On the 18th of March 2024, the European Securities and Markets Authority (ESMA) published a survey on legal entities identifiers (LEI). The objective of the survey was to collect feedback from market participants on the opportunities and challenges, as well as costs and benefits, of using different identifiers (other than the LEI) more broadly in future financial reporting.
The results of the survey were published on the 3rd of February 2025, having managed to gather evidence on the impacts of including alternatives for reporting, disclosure or record keeping requirements.
What is a legal entity identifier (LEI)?
A LEI is a 20-character alpha-numeric code which allows for clear and unique identification of legal entities participating in transactions within the global financial system. Each LEI code contains information about a company, including their group structure and identity, allowing for increased transparency within capital markets amongst other benefits. As an ISO standard, it is a legal requirement for many companies and is mandated by several EU Directives such as MiFIR & MIFID II.
In Cyprus, the LEI codes are issued by the Cyprus Stock Exchange.
Survey Results:
With diverse representation from 26 different countries, 136 respondents participated in the survey, showcasing some interesting results.
The respondents highlighted that while specific cost estimates for implementing or changing legal identifiers (LEIs and alternatives) were difficult to provide, they acknowledged that these efforts would involve significant costs. They also acknowledged that introducing new identifiers would increase operational complexity, requiring additional efforts in data management, integration, and ongoing verification of identifiers.
Overall, the LEI was the overwhelmingly preferred identifier, with over 86% survey participants selecting it over the European Unified ID (EUID).
According to ESMA, a follow up workshop will be organized with the participants and other key stakeholders to further discuss the results and possible future actions around them.
