There is some inconsistency in the regulatory text as to how British nationals should be identified in UK and EU MIFID transaction reports (RTS 22), following the End of the Brexit Transitional Period (31/12/2020).

RTS 22 states: “A natural person shall be identified in a transaction report using (…) national client identifier listed in Annex II based on the nationality of the person”. (RTS 22 Article 6.1). Annex II shows the 1st Priority for GB nationals as ‘UK National Insurance number’ (Article 6 and Annex II, FCA RTS 22), (Annex II, RTS 22).

The FCA and EC have not updated this table or RTS 22 article 6 following UK departure from the EEA.

However, this contradicts RTS 22 Article 6.3 which states as part of a wider clause: “Where a natural person has a non-EEA nationality, the highest priority identifier in accordance with the field referring to ‘all other countries’ provided in Annex II shall be used”.

As GB is no longer part of the EEA it could be considered that EU reporting firms should identify GB nationals using this code (National Passport Number).

We have queried this with ESMA and awaiting their clarification.

 

The FCA provide the UK version of the RTS 22 Annex II table, where additional difference is the choice of identifier for Liechtenstein.

 

*UPDATE 06/07/2021

We have received a clarification from ESMA, stating “any reference to the UK, UK nationals, UK entities, etc. in EU legislation should in principle be read as reference to third-country, third-country nationals, third-country entities and so on.”

This implies that when reporting to an EU NCA, the UK nationals (who are not holding any EU nationality) should be identified as a non-EEA nationality, using the highest priority identifier in accordance with the field referring to ‘all other countries’ in in Annex II (i.e. passport number as first priority or with CONCAT if they don’t have a passport).

This requires the reporting counterparties with dual reporting obligation to hold both the passport number/CONCAT, as well as the National Insurance Number for the UK Natural Persons they identify in their MIFIR transaction reports. Reports made to EU NCA and FCA for transactions with dual reporting obligation should use the identifiers appropriate for the receiving NCA jurisdiction.

Control Now TR Accuracy tool has been updated to take into consideration the reporting jurisdiction and validate appropriate identifier types for nationalities where requirements differ between EU and UK.

 

 

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