INTC or not INTC? FCA expectations for aggregate client accounts under MiFIR Transaction Reporting

One MiFIR transaction reporting convention that continues to trip firms up is the aggregate client account: INTC. In this blog, we take a deep dive into how INTC is supposed to work and why regulators keep coming back to it.

INTC isn’t obscure. It’s everywhere:

• 108 references in ESMA reporting examples
• a clear legal basis in RTS 22
• detailed direction in the ESMA Guidelines
• repeated warnings in FCA Market Watch 62 and 70, and 
• extensive coverage again in the FCA’s discussion and consultation papers.

So why does it still go wrong so often?

The legal foundation for INTC: RTS 22

RTS 22, Article 11 is clear about the objective of INTC: to enable effective market monitoring, transaction reports must include exact information on any change in position of the investment firm or its client at the time the transaction took place. Firms must therefore report related fields consistently, and report different legs of a transaction such that their reports, collectively, provide a clear overall picture that accurately reflects changes in position.

INTC is one of the conventions that allows firms to meet this objective, but only when used exactly as intended. ESMA fills in the “how” in the Guidelines.

What INTC actually is (and isn’t) under MiFIR

The ESMA guidelines define INTC clearly: the aggregate client account (INTC) is a reporting convention used to provide a link between the market side and client side of transactions.

It therefore:

• is not “real”
• does not represent ownership
• does not indicate internal position-taking
• must never introduce a net position.

When a firm aggregates multiple client orders and executes them in the market, INTC provides the bridge that allows a regulator to connect the market execution and the allocations to the underlying clients.

That bridge must be temporary. Any movement through INTC must net to zero within the same business day.

When INTC may be used in transaction reporting

When reporting with INTC, there must always be:

• a market-side transaction(s) into or out of INTC, and
• corresponding client-side transactions out of or into INTC

The ESMA guidelines are unambiguous: INTC should only be used in the circumstances set out in the guidelines. It shouldn’t be used for:

• an order for one client executed in a single execution, or
• an order for one client executed in multiple executions.

And where there is a transfer into INTC, there must be a corresponding transfer out within the same business day, so the aggregate client account is flat.

FCA Market Watch: repeated warnings

The FCA has been flagging misuse for years. In Market Watch 62, the FCA highlighted firms:

• using INTC for single-client orders, and
• reporting flows that did not net off on the same business day.

In Market Watch 70, three years later, the same issues remained:

• one client, multiple fills reported via INTC
• INTC used to signal an internal trading account, and
• missing the market-side or client-side leg altogether.

The underlying message is consistent: INTC is not a convenience field. It is a controlled linking convention.

The scale of the problem: FCA policy papers

The recent FCA discussion and consultation papers add numbers to what had previously been more of a supervisory narrative.

The regulator’s analysis shows

• one in five firms had INTC imbalances
• seven per cent of all INTC reports contributed directly to those imbalances.

Across the most recent full year of FCA analysis (2023):

• 342 million reports used INTC
• 447 firms used INTC.

The FCA considered whether to introduce more precise linkage mechanisms between market and client side. The direction of travel in the consultation is to rule that out because implementation costs would outweigh benefits and increasing complexity could worsen data quality.

In other words: the regulator is not planning to redesign INTC for firms but it does expect firms to use it properly.

Why the FCA cares so much about INTC

INTC errors are not cosmetic. When INTC does not net to zero – or is used incorrectly – the consequences are material:

• regulators see phantom positions
• ownership appears to pass through firms incorrectly
• market abuse surveillance becomes distorted
• aggregation logic breaks down.

In short: market reconstruction fails.

What firms should be doing now

For MiFIR firms, the message is clear. The regulator has acknowledged that structural change may not be beneficial which means it will expect higher accuracy within the existing framework.

1. Re-validate your INTC logic:

• is INTC used only for genuine aggregation across multiple clients?
• does it net to zero by instrument, per day?
• do your reporting scenarios adhere to the guidelines?

2. Expect supervisory scrutiny:

• the FCA is clearly focusing on INTC
• guidance will be reviewed, but the existing expectations already apply
• less complexity in the regime means the regulator will expect greater precision, not less.

Four simple letters – ‘INTC’ – have an outsized impact. Getting it right is one of the simplest ways to materially improve transaction reporting quality – and one of the easiest ways to stand out for the wrong reasons if you don’t. 

While you are driving home for Christmas or taking your chance on the trains, worrying that you’ll be getting a FCA letter about INTC, please get in touch. Our award-winning ReportShield quality assurance highlights any issues you may have with INTC and once you know you have a problem, you can put it right before the FCA gets in touch.