In accordance with new guidance issued by the Global LEI Foundation, all GMEI Utility users will need to have a signatory of the firm complete and submit a form similar to this draft form from DTCC, which authorizes the user (or a third party) to obtain or renew the firm’s LEI. Although DTCC had initially announced that all users must submit the final form by May 20, 2019, they have since rescinded that deadline and will be using a phased approach that they plan to communicate to users in the near future.
The new verification requirement applies to all swap market participants that obtain and renew their legal entity identifiers (“LEIs”) from GMEI Utility. In an e-mail to its customers, DTCC noted that the draft form it provided is for “awareness and planning purposes only”. The draft form also requires that users print the authorization on company letterhead, an administrative burden that will hopefully be deleted from the final version of the form. The organization plans to publish a final form in the near future, and will communicate more details to customers on the implementation timing.
The form provided by DTCC is intended to verify that users requesting LEI registrations or renewals have proper organizational authority. It includes basic biographical information about the authorized person or, if a third party is authorized, the authorized company. Once submitted to the GMEI Utility, the form will be verified in order to establish that the appropriate authority exists. After the not-yet-announced compliance deadline, if the GMEI Utility has not received this form, it will not be able to process LEI registration or renewal requests.
Many clients of Michael Best rely on our Swap Customer Agreement to provide authorization for the bank/swap provider to obtain an LEI on its customers’ behalf. While our form Swap Customer Agreement already contains a third party authorization, following this new guidance we are updating the Swap Customer Agreement in order to comply with the signing authority verification requirement. Beginning on the relevant compliance deadline, the final DTCC form will be appended to the Swap Customer Agreement as an Exhibit for the customer to complete and (for the time being) place on firm letterhead.
Please contact Alec Fraser or Cheryl Isaac Aaron with any questions on this new compliance obligation.