Requirement to obtain a Legal Entity Identifier for international branch issuers

Overview
Issuers are now starting to receive requests to provide a valid Legal Entity Identifier (“LEI”) to international central securities depositories (the “ICSDs”) at the time eligibility in the relevant ICSD is requested for a particular securities issuance or MTN programme.

Contents
From 2 April 2018, such requirement will become mandatory at the time eligibility in the ICSDs is requested and before the securities can be accepted and assigned an ISIN, common code or programme number.

However, the position for international branch issuers outside the head office’s jurisdiction has been less clear. From our recent deal experience, we understand that the ICSDs may request and apply a separate LEI for an international branch issuer notwithstanding that its head office already has an LEI.

The LEI Regulatory Oversight Committee has stated that an LEI may be required for international branches, subject to the following conditions:

1.International branches only: the international branch issuer is located in a jurisdiction (“host jurisdiction”) outside of the head office’s jurisdiction. Only one LEI will be issued per host jurisdiction such that a branch LEI can be used for a single office or several offices (i.e. a branch network) in different locations of the same host jurisdiction, essentially amounting to a “one country-one LEI” policy.

2.Official registration in host jurisdiction: the international branch issuer is registered in a publicly accessible business registry, regulatory registry or tax registry in the host jurisdiction.

3.Head Office has its own LEI: the head office of the international branch issuer must already have an LEI so that the head office LEI can be associated with the international branch LEI in the global LEI system.

4.Reference data must specify relevant branch detail: reference data in the global LEI system relating to the international branch issuer should clearly specify that the LEI corresponds to the international branch issuer so that market participants can easily identify whether a particular LEI is attributable to the head office or a particular international branch issuer.

Although the practice of requiring LEIs for international branch issuers is evolving, international branch issuers should going forward consider obtaining an LEI in connection with any securities issuance or MTN programme to ensure that acceptance of a securities issuance or MTN programme by the ICSDs is not delayed. We understand that some ICSDs currently will apply the LEI of the head office if no international branch issuer LEI is available, but such international branch issuer would need to check with the ICSDs well in advance to ensure that such approach can continue to be relied on.

The LEI of a head office issuer and the LEI of any of its international branch issuers can be obtained from different LEI providers.

Note: this article was originally published on 12 February 2018 and has subsequently been revised to reflect evolving market requirements.