LuxCSD receives accreditation for issuance of Legal Entity Identifiers
Luxembourg’s central securities depository LuxCSD has been accredited by the Global Legal Entity Identifier Foundation (GLEIF) to become an official Local Operating Unit (LOU) for issuance of Global Legal Entity Identifiers (LEI). This accreditation underlines the suitability of LuxCSD to operate as an issuer within the global LEI system.
The use of LEIs ultimately aims at bolstering the safety of the financial system and the demand for LEIs plays a growing role in light of supranational regulations such as MiFID II, MiFIR and CSDR. Based on the principles established by the Regulatory Oversight Committee (ROC), GLEIF implements LEI standards and oversees the LOU activities for the issuance and management of LEIs and the publication of the Legal Entity Reference Data.
Legal Entity Identifiers are increasingly used in Europe and around the world to further boost transparency in the banking, investment fund, brokerage and insurance sectors. They are in strong demand for uniquely identifying counterparties for regulatory purposes including reporting of transactions, identifying participants and issuers. In the private sector LEIs help to evaluate risk, improve the accuracy of financial data and form part of KYC compliance.
Organisations authorised to issue LEIs to legal entities, so-called LOUs, supply registration, renewal and other services, and act as the primary interface with registrants for LEIs. The status granted is a globally recognised designation of commitment to data quality and customer service.
Patrick Georg, General Manager of LuxCSD, said: “LEI remains the industry standard to provide open and reliable data for unique legal entity identification management. The accreditation strengthens the commitment of Luxembourg’s financial centre to compliance with international standards. We are convinced that this step will also generate advantages for the wider business community.”
LuxCSD is jointly (50/50) owned by the Central Bank of Luxembourg (BCL) and Clearstream International S.A. LuxCSD offers custodians and distributors across Europe excellent custody and added value services built on a highly efficient settlement process with access to many counterparties. Settlement of securities transactions in central bank money reduces risk for financial market participants. The CSD fully supports dematerialised securities as these will significantly reduce inefficiencies, risks and costs for the industry. LuxCSD can also advise issuers in dematerialising existing physical securities.
The company was created in July 2010 within the context of the planned implementation of the Eurosystem’s TARGET2-Securities (T2S) initiative. Today, LuxCSD provides the Luxembourg financial market infrastructure with a national access point to T2S which enables Luxembourg market participants to reduce their settlement risks as delivery versus payment (DVP) settlement in central bank money is widely recognised as the safest way to achieve securities settlement. This is an important factor in helping the Luxembourg market to remain competitive as a financial centre.
LuxCSD is based on the competence of its founding shareholders, each bringing their respective expertise in risk-free central bank money and cross-border securities processing to the venture.