uptake of the use of LEIs across jurisdictions. In the near term, the OSC is focused on monitoring non-reporting of LEIs where counterparties are located in jurisdictions where LEI reporting is a mandatory requirement and no legal impediments to reporting this information are present.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in the capital markets, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at www.osc.ca.

 

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