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SOCIETE GENERALE

The use of pre-LEIs or LEIs as unique identification codes will be useful for regulators as well as for financial market participants. But regulators should not underestimate the cost and the difficulties of implementation of pre-LEI or LEI in terms of investment, organisation, IT and human resources. This project has two faces: LEI for group legal entities and LEI for clients or counterparts (Third Party), meaning double labour.

EBA requires financial entities, to obtain and use pre-LEI for reporting requirements as described into the Implementing Technical Standards on Supervisory Reporting (ITS) of EBA ensuring uniform reporting requirements across EU Member States, but not to use pre-LEI to identify Third Parties outside of their group.

Concerning the use of pre-LEI or LEI to identify third party, it is important to notice that some Third Parties concerned by the LEI for regulation and regulatory reportings, are not conscious of these requirements, and have not already obtain their pre-LEI.
Therefore we cannot avoid the risk of third party not having LEI, or even not being aware of the necessity to obtain LEI (asset managers or corporates for instance)
Some guidelines and information raising awareness in that perspective should be suitable at European and local levels.
To relief this concern, we can imagine offering the possibility for financial institution to use, on a temporality basis alternative codes (for instance BIC, ISIN...) to flag Third Parties; with a regularisation afterwards.

Other perimeters points appear with this Public Consultation, the EBA scoop of regulation is European, but legal entities of third countries are involved in the LEI process.

These points need to be clarified and addressed for a better common understanding and performance of the Global LEI System (GLEIS).
Main benefit is to bring better comprehension and coherence to the LEI project in Europe, instead of diverse principles issued by the ROC or Financial Stability Board’s (FSB) Recommendations and High Level Principles. But EBA should keep in mind LEI is a worldwide project with a greater scoop than Europe.

Similarly EBA Recommendation will possibly help clarifying how financial institutions will be able to implement LEI.






On the cost side:
Still perimeters should be taken into consideration.

The Public Consultation refers to the use of pre-LEIs for various financials reporting.

Those references enlarge the exiting perimeters that financial institutions could have reasonably envisaged at first step: taking into account the reporting of EMIR, DFA, AIFM, and CCR.

Therefore two possible kinds of reportings seem to be now concerned:
Reporting from local regulatory body to the EBA,
Reporting from financial institutions to the local regulatory body.

We think clarification by the EBA should be necessary to precise if reporting from financial institutions is limited to credit institution and investment firm excluding Investment manager for instance, and if Third Party are also targeted.

The financial impact of LEI has been underestimated by EBA, by taking in account only the registration fees. In order to implement LEI in their group and for the control of the LEI of their counterparties (Third Party), financials institutions will need to set-up a complete organisation with dedicated means and human resources, in a restricted time.
Still clarification is necessary on the timeline for LEI implantation. A prior approach was based upon the timeline of each regulation, where reporting using LEI was necessary: EMIR (February 2014), DFA, AIFM, and CCR.
But here two new timelines (31 March 2014 and 31 December 2014) are suggested, not for reporting but also for the competent authorities to verify if concerned institutions have obtained pre-LEI codes.
It enlarges the initial LEI perimeters, first initiated for regulatory reporting to a wide scoop of regulator reportings, not formerly identified. This creates some uncertainty and pressure upon the timelines which can be counterproductive vis-à-vis the LEI purposes.
Reconciling and coherence are prerequisites for a better introduction of the LEI.

Setting a unique deadline for December 2014, for instance, could secure opportunely the performance of the Global LEI System.

Also the latest deadline concerns “other institutions” which is not a clear category, does it covers asset managers or corporates?
Olivier Sabourin
+33 (0) 1.42.14.72.65