Level 1 lifecycle of each product from the UK investment firm’s point of view: the firm takes the client’s order, executes it with the RSP market makers, on the venues or from its own book, clears and settles through its own CCP membership and CREST account or its clearing broker, holds or introduces the account, and reports to the FCA under COBS, CASS, the IFPR and the market rules. Columns are the parties, rows the phases from the order to the quarterly MIF returns; numbered steps are messages, deliveries or payments between them, with the channel or infrastructure in the pill. Hover a step for the detail, click it or use the walkthrough to be taken through the diagram step by step. The groups are business lines: retail and institutional brokerage, market making, clearing and custody, financial responsibility and capital markets; the Inside the Investment Firm section shows the same flows from inside the firm, team by team and system by system. The US, EU and Canadian flags open the same product on the sibling pages. This is the United Kingdom version: London market conventions, settlement on T+2 until October 2027 (gilts T+1), GBP throughout; all numbers illustrative. New to this? Begin with Start here.
How the diagrams work, the lifecycle common to all 15 products, a map of the products and of the views inside the firm, which firms run each product and what it takes in capital and reporting, and a glossary of the UK terms.
The retail business of a UK investment firm: the client’s equity order through the RTS 6 controls to the RSP market makers or the exchange under the best execution policy, then to the clearing broker (introducing) or through the firm’s own CCP membership and CREST account (self-clearing); the margin loan under the firm’s own policy and the client money the firm holds on trust under CASS; and a covered call cleared at ICE Clear Europe. COBS governs the advice, CASS the client assets, the transaction reports give the FCA the trades, and the clearing agreement decides who does the rest.
The agency business with institutions: the client’s order worked by the firm’s algorithms across the exchanges, the MTFs and the SIs, confirmed through CTM, confirmed with the custodians under the T+1 code and settled to each fund’s custodian in CREST, with the commission paying for execution and, through a research payment account or a joint payment, for research; and the block that is either crossed as agent under the large-in-scale waiver or facilitated as principal with the firm’s capital at risk. Best execution, the information barriers, the market sounding rules and the capacity disclosure are the controls.
The principal businesses: a retail service provider and systematic internaliser executing the retail brokers’ orders against its own book through the RSP network, with its quoting and publication duties, quoting on the London Stock Exchange under its market maker schemes and hedging the residual on the venues, without payment for order flow since the FCA banned it in 2012; and a bond desk that sells to its advisers’ clients from inventory or as matched principal with the spread checked for fairness and disclosed as a cost, both legs published through an APA. Both finance an inventory and carry its K-NPR charge.
What a clearing broker and a self-clearing firm do: carrying accounts for introducing firms under the clearing and custody agreement, with the conversion line by line, the daily files, the margin and the clearing broker’s own CASS obligations across every introducing firm; the clearing member’s and CREST member’s settlement cycle at the CCPs and in CREST, the cash through the settlement bank, the margins and the segregation; and the stock loan desk that borrows after the locate the UK short selling rules require and lends the supply the consents allow, with every loan reported under UK SFTR.
The rules that regulate the firm’s balance sheet: the own funds requirement under the IFPR as the highest of the permanent minimum, the fixed overheads and the K-factors, measured from the CCPs’, CREST’s and the back office’s data, with the liquid assets requirement, the ICARA, the quarterly MIF returns, the audited accounts and the CASS audit report and the FCA’s supervisory review; and the funding of the margin book, the inventory and the settlements from bank lines, stock loan collateral, repo and own funds, with the client money kept apart.
What a UK investment firm does in the primary market and as a venue: a co-lead seat in an accelerated bookbuild, with the K-NPR charge on the commitment and the shares delivered through CREST on T+2; a private placement under the POATRs’ exemptions with the firm’s due diligence, its financial promotion approval and its product governance, the funds in an escrow and no filing; and an MTF under UK MiFID, matching at the midpoint under the reference price waiver with no volume cap, with the venue’s own transparency, reporting and surveillance duties.
The same flows seen from inside the firm: who does what, in which system, in what order. Front to Back is the map. The advisers and the trading desk face the clients and the venues; supervision and compliance keep the evidence the FCA examine; operations keeps the client money and asset records and the stock record or reconciles to the clearing broker that keeps them; the CFO computes what the own funds allow and what the clients are owed. Columns are the firm’s own teams, with the outside world at the edges; the pills name the systems.
A product can be read two ways: scroll the diagram and hover for detail, or press Walk through the steps above any diagram to follow it one step at a time, with the detail in a card. The arrow keys move forward and back.
Each card opens its diagram. The business line and product tabs at the top do the same; the search box finds a product by name, rule or keyword. GBP throughout; all numbers illustrative.
The same flows seen from the firm’s own teams: who does what, in which system. Front to Back is the map; supervision and compliance keep the evidence; operations keeps the client money and asset records and the stock record or reconciles to the clearing broker; the CFO computes the own funds and the CASS reconciliations.
The same five questions for every product, from the firm’s side. An investment firm’s business model is the answer to the second and third: agent or principal, introducing or self-clearing; the K-factors and the reporting follow from it.
| Product | Firm types | Executed | Cleared and held | Capital and funding | Reported |
|---|---|---|---|---|---|
| Retail Equity Order | introducing firms, self-clearing firms, the investment platforms, the banks’ brokerage arms, the online brokers | an RFQ to the RSP market makers or the exchange order book under the best execution policy; no PFOF since 2012 | the clearing broker and custodian, or the CCP and CREST for a self-clearing firm; the RSP trades bilateral | the permanent minimum by the permissions and the K-factors; K-CMH and K-ASA for a firm holding client money and assets | the transaction report through an ARM by T+1; the market maker’s or the venue’s publication; the contract note and the quarterly statement under COBS |
| Margin and Client Money | carrying firms and the banks; introducing firms through the clearing broker | none: the account | the clearing broker’s or the firm’s own margin department; the nominee at CREST; client bank accounts on the CASS 7 trust | the firm’s margin policy; bank lines and lending with express consent; K-TCD, K-CMH, K-ASA | the margin disclosure; the client money terms; the CMAR and the MIF returns; the CASS audit report |
| Retail Options | firms with derivatives permissions and qualified advisers | ICE Futures Europe; US names through a US broker | ICE Clear Europe through the firm or its clearing broker | the CCP’s margin; client margin under the firm’s policy; covered by the shares | the transaction reports through an ARM; the appropriateness test and the KID on file |
| Product | Firm types | Executed | Cleared and held | Capital and funding | Reported |
|---|---|---|---|---|---|
| Institutional Algo Order | the banks’ cash equities desks, agency and electronic brokers, the global brokers’ London arms | the firm’s algorithms across the London Stock Exchange, the lit and dark MTFs, the auctions and the SIs | the CCP for the firm’s side; delivery to each custodian in CREST after the T+1 code’s confirmation | agency: little capital; K-COH on the orders handled; the research payment accounts administered | the transaction reports with the client’s LEI and the algorithm identifiers; the best execution policy disclosed; the confirmations under the T+1 code |
| Block and Facilitation | the banks and the brokers with capital | crossed under the large-in-scale waiver on an MTF, a block venue or OTC through an APA, or bought by the desk; worked out through the algorithms | the CCP and CREST; a facilitated position in the firm’s own account | K-NPR on the overnight position under the market risk rules; the firm’s own funding | the publication with the deferral and the transaction reports with both clients’ identifiers; the market sounding records under UK MAR |
| Product | Firm types | Executed | Cleared and held | Capital and funding | Reported |
|---|---|---|---|---|---|
| RSP Market Maker | the retail service providers (Winterflood, Peel Hunt, Stifel), the banks’ and the global market makers’ London desks | against the market maker’s own book at or inside the exchange touch through the RSP network; market maker schemes on the exchange | bilateral in CREST for the RSP trades, LCH Ltd for the order book trades, net | K-NPR on the inventory and K-DTF on the flow; bank lines and stock loan | the APA publication within one minute as the executing party; the transaction reports; the SI opt-in in the FCA register |
| Bond Dealer | the banks’ desks, the independent firms’ smaller desks, the platforms | from inventory or as matched principal against the banks by RFQ and the Order Book for Retail Bonds | CREST or the ICSD, in and out the same day | K-NPR by issuer and maturity; repo and triparty | both legs through an APA under the 2025 regime with the deferrals; the transaction reports; the costs on the contract note |
| Product | Firm types | Executed | Cleared and held | Capital and funding | Reported |
|---|---|---|---|---|---|
| Clearing Broker | the clearing specialists (Pershing, SEI, Winterflood Business Services, Platform Securities) and the custodian banks | none: the introducing firm executes | the clearing broker as the general clearing member and CREST member, in the introducing firm’s name | the clearing broker’s K-factors or the UK CRR and the CASS obligations across all introducing firms; the introducing firm’s deposit | the clearing and custody agreement; the introducing firm’s MIF returns reviewed; the clearing broker’s own reports, the CMAR and UK SFTR |
| CCP and CREST Cycle | self-clearing firms | none: the settlement of the day’s trades | the CCPs and CREST, the settlement bank paying in central bank money | the CCPs’ margins and default fund contributions; K-TCD on the fails; the CASS reconciliations | the MIF returns and the CMAR; the settlement fails statistics from CREST; the CASS audit report; the transaction reports |
| Stock Loan | carrying firms with a stock loan desk; the prime brokerage arms | by voice and on EquiLend; Pirum for the lifecycle; the GMSLA | CREST and the triparty agents (Euroclear Bank, BNY, J.P. Morgan) against 105% cash or securities collateral | fees and rebates; the consented client securities as supply; K-TCD and the collateral mismatch | UK SFTR loan by loan by T+1 by both sides; the locate records under the UK short selling rules; the reuse disclosed to clients |
| Product | Firm types | Executed | Cleared and held | Capital and funding | Reported |
|---|---|---|---|---|---|
| Own Funds and the IFPR | every UK investment firm; the largest own-account dealers under the PRA | none: the computation | none | own funds against the highest of the permanent minimum, the fixed overheads and the K-factors; the liquid assets requirement; the ICARA | the MIF returns quarterly; a breach notified at once; the audited accounts and the CASS audit report; the SREP |
| Funding | carrying firms; the banks’ brokerage arms inside the bank | none: the balance sheet | none: the settlement bank and CHAPS, the CCPs | own funds, bank lines, stock loan collateral, repo and triparty, subordinated Tier 2, the parent; never client money | the MIF returns; the liquid assets requirement and the ICARA; the CCPs’ calls |
| Product | Firm types | Executed | Cleared and held | Capital and funding | Reported |
|---|---|---|---|---|---|
| Syndicate Participation | the banks as leads, the brokers as co-leads and selling agents | indications from the firm’s institutional investors overnight under the POATRs’ exemptions | issued through CREST to the lead at the closing on T+2 and to the members in CREST | the K-NPR charge on the underwriting commitment from the signing to the allocation | the announcement; UK MAR’s stabilisation and sounding records; the allocation policy and its justification; the transaction reports |
| Private Placement | corporate finance boutiques and regional firms; the crowdfunding and public offer platforms | placed with qualified investors and fewer than 150 others under the POATRs’ exemptions, with the financial promotion rules | none: entered in the company’s register of members; unlisted, no statutory hold period | none: agency; the funds in escrow; K-NPR only for a firm commitment | no FCA filing for an exempt offer; the due diligence, promotion approval and target market records; the public offer platform above GBP 5 million |
| Running an MTF | MTF operators among the firms; the dark pools, the periodic auctions and the bond platforms | matched at the midpoint under the reference price waiver with no volume cap; routed out under RTS 6 | cleared at the CCP between the members, net in CREST; the operator outside the trade | GBP 150,000 permanent minimum, the fixed overheads, K-COH; no positions | the real-time publication with the waiver flag; the transaction reports for non-MiFID members; RTS 7 self-assessment; the FCA register |
The terms that come back on every diagram. Every pill in the diagrams also shows its definition on hover.
A retail client’s order enters the firm’s system, passes the algorithmic trading controls and is routed under the firm’s best execution policy to the RSP market makers or the exchange, with no payment for the flow. On the introducing route the execution goes to the clearing broker, which holds the account, confirms, settles in CREST and sends the statements (I); a self-clearing firm does all of that itself (S). The firm reports the transaction to the FCA through an ARM either way, and the market maker or the exchange publishes the trade.
The two sides of a client’s cash: the margin loan the firm extends under its own margin policy, funded by its own funds, bank lines or the lending of the client’s securities with the client’s express consent, and the client money the firm may not use at all, held on trust in client bank accounts and reconciled daily under CASS 7. The margin rate and the cash spread are the firm’s (or the group’s bank’s) revenue; segregation, the consent, the daily reconciliations and the CMAR are its obligations.
A client sells covered calls through the firm: the order passes the approval and cover checks and the appropriateness test, is routed to ICE Futures Europe, clears at ICE Clear Europe through the firm or its clearing broker as clearing member, and at expiry is assigned or lapses with ICE Clear Europe’s random assignment and the member’s own allocation method. The derivatives supervisor supervises; the firm reports the transactions to the FCA.
An institutional client sends an order to the firm’s algorithm by FIX; the firm works it across the exchanges, the MTFs and the systematic internalizers under its best execution policy and the RTS 6 controls, returns the fills and the TCA, confirms the client’s allocations through CTM, confirms them with each fund’s custodian under the T+1 code, settles in CREST and nets its own side at the CCP. The commission pays for execution and, through a research payment account or a separate invoice, for research; the best execution committee and the transaction reports to the FCA are the controls.
A client’s block is either crossed with another client as agent under the large-in-scale waiver, on an MTF, a block venue or OTC through an APA, with a commission on each side (C), or bought by the firm as principal at a discount and worked out of over the following days, with the firm’s capital at risk (R). The information control around the inquiry, the market sounding rules and the capacity on the confirmation are what the rules require.
A firm executes the retail brokers’ orders against its own book as a retail service provider on the RSP network and a systematic internaliser, quoting firm prices on request at or inside the exchange touch within the tick size regime, and quoting on the London Stock Exchange under its market maker schemes; it nets the longs and shorts across hundreds of thousands of orders and hedges the residual on the venues. It publishes every trade through an APA, reports every transaction to the FCA, settles the RSP trades bilaterally in CREST and the order book trades through LCH Ltd, and finances its inventory under the K-factors. No payment for order flow sits behind the routing: the FCA banned it in 2012.
A firm’s bond desk sells to its advisers’ clients from inventory or as matched principal, buying from a bank’s desk by RFQ and reselling with a spread the firm checks for fairness and discloses as a cost under COBS. Both legs are published through an APA and reported to the FCA through an ARM, the bond passes through the firm’s account in CREST or at the ICSD, the inventory is financed in repo and charged under the K-factors, and the fixed income supervisor reviews the spreads.
The clearing broker’s side of the introducing arrangement: due diligence and the clearing and custody agreement under SYSC’s outsourcing rules, the conversion and the connectivity, the daily processing of the introducing firm’s clients’ orders and activity in the introducing firm’s name, clearing and settlement as the general clearing member and CREST participant, margin and the introducing firm’s exposure, the daily files and exception queues, the clearing broker’s own safeguarding and capital obligations across all introducing firms, the monitoring of the introducing firm, and the fees.
What a self-clearing investment firm does every day as a clearing member and a CREST member: the day’s venue trades novated and netted at the CCP, the RSP and OTC trades instructed and matched in CREST, the back office reconciled to the CCP reports, the net deliveries and receipts in CREST on T+2 with the cash through CHAPS, the institutional deliveries against the custodians, the margin and the default fund with their intraday calls, client asset segregation in CREST, the income and corporate actions allocated by the stock record, and the books and records that hold it together.
The investment firm’s stock loan desk borrows shares to deliver on its clients’ short sales and its own fails after the locate the UK short selling rules requires, lends the securities its clients have consented to lend and its inventory against cash or securities collateral, and runs conduit loans for the spread. Every loan is marked daily, rates and recalls move with the name, the CASS consent rules limit what can be lent, UK SFTR reports every loan to a trade repository, and the financing cost and the buy-in rules make the fails expensive.
The own funds rule for a UK investment firm in practice: the requirement as the highest of the permanent minimum, the fixed overheads and the K-factors, measured from the CCPs’, CREST’s and the back office’s data, the liquid assets requirement beside it, the firm’s own ICARA and the FCA’s review, the quarterly MIF returns, the annual audit with the CASS report, the FSCS levy and the FCA’s supervisory review. Own funds are what let the firm carry inventory, fails and margin, and a breach stops the business.
How a UK investment firm funds its margin book, its inventory and its settlements: bank lines secured by the consented margin securities and its own securities, stock loan collateral from lending the securities it may use, repo on the bond inventory bilaterally, in triparty or at LCH Ltd, and its own funds, with client money kept apart in the client bank accounts, the settlement bank and CHAPS for the daily settlement and the CCPs’ intraday calls as the hard deadlines. The CASS rules draw the line between the firm’s funding and the clients’ money.
A standalone investment firm joins a syndicate as a co-lead in an overnight placing: the commitment committee sizes the K-NPR charge, the firm markets the placing to its institutional investors without a prospectus under the POATRs’ exemptions, submits its book, the lead prices and allocates, the firm allocates its shares under its COBS 11.3 allocation policy and confirms, the shares are delivered through CREST at the closing and the firm keeps the placing commission. UK MAR, the market sounding regime and the allocation rules govern it.
The firm places a private company’s securities with qualified investors under the POATRs’ exemptions: an engagement letter and a placement fee, the firm’s own due diligence and product governance (its liability), the offering to investors it has a relationship with, subscriptions with the qualification and the AML checks, the funds in an escrow until the minimum is met, the closing with the fee, the records COBS requires, and the unlisted securities the investors then hold.
An investment firm operating a multilateral trading facility under UK MiFID: the FCA’s permission with the rulebook and the RTS 7 systems requirements, the membership agreements, orders matched at the midpoint under the reference price waiver with no volume cap (or in a periodic auction), publication in real time and the transaction reports for the non-MiFID members, routing out under RTS 6, clearing of the matches at the CCP between the members with the operator outside the trade, confirmations and fees, the UK MAR surveillance and the information controls, and the venue’s obligations. The firm is a venue and an investment firm at once.
A retail client order seen from inside a UK investment firm: the adviser or the app, the order system and the RTS 6 controls with the client identifier, the router and the venues, the trade to the clearing broker or through the firm’s own CCP membership, the confirmation and the account, the branch manager’s and head office’s reviews, compliance’s surveillance, best execution monitoring and transaction report, the CFO’s computations and the records. The clearing agreement decides which steps belong to the clearing broker.
The control functions of a UK investment firm: the authorisation and the SMCR, the supervisory system under SYSC, the approvals and the branch reviews, the surveillance exceptions, the UK MAR surveillance and the transaction reports, the AML program and the National Crime Agency, the complaints and the Financial Ombudsman Service, the FCA’s supervision and its thematic reviews, and the filings. Approvals before the act, reviews and surveillance after it, and the records that prove both.
The back office of a UK investment firm in its two forms: an introducing firm that reconciles to its clearing broker’s files and uses its portal, and a self-clearing firm that runs its own trade processing, cash, stock record and corporate actions against the CCPs, CREST and the banks. Either way operations owns the reconciliation, the client money and asset records, the fails and their financing, the statements and the data the CFO computes from.
The finance function of a UK investment firm: the daily inputs from operations or the clearing broker, the own funds requirement under the IFPR and the liquid assets requirement, the daily CASS reconciliations, the limits that own funds set for the business, the settlement and the funding, the MIF returns, the CMAR and the notifications, the board and the ICARA, the operational controls the rules require, the FCA’s supervisory review, and what happens to the clients if the firm fails.