Executive Summary:
This RBI circular mandates the use of Legal Entity Identifier (LEI) codes for non-individual participants in RBI-regulated markets, including government securities, money markets, and non-derivative forex markets. The goal is to improve financial data quality and risk management. Implementation is phased based on entity net worth, with deadlines ranging from April 30, 2019, to March 31, 2020.
Key Points / Main Content:
LEI Requirement:
* All participants, excluding individuals, in RBI-regulated markets must obtain an LEI code.
* Transactions on recognized stock exchanges are exempt.
Scope of Application:
* Applies to Government securities markets, money markets (instruments with maturity of one year or less), and non-derivative forex markets (transactions settling on or before the spot date).
* For non-derivative forex, all interbank transactions require an LEI. Client transactions require an LEI for amounts equivalent to or exceeding USD 1 million.
* Non-resident entities also require LEI codes. Funds operated by a non-resident parent company can use the LEI of the parent company.
Implementation Timeline:
* Phase I (Net Worth above Rs. 10000 million): April 30, 2019
* Phase II (Net Worth between Rs. 2000 million and Rs. 10000 million): August 31, 2019
* Phase III (Net Worth up to Rs. 2000 million): March 31, 2020
* Only entities with LEI codes obtained by the applicable deadline can transact in these markets after the deadline.
Responsibilities:
* Entities executing transactions, reporting, or performing depository functions must capture the LEI code of transacting participants.
* Entities must ensure their LEI code is current under the Global LEI System. Lapsed LEI codes are invalid.
Obtaining LEI:
* LEI can be obtained from any Local Operating Unit (LOU) accredited by the Global Legal Entity Identifier Foundation (GLEIF).
* In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL).
Impact Analysis:
Market Participants (excluding individuals):
* Impact: Required to obtain and maintain a valid LEI code to participate in specified financial markets.
* Action Required: Obtain an LEI code from an accredited LOU (e.g., LEIL) before the applicable deadline based on their net worth. Ensure the LEI remains current.
Entities responsible for executing transactions, reporting, or depository functions:
* Impact: Need to modify systems to capture and store LEI codes of transacting participants.
* Action Required: Update systems to accommodate LEI capture and validation.
Non-resident entities:
* Impact: Need to obtain LEI codes to transact in the specified markets.
* Action Required: Obtain an LEI code. Funds operated by a non-resident parent company can use the LEI of the parent company.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating financial markets.
Legal Entity Identifier (LEI): A 20-character unique identity code assigned to entities who are parties to a financial transaction.
Global Financial Crisis: A worldwide economic downturn that began in 2008.
Global Legal Entity Identifier Foundation (GLEIF): The organization that accredits Local Operating Units (LOUs) for LEI issuance.
Legal Entity Identifier India Ltd. (LEIL): The entity in India authorized to issue LEI codes.
Mumbai, Maharashtra: City in India, location of Financial Markets Regulation Department, Central Office of RBI
Reserve Bank of India Act, 1934: The legislation under which the directions regarding LEI are issued.
T. Rabi Sankar: Chief General Manager at Reserve Bank of India
RESERVE BANK OF INDIA
www.rbi.org.in
RBI/2018-19/83
FMRD.FMID.No.10/11.01.007/2018-19 November 29, 2018
To
All eligible market participants
Dear Sir/Madam
Legal Entity Identifier Code for participation in non-derivative markets
The Legal Entity Identifier (LEI) code has been conceived of as a key measure to improve the
quality and accuracy of financial data systems for better risk management post the Global
Financial Crisis. The LEI is a 20-character unique identity code assigned to entities who are
parties to a financial transaction. Globally, use of LEI has expanded beyond derivative reporting
and it is being used in areas relating to banking, securities market, credit rating, market
supervision, etc.(https://www.gleif.org/en/about-lei/regulatory-use-of-the-lei). The LEI system has
been implemented in a phased manner for participants (other than individuals) in the over-the-
counter markets for rupee interest rate derivatives, foreign currency derivatives and credit
derivatives in India in terms of RBI circular FMRD.FMID No. 14/11.01.007/2016-17 dated June 1,
2017 and for large corporate borrowers of banks in terms of RBI Circular
DBR.No.BP.BC.92/21.04.048/2017-18 dated November 2, 2017.
2. In the Statement on Developmental and Regulatory Policies, First Bi-monthly Monetary Policy
Statement for 2018-19 (Paragraph No. 8), dated April 05, 2018, it was proposed to implement
the LEI mechanism for all financial market transactions undertaken by non-individuals in interest
rate, currency or credit markets regulated by RBI. Accordingly, draft directions in this regard were
issued for public comments on June 20, 2018. Based on comments received during the
consultation, the directions on requirement of LEI Code for participation in non-derivative markets
have been finalized as below.
�वत्तीय बाज़ार �व�नयमन �वभाग,क�द्र�य कायार्लय, पहल� मंिजल, मुख्य भवन,शह�द भगत �सहं माग,र् फोटर्,मुंबई–400001.भारत
फोन: (91-22) 2261 1765,फैक्स: (91-22) 22702290 ई-मेल: cgmfmrd@rbi.org.in
Financial Markets Regulation Department, Central Office, 1st Floor, Main Building, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001. India
Tel: (91-22) 2261 1765, Fax: (91-22) 22702290 e-mail- cgmfmrd@rbi.org.in
िहन्दी आसान ह,ै इसका प्रयोग बढ़ाइए3. All participants, other than individuals, undertaking transactions in the markets regulated by
RBI viz., Government securities markets, money markets (markets for any instrument with a
maturity of one year or less) and non-derivative forex markets (transactions that settle on or
before the spot date) shall obtain Legal Entity Identifier (LEI) codes by the due date indicated in
the schedule given in Annex. Only those entities that obtain an LEI code on or before the due
dates applicable to them shall be able to undertake transactions in these financial markets after
the due date, either as an issuer or as an investor or as a seller / buyer. Transactions undertaken
on recognized stock exchanges are outside the purview of the LEI requirement.
4. In case of non-derivative forex transactions, while all inter-bank transactions shall be subject to
LEI requirement, client transactions shall require LEI code for transactions involving an amount
equivalent to or exceeding USD one million or equivalent thereof in other currencies.
5. Non-resident entities undertaking financial transactions in the relevant markets shall also
require LEI code. Such entities that are not legal entities in their country of incorporation (e.g.,
funds operated by a non-resident parent/management company that are each registered as an
FPI) shall use the LEI code of the parent/management company.
6. Entities responsible for executing transactions, reporting or for depository functions in these
markets shall capture the LEI code of the transacting participants in their systems.
7. Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global
Legal Entity Identifier Foundation (GLEIF) (https://www.gleif.org/en). In India LEI code may be
obtained from Legal Entity Identifier India Ltd. (LEIL) (https://www.ccilindia-lei.co.in). The rules,
procedures and documentation requirements may be ascertained from LEIL
(https://www.ccilindia-lei.co.in/USR_FAQ_DOCS.aspx).
8. Entities undertaking financial transactions shall ensure that their LEI code is considered
current under the rules of the Global LEI System. Lapsed LEI codes shall be deemed invalid for
transactions in markets regulated by RBI.
9. The Directions are issued under section 45W, read with section 45U, of the Reserve Bank of
India Act, 1934.
Yours faithfully
(T. Rabi Sankar)
Chief General ManagerAnnex
Schedule for Implementation of LEI in the Money market, G-sec market and Forex market
Phase Net Worth of Entities Proposed
deadline
Phase I above Rs.10000 million April 30, 2019
Phase II between Rs.2000 million and Rs August 31, 2019
10000 million
Phase III up to Rs.2000 million March 31, 2020