MiFID II/MiFIR: Update on changes to the requirements for the flagging of orders according to MiFID II and MiFIR

Release date: 26 Jul 2021

055/2021 MiFID II/MiFIR: Update on changes to the requirements for the flagging of orders according to MiFID II and MiFIRXetra Circular 055/21

1. Introduction

With respect to usage and decryption of Short and Long Codes, the future administrative practice, which was announced with Xetra circular 043/21, has been amended in accordance with the Exchange Supervisory Authority of the State of Hesse.

In contrast to the requirements outlined in circular 043/21, Short Codes used in an order for the first time may be decrypted into the corresponding Long Codes latest by the end of the trading day following the trading day of the order submission. In contrast, it is not required that the Long Code assigned to a Short Code is already registered with the Exchange prior to first usage of the Short Code. The requirement to use "stable", i.e. unique, and invariable Short/Long Code combinations over time, remains unchanged. A registered Short/Long Code combination is not permitted to be changed, with the exception of certain legal reasons. In this respect, the requirements in circular 043/21 remain unaffected.

Effective date: 1 January 2022

2. Required action

As of 1 January 2022, Trading Participants are obliged to use unique and over time invariable Short/Long Code combinations. When using a Short/Long Code combination in an order for the first time, this Short Code used shall be decrypted into the corresponding Long Code by the end of the trading day following the trading day of its first use. Already registered Short/Long Code combinations, which do not comply with the aforementioned requirements, shall be deleted or updated by the Trading Participant by 1 January 2022.

3. Details

Since 3 January 2018, all Trading Participants have been obliged to identify the algorithms used in the context of their participation in exchange trading, the "execution decision maker", the "investment decisionmaker " and the client (Article 48(10) of Directive 2014/65 EU and Article 25 of Regulation 600/2014). This legal requirement is implemented in the Exchange Rules of FWB® (Sections 40, 74 and 114 of the Exchange Rules FWB®).

The fields "Execution Decision", "Investment Decision" and "ClientID" are to be populated in the order and quote messages by using short codes. Only natural persons and legal entities must be encoded by means of "Short Codes".

Until now, Trading Participants have been obliged to upload the Long Codes used to decrypt the Short Codes to the FWB® upload functionalities (SFTP or Member Section) on the following trading day (T+1) at the latest. As of 1 January 2022, this is only permitted when using a Short/Long Code combination for the first time. Afterwards, the registered Short/Long Code combination must be unique over time. A change of the Long Code is inadmissible except for certain legal reasons.

We expressly point out that violations of the reporting obligation will lead to sanctions.


Further information

Recipients:

All Xetra® Members and Vendors

Target groups:

Traders, Technical Contacts, Security Administrators, System Administrators, Compliance-Department, Nominated Persons

Contact:

Your Key Account Manager or client.services@deutsche-boerse.com, for regulatory questions: Regulatory Processing,  regulatory.processing@deutsche-boerse.com, tel. +49-69-211-1 58 58

Web:

www.xetra.com

Authorised by:

Cord Gebhardt, Annette Czypull (on behalf of the Management Board)