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Compliance, Investments

LEI deadline closes at end of the month

LEI SMSF trustees

SMSF trustees will need to obtain a legal entity identifier (LEI) by 30 September if they want to invest in offerings such as contracts for difference.

SMSF trustees will need to secure a legal entity identifier (LEI) by 30 September to enable them to execute transactions involving non-exchange-traded investment instruments such as contracts for difference (CFD).

The deadline is likely to take effect as there is no indication the Australian Securities and Investments Commission (ASIC) will apply an extension beyond the cut-off date as it did previously.

“An LEI is a 20-character alpha-numeric code that enables identification of legal entities participating in certain financial transactions. Obtaining a LEI is a one-off exercise, and once a SMSF obtains an LEI, the identifier stays with it for the entirety of its existence,” APIR Systems chief executive Chris Donohoe said.

“From 1 October, a range of Australian financial services entities, including funds, brokers/traders, as well as SMSF trustees, will be unable to transact non-exchange-traded instruments such as CFDs and FX (foreign exchange) if they don’t have a LEI.

“Although ASIC has extended relief on this deadline in the past, we don’t believe that another extension is likely.”

Donohoe revealed APIR Systems, an official registration agent for the issuance of LEIs, has received a significant increase in applications for the regulatory protocol in the past few weeks as the deadline looms. He said this experience was consistent with past trends when previous LEI deadlines appeared to be imminent.

The LEI requirement represents a move toward standard regulation of financial services institutions around the world, he noted.

“In recent years, we have witnessed an evolution in the way coding systems are used in the financial services industry. Once seen as a useful way to categorise and monitor financial products, they are now an integral part of the compliance system,” he said.

“As global regulatory harmony increases, and cross-border investing is facilitated, common standards and language need to be in place internationally for the system to work. The requirement for LEI registration is the latest example of this.”

The previous deadline associated with the requirement for SMSFs to obtain and LEI was 1 April 2019 before ASIC extended it.

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