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Compliance

Regulatory requirement gets time extension

The deadline by which SMSFs had to obtain a legal entity identifier (LEI) under the European-based Markets in Financial Instruments Directive (MiFID II) regulations has been extended by six months.

Originally, European regulators deemed it necessary for SMSFs and other financial services organisations to obtain a 20-character alphanumeric LEI by 3 January 2018 if they wanted to carry out transactions involving a counterparty based in Europe.

Financial organisations, including SMSFs, now have until 3 July 2018 to obtain an LEI.

“The extension was granted because large European organisations were struggling to hit the deadline,” APIR Systems chief executive Chris Donohoe told selfmanagedsuper.

The new requirement for Australian financial entities and the associated deadline caused some concern late last year and in the early stages of this year, and Donohoe predicts the angst will now abate for a while due to the amended time frame.

“It’s quietened down now, but we will see the same feeling of urgency again as the new deadline approaches,” he said.

Looking at the European regulations from a long-term perspective, Donohoe forecast the current LEI requirements would potentially be more wide-reaching.

“We’re seeing the globalisation of regulation and there’s an overall regulatory movement which is aimed at harmonising these rules,” he noted.

“Australia is a member of the G20, but we are in some ways not aligned particularly across the use of the LEI. We might see some changes around that.

“Where that goes to I don’t know. But it will certainly be far more reaching than what it is today, given that people have been hit unwittingly and I don’t know whether even ASIC (Australian Securities and Investments Commission) was prepared for what happened with the MiFID stuff.

“There are questions whether every SMSF may be required to have an LEI at some point in time, but we’re not sure because the SMSF structure is very unique to our market.”

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