Pre-Trade Allocations

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1

Imported from previous forum

2

The latest FIX 4.3 documentation (Vol 5 - p4) talks about:

"Allocation is typically communicated Post-Trade (after fills have been received and processed). It can, however, also be communicated Pre-Trade (at the time the order is being placed) to specify the account(s) and their respective order quantities which make up the order. This is a regulatory requirement in certain markets and for certain types of securities."

Does anyone know of the regulatory requirements, markets and securities this is talking about?

Thanks

Regards
->Jogi

3

From what I understand to trade in certain markets notably:

Indonesia
Malaysia
Korea
Brazil
Peru

Before trading can commence the trader must have the clients ‘Investor Ids’ and these are obtained pre-Trade and sent down as a part of trade report with a marker.
These Investor Ids do not relate to the specific client Fund IDs but these will flow through when the client shapes the blocks of the trade.

thanks

Alasdair

Goldman Sachs

> The latest FIX 4.3 documentation (Vol 5 - p4) talks about:
>
> "Allocation is typically communicated Post-Trade (after fills have been received and processed). It can, however, also be communicated Pre-Trade (at the time the order is being placed) to specify the account(s) and their respective order quantities which make up the order. This is a regulatory requirement in certain markets and for certain types of securities."
>
> Does anyone know of the regulatory requirements, markets and securities this is talking about?
>
> Thanks
>
> Regards
> ->Jogi
>

4

Also add: Taiwan, China, Egypt, and Poland. U.S. Futures markets require pre-allocation as well.

> From what I understand to trade in certain markets notably:
>
> Indonesia
> Malaysia
> Korea
> Brazil
> Peru
>
> Before trading can commence the trader must have the clients ‘Investor Ids’ and these are obtained pre-Trade and sent down as a part of trade report with a marker.
> These Investor Ids do not relate to the specific client Fund IDs but these will flow through when the client shapes the blocks of the trade.
>
> thanks
>
> Alasdair
>
>
> Goldman Sachs
>
>
> > The latest FIX 4.3 documentation (Vol 5 - p4) talks about:
> >
> > “Allocation is typically communicated Post-Trade (after fills have been received and processed). It can, however, also be communicated Pre-Trade (at the time the order is being placed) to specify the account(s) and their respective order quantities which make up the order. This is a regulatory requirement in certain markets and for certain types of securities.”
> >
> > Does anyone know of the regulatory requirements, markets and securities this is talking about?
> >
> > Thanks
> >
> > Regards
> > ->Jogi
> >
>

5

Some markets (notably Taiwan and Korea) require an Exchange ID/Investor ID to be present on any order that is sent to the Exchange. This information is used by those markets to determine which nationals are holding their stock (similarly, the UK, for certain stocks, requires a nationality declaration to be made when purchasing that stock).

An Exchange / Investor ID does not necessarily have a one to one relationship with a Fund Id. For example, a Fund Manager may contact a broker with an order for 30,000 shares and tell that broker that 10,000 is for Exchange A/C 1, 15,000 for Exchange A/C 2 and 5,000 for Exchange A/C 3. The broker will place THREE ORDERS in the market, each bearing the appropriate Exchange A/C ID.

Once filled, each of those three orders may be allocated over one or more Funds (but each fund must share the same Exchange ID.

The use of the term pre-allocation in this context is not strictly correct but I can understand why people may wish to use it.
>
The latest FIX 4.3 documentation (Vol 5 - p4) talks about:
>
> "Allocation is typically communicated Post-Trade (after fills have been received and processed). It can, however, also be communicated Pre-Trade (at the time the order is being placed) to specify the account(s) and their respective order quantities which make up the order. This is a regulatory requirement in certain markets and for certain types of securities."
>
> Does anyone know of the regulatory requirements, markets and securities this is talking about?
>
> Thanks
>
> Regards
> ->Jogi
>