STSM042105 | Exemptions and Reliefs: reliefs: Intermediary Relief –shares regularly traded only on an multilateral trading facility (MTF)

Where shares are acquired that are only regularly traded (see STSM042100) on a multilateral trading facility (MTF), a recognised foreign exchange, or a recognised foreign options exchange (therefore meaning the shares are not regularly traded on a regulated market), the transaction will only be eligible for intermediary relief if the transaction is effected on that MTF/exchange.

Effected on the MTF/exchange

The legislation (section 80A (6) and 88A (6) FA1986) defines this as being when both:

a. The transaction is subject to the rules of the MTF/exchange

This will depend on the relevant rules which mean the transfer is treated as taking place on-market by the relevant MTF/exchange being met. As the requirements are likely to vary between MTFs/exchanges this must be considered on a case-by-case basis.

b. The transaction is reported to the MTF/exchange

Where the rules of the MTF/exchange specify how transactions must be reported to it, then those relevant reporting procedures must be followed for the reporting condition to be met. As it is also likely that the reporting requirements will vary between MTFs/exchanges, this must similarly be considered on a case-by-case basis

HM Revenue and Customs (HMRC) understands that the rules of some MTFs/exchanges may not contain a requirement to report a transaction to the MTF/exchange. This means that members of those trading venues are strictly unable to fulfil the requirement in the legislation that transactions must be reported to the MTF/exchange.

HMRC will not refuse relief where the rules of an MTF/exchange are either silent about the need to report transactions, or specifically state that a report is not required, provided the CREST Trade System of Origin (TSO) field is populated with the MTF/exchange that the securities were traded on. This is however only appropriate when the requirements under the rules of the relevant MTF/exchange for the trade to be on-market have been met.