INST trade

A large institution often does not know, at the moment of trading, exactly which of its sub-schemes or portfolios a trade should belong to. Working that out on the fly would slow the order down.

So the trading member enters the order with a placeholder code — "INST" — instead of a real custodial participant code. The real allocation to individual schemes happens afterwards, in the back office, once the details are known.

This lets the trade execute fast, and lets the sorting-out happen at a pace that suits paperwork rather than the market.

The workbook (Chapter 3, section 3.4.2, and Chapter 5, section 5.6.1) explains that a trading member may enter "INST" in the custodial participant code field when placing an order on behalf of an institutional client, instead of that client's own CP code.

Members must then allocate the INST trade to the correct categories within the time specified by the exchange or clearing corporation. The clearing-process timeline in Chapter 5 gives a concrete deadline for this: an Obligation Transfer Request (OTR) for INST trades on T day, up to 8:00 p.m.

For Foreign Portfolio Investors (FPIs) that are corporate bodies, individuals or family offices, the INST facility does not work the same way as for ordinary non-institutional CP codes: for these FPIs, INST allocation is permitted only to related FPIs, and members must provide details of related FPIs to the clearing corporation in advance.

A trading member executes a buy order for 60,000 shares of a listed company on behalf of a large institutional client on Monday (T day), entering the CP code as "INST" because the order will later be split across the client's multiple portfolios.

By 8:00 p.m. on T day, the trading member must submit an Obligation Transfer Request re-allocating the trade out of the INST bucket and into the client's actual custodial participant codes, tied to the sub-schemes decided in the trade allocation process. The custodian confirms these allocated trades by 7:30 a.m. on T+1.

Now suppose the client is instead a Category II FPI structured as a family office. That FPI cannot simply split the INST trade across any sub-account it likes — the allocation is permitted only to other FPIs related to it, and the member must already have furnished the clearing corporation with the list of those related FPIs.

Chapter 3 introduces the "INST" CP code as part of trade allocation, and Chapter 5 (sections 5.6.1) fixes the operational timeline — the 8:00 p.m. OTR deadline on T day — and the special restriction for certain FPI categories. Expect a question on what "INST" stands for functionally (a placeholder CP code for later allocation) and on the FPI-related-entities restriction.

• "INST" is not a real custodial participant's own code — it is a temporary marker used only until the back office allocates the trade.
• The Obligation Transfer Request deadline is 8:00 p.m. on T day — missing it is a timeline breach, not just an administrative delay.
• For FPIs that are corporate bodies, individuals or family offices, INST allocation is restricted to related FPIs only — ordinary institutional clients do not face this restriction.
• Do not confuse an INST trade's later allocation with an ordinary client code modification; INST allocation is the routine, expected next step for these trades, not a correction of an error.