From 1 January 2021 onwards, the UK will no longer be part of the European Union and European Economic Area (EEA). A Brexit deal is unlikely. In a no-deal Brexit scenario, as an EU investment firm:

  • What’s the new reporting requirement for your individual clients?
  • What do you need to do now?

What will change in a no-deal Brexit scenario?

The UK will become a non-EEA (non- European Economic Area) country, i.e. a third country, and therefore UK nationals will be classified differently according to RTS 22 of MiFIR and its Annex II.

The table below shows you the difference in reporting requirements before and after Brexit in a no-deal Brexit situation with 2 different client scenarios. The changes are highlighted in red.

Before/After BrexitCountryPriority 1Priority 2Priority 3
Scenario 1: If your individual client only has UK nationality
BeforeGBNational Insurance NumberCONCATNA
AfterAll other countriesNational Passport NumberCONCATNA
Scenario 2: If your individual client’s nationality is Non-EEA
BeforeAll other countriesNational Passport NumberCONCATNA
AfterAll other countriesNational Passport NumberCONCATNA

What do you need to do now in order to be compliant in the new year?

You will need to start collecting passport numbers for your clients that are UK nationals such as in scenario 1 above.

We suggest you take the opportunity to review your client onboarding process to ensure that you are requesting the appropriate national identifier information for each client based on their country of residence. It may be worthwhile reviewing national identifiers held across your entire client base to ensure they are current and have provided you with the highest priority identifier they have available.

Will the transactions/identifiers get rejected based on validation?

It is not possible for an Approved Reporting Mechanism to validate if the correct priority identifier is used in your reporting, or whether the right nationality is reported. This means a report may be accepted by the ARM without necessarily being technically correct according to RTS 22. However, this does not mean that a future and more in-depth review of your reporting by a regulator will highlight the importance of following these national client identifier requirements.

If you still have any questions, please contact us.

Quinn Perrott

Quinn is co-CEO and founder of TRAction and focuses on assisting clients in Europe, Asia and Australia to meet their regulatory requirements with trade and transaction reporting solutions as well as development of the best execution platform. With a background in IT, Quinn started in the financial markets as IT Manager for City Index. He then co-founded and worked as a General Manager at one of Australia’s largest margin FX and CFD providers. Quinn has provided educational sessions to Australia’s regulatory bodies in relation to operational aspects of derivatives and trading platforms.