The " Recommended Practices for Commission Unbundling as required by MiFID II" published Nov 2017 do not address guidance around communicating the expected commission rules on the FIX New Order Single. The only thing I have come across is 81=1 to designate CSA. This has become a real point of confusion for brokers receiving order flow, as it is ambiguous as to whether or not the accounts within the order will be paying research, or will be execution-only for commission.
(The published guidelines fully document how to break this information out for post-trade, on the FIX Allocation message, which we fully support, however, that is often ‘understood’ too late within the order trade lifecycle at the sellside firm)
From our perspective, there are 3 categories:
- Execution + Research paid directly to the broker
- Execution + Research directed to a CSA account
81=1 only addresses #3 above. So, my question is how are other firms communicating / handling this? We have heard from a couple of brokers saying that clients are populating a keyword value such as “Exec Only” and “Non CSA” within tag 1 (Account) field.
I would like to understand if that is a defacto ‘standard’, if there are alternatives, and if there are standard ‘values’ used. I am also interested in how one handles the case where tag 1 is required for something else (eg Taiwanese Exchange Investor ID, Korean QDII, etc). Further, given that it is possible to have a mix across accounts within a block order – where some accounts are paying research, and others are exec-only, how is that being handled/addressed at order submission time?