Strate has been approved to issue Legal Entity Identifiers

South African legal entities who have to comply with European regulations to execute a transaction with European counterparts can now apply to Strate for their Legal Entity Identifier (LEI), which is being used by regulators to provide greater transparency into financial markets and counter party exposures.


From June 2018, firms subject to MiFID II transaction reporting obligations will not be able to execute a trade on behalf of a client who does not have a valid LEI. This is just one of a number of European regulations and directives where an LEI is required, with the next phase of European Markets Infrastructure Regulation (EMIR) on margin requirements for non-centrally cleared OTC derivatives to follow.


On 31 May 2018, the Global LEI Foundation (GLEIF) approved Strate as a fully accredited issuer of LEIs, known as a Local Operating Unit (LOU). LOUs are the utilities endorsed by the Regulatory Oversight Committee (ROC), or accredited by the GLEIF under ROC oversight, to provide LEI registrations to registrants and other services. Strate has been issuing LEI since 2014 in its role as an endorsed pre-LOU, and to date, has issued over 350 LEIs.


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Application to Become a Local Operating Unit for Legal Entity Identifiers Underway

During 2014 Strate’s regulator, the Financial Services Board (FSB), announced that Strate had been allocated a globally unique four-digit prefix that it will use to issue Legal Entity Identifiers (LEIs). Strate has now applied to become a fully-operational local operating unit (LOU) to the Regulatory Oversight Committee (ROC).


The LEI is a 20-digit, alpha-numeric code, to uniquely identify legally distinct entities that engage in financial transactions. It has been designed as a globally recognised standard (through ISO 17442) that can be applied to any organisation or firm involved in a financial transaction internationally. It enables a quick and reliable assessment of market participant’s financial transaction exposures to one another to identify potential risk across the financial system. While regulators can monitor these risks, companies are able to better analyse their operational risks and proactively mitigate them.


The LEI is a solution to overcome the fragmented system of identifying companies to mitigate systemic risk and address vulnerabilities across international financial markets.


The ROC is a committee of global regulators established after recommendations by the international Financial Stability Board and subsequently endorsed by the Group of 20 nations that endorses LOUs to issue LEIs. The ROC endorsement is a prerequisite for using LEIs for reporting both local and international financial transactions.


Should Strate’s endorsement as a pre-LOU be approved, any legal entity seeking an LEI will be able to submit its application through Strate’s LEI service, along with the required supporting documentation.


Strate will continue to provide feedback on the progress of this application.