MiFID II - New Order Entry Fields

MiFID II fields 

Since 3 January 2018, MiFID II / MiFIR requires all trading participants to identify algorithms, natural or legal persons of “execution within firm”, the “investment decision within firm” and the “client identification code” (Article 48(10) Directive 2014/65 EU and Article 25(2)(3) Regulation 600/2014).

Proprietary accounts (ESMA trading capacity DEAL)

AOTC: when an investment firm trades in any other trading capacity which is not DEAL or MTCH (e.g. Agency)

Agent account (ESMA trading capacity AOTC) and riskless principal account (ESMA trading capacity MTCH); client ID mandatory

Order Entry Fields in KODIAK Oms

The following table shows for which order capacity which field is mandatory, if the requirements are not met the order will be rejected.

Mapping between Kodiak OMS order capacity and MiFID II trading capacity

Client Identification Code

Short code corresponding to LEI, National ID, ‘AGGR’ or ‘PNAL’. Mandatory if Kodiak OMS Order Capacity = Client, Issuer Holding,or Issue Price Stabilizing (MiFID II Trading Capacity = AOTC or MTCH ).

Code used to identify the client of the member or participant of the trading venue.  Where the client is a legal entity, the LEI code of the client shall be used. Where the client is not a legal entity, the National ID shall be used. In case of aggregated orders, the flag AGGR shall be used. In case of pending allocations, the flag PNAL shall be used. This field shall be left blank only if the member or participant of the trading venue has no client.

Investment decision within firm

Short code corresponding to National ID or algorithm ID. Mandatory if  Kodiak OMS Order Capacity = Own Account or Market Maker (MiFID II Trading Capacity = DEAL).

Code used to identify the person or the algorithm within the member or participant of the trading venue who is responsible for the investment decision. Where a natural persons within the member or participant of the trading venue is responsible for the investment decision the person who is responsible or has primary responsibility for the investment decision shall be identified with the National ID. This field shall be left blank when the investment decision was not made by a person or algorithm within the member or participant of the trading venue.

Execution decision within firm

Short code corresponding to National ID or algorithm ID or ‘CLIENT’ ('CLIENT' is now defined as 'NORE'). Always Mandatory for all Order Capacities.

Code used to identify the person or algorithm within the member or participant of the trading venue who is responsible for the execution of the transaction resulting from the order. Where a natural person is responsible for the execution of the transaction, the person shall be identified National ID. Where more than one person or a combination of persons and algorithms are involved in the execution of the transaction, the member or participant or client of the trading venue shall determine the trader primarily responsible and populate this field with the identity of that trader.

CLIENT (NORE) - Should be used when the firm receives specific instructions from the client, which prevents the investment firm from taking its own execution decision. In this case the execution decision was already taken by persons outside the investment firm without any further intervention by the investment firm in that case should the field "Execution decision within firm" be filled with the identifier 'CLIENT' ( or 'NORE').

Nasdaq's Solution

The new Order Entry fields that are introduced may contain sensitive and confidential data, therefore the solution that Nasdaq will implement requires members to submit short
codes on each order. These fields are Client identification, Execution decision and Investment Decision. Nasdaq will support short codes for the Equity, Equity Derivatives,
Commodities and Fixed Income markets.

The short codes will be created by the members. Nasdaq will not validate short codes upon order entry, but expect a short code that
has been used a specific trading date, to be mapped up at the latest by end of day, that very same date.

Kodiak OMS Solution

Market Orders: The three new order entry fields will be available in the Market Order Window

Client Order: Two new order entry field will be available in the Client Order Window.

In Kodiak OMS these fields are populated with auto-complete boxes, Kodiak OMS then creates and sends a short code that represents the chosen value with the order.

The short codes must then be mapped to a long code (National ID or LEI) in the Nasdaq Member Portal. Kodiak OMS will handle the mapping of the short and long codes once MiFID II is live.

Open

Open

Client Identification code 

In Kodiak OMS you can choose a client from the auto-complete box, Kodiak OMS will then create and send a short code that represents the client with the order.

In Client Orders this field will be populated automatically based on which client is attached to the Client Order.

Investment decision within firm

In Kodiak OMS you can choose a user from the auto-complete box, Kodiak OMS will then create and send a short code that represents the user with the order.

Execution decision within firm

In Kodiak OMS you can choose a user from the auto-complete box, Kodiak OMS will then create and send a short code that represents the user with the order.

Price Quote

In the Price Quote control the default MiFID II Order Entry Field values from settings are sent with the  Market Orders. The default values can be configured in Settings → MiFID, as can be seen below .

Settings 

In Kodiak OMS Settings, users can configure default values for the new order entry fields for both Market and Client Orders.

Order Capacities

Order Capacities can be set as a default value in Settings → Market Orders or Settings → Client Orders

It can also be modified in the Client Order Entry Window and Market Order Entry Window by going into the form and changing the Capacity value.

DMA users in Kodiak PRO

The new MiFID Order Entry Fields are set to fixed values for each user, the DMA users cannot change these values.

Client Identification Code: A short code for the customer who is responsible for the account (The customer defined for the user in AdminX → External Users).

Investment decision within firm: Will always be sent blank (NONE)

Execution decision within firm: Will always send CLIENT ('NORE')