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Newsflash - Introduction of Legal Identity Identifier Number for OTC Derivatives Market Participants - RSM India Newsflash

The Reserve Bank of India had issued a Notification dated 1st of June 2017Introduction of Legal Entity Identifiers for OTC derivative markets (RBI/2016-17/314 FMRD.FMID No.14/11.01.007/2016-17)” which requires creation of LEI (Legal Entity Identifier) number for participating into OTC Derivative market for all entities.

The Reserve Bank of India has mandated the implementation of the Legal Entity Identification (LEI) system for all participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India, in a phased manner. Entities without an LEI code would not be eligible to participate in the OTC derivative markets, after the date specified in the schedule. Accordingly all the current and future participants would be required to obtain the unique LEI code as per the time lines laid out.

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 financial transactions.

An entity registered in India needs to apply for LEI code from time to time. The list of entities eligible to apply for LEI codes are Sole Proprietorships, Limited Liability Partnerships, Partnership Firms, Trusts, Private Limited Companies, Public Limited Companies, Government Companies, One Person Company, Insurance Companies, Housing Finance Companies, Non-Banking Finance Companies, Non- profit companies, Special Purpose Vehicles – Trusts, Special Purpose Vehicles – Companies, SPV - Partnership Firms, SPV – Co-operative Societies or Multistate Co-operative Societies Mutual Fund, Mutual Funds-Sub Scheme, Alternative Investment Fund (AIF), AIF- Sub Scheme, Nationalised Banks, Scheduled Urban Cooperative Bank, Banking Companies – Others, Stand Alone Primary Dealers, Public Financial Institutions, Unlimited Companies, Cooperative Societies or Multistate Cooperative Societies, Government Organizations, Companies Limited by Guarantee etc. Other entities as may be specified from time to time.

As RBI has mandated the implementation of LEI system for all participants, any entity without LEI code would not be eligible to participate in OTC derivative markets after the dates specified as under:



Date by which the LEI code is to be obtained

Phase I

Entities regulated by RBI / SEBI / IRDA / PFRDA and Corporates with Net Worth above Rs. 10,000 millions.

1 August 2017

Phase II

Corporates with Net Worth between Rs. 2,000 millions to Rs. 10,000 millions.

1 October 2017

Phase III

Corporates with Net Worth between Rs. 700 millions to Rs. 2,000 millions.

1 December 2017

Phase IV

Corporates with Net Worth of Rs. 700 millions and below

31 March 2018

We have mentioned some of the relevant FAQs in context of obtaining of LEI number by the participants on the OTC derivative markets.

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