MiFID II/MiFIR order flagging requirements: Reminder regarding the “short code uniqueness rule” and process for requesting an exemption

Release date: 28 Nov 2022

061/2022 MiFID II/MiFIR order flagging requirements: Reminder regarding the “short code uniqueness rule” and process for requesting an exemptionXetra Circular 061/22

1.   Introduction

Since 1 January 2022, Trading Participants have been obligated to assign only one short code to each long code. Only in substantiated exceptional cases may the Management Board of the Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange) grant an exemption from this rule. 

This Circular reminds Trading Participants of this obligation and describes the process to be followed where Trading Participants cannot comply with this obligation for justifiable reasons, as provided for in § 114 (2) of the Exchange Rules for the Frankfurter Wertpapierbörse (“Exchange Rules FWB”).

Trading Participants that do not currently hold an exemption and that are not complying with the requirement to assign only one short code to each long code are asked to:

  1. either apply for an exemption following the process described in this Circular
    and/or
  2. delete any additional short codes assigned to registered long codes as indicated in the daily report TR167 Non-Uniqueness Identifier.

No action is needed from Trading Participants already holding a time-limited exemption in order to renew the exemption for an additional one-year period. These exemptions will be prolonged automatically in the final quarter of each year insofar as the reasons for the exemption continue to exist, without the need to submit an additional application or request.

2.   Required actions

Short code uniqueness rule

Trading Participants must, as a general rule, assign only one short code to each long code as provided in § 114 (2) Sentence 2 of the Exchange Rules FWB (“short code uniqueness rule”). 

The registration of a second or further short code to a validly registered long code (“non-unique mapping”) is only permitted where the Trading Participant holds a valid exemption and the reason(s) for which the non-unique mappings are registered are covered by the terms of that exemption. 

Additionally, Trading Participants may assign different short codes to a CONCAT where two or more different natural persons identified by the CONCAT have the same birth date and same first five letters of their first and last names (i.e., where the MiFIR identifier is identical for two or more different natural persons). In this case, one short code may be assigned per natural person and no exemption is required for this purpose.

Exemptions from the short code uniqueness rule

Trading Participants unable to comply with the above rule must apply for and be granted an exemption pursuant to § 114 (2) Sentence 3 of the Exchange Rules FWB. The process for doing so is described in Subsection 3, below.

Report TR167 Non-Uniqueness Identifier

Trading Participants are further reminded that Frankfurt Stock Exchange provides a daily report, the TR167 Non-Uniqueness Identifier, to all Trading Participants indicating all long codes for which more than one short code has been registered. 

This report should be used as follows:

  • Trading Participants not holding an exemption: Either delete all non-unique mappings or apply for an exemption if there are justifiable reasons for doing so.
  • Trading Participants holding an exemption: Ensure that all non-unique mappings listed in the TR167 have been registered for reason(s) covered by the exemption. If they do not, either delete the affected mappings or apply for an expansion of the existing exemption if there are justifiable reasons for doing so.

3.   Details

Trading Participants that cannot comply with the short code uniqueness rule for justifiable reasons must submit an application for an exemption to the Frankfurt Stock Exchange. 

Applications should contain the following information:

  • The LEI and/or Participant ID(s) for which the exemption is requested.
  • A statement that the exemption is sought for short code-long code mappings registered to the MICs operated by the FWB (XETR and/or XFRA).
  • A description of the reason or reasons non-unique short codes are being registered.

Applications should be submitted to regulatory.processing@deutsche-boerse.com.

Justifiable reasons for the granting of an exemption include, but are not limited to, the case specifically mentioned in § 114 (2) Sentence 3 of the Exchange Rules FWB, namely the use of more than one short code to identify various securities custody accounts belonging to a Trading Participant’s client. Trading Participants that are uncertain whether they might qualify for an exemption are advised to contact regulatory.processing@deutsche-boerse.com to discuss the specifics of their case.

No action is needed from Trading Participants already holding a time-limited exemption in order to renew the exemption for an additional one-year period. These exemptions will be prolonged automatically in the final quarter of each year insofar as the reasons for the exemption continue to exist, without the need to submit an additional application or request. 
 

Further information

Recipients:

All Xetra® Trading Participants and Vendors

Target groups:

Traders, Technical Contacts, Security Administrators, System Administrators, General

Contact:

regulatory.processing@deutsche-boerse.com

Related circular:

 

Xetra Circular 074/21

Web:

 

www.xetra.com

Authorised by:

Melanie Dannheimer, Jenna Marangoni (on behalf of the Management Board)