What are Legal Entity Identifiers and Does Your SSAS Need One?
From 3rd January 2018 it will be a requirement for legal entities and structures to obtain a reference called a Legal Entity Identifier (LEI) from the London Stock Exchange in order for the trustees of a SSAS to carry on investing. This article looks at what an LEI is, what determines whether a SSAS needs one, and what the costs are if it does.
What is a Legal Entity Identifier?
On 3rd January 2018, the Markets in Financial Instruments Directive and Regulation comes into effect. As a result of this new legislation, a pension scheme – and a SSAS is a pension scheme – must have a Legal Entity Identifier so that it is able to continue to receive investment services.
So what exactly is an LEI and what is it used for?
- An LEI is a 20-character alphanumeric reference code that will be unique to the pension scheme.
- The code will be used to identify the pension scheme whenever there is investment activity in a reportable financial instrument (and that includes equities and bonds) by or on behalf of that pension scheme.
- The LEI code enables the regulatory authorities in the UK and the rest of Europe to monitor this trading activity, to ensure that it is fully legal and compliant. In particular, it is a regulatory instrument aimed at preventing market abuse and market manipulation.
Who is Responsible for Obtaining an LEI?
The SSAS trustees are responsible for obtaining an LEI. It is possible, with the agreement of the SSAS’s trustees for an investment firm to apply for the LEI on the pension scheme’s behalf, for which they can charge a fee for so doing, in addition to the cost of the LEI itself.
They key issue here is that of the SSAS invests in reportable financial instruments, then the scheme’s trustees or an authorised investment firm on their behalf must obtain the LEI BY 3rd January 2018. Without an LEI, investment firms will not be able to provide investment services – that is the execution of trades – on behalf of the pension scheme.
For help and advice on LEIs, please contact us or call us on 0121 693 0690. We will advise whether your SSAS needs an LEI and we can also help with the process of applying for one.