RegTech Intelligence 
JWG analysis.
The Regulatory Oversight Committee is branching out.
On Wednesday, the ROC released a consultation paper on the possible issuance of LEIs to international branches of a head office legal entity. The idea is that this may reduce the likelihood of the double trade and transaction reporting that foreign branches are often subject to from both their home and host jurisdictions. It would also help the GLEIS further their efforts in risk identification and aggregation by linking the LEI branch to its LEI headquarters, and identify the headquarters in the event of a branch failure. For example, should a foreign branch go into liquidation, it is often subject to a different reactionary treatment (from the jurisdiction it is based in) to what its home jurisdiction would impose. Being able to link a subsidiary to its headquarters wherever it is based in the world will significantly reduce this complexity and allow for more structured plans in the event of a failure.
The reason why LEIROC is looking to issue LEIs to international branches but not domestic branches is precisely for this reason. Domestic branches of head office legal entities are rarely subject to the same disparities in regulation and treatment.
The issuance would be under three conditions:
- As mentioned, eligibility is limited to international branches only, not domestic branches
- The branch must be registered in a business register, tying in with the existing reference data requirement for LOUs to specific the business registry of an LEI
- The head office must already have an LEI – being able to clearly identify both LEIs as belonging to the same legal person is of utmost importance.
Having outlined the suggestions, LEIROC are keen to make clear that these are just suggestions and that it is up to the national authorities and the Local Operating Units to decide whether they have the capacity to take on international branches in the GLEIS.
Comments are welcome up to 16 November, so firms can get their opinions in until then. This news follows a number of recent movements in the development of the LEI as the upcoming global identifier. It is becoming more and more prominent in regulation and, thus, even small consultations such as this will have a big impact on the future climate when LEI uptake has skyrocketed.
With this in mind, keep up to date with all the LEI updates here from across the industry, as we trace and analyse them in real-time. In addition, the LEI is appearing in conversation more and more at our CDMG meetings, where firms and vendors meet to discuss upcoming requirements. The next CDMG meeting will be on 24 November and will tackle the upcoming General Data Protection Regulation (GDPR) and, once again, examine the interdependencies and complexities that can help firms meet their requirements. If you want to sign up, email cmdg@jwg-it.eu.