ELM 1
Application,
contents, purpose and general
ELM 1.1
Application
- 01/12/2004
ELM 1.1.1
See Notes
- 27/04/2002
ELM 1.1.2
See Notes
Application of different chapters of ELM (except for an incoming EEA firm or an incoming Treaty firm)
(1) Chapter | (2) Categories of person to which chapter applies | (3) Applicable rules and guidance |
1 (Application, contents, purpose and general) | Every firm that wishes to issue e-money | ELM 1.3 |
An e-money firm | The whole chapter | |
A small e-money issuer and an applicant for a small e-money issuer certificate | The whole chapter except ELM 1.5 | |
2 (Initial and continuing own funds requirements) | An ELMI that is not a lead regulated firm | The whole chapter |
3 (Management of the e-money float) | An ELMI that is not a lead regulated firm | The whole chapter |
4 (Limitations on activities) | An ELMI | The whole chapter |
An e-money firm that is not an ELMI | The whole chapter except ELM 4.3 | |
5 (Systems and controls; Rules for making calculations)(Note 1) | An ELMI | The whole chapter |
An e-money firm that is not an ELMI | ELM 5.1, ELM 5.2 and ELM 5.4 | |
6 (Redemption, information requirements and purse limits) | An e-money firm | The whole chapter |
7 (Consolidated financial supervision) | An ELMI that is a member of a group and is not a lead regulated firm | The whole chapter |
8 (Small e-money issuers) | An applicant for a small e-money issuer certificate and a small e-money issuer | The whole chapter |
Note 1 = ELM 5.1.2 R and ELM 5.1.3 R contain further application statements with respect to ELM 5.4A. |
- 01/01/2007
- Past version of ELM 1.1.2 before 01/01/2007
Incoming EEA firms and incoming Treaty firms
ELM 1.1.3
See Notes
- (1) ELM 1 applies to an e-money firm that is:
- (a) an incoming EEA firm; or
- (b) an incoming Treaty firm;
- if it has not established a branch in the United Kingdom. Otherwise ELM does not apply to such firms.
- (2) ELM 1 and ELM 6 apply to an e-money firm that is:
- (a) an incoming EEA firm; or
- (b) an incoming Treaty firm;
- if it has established a branch in the United Kingdom. Otherwise ELM does not apply to such firms.
- 27/04/2002
Firms established outside the EEA
ELM 1.1.4
See Notes
- 27/04/2002
Distance marketing activities
ELM 1.1.5
See Notes
- (1) ELM 1.4A sets out certain minimum requirements under the Distance Marketing Directive in respect of a customer's cancellation rights. These rules are supplemented by the requirements in COBS 15.2 (The right to cancel), COBS 15.3 (Notice of exercise) and COBS 15.4 (Effects of cancellation) which all apply to e-money firms.
- (2) As set out in, COBS 15 applies to e-money firms as if references to 'accepting deposits and 'deposits' were references to 'issuing e-money' and 'e-money' respectively.'
ELM 1.2
Contents and purpose
- 01/12/2004
ELM 1.2.1
See Notes
- 27/04/2002
ELM 1.2.2
See Notes
- 27/04/2002
ELM 1.2.3
See Notes
ELM implements the parts of the E-Money Directive and (for ELMIs) the Banking Consolidation Directive dealing with these topics. As from 1 January 2007 the version of the Banking Consolidation Directive in force when the E-Money Directive came into force (Directive 2000/12/EC) was replaced by the current version. The FSA's policy in implementing the parts of the Banking Consolidation Directive that apply to ELMIs is generally that the current version of the Banking Consolidation Directive applies except that generally:
- (1) ELM does not implement provisions of the current version of the Banking Consolidation Directive that have no counterpart in the previous version; and
- (2) where the E-Money Directive applied a part of the previous version of the Banking Consolidation Directive that does not have a direct counterpart in the current version, ELM continues to implement the previous version.
- 01/01/2007
- Past version of ELM 1.2.3 before 01/01/2007
ELM 1.2.4
See Notes
- 27/04/2002
- Future version of ELM 1.2.4 after 06/08/2010
ELM 1.2.5
See Notes
The requirements for ELMIs are intended to take account of the following principles, which are based on the recitals to the E-Money Directive.
- (1) It is desirable to provide a regulatory framework that helps to ensure that e-money delivers its full potential benefits and that avoids hampering technological innovation. Therefore the regime provides a "technology neutral" regulatory framework.
- (2) In order to respond to the specific risks associated with e-money, the supervisory regime is targeted specifically at issues relating to issuing e-money. As a result, parts of the prudential supervisory regime applying to banks do not apply to ELMIs.
- (3) It is necessary to preserve a level playing field between ELMIs and banks and building societies issuing e-money and, thus, to ensure fair competition among a wider range of institutions to the benefit of holders of e-money. To assist in achieving this, the removal of some features of the prudential supervisory regime applying to banks and building societies is balanced by rules that are stricter than those applying to banks and building societies. The main example of these stricter requirements is the limits on the business activities that ELMIs may carry on and the requirements about asset-liability management of the e-money float. As the main prudential measures that apply to ELMIs are targeted specifically at the issue of e-money, it is necessary to restrict the business of ELMIs to that activity.
- 27/04/2002
ELM 1.3
Restriction on issuing e-money
- 01/12/2004
ELM 1.3.1
See Notes
- 27/04/2002
ELM 1.3.2
See Notes
- 27/04/2002
ELM 1.3.3
See Notes
- 27/04/2002
ELM 1.4
Meaning of e-money and application of financial promotion
- 01/12/2004
ELM 1.4.1
See Notes
- 27/04/2002
ELM 1.4A
Distance contracts: cancellation
- 01/12/2004
Right to cancel
ELM 1.4A.1
See Notes
A consumer has a right to cancel a distance contract the making or performance of which by the firm constitutes, or is part of, issuing e-money unless:
- (1) the performance of the distance contract has been fully completed by both parties at the customer's express request before the customer exercises his right to cancel; or
- (2) the firm has an initial service agreement with the consumer and the contract is in relation to a successive operation or separate operation of the same nature under that agreement (see COBS 15 Annex 1 1.11R), in which case the right to cancel applies only to the initial agreement.
- 01/11/2007
- Past version of ELM 1.4A.1 before 01/11/2007
Cancellation period
ELM 1.4A.2
See Notes
The right to cancel referred to in ELM 1.4A.1 R starts on the later of:
- 01/11/2007
- Past version of ELM 1.4A.2 before 01/11/2007
Failure to give information on cancellation rights
ELM 1.4A.3
See Notes
- 01/11/2007
- Past version of ELM 1.4A.3 before 01/11/2007
Exercising the right to cancel
ELM 1.4A.4
See Notes
- 01/11/2007
- Past version of ELM 1.4A.4 before 01/11/2007
ELM 1.4A.5
See Notes
ELM 1.5
Application of other parts of the Handbook to ELMIs
- 01/12/2004
ELM 1.5.1
See Notes
- 27/04/2002
ELM 1.5.2
See Notes
Application of other parts of the Handbook to ELMIs
Block | Module | Application |
High level standards | Principles for businesses (PRIN) | Applies to every ELMI. As explained in PRIN 1.1.3 G, the Principles apply with respect to regulated activities generally, but, in applying the Principles with respect to issuing e-money, the FSA will proceed only in a prudential context. |
Threshold conditions (COND) | Applies to every ELMI. Threshold condition 1 says that a firm that wishes to issue e-money must be a body corporate or a partnership. (See COND 2.1 for more detail.) | |
Statements of principle and code of practice for approved persons (APER) | Applies to every approved person who performs a controlled function for an ELMI. | |
The fit and proper test for approved persons (FIT) | Applies in relation to the criteria that the FSA will consider when assessing the fitness and propriety of a candidate for a controlled function to be performed for an ELMI. It is also relevant in assessing the continuing fitness and propriety of approved persons carrying on such a controlled function. | |
Senior management arrangements, systems and controls (SYSC) | SYSC 1 (Application and purpose), SYSC 2 (Senior management arrangements), SYSC 3 (Systems and controls), SYSC 12.1 (Group risk systems and control requirement) and SYSC 18 (Guidance on Public Interest Disclosure Act: Whistleblowing) apply to every ELMI. | |
General provisions (GEN) | Applies to every ELMI. | |
Business Standards | Interim Prudential sourcebooks: IPRU(INS), IPRU(FSOC), PRU(BANK), PRU(BSOC) and PRU(INV) | These sourcebooks do not apply to ELMIs. |
Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU) | ELM 7 (Consolidated financial supervision) applies BIPRU 8 (Group risk-consolidation) to certain ELMIs who are members of a group. | |
General Prudential sourcebook (GENPRU) | GENPRU 1.4 (Actions for damages), GENPRU 3.1 (Cross sector groups), GENPRU 3.2 (Third country groups), GENPRU 3 Ann 1R (Capital adequacy calculations for financial conglomerates), GENPRU 3 Ann 2R (Prudential rules for third country groups), GENPRU 3 Annex 3G (Financial conglomerates: Cooperative decision making by competent authorities and consultation) and GENPRU 3 Ann 4R (Classification of groups) apply to an ELMI. | |
Other sourcebooks in Prudential Standards (Block 2): Prudential sourcebook for Insurers (INSPRU), Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU) and Prudential sourcebook for UCITS Firms (UPRU) | These sourcebooks do not apply to ELMIs. | |
Market Conduct (MAR) | MAR 1 (The Code of Market Conduct) applies if an ELMI is seeking guidance as to whether or not behaviour amounts to market abuse. MAR 2 (Price Stabilising Rules), MAR 3 (Inter-Professional Conduct) and MAR 4 (Endorsement of the Takeover Code) do not apply to an ELMI when issuing e-money. MAR 5 (Multilateral Trading Facilities ) will not apply to an ELMI, as there are restrictions on the type of business activities that an ELMI may carry on. | |
Conduct of Business sourcebook (COBS) | The effect of: (1) ELM 6.8.2A R is that COBS 5 (Distance contracts) applies to a firm issuing e-money; (2) ELM 1.4A.5 R is that COBS 15.3.4 R, COBS 15.3.1 R and COBS 15.4 apply; and (3) [deleted] Otherwise, COBS does not apply to an ELMI when issuing e-money and the rules in COBS about financial promotions do not usually apply to e-money, but may do so in certain situations. |
|
Insurance: Conduct of Business sourcebook (ICOBS) | Does not apply to an ELMI when issuing e-money | |
Mortgages: Conduct of Business sourcebook (MCOB) | Does not apply to an ELMI when issuing e-money | |
Client Assets sourcebook (CASS) | Does not apply to an ELMI when issuing e-money. | |
Training and Competence Sourcebook (TC) | TC applies to a firm whose employees carry on activities listed in TC App 1. Those activities do not include issuing e-money. | |
Regulatory processes | Supervision manual (SUP) | The following chapters of SUP apply to every ELMI: 1, 2, 3, 5, 6, 7, 8, 9, 10, 11, 13, 15, 16 and 20. The following chapters of SUP do not apply to an ELMI: 4, 12, 14, 17, 18 and 19. |
Decision, Procedure and Penalties Manual (DEPP) | Applies to every ELMI. | |
Redress | Complaints (DISP) | Applies to every ELMI. |
Compensation (COMP) | An ELMI is not a participant firm for the purposes of COMP in relation to issuing e-money. Under article 9J of the Regulated Activities Order, the compensation scheme is not to provide for the compensation of persons in respect of claims made in connection with issuing e-money. | |
Complaints against the FSA (COAF) | Applies to every ELMI. | |
Specialist sourcebooks other than ELM | Credit unions (CRED), Professional firms, (PROF), Collective Investment Schemes (CIS) or COLL) and Recognised Investment Exchanges and Recognised Clearing Houses (REC). | These sourcebooks do not apply to an ELMI. |
[deleted] | [deleted] | |
Listing, Prospectus and Disclosure | Listing Rules (LR) | May apply if the ELMI is applying for listing in the United Kingdom or is a listed issuer in the United Kingdom. |
Prospectus Rules (PR) | May apply if the ELMI makes an offer of transferable securities to the public in the United Kingdom or is seeking the admission to trading of transferable securities on a regulated market situated or operating in the United Kingdom. | |
Disclosure Rules and Transparency Rules (DTR) | May apply if the ELMI is an issuer, any class of whose financial instruments have been admitted to trading on a regulated market, or are the subject of an application for admission to trading on a regulated market, other than issuers who have not requested or approved admission of their financial instruments to trading on a regulated market. |
ELM 1.6
Actions for damages
- 01/12/2004
ELM 1.6.1
See Notes
- 27/04/2002
ELM 1.6.2
See Notes
- 27/04/2002
ELM 2
Initial and continuing own funds requirements
ELM 2.1
Application
- 01/12/2004
ELM 2.1.1
See Notes
The effect of ELM 1.1.1 R to ELM 1.1.3 R is that this chapter:
- (1) applies to an ELMI other than a lead regulated firm;
- (2) does not apply to:
- (a) an incoming EEA firm; or
- (b) an incoming Treaty firm.
- 27/04/2002
ELM 2.2
Purpose
- 01/12/2004
ELM 2.2.1
See Notes
- 27/04/2002
ELM 2.2.2
See Notes
- 27/04/2002
ELM 2.2.3
See Notes
The purpose of the capital requirements in this chapter is to:
- (1) help an ELMI to maintain itself as a viable going concern, to overcome expected and unexpected difficulties and to sustain its infrastructure;
- (2) help an ELMI to secure, in conjunction with the asset-liability management requirements in ELM 3, its ability to redeem e-money whenever redemption may be required; and
- (3) help to maintain public confidence in an ELMI's ability to redeem e-money as and when required.
- 27/04/2002
ELM 2.2.4
See Notes
- 27/04/2002
ELM 2.3
Base capital requirements
- 01/12/2004
ELM 2.3.1
See Notes
A firm must:
- (1) (at the time it is granted an e-money permission) have initial capital, calculated in accordance with ELM 2.4.2 R;
- (2) (at all times) maintain own funds, calculated in accordance with ELM 2.4.2 R;
- amounting to not less than:
- (3) (if the firm's base currency is the euro) one million euro;
- (4) (if the firm has another base currency) the equivalent amount in that currency.
- 27/04/2002
ELM 2.4
Calculation of initial capital and own funds
- 01/12/2004
ELM 2.4.1
See Notes
- 27/04/2002
ELM 2.4.2
See Notes
Calculation of initial capital and own funds
the sum of: | ||
ordinary share capital (see ELM 2.4.3 R) | ||
share premium account (see ELM 2.4.3 R) | ||
audited reserves excluding revaluation reserves (see ELM 2.4.4 R) | ||
externally verified interim net profits (see ELM 2.4.6 R) | ||
partnership capital (see ELM 2.4.7 R) | ||
= initial capital: | (A) | |
the sum of: | ||
investments in own shares | ||
intangible assets (see ELM 2.4.9 R) | ||
interim net losses (see ELM 2.4.10 R) | ||
= deductions for calculating tier one capital: | (B) | |
tier one capital = A - B | (C) | |
the sum of: | ||
subordinated debt forming part of upper tier 2 capital (see ELM 2.4.11 R and ELM 2.4.13 R) | ||
revaluation reserves | ||
= upper tier 2 capital | (D) | |
subordinated debt forming lower tier 2 capital (see ELM 2.4.11 R and ELM 2.4.12 R) | (E) | |
D + E = tier two capital | ||
the total amount of material holdings in certain persons (see ELM 2.4.17 R) | (F) | |
C + D + E - F = own funds |
- 01/01/2005
- Past version of ELM 2.4.2 before 01/01/2005
Ordinary share capital
ELM 2.4.3
See Notes
- 27/04/2002
Reserves
ELM 2.4.4
See Notes
- 27/04/2002
ELM 2.4.5
See Notes
- 27/04/2002
Net profits
ELM 2.4.6
See Notes
- 27/04/2002
Partnership capital
ELM 2.4.7
See Notes
Partnership capital is made up of the partners' capital accounts. The capital account is an account:
- (1) into which capital contributed by the partners is paid; and
- (2) from which under the terms of the partnership agreement an amount representing capital may be withdrawn by a partner only if:
- (a) he ceases to be a partner and an equal amount is transferred to another such account by his former partners or any person replacing him as their partner; or
- (b) the partnership is otherwise dissolved or wound up.
- 27/04/2002
ELM 2.4.8
See Notes
- 27/04/2002
Intangible assets
ELM 2.4.9
See Notes
- 27/04/2002
Losses
ELM 2.4.10
See Notes
- 27/04/2002
Subordinated debt capital: requirements for both upper and lower tier two capital
ELM 2.4.11
See Notes
Subordinated debt capital does not form part of the own funds of a firm unless the following requirements are met:
- (1) the claims of the subordinated creditors (whether in respect of principal, interest or otherwise) must rank behind those of all unsubordinated creditors of the firm and behind any unsubordinated creditors of any partner in it;
- (2) the debt capital is unsecured and fully paid up;
- (3) to the fullest extent permitted under the laws of all relevant jurisdictions, creditors must waive their right to set off amounts they owe the firm against the subordinated debt capital;
- (4) the remedies (other than rights falling into (3)) available to the subordinated creditor in the event of non-payment, an event of default, breach of agreement or other default in respect of the subordinated debt capital (so far as applicable) must be limited to:
- (a) bringing proceedings for the winding up, bankruptcy or administration of the firm (or any partner in the firm) or any similar or equivalent proceedings under the law of any part of the United Kingdom or of any other country; or
- (b) proving for the debt and claiming in the liquidation of the firm or in any other proceedings referred to in (4)(a);
- (5) neither the firm nor any partner in it may by virtue of any remedy mentioned in ELM 2.4.11 R (4) be obliged to pay any sum or sums sooner than the same is payable under ELM 2.4.12 R (1) (in the case of lower tier two capital) or ELM 2.4.13 R (1) (in the case of upper tier two capital);
- (6) the terms of the subordinated debt capital must be set out in a written agreement or instrument that contains terms that provide for the conditions set out in:
- (a) (1) to (5); and
- (b) ELM 2.4.12 R (in the case of lower tier two capital) or ELM 2.4.13 R (in the case of upper tier two capital); and
- (7) the firm has obtained a written legal opinion from a suitably experienced external lawyer confirming that the debt capital meets the requirements of:
- (a) (1) to (6); and
- (b) ELM 2.4.12 R (in the case of lower tier two capital) or ELM 2.4.13 R (in the case of upper tier two capital).
- 27/04/2002
Subordinated debt capital: additional requirements for lower tier two capital
ELM 2.4.12
See Notes
Subordinated debt capital does not form part of the of the lower tier two capital of a firm unless the following requirements are met (in addition to those in ELM 2.4.11 R):
- (1) (without limiting the requirements in ELM 2.4.11 R (1)) the subordinated debt capital must not be capable of becoming due and payable before any maturity date set under (2) except (if it is subject to any events of default) on an event of default complying with (3);
- (2) (without limiting the requirements in ELM 2.4.11 R (1)) the subordinated debt capital must:
- (a) have a fixed original maturity of at least five years; or
- (b) be subject to notice of repayment of at least five years; or
- (c) be perpetual; or
- (d) be repayable only in a winding up of the firm or in any other proceedings referred to in ELM 2.4.11 R (4)(a);
- (3) any events of default are limited to the winding-up of the firm or the bringing of any other proceedings referred to in ELM 2.4.11 R (4)(a); and
- (4) any:
- (a) events of default; or
- (b) remedy referred to in ELM 2.4.11 R (3) or ELM 2.4.11 R (4); or
- (c) provision for a final maturity date;
- must not prejudice the subordination set out in (1) and ELM 2.4.11 R (1).
- 27/04/2002
Subordinated debt capital: additional requirements for upper tier two capital
ELM 2.4.13
See Notes
Subordinated debt capital does not form part of a firm's upper tier two capital unless the following requirements are met (in addition to those in ELM 2.4.11 R):
- (1) (without limiting the requirements in ELM 2.4.11 R (1)) the subordinated debt capital is perpetual or is only repayable in a winding up of the firm or in any similar proceedings relating to the firm or relating to the firm and any partner of the firm;
- (2) no interest, principal or other amount may be payable:
- (a) at a time when the firm is in breach of any ELM financial rule or is insolvent; or
- (b) if making that payment would result in the firm breaching any ELM financial rule or becoming insolvent;
- (3) the firm may defer the payment of any interest;
- (4) the subordinated debt capital complies with the conditions in article 63(2)(d) of the Banking Consolidation Directive;
- (5) the debt capital is not subject to any event of default; and
- (6) any remedy referred to in ELM 2.4.11 R (3) or ELM 2.4.11 R (4) must not prejudice the subordination set out in (1) and ELM 2.4.11 R (1).
- 01/01/2007
- Past version of ELM 2.4.13 before 01/01/2007
ELM 2.4.14
See Notes
- 27/04/2002
ELM 2.4.15
See Notes
- 27/04/2002
ELM 2.4.16
See Notes
- 01/01/2007
- Past version of ELM 2.4.16 before 01/01/2007
Material holdings
ELM 2.4.17
See Notes
- (1) The total amount of a firm's material holdings as referred to at stage F of the calculation in the table in ELM 2.4.2 R is the sum of:
- (a) the total value of all ownership shares and all capital coming within (6) owned by the firm (or in which it has a position) in any relevant financial services company or financial institution in which the firm owns more than 10% of the ownership shares;
- (b) the amount by which the total amount specified in (3) exceeds 10% of the firm's own funds (calculated before the deduction of material holdings at stage F of the calculation in ELM 2.4.2 R);
- (c) ownership shares in any:
- (i) insurance undertaking; or
- (ii) insurance holding company;
- if it fulfils one of the following conditions:
- (iii) it is a subsidiary undertaking of the firm; or
- (iv) the firm holds a participation in it; and
- (d) any item of capital of a type referred to in (6) in an insurance undertaking or insurance holding company coming within (1)(c).
- (2) In the case of ownership shares in an issuer with a share premium account, the figure of 10% in (1)(a) must be calculated by reference to the share capital plus share premium of that issuer.
- (3) The amount referred to in (1)(b) is the sum of the total value of all the ownership shares and all capital coming within (6) owned by the firm (or in which it has a position) in financial institutions or relevant financial services companies except for financial institutions or relevant financial services companies that fall into (1)(a).
- (4) The firm must include ownership shares and any item of capital of the type referred to in (6):
- (a) of which it is not the registered owner but which it owns beneficially; or
- (b) that are or should be included as an asset in its accounting records.
- (5) The value of ownership shares and capital coming within (6) for the purposes of ELM 2.4.17 R is the full balance sheet value.
- (6) An item falls into this paragraph if it is a subordinated debt or other item of capital that:
- (a) (in the case of an insurance undertaking or insurance holding company) falls into Article 16(3) of the First Non-Life Directive or, as applicable, Article 27(4) of the Consolidated Life Directive; or
- (b) (in the case of a relevant financial services company or financial institution) falls into Article 63 or Article 64(3) of the Banking Consolidation Directive.
- 01/01/2007
- Past version of ELM 2.4.17 before 01/01/2007
Limits on components of own funds
ELM 2.4.18
See Notes
- 27/04/2002
ELM 2.4.19
See Notes
- 27/04/2002
Adjustments to own funds
ELM 2.4.20
See Notes
- 01/01/2007
- Past version of ELM 2.4.20 before 01/01/2007
Credit institutions and material holdings
ELM 2.4.21
See Notes
- 27/04/2002
Exclusion from own funds
ELM 2.4.22
See Notes
- 01/01/2007
ELM 2.4.23
See Notes
- 01/01/2007
ELM 2.5
Continuing capital requirement
- 01/12/2004
Obligation to meet own funds requirement
ELM 2.5.1
See Notes
- 27/04/2002
Calculation of own funds requirement
ELM 2.5.2
See Notes
A firm's own funds requirement is, at any time, 2% of the higher of the following amounts:
- (1) its e-money outstandings at that time; and
- (2) the average of its daily e-money outstandings amount for the six month period ending at that time.
- 27/04/2002
Newly authorised ELMI without a six month average
ELM 2.5.3
See Notes
- 27/04/2002
ELM 2.5.4
See Notes
If, in relation to a firm:
- (1) the projections referred to in ELM 2.5.3 R (or any further projections prepared under this rule) have proved to be significantly incorrect; or
- (2) it is reasonably likely that those projections will prove to be significantly incorrect;
and more than one month of the six month period beginning on the date the firm is granted an e-money permission remains at the time that the circumstances in ELM 2.5.4 R (1) or ELM 2.5.4 R (2) first arise, the firm must prepare revised projections of its daily e-money outstandings amount for the rest of that period.
- 27/04/2002
ELM 2.5.5
See Notes
The revised projections in ELM 2.5.4 R must:
- (1) be prepared to a high standard and be fair and reasonable;
- (2) be based on reasonable and appropriate assumptions and research and (where appropriate) fact; and
- (3) be completed and sent to the FSA within ten business days of the circumstances in ELM 2.5.4 R (1) or ELM 2.5.4 R (2) first arising.
- 27/04/2002
ELM 2.5.6
See Notes
If a firm produces new projections under ELM 2.5.4 R, the amount referred to in ELM 2.5.2 R (2) must be calculated from the average of its daily e-money outstandings amount for the six month period beginning on the day it is granted an e-money permission, as follows:
- (1) (for the period prior to the day as of which the calculation is being made) from the firm's actual e-money outstandings; and
- (2) (for the remainder of the six month period) from those new projections.
- 27/04/2002
ELM 2.5.7
See Notes
- 27/04/2002
- Future version of ELM 2.5.7 after 01/04/2009
ELM 3
Management of the e-money float
ELM 3.1
Application
- 01/12/2004
ELM 3.1.1
See Notes
The effect of ELM 1.1.1 R to ELM 1.1.3 R is that this chapter:
- (1) applies to an ELMI other than a lead regulated firm;
- (2) does not apply to:
- (a) an incoming EEA firm; or
- (b) an incoming Treaty firm.
- 27/04/2002
ELM 3.2
Purpose
- 01/12/2004
ELM 3.2.1
See Notes
- 27/04/2002
ELM 3.2.2
See Notes
- 27/04/2002
ELM 3.2.3
See Notes
- 27/04/2002
ELM 3.2.4
See Notes
- 27/04/2002
ELM 3.2.5
See Notes
- 27/04/2002
ELM 3.2.6
See Notes
The purpose of the liquidity requirements of this chapter is to help to enable a firm to be able to do the following in particular:
- (1) to meet maturing obligations in the normal course of business (business liquidity);
- (2) to maintain an additional cushion of liquidity to cope with unexpected events such as the failure of a significant counterparty or debtor (contingent liquidity); and
- (3) to survive in a wider market-generated crisis (market liquidity).
- 27/04/2002
ELM 3.2.7
See Notes
- 27/04/2002
ELM 3.2.8
See Notes
- 27/04/2002
ELM 3.2.9
See Notes
- 27/04/2002
ELM 3.3
Asset-liability management
- 01/12/2004
ELM 3.3.1
See Notes
- 27/04/2002
ELM 3.3.2
See Notes
For the purpose of ELM 3.3.1 R, a firm's qualifying liquid assets must be valued at the lower of:
- (1) cost;
- (2) the amount that can reasonably be realised in money from that investment (within the time specified in ELM 3.3.11 R (2) or less) by redemption, realisation, sale, exchange or other disposal of that asset.
- 27/04/2002
ELM 3.3.3
See Notes
- 27/04/2002
ELM 3.3.4
See Notes
- 27/04/2002
Liquid assets
ELM 3.3.5
See Notes
A qualifying liquid asset is an investment fulfilling all the following criteria:
- (1) it is unsubordinated;
- (2) it ranks at least equally with the unsubordinated, non-preferred and unsecured obligations of the person who owes the obligation under the qualifying liquid asset in question;
- (3) it is:
- (a) a zero weighted asset; or
- (b) a deposit that is repayable on demand and is held with a Zone A credit institution; or
- (c) a qualifying debt security; and
- (4) either:
- (a) it has a residual maturity of one year or less; or
- (b) (in the case of an investment on which a floating rate of interest is payable) the interest rate will be redetermined no later than one year from the time in question.
- 27/04/2002
ELM 3.3.6
See Notes
- 27/04/2002
ELM 3.3.7
See Notes
- 27/04/2002
ELM 3.3.8
See Notes
A zero weighted asset is any of the following:
- (1) cash;
- (2) a security issued by and representing a claim on (or that is fully, directly and unconditionally guaranteed by):
- (a) a central government or central bank of a Zone A country; or
- (b) the European Communities; or
- (c) the European Central Bank;
- 27/04/2002
- Future version of ELM 3.3.8 after 01/12/2009
ELM 3.3.9
See Notes
A qualifying debt security means a debenture or government and public security (other than a zero weighted asset) that:
- (1) is sufficiently liquid;
- (2) is not issued by a controller of the firm or by a person in the same group as the firm; and
- (3) satisfies the condition in ELM 3.3.10 R.
- 27/04/2002
ELM 3.3.10
See Notes
The condition referred to in ELM 3.3.9 R is that either:
- (1) the security is issued by and represents a claim on (or it is fully, directly and unconditionally guaranteed by):
- (a) a multilateral development bank; or
- (b) the regional or local government of a Zone A country; or
- (c) a Zone A credit institution, but only if the security does not form part of its regulatory capital resources; or
- (d) an MiFID investment firm or recognised third country investment firm, but only if the shares of that person are listed on a recognised investment exchange or designated investment exchange; or
- (2) the security:
- (a) is listed on a recognised investment exchange or designated investment exchange; and
- (b) is subject to a degree of default risk that, by virtue of the solvency of the issuer or guarantor (as the case may be) is no greater than what would be within the range of what is normal for a security falling into ELM 3.3.10 R (1).
- 01/11/2007
- Past version of ELM 3.3.10 before 01/11/2007
Test for liquidity
ELM 3.3.11
See Notes
Investments held by a firm are only sufficiently liquid if they satisfy all of the following requirements:
- (1) the firm is without delay able to get quotations for the sale or purchase of the investments complying with the following conditions:
- (a) the prices are for transactions that would fall into ELM 3.3.11 R (2) and ELM 3.3.11 R (3); and
- (b) the firm gets the prices from persons who are not associates of the firm, who are independent of the firm and who are willing and able to buy and purchase those investments at the prices they quote;
- (2) it is reasonable to conclude that, except in exceptional circumstances, the firm will be able to find a buyer for the investments and complete the sale, for money, within a time that is within the range of (or that is quicker than) what is normal for a sale falling into (5);
- (3) it is reasonable to conclude that, except in exceptional circumstances, the price that the firm will be able to obtain for the sale of the investments will not be materially affected by either the speed of the sale or the amount of the investments sold;
- (4) they are regularly traded;
- (5) taking into account all other factors such as the volume of trading and the number of persons who frequently trade in them, their liquidity is at least as great as would be within the range of what is normal for government and public securities (being traded on the main market for those government and public securities) of the central government of a Zone A country that are widely and continuously traded in large volumes; and
- (6) the firm can buy or sell the investments in a market in which:
- (a) there is a timetable for the settlement of sales of those investments; and
- (b) it is general market practice in that market to follow that timetable;
- 27/04/2002
ELM 3.3.12
See Notes
- 27/04/2002
Establishment of the e-money float
ELM 3.3.13
See Notes
- 27/04/2002
ELM 3.4
Foreign exchange risk
- 01/12/2004
ELM 3.4.1
See Notes
- 27/04/2002
ELM 3.4.2
See Notes
A firm must, at all times, have sufficient own funds to ensure that its FX exposure does not exceed its FX exposure limit on more than:
ending on the day in question.
- 27/04/2002
Calculation of FX exposure
ELM 3.4.3
See Notes
- 27/04/2002
ELM 3.4.4
See Notes
A firm's net FX open position is calculated as follows:
- (1) only take into account an asset, liability or other position that:
- (a) is denominated in, or gives rise to a position in, a foreign currency; and
- (b) forms part of its e-money outstandings or e-money float;
- (2) items forming part of its e-money float must be valued in accordance with ELM 3.3.2 R;
- (3) for each foreign currency:
- (a) sum the long and short positions;
- (b) calculate the net long or short position for that currency;
- (4) convert each net position, long and short, into the firm's base currency at prevailing spot rates;
- (5) sum all short positions and sum all long positions;
- (6) the largest figure from (5) is the firm's net FX open position.
- 27/04/2002
ELM 3.4.5
See Notes
For the purposes of determining the currency in which a position is denominated, a firm must apply the following principles:
- (1) where the price of an investment is quoted in only one currency, a position in that investment must be treated as denominated in that currency;
- (2) where the price of an investment is quoted in more than one currency, a position in that investment must be treated as denominated in the currency in which the firm accounts for the investment.
- 27/04/2002
FX exposure limits
ELM 3.4.6
See Notes
- 27/04/2002
ELM 3.4.7
See Notes
- 27/04/2002
ELM 3.4.8
See Notes
- 27/04/2002
ELM 3.4.9
See Notes
- 27/04/2002
ELM 3.4.10
See Notes
- 27/04/2002
ELM 3.4.11
See Notes
- 27/04/2002
ELM 3.4.12
See Notes
- 27/04/2002
ELM 3.5
Large exposure risk
- 01/12/2004
Large exposure limits
ELM 3.5.1
See Notes
- 27/04/2002
ELM 3.5.2
See Notes
- 27/04/2002
General rules for calculation of exposures
ELM 3.5.3
See Notes
- (1) A firm has an e-money float exposure to a person if the firm is exposed to the risk of incurring losses:
- (a) in connection with an item that forms part of the firm's e-money float and that involves an obligation of that person; or
- (b) if the firm realises an asset or off-balance sheet position that relates to an investment forming part of the firm's e-money float issued by that person or that otherwise involves an obligation of that person; or
- (c) if the risk:
- (i) relates to an investment forming part of the firm's e-money float; and
- (ii) is wholly or mainly attributable to the risk that the person fails to meet or cannot meet an obligation or to the condition or prospects of that person (including its financial soundness).
- (2) The amount of a firm's e-money float exposure in (1) is the maximum loss that the firm might suffer.
- (3) An individual item gives rise to an individual e-money float exposure.
- (4) The total e-money float exposure to a person is the sum of all such individual e-money float exposures.
- 27/04/2002
ELM 3.5.4
See Notes
- 27/04/2002
ELM 3.5.5
See Notes
- 27/04/2002
Exclusions
ELM 3.5.6
See Notes
A firm must not take account of the following e-money float exposures for the purposes of the definition of large e-money float exposure:
- (1) a claim or other asset required to be deducted at stages C or F set out in ELM 2.4.2 R;
- (2) a bill endorsement on a bill already endorsed by another firm;
- (3) an e-money float exposure under a zero weighted asset;
- (4) an e-money float exposure that is secured by collateral held by the firm in the form of:
- (a) zero weighted assets; or
- (b) a deposit of money with or certificates of deposit issued by the firm;
- (but see ELM 3.5.16 R);
- (5) an e-money float exposure with a residual maturity of one year or less to a full credit institution (including a deposit that is a qualifying liquid asset under ELM 3.3.5 R (3)(b)), but only if that e-money float exposure does not form part of that credit institution's regulatory capital resources.
- 27/04/2002
Calculation of large e-money float exposure
ELM 3.5.7
See Notes
Each of the following is a large e-money float exposure of a firm:
- (1) (if the total of the firm's e-money float exposures to a person equals or exceeds 10% of the firm's own funds) all the firm's e-money float exposures to that person; and
- (2) (if the total of the firm's e-money float exposures to each member of a group of closely related counterparties equals or exceeds 10% of the firm's own funds) all the firm's e-money float exposures to each member of that group of closely related counterparties.
- 27/04/2002
ELM 3.5.8
See Notes
- 27/04/2002
ELM 3.5.9
See Notes
In ELM 3.5.8 R, persons are closely related if:
- (1) the financial soundness of one of them is, or is likely to be, significantly affected by the financial soundness of the others; or
- (2) it would be prudent to regard them as representing the same risk, because the same factors are likely to affect the financial soundness of them all or for some other reason.
- 27/04/2002
ELM 3.5.10
See Notes
- 27/04/2002
ELM 3.5.11
See Notes
- (1) ELM 3.5.10 R does not apply with respect to particular e-money float exposures if the firm:
- (a) has taken all steps that are reasonably required to prove that the persons in question are not closely related as defined in ELM 3.5.9 R; and
- (b) makes and retains a record of the steps taken under (1)(a).
- (2) A firm must retain the record in (1) for the period of three years after the firm ceases to take advantage of the disapplication of ELM 3.5.10 R by (1) (including where the firm ceases to have that e-money float exposure).
- 27/04/2002
ELM 3.5.12
See Notes
- 27/04/2002
Treatment of guarantees and collateral
ELM 3.5.13
See Notes
- 27/04/2002
ELM 3.5.14
See Notes
- 27/04/2002
ELM 3.5.15
See Notes
- 27/04/2002
ELM 3.5.16
See Notes
A firm may not recognise the benefits of collateral for the purpose of this section, unless:
- (1) the firm has an unconditional right to apply the collateral to discharge (or to use the proceeds of realising the collateral to discharge) the liability forming the e-money float exposure;
- (2) the collateral arrangements are:
- (a) legally well-founded in all relevant jurisdictions; and
- (b) enforceable in the default, liquidation, bankruptcy or other similar circumstance of the person who provides the collateral, the person to whom the firm has the e-money float exposure and the firm; and
- (3) the firm has obtained legal opinions from suitably experienced external lawyers confirming that the requirements of (1) and (2) are satisfied and has taken such other steps as are reasonable to confirm that they are satisfied.
- 27/04/2002
ELM 3.5.17
See Notes
A firm may not recognise the benefits of collateral under ELM 3.5.14 R unless:
- (1) the securities referred to in ELM 3.5.14 R are not issued by:
- (a) the firm;
- (b) another member of its group;
- (c) the person to whom the firm has the e-money float exposure in question; or
- (d) (in a case in which the question is whether the firm has a large e-money float exposure under ELM 3.5.7 R (2)) any member of that group of closely related counterparties;
- (2) the securities are listed on a recognised investment exchange or designated investment exchange;
- (3) the mark to market value of the securities is at least 200% of the amount of the e-money float exposure concerned, except that:
- (a) the percentage figure is 250% rather 200% in the case of shares;
- (b) the percentage figure is 150% rather than 200% in the case of debentures issued by a full credit institution if those debentures do not form part of its regulatory capital resources; and
- (c) the percentage figure is 150% rather than 200% in the case of debentures or government and public securities issued by regional or local authorities of an EEA State or by a multilateral development bank; and
- (4) the securities issued by any credit institution do not form part of its regulatory capital resources.
- 01/01/2007
- Past version of ELM 3.5.17 before 01/01/2007
ELM 3.5.18
See Notes
A firm must make the choices set out in this section on a consistent basis. In particular, the firm must not:
- (1) treat a guaranteed e-money float exposure as being one to the guarantor for the purposes of some of the rules in ELM and as being to the principal debtor for others; or
- (2) treat a secured e-money float exposure as being one to the person who is the debtor under the security that is held as collateral for the purposes of some of the rules in ELM and as being to the debtor under the secured obligation for others.
- 27/04/2002
ELM 3.5.19
See Notes
- 27/04/2002
ELM 3.5.20
See Notes
- 01/01/2007
- Past version of ELM 3.5.20 before 01/01/2007
Notifying the FSA of reportable large exposures
ELM 3.5.21
See Notes
A firm must notify the FSA if:
- (1) it proposes to enter into a transaction or transactions that would result in it having a reportable large exposure; or
- (2) it has a reportable large exposure not already notified under (1).
- 27/04/2002
ELM 3.5.22
See Notes
- 27/04/2002
Factors to consider when deciding whether to incur an exposure
ELM 3.5.23
See Notes
When considering the acceptability of a particular e-money float exposure, the FSA expects a firm to consider:
- (1) the standing of the counterparty;
- (2) the nature of the firm's relationship with the counterparty;
- (3) the nature and extent of security taken against the e-money float exposure;
- (4) the maturity of the e-money float exposure; and
- (5) the firm's expertise in the type of transaction.
- 27/04/2002
ELM 3.6
Liquidity and interest rate risk
- 01/12/2004
ELM 3.6.1
See Notes
- 27/04/2002
ELM 3.6.2
See Notes
A firm should be able to meet its obligations as they fall due. It should hold sufficient liquidity to ensure it can be considered to be conducting its business in a prudent manner. This includes holding adequate liquidity to meet:
- (1) its e-money outstandings; and
- (2) requirements to make other payments such as cash flows in respect of off-balance sheet instruments and other expenses.
- 27/04/2002
ELM 3.6.3
See Notes
A firm can meet such obligations in a number of ways:
- (1) by holding sufficiently immediately available cash (including bank deposits) or marketable assets; this is the primary method to be used to meet e-money obligations;
- (2) by securing an appropriate matching future profile of cash flows from maturing assets and liabilities; and
- (3) by borrowing; this is subject to the firm's ability to raise funds and the cost at which they can be raised, which depends upon its standing in the market and on the general liquidity situation at the time.
- 27/04/2002
ELM 3.6.4
See Notes
- 27/04/2002
ELM 3.7
Derivatives
- 01/12/2004
ELM 3.7.1
See Notes
- 27/04/2002
ELM 3.7.2
See Notes
A firm may be a party to a derivative or quasi derivative contract if:
- (1) the sole purpose (ignoring any other purposes which together are insignificant) of becoming a party to it is hedging market risks arising from:
- (a) issuing e-money; or
- (b) the e-money float;
- (2) so far as reasonably possible, being a party to that derivative or quasi derivative contract achieves the permitted purpose described in ELM 3.7.2 R (1);
- (3) the derivative or quasi derivative contract is sufficiently liquid; and
- (4) either:
- (a) the derivative or quasi derivative contract is an exchange rate contract relating to a foreign currency with an original maturity of 14 days or less; or
- (b) the derivative or quasi derivative contract:
- (i) is an interest rate or foreign exchange related contract;
- (ii) is regularly traded on a recognised investment exchange or designated investment exchange; and
- (iii) is subject to daily margin requirements under the rules of that exchange.
- 27/04/2002
ELM 4
Limitations
on activities
ELM 4.1
Application
- 01/12/2004
ELM 4.1.1
See Notes
The effect of ELM 1.1.1 R to ELM 1.1.3 R is that:
- (1) this chapter applies to ELMIs;
- (2) this chapter, except ELM 4.3, applies to a bank or building society that is an e-money firm;
- (3) no part of this chapter applies to:
- (a) an incoming EEA firm; or
- (b) an incoming Treaty firm.
- 27/04/2002
ELM 4.1.2
See Notes
- 27/04/2002
ELM 4.1.3
See Notes
- 27/04/2002
ELM 4.1.4
See Notes
- 27/04/2002
ELM 4.2
Purpose
- 01/12/2004
ELM 4.2.1
See Notes
- 27/04/2002
ELM 4.2.2
See Notes
- 27/04/2002
ELM 4.2.3
See Notes
- 27/04/2002
ELM 4.3
Restriction to issuing e-money and related activities
- 01/12/2004
Restriction on activities
ELM 4.3.1
See Notes
- 27/04/2002
ELM 4.3.2
See Notes
The activities referred to in ELM 4.3.1 R are:
- (1) the provision of financial and non-financial services closely related to issuing e-money, such as:
- (a) the administering of e-money by the performance of operational and other ancillary functions related to its issuance; and
- (b) the issuing and administering of other means of payment; and
- (2) the storing (on behalf of other undertakings or public institutions) of data on e-money electronic devices on which e-money issued by the firm is stored or which can be used to use or spend e-money issued by the firm;
but excluding the granting of any form of credit.
- 27/04/2002
ELM 4.3.3
See Notes
- 27/04/2002
Restriction on giving credit
ELM 4.3.4
See Notes
- 27/04/2002
ELM 4.3.5
See Notes
- 27/04/2002
ELM 4.3.6
See Notes
- 27/04/2002
Restriction on interest
- 27/04/2002
ELM 4.3.8
See Notes
- 27/04/2002
Restriction on holdings in other undertakings
ELM 4.3.9
See Notes
A firm must:
- (1) not have an ownership share; and
- (2) ensure that no member of its sub group has any ownership share;
in another undertaking except in an undertaking that falls into ELM 4.3.11 R.
- 27/04/2002
ELM 4.3.10
See Notes
- 27/04/2002
ELM 4.3.11
See Notes
- 27/04/2002
ELM 4.4
Prohibition on issue of e-money at a discount
- 01/12/2004
ELM 4.4.1
See Notes
- 27/04/2002
ELM 4.4.2
See Notes
- 27/04/2002
ELM 4.4.3
See Notes
A firm may be able to issue e-money in the way described in ELM 4.4.2 G without infringing ELM 4.4.1 R. A sum paid by a third party to the firm before the firm issues e-money can form part of the e-money issue price for that e-money if:
- (1) that sum is paid to the firm in payment of part or all of the e-money issue price for that e-money; and
- (2) at the time when the firm issues that e-money it applies that sum towards the payment of the e-money issue price of that e-money.
- 27/04/2002
ELM 4.4.4
See Notes
- 27/04/2002
ELM 4.4.5
See Notes
- 27/04/2002
ELM 4.4.6
See Notes
- 27/04/2002
Export chapter as
ELM 5
Systems
and controls; Rules for making calculations
ELM 5.1
Application
- 01/12/2004
ELM 5.1.1
See Notes
The effect of ELM 1.1.1 R to ELM 1.1.3 R is that:
- (1) this chapter applies to ELMIs;
- (2) ELM 5.4 applies to a bank or building society that is an e-money firm;
- (3) none of this chapter applies to:
- (a) an incoming EEA firm; or
- (b) an incoming Treaty firm.
- 27/04/2002
ELM 5.1.2
See Notes
ELM 5.4A applies with respect to the carrying on of:
- (1) regulated activities; and
- (2) ancillary activities in relation to regulated activities.
- 01/01/2007
ELM 5.1.3
See Notes
ELM 5.4A also:
- (1) applies with respect to the carrying on of unregulated activities in a prudential context; and
- (2) takes into account any activity of other members of a group of which the firm is a member.
- 01/01/2007
ELM 5.2
Purpose
- 01/12/2004
ELM 5.2.1
See Notes
- 27/04/2002
ELM 5.2.2
See Notes
- 27/04/2002
ELM 5.2.3
See Notes
- 27/04/2002
ELM 5.2.4
See Notes
- 27/04/2002
ELM 5.2.5
See Notes
- 27/04/2002
- Future version of ELM 5.2.5 after 01/04/2009
ELM 5.2.6
See Notes
- 01/01/2007
- Past version of ELM 5.2.6 before 01/01/2007
ELM 5.3
Business to be directed by at least two individuals
- 01/12/2004
ELM 5.3.1
See Notes
- 27/04/2002
ELM 5.3.2
See Notes
- 01/01/2007
- Past version of ELM 5.3.2 before 01/01/2007
ELM 5.3.3
See Notes
- 27/04/2002
ELM 5.3.4
See Notes
- 27/04/2002
ELM 5.3.5
See Notes
- 27/04/2002
ELM 5.3.6
See Notes
- 27/04/2002
ELM 5.4
Systems and controls: e-money firms
- 01/12/2004
ELM 5.4.1
See Notes
- 27/04/2002
- Future version of ELM 5.4.1 after 01/04/2009
ELM 5.4.2
See Notes
- 27/04/2002
- Future version of ELM 5.4.2 after 01/04/2009
ELM 5.4.3
See Notes
A firm should, to the degree appropriate in the light of the factors listed in SYSC 3.1.2 G (1):
- (1) authenticate the identity of customers with whom it transacts and the capacity and authority to act of persons with whom the firm deals;
- (2) use transaction authentication methods that ensure that transactions in e-money to which it is a party do not have to be unwound or reversed;
- (3) ensure that proper authorisation controls and access privileges are in place for all its systems, databases and applications;
- (4) ensure that measures are in place to protect the data integrity of transactions in e-money to which it is a party and records and information about such transactions;
- (5) ensure that measures are in place to prevent fraud;
- (6) establish clear audit trails for all transactions in e-money to which it is a party; and
- (7) ensure the confidentiality of customer and transaction information, having regard to the sensitivity of the information and any other relevant factor.
- 27/04/2002
- Future version of ELM 5.4.3 after 01/04/2009
ELM 5.4.4
See Notes
The risks of regulatory concern referred to in SYSC 3.2.11 G relating to e-money include the following risks:
- (1) unauthorised creation, transfer or redemption of e-money;
- (2) incorrect attribution of funds within the system for the creation, circulation and redemption of e-money issued by the firm or in which it transacts;
- (3) loss of e-money within the system referred to in (2) and loss of function of any part of that system; and
- (4) use of the system referred to in (2) for financial crime or in a way that may harm or misuse any part of the financial system.
- 27/04/2002
- Future version of ELM 5.4.4 after 04/01/2009
ELM 5.4A
Organisation and internal control mechanisms
- 01/01/2007
ELM 5.4A.1
See Notes
- 01/01/2007
ELM 5.4A.2
See Notes
- 01/01/2007
ELM 5.4A.3
See Notes
- 01/01/2007
ELM 5.5
Rules for making calculations
- 01/12/2004
Exchange rates for the ELM financial rules
ELM 5.5.1
See Notes
- 27/04/2002
Accounting policy for the ELM financial rules
ELM 5.5.2
See Notes
- 06/10/2007
- Past version of ELM 5.5.2 before 06/10/2007
ELM 5.5.3
See Notes
- 27/04/2002
Valuation under the ELM financial rules
ELM 5.5.4
See Notes
- 27/04/2002
ELM 6
Redemption, information requirements
and purse limits
ELM 6.1
Application
- 01/12/2004
ELM 6.1.1
See Notes
The effect of ELM 1.1.1 R to ELM 1.1.3 R is that this chapter:
- (1) does not apply to an incoming EEA firm or incoming Treaty firm carrying on business in the United Kingdom on a cross-border services basis only;
- (2) applies to all other e-money firms.
- 27/04/2002
ELM 6.1.2
See Notes
- 27/04/2002
ELM 6.2
Purpose
- 01/12/2004
ELM 6.2.1
See Notes
- 27/04/2002
ELM 6.2.2
See Notes
- 27/04/2002
ELM 6.2.3
See Notes
- 01/01/2007
- Past version of ELM 6.2.3 before 01/01/2007
ELM 6.2.4
See Notes
- 27/04/2002
ELM 6.2.5
See Notes
- 27/04/2002
ELM 6.2.6
See Notes
- 27/04/2002
ELM 6.3
Duty to redeem
- 01/12/2004
Person entitled to redemption
ELM 6.3.1
See Notes
- 01/04/2005
- Past version of ELM 6.3.1 before 01/04/2005
Currency of redemption
ELM 6.3.2
See Notes
- 27/04/2002
Time of redemption
ELM 6.3.3
See Notes
A firm must give a person who is exercising a redemption right against the firm in accordance with ELM 6.5.1 R:
- (1) (in the case of redemption for cash) the right to receive the cash immediately following the completion of the procedures in ELM 6.3.4 R;
- (2) (in the case of redemption in accordance with ELM 6.5.1 R (2)) the right to be paid as follows:
- (a) the firm must give the necessary payment instructions immediately following the completion of the procedures in ELM 6.3.4 R; and
- (b) the firm must ensure that the funds reach the holder's account within five business days of the day on which it gave the instructions in (2)(a).
- 27/04/2002
Money laundering and other checks
ELM 6.3.4
See Notes
- (1) The procedures referred to in ELM 6.3.3 R are the carrying out of any checks that are reasonably required to prevent money laundering or fraud or to check whether the holder of the e-money is a person who is entitled to redeem it.
- (2) A firm must complete any procedures referred to in (1) as soon as reasonably possible.
- 27/04/2002
ELM 6.3.5
See Notes
Nothing in ELM 6.3 requires a firm to do anything:
- (1) [deleted]
- (2) prohibited by the Money Laundering Regulations; or
- (3) that would be a criminal offence under the law of any part of the United Kingdom; or
- (4) (in relation to e-money) that would be a criminal offence under the law of a country other than the United Kingdom in which the firm redeems or would redeem that e-money.
- 01/03/2006
- Past version of ELM 6.3.5 before 01/03/2006
Redemption prevented by circumstances beyond the firm's control
ELM 6.3.6
See Notes
- 27/04/2002
Guidance
ELM 6.3.7
See Notes
- 01/04/2005
- Past version of ELM 6.3.7 before 01/04/2005
ELM 6.3.8
See Notes
- 27/04/2002
ELM 6.3.9
See Notes
- 27/04/2002
ELM 6.3.10
See Notes
- 06/02/2008
- Past version of ELM 6.3.10 before 06/02/2008
ELM 6.4
Exceptions to the duty to redeem
- 01/12/2004
Minimum redemption amount
ELM 6.4.1
See Notes
ELM 6.3.1 R does not apply if:
- (1) the e-money to be redeemed has a par value of less than:
- (a) (if the e-money is denominated in euro) 10 euro; or
- (b) (if it is denominated in another currency) the equivalent of 10 euro in that currency; and
- (2) this exception is expressly provided for by the e-money scheme rules.
- 27/04/2002
Expiration of e-money
ELM 6.4.2
See Notes
- 27/04/2002
ELM 6.4.3
See Notes
- 27/04/2002
Guidance
ELM 6.4.4
See Notes
- 27/04/2002
ELM 6.4.5
See Notes
- 27/04/2002
ELM 6.5
Methods of redemption
- 01/12/2004
ELM 6.5.1
See Notes
A firm must give a person who is exercising a redemption right against the firm the right to have the proceeds of redemption paid to him:
- (1) in cash; or
- (2) by electronic transfer to an account with a bank or other financial undertaking nominated by that person.
- 27/04/2002
ELM 6.5.2
See Notes
- 27/04/2002
ELM 6.5.3
See Notes
- 27/04/2002
ELM 6.5.4
See Notes
- 01/01/2007
- Past version of ELM 6.5.4 before 01/01/2007
ELM 6.5.5
See Notes
- 27/04/2002
ELM 6.5.6
See Notes
- 27/04/2002
ELM 6.6
Charges for redemption
- 01/12/2004
ELM 6.6.1
See Notes
A firm may not charge a person any fee, expenses or other charge for or in connection with the exercise of a redemption right, except that a firm may charge a fee for the redemption of e-money if the following conditions are satisfied:
- (1) the e-money scheme rules give the firm the right to charge that fee;
- (2) the person exercising the redemption right is informed of the amount of the fee after the person makes the request for redemption and before completion of the redemption;
- (3) that person is given the opportunity, after he has received the information as described in (2), of withdrawing the request before the e-money is redeemed;
- (4) the fee is in accordance with the firm's usual tariff of fees for such redemptions; and
- (5) the fee is no greater than necessary to recover the costs to the firm of carrying out that redemption.
- 27/04/2002
ELM 6.6.2
See Notes
- 27/04/2002
ELM 6.7
Terms of redemption
- 01/12/2004
Contents of e-money scheme contracts
ELM 6.7.1
See Notes
- 27/04/2002
Obligation to enter into contracts with those entitled to redeem e-money
ELM 6.7.2
See Notes
- 27/04/2002
ELM 6.7.3
See Notes
- 27/04/2002
ELM 6.7.4
See Notes
- 27/04/2002
Obligation to offer redemption as a contractual right
ELM 6.7.5
See Notes
- 27/04/2002
ELM 6.8
Information
- 01/12/2004
ELM 6.8.1
See Notes
- 09/10/2004
ELM 6.8.2
See Notes
A firm must make available to actual and prospective holders of e-money issued by the firm or that may be issued by it in the future:
- (1) information about the redemption right, including the information specified in ELM 6.8.4 R; and
- (2) the information specified in ELM 6.8.5 R.
- 27/04/2002
ELM 6.8.2A
See Notes
- 01/11/2007
- Past version of ELM 6.8.2A before 01/11/2007
ELM 6.8.3
See Notes
- 09/10/2004
ELM 6.8.4
See Notes
The information referred to in ELM 6.8.2 R (1) is:
- (1) the amount of any fee of the type referred to in ELM 6.6.1 R, or, if there is no such fee, that fact;
- (2) details of how the redemption right is to be exercised;
- (3) the amount of any limit of the type set out in ELM 6.4.1 R, or, if there is no such limit, that fact; and
- (4) the length of any period of validity of the type set out in ELM 6.4.2 R, or, if there is no such period of validity, that fact.
- 27/04/2002
ELM 6.8.5
See Notes
The information referred to in ELM 6.8.2 R (2) is:
- (1) an explanation of the liability of a holder of e-money issued by the firm, and of the liability of the firm, for loss arising from, and the risks to such a holder arising from:
- (a) the use, by a person other than such a holder, of the e-money electronic device used by the holder;
- (b) fraud by another in relation to such a holder's e-money;
- (c) access to or use of such a holder's e-money by another;
- (d) loss, malfunction, theft or damage to or of any e-money electronic device used by such a holder;
- (2) any other significant risks arising from the acquisition, use or holding of the e-money;
- (3) the fact that the compensation scheme does not cover claims made in connection with issuing e-money;
- (4) details about any scheme that compensates holders of e-money issued by the firm in cases where the firm is unable to satisfy claims against it in relation to e-money or the fact that there is no such scheme;
- (5) details about:
- (a) the Financial Ombudsman Service and its application to the e-money scheme in question;
- (b) any other complaints and redress procedures available to the holder; and
- (c) how the holder may initiate those procedures; and
- (6) a geographical address at which the firm may be contacted.
- 27/04/2002
ELM 6.8.6
See Notes
- 27/04/2002
ELM 6.8.7
- 01/11/2007
Additional rules for e-commerce
ELM 6.9
Purse limits and warnings on cards
- 01/12/2004
Purse limits
ELM 6.9.1
See Notes
- (1) A firm must ensure that:
- (a) e-money issued by it cannot be stored on a consumer e-money device with a capacity that exceeds the sum in (2); and
- (b) a consumer e-money holder is not able to hold, as part of the same balance or otherwise under the same arrangements, e-money issued by the firm of an amount that exceeds, at any time, the sum in (2).
- (2) The sum referred to in (1) is:
- 27/04/2002
Exception to the purse limit
ELM 6.9.2
See Notes
ELM 6.9.1 R does not apply in a particular case if:
- (1) the firm has (in accordance with ELM 6.9.4 R) first given a warning of the matters in ELM 6.9.3 R to the consumer e-money holder referred to in ELM 6.9.1 R (1)(b) and the owner for the time being of the e-money stored on the consumer e-money device referred to in ELM 6.9.1 R (1)(a)(that consumer e-money holder being referred to as the "holder" in ELM 6.9);
- (2) the firm has received an acknowledgement from the holder in accordance with ELM 6.9.5 R; and
- (3) the requirements of ELM 6.9.7 R are met as respects the consumer e-money device referred to in ELM 6.9.1 R (1)(a) or which the holder uses to spend or otherwise use his e-money and as respects the scheme under which the firm issues the e-money.
- 27/04/2002
ELM 6.9.3
See Notes
The warning referred to in ELM 6.9.2 R (1) is a warning that:
- 27/04/2002
ELM 6.9.4
See Notes
The warning referred to in ELM 6.9.2 R (1) must:
- (1) be in writing;
- (2) be presented in a way that can be easily understood; and
- (3) be presented in such manner as, depending on the means by which the warning is given, is best calculated to bring it to the attention of the holder and to allow him to consider it.
- 27/04/2002
ELM 6.9.5
See Notes
- 27/04/2002
ELM 6.9.6
See Notes
The acknowledgement referred to in ELM 6.9.2 R (2) must:
- (1) be in writing; and
- (2) relate to the warning referred to in ELM 6.9.2 R (1) only.
- 27/04/2002
ELM 6.9.7
See Notes
The requirements of this rule are only met in a particular case if:
- (1) the scheme under which the e-money is issued is organised in such a way that the loss, malfunction, theft or damage to or of the consumer e-money device referred to in ELM 6.9.2 R (3) will not result in the holder losing any e-money or in any substantial prejudice to his redemption right or his ability to exercise it;
- (2) (in the case of any scheme under which a firm issues e-money) the firm is able to prevent the use or spending of any e-money it issues under that scheme; and
- (3) the identity of the person who is entitled to e-money issued by the firm under the scheme in question, the amount of such e-money to which he is entitled, the identity of the person who at any time has a redemption right against the firm under that scheme and the amount that he is entitled to have redeemed are determined by records maintained by or on behalf of the firm and are not affected by the matters in (1).
- 27/04/2002
ELM 6.9.8
See Notes
- 27/04/2002
ELM 6.9.9
See Notes
- 27/04/2002
ELM 6.9.10
See Notes
- 27/04/2002
ELM 6.9.11
See Notes
- 27/04/2002
Warnings on cards
ELM 6.9.12
See Notes
- 27/04/2002
ELM 6.10
Establishing to what e-money ELM 6 applies
- 01/12/2004
ELM 6.10.1
See Notes
- 27/04/2002
ELM 6.10.2
See Notes
ELM 6.10.1 R does not:
- (1) cover a case in which the design referred to in ELM 6.10.3 R does not materially contribute to the firm's inability to make the distinction referred to in ELM 6.10.3 R; or
- (2) cover e-money in respect of which the firm can establish it is not subject to that obligation; or
- (3) require a firm to extend any rights to a person whose holding the e-money in question is contrary to the e-money scheme rules.
- 27/04/2002
ELM 6.10.3
See Notes
- 27/04/2002
ELM 6.10.4
See Notes
- 27/04/2002
ELM 6.10.5
See Notes
Thus, for example, if a firm is unable to distinguish between:
- (1) e-money issued by the firm and e-money issued by other issuers under the e-money scheme in question, it should offer the redemption right to holders of all e-money issued under that scheme;
- (2) e-money issued by the firm within the territorial scope of this chapter and other e-money issued by the firm, it should offer the redemption right to holders of all e-money issued by it.
- 27/04/2002
ELM 7
Consolidated financial supervision
ELM 7.1
Application
- 01/12/2004
ELM 7.1.1
See Notes
The effect of ELM 1.1.1 R to ELM 1.1.3 R is that this chapter:
- (1) applies to an ELMI that is a member of a group;
- (2) does not apply to:
- (a) a lead regulated firm; or
- (b) an incoming EEA firm; or
- (c) an incoming Treaty firm.
- 27/04/2002
ELM 7.2
Purpose
- 01/12/2004
ELM 7.2.1
See Notes
The requirements of this chapter address three main areas of supervisory concern arising from group membership:
- (1) losses in another group entity lead to financial pressure on a firm, because of financial or reputational linkages, or both;
- (2) capital is subject to double gearing or leveraging: that is, a solo assessment of a firm over-estimates the quantity or quality of capital, or both, that is available to support that firm's risks, because of the way its capital has been raised or accounted for by the group;
- (3) business is booked in an unauthorised group entity to avoid regulatory requirements.
- 27/04/2002
ELM 7.2.2
See Notes
- 27/04/2002
ELM 7.3
Consolidated capital adequacy
- 01/12/2004
ELM 7.3.1
See Notes
If:
- (1) a firm (firm A) is a member of a group;
- (2) another member of that group (firm B) is a firm that is subject to BIPRU 8;
- (3) firm B is in firm A's immediate group; and
- (4) firm A is included in the scope of the consolidation under BIPRU 8 as it applies to firm B;
firm A must comply with BIPRU 8 as it applies to firm B except that the rules in BIPRU 8 relating to non-EEA sub-group do not apply.
- 01/01/2007
- Past version of ELM 7.3.1 before 01/01/2007
ELM 7.3.2
See Notes
If:
- (1) ELM 7.3.1 R does not apply to a firm;
- (2) he firm is a member of an EEA consolidated group;
- (3) there is a full credit institution or an investment firm in that EEA consolidated group;
- (4) the undertaking in (3) is in the firm's immediate group; and
- (5) that EEA consolidated group is not subject to supervision on a consolidated basis by a competent authority of another EEA State under the Banking Consolidation Directive, the E-Money Directive or the Capital Adequacy Directive;
the firm must comply with BIPRU 8 with respect to that EEA consolidated group as follows:
- (6) BIPRU 8 applies as it does to a bank in a UK consolidation group; and
- (7) the rules in BIPRU 8 relating to non-EEA sub-group do not apply.
- 01/01/2007
- Past version of ELM 7.3.2 before 01/01/2007
ELM 7.3.2A
See Notes
If:
- (1) ELM 7.3.1 R and ELM 7.3.2 R do not apply to a firm;
- (2) the firm is a member of an UK consolidated group;
- (3) there is a full credit institution or an investment firm in that UK consolidated group; and
- (4) the undertaking in (3) is in the firm's immediate group;
the firm must, at all times, maintain capital resources (calculated in accordance with the relevant rule) at a level that ensures that, taking into account (in the manner and to the extent provided for in that rule) the capital resources of other members of the firm's group, the firm would comply with BIPRU 8 as it applies when there is a bank in the UK consolidation group if it applied to the firm. For the purposes of ELM 7.3.3 R, the rules in BIPRU 8 apply to the UK consolidated group in the same way as they apply to a UK consolidation group under BIPRU 8. The rules in BIPRU 8 relating to non-EEA sub-group do not apply.
- 01/01/2007
ELM 7.3.3
See Notes
If:
- (1) ELM 7.3.1 R, ELM 7.3.2 R and ELM 7.3.2A R do not apply to a firm;
- (2) the firm is a member of an EEA consolidated group; and
- (3) that EEA consolidated group is not subject to supervision on a consolidated basis by a competent authority of another EEA State under the Banking Consolidation Directive, the E-Money Directive or the Capital Adequacy Directive;
the firm must ensure that at all times its own funds are of such an amount that its EEA group risk own funds are equal to or exceed its EEA group risk own funds requirement.
- 01/01/2007
- Past version of ELM 7.3.3 before 01/01/2007
ELM 7.3.4
See Notes
If:
- (1) ELM 7.3.1 R, ELM 7.3.2 R, ELM 7.3.2A R and ELM 7.3.3 R do not apply to a firm; and
- (2) the firm is a member of a UK consolidated group;
the firm must ensure that at all times its own funds are of such an amount that its UK group risk own funds are equal to or exceed its UK group risk own funds requirement.
- 01/01/2007
- Past version of ELM 7.3.4 before 01/01/2007
ELM 7.4
Scope of consolidation
- 01/12/2004
ELM 7.4.1
See Notes
- 27/04/2002
ELM 7.4.2
See Notes
- 27/04/2002
ELM 7.4.3
See Notes
A firm's UK consolidated group is the consolidated sub-group of:
- (1) the firm's UK financial parent undertaking; or
- (2) (if the firm has no UK financial parent undertaking and the firm is a UK domestic firm) the firm.
- 27/04/2002
ELM 7.4.4
See Notes
- 27/04/2002
ELM 7.4.5
See Notes
A firm, having given prior notice to the FSA, may exclude from its EEA consolidated group or UK consolidated group for the purposes of this chapter:
- (1) an undertaking, the total assets of which; or
- (2) two or more undertakings, the total of whose assets added together;
are less than the smaller of 10 million euro and 1% of the total assets of the firm.
- 27/04/2002
ELM 7.5
Calculation of capital adequacy on a consolidated basis
- 01/12/2004
EEA group risk own funds
ELM 7.5.1
See Notes
A firm's EEA group risk own funds are calculated as follows:
- (1) the own funds of members of the EEA consolidated group are consolidated using the principles that apply to preparing consolidated accounts under the Companies Act 1985 and in accordance with accounting principles generally accepted in the United Kingdom;
- (2) for these purposes the own funds of a person to whom ELM 2.4.2 R does not apply are calculated as if it did apply;
- (3) the adjustments provided for in article 65 of the Banking Consolidation Directive apply (if required by the Banking Consolidation Directive), in accordance with (1);
- (4) the deductions specified in ELM 2.4.2 R must be recalculated at the level of the EEA consolidated group;
- (5) the deduction at stage (F) of the calculation in ELM 2.4.2 R does not apply to material holdings held by members of the EEA consolidated group in another member;
- (6) the limits in ELM 2.4.18 R and ELM 2.4.19 R (Limits on components of own funds) must be applied;
- (7) minority interests are not included; and
- (8) own funds of members of the EEA consolidated group other than the person at its head are only included if they represent capital that is freely transferable to other members of the EEA consolidated group.
EEA group risk own funds requirement
ELM 7.5.2
See Notes
A firm's EEA group risk own funds requirement is calculated by way of consolidation using the principles that apply to preparing consolidated accounts under the Companies Act 1985 as follows:
- (1) the rules for calculating a firm's own funds requirement must be applied to the firm's EEA consolidated group as if it were a single firm subject to the ELM financial rules;
- (2) the consolidation must be in accordance with accounting principles generally accepted in the United Kingdom.
- 27/04/2002
- Future version of ELM 7.5.2 after 06/06/2008
Proportional consolidation
ELM 7.5.3
See Notes
- 27/04/2002
The Banking Consolidation Directive
ELM 7.5.4
See Notes
- 27/04/2002
UK group risk own funds and UK group risk own funds requirement
ELM 7.5.5
See Notes
- 27/04/2002
ELM 7.6
Large exposures
- 01/12/2004
The EEA group
ELM 7.6.1
See Notes
- 27/04/2002
ELM 7.6.2
See Notes
A firm's EEA group large exposures must be calculated as follows:
- (1) the rules for calculating a firm's large e-money float exposures must be applied to the firm's EEA consolidated group as if it were a single firm subject to the ELM financial rules;
- (2) the exclusions in ELM 3.5.6 R are applied at the level of the firm's EEA consolidated group; and
- (3) the consolidation must be in accordance with accounting principles generally accepted in the United Kingdom.
- 27/04/2002
The UK group
ELM 7.6.3
See Notes
If ELM 7.3.4 R applies to a firm, the firm must ensure that at all times its own funds are of such an amount that:
- (1) no UK group large exposure exceeds 25% of its UK group risk own funds;
- (2) the total of its UK group large exposures does not exceed 800% of its UK group risk own funds.
- 27/04/2002
ELM 7.6.4
See Notes
- 27/04/2002
ELM 7.7
Waiver
- 01/12/2004
ELM 7.7.1
See Notes
Article 73 of the Banking Consolidation Directive says that competent authorities responsible for exercising supervision on a consolidated basis may decide that a credit institution, financial institution or ancillary services undertaking which is a subsidiary or in which a participation is held need not be included in the consolidation in certain cases. These include the following:
- (1) where the undertaking concerned is situated in a third country where there are legal impediments to the transfer of the necessary information;
- (2) if, in the opinion of the competent authorities responsible for exercising supervision on a consolidated basis, the consolidation of the financial situation of the undertaking concerned would be inappropriate or misleading as far as the objectives of the supervision of credit institutions are concerned.
- 01/01/2007
- Past version of ELM 7.7.1 before 01/01/2007
ELM 7.7.2
See Notes
- 27/04/2002
ELM 7.8
Summary of consolidation rules
- 01/12/2004
ELM 7.8.1
See Notes
- 27/04/2002
ELM 7.8.3
See Notes
- 01/01/2007
- Past version of ELM 7.8.3 before 01/01/2007
ELM 7.8.4
See Notes
- 01/01/2007
- Past version of ELM 7.8.4 before 01/01/2007
ELM 7.8.5
See Notes
- 01/01/2007
- Past version of ELM 7.8.5 before 01/01/2007
ELM 7.8.6
See Notes
- 27/04/2002
ELM 7.8.7
See Notes
- 27/04/2002
ELM 7.8.8
See Notes
- 27/04/2002
ELM 7.8.9
See Notes
- 01/01/2005
ELM 7.8.10
See Notes
- 01/01/2007
- Past version of ELM 7.8.10 before 01/01/2007
ELM 8
Small e-money issuers
ELM 8.1
Application
- 01/12/2004
ELM 8.1.1
See Notes
The effect of ELM 1.1.1 R and ELM 1.1.2 R is that this chapter applies to:
- (1) an applicant for a small e-money issuer certificate; and
- (2) a small e-money issuer.
- 27/04/2002
ELM 8.1.2
See Notes
- 27/04/2002
ELM 8.2
Purpose
- 01/12/2004
ELM 8.2.1
See Notes
- 27/04/2002
ELM 8.2.2
See Notes
- 27/04/2002
ELM 8.3
Introduction
- 01/12/2004
The small e-money issuer certificate
ELM 8.3.1
See Notes
- 27/04/2002
ELM 8.3.2
See Notes
A small e-money issuer is not an exempt person within the meaning of the Act, that is a person who is carrying on a regulated activity but exempt from the need to be authorised. The small e-money issuer is not, as such, carrying on a regulated activity. This means, in particular, that:
- (1) an authorised person can be a small money issuer (unless it is a full credit institution (see ELM 8.4.2 G); and
- (2) a small e-money issuer does not benefit from the exclusion in article 16 of the Financial Promotion Order (Exempt persons).
- 27/04/2002
ELM 8.3.3
See Notes
- 06/02/2008
- Past version of ELM 8.3.3 before 06/02/2008
ELM 8.3.4
See Notes
A person who issues e-money on a limited scale may apply to the FSA for a small e-money issuer certificate. This chapter contains the provisions relating to the certificate in the following sections:
- (1) ELM 8.4 gives guidance on the three conditions under which a certificate may be given;
- (2) ELM 8.5 contains the direction on how to apply for a certificate and gives guidance on the application procedure;
- (3) ELM 8.6 contains the direction on how to apply for a revocation of a certificate and gives guidance on how the FSA may revoke a certificate on its own initiative; and
- (4) ELM 8.7 contains rules and guidance about the provision of information to the FSA, including the rules which require a small e-money issuer to give periodic reports and change reports to the FSA on Form ELM-SI (which is set out in ELM 8 Annex 2 R).
- 27/04/2002
- Future version of ELM 8.3.4 after 31/08/2008
ELM 8.3.5
See Notes
- 27/04/2002
Procedural provisions
ELM 8.3.6
See Notes
- 27/04/2002
ELM 8.3.7
See Notes
- 27/04/2002
ELM 8.3.8
See Notes
- 27/04/2002
ELM 8.3.9
See Notes
- 28/08/2007
- Past version of ELM 8.3.9 before 28/08/2007
ELM 8.3.10
See Notes
- 28/08/2007
- Past version of ELM 8.3.10 before 28/08/2007
Criminal offences relating to status
ELM 8.3.11
See Notes
- 27/04/2002
ELM 8.3.12
See Notes
- 28/08/2007
- Past version of ELM 8.3.12 before 28/08/2007
ELM 8.3.13
See Notes
- 27/04/2002
The Financial Services Compensation Scheme
ELM 8.3.14
See Notes
- 27/04/2002
The FSA's public register
ELM 8.3.15
See Notes
- 27/04/2002
ELM 8.4
The conditions for giving a small e-money issuer certificate
- 01/12/2004
Who may apply?
ELM 8.4.1
See Notes
- 27/04/2002
ELM 8.4.2
See Notes
- 27/04/2002
The conditions
ELM 8.4.3
See Notes
- 27/04/2002
ELM 8.4.4
See Notes
- 27/04/2002
ELM 8.4.5
See Notes
- 27/04/2002
The first condition
ELM 8.4.6
See Notes
The first condition applies if:
- (1) the applicant does not issue e-money except on terms that the electronic device on which the monetary value is stored is subject to a maximum storage amount of not more than 150 euro; and
- (2) the applicant's total liabilities with respect to issuing e-money do not (or will not) usually exceed 5 million euro and do not (or will not) ever exceed 6 million euro.
- 27/04/2002
ELM 8.4.7
See Notes
- 27/04/2002
ELM 8.4.8
See Notes
- 27/04/2002
The second condition
ELM 8.4.9
See Notes
The second condition applies if:
- (1) the condition in ELM 8.4.6 G (1) is met;
- (2) the applicant's total liabilities with respect to the issuing of e-money do not (or will not) exceed 10 million euro; and
- (3) e-money issued by the applicant is accepted as a means of payment only by:
- (a) subsidiaries of the applicant which perform operational or other ancillary functions related to e-money issued or distributed by the applicant; or
- (b) other members of the same group as the applicant (other than its subsidiaries).
- 27/04/2002
The third condition
ELM 8.4.10
See Notes
The third condition applies if:
- (1) the conditions referred to in ELM 8.4.6 G (1) and ELM 8.4.9 G (2) are met; and
- (2) e-money issued by the applicant is accepted as a means of payment, in the course of business, by not more than one hundred persons where:
- 27/04/2002
The third condition: locations
ELM 8.4.11
See Notes
For the purposes of ELM 8.4.10 G (2)(a), locations are situated within the same premises or limited local area if they are situated within:
- (1) a shopping centre, airport, railway station, bus station or campus of a university, polytechnic, college, school or similar educational establishment; or
- (2) an area which does not exceed four square kilometres.
- 27/04/2002
ELM 8.4.12
See Notes
- 27/04/2002
ELM 8.4.13
See Notes
- 27/04/2002
ELM 8.4.14
See Notes
- 27/04/2002
ELM 8.4.15
See Notes
- 27/04/2002
ELM 8.4.16
See Notes
- 27/04/2002
The third condition: close financial or business relationship
ELM 8.4.17
See Notes
- 27/04/2002
ELM 8.4.18
See Notes
- 27/04/2002
ELM 8.4.19
See Notes
- 27/04/2002
ELM 8.5
Application for a small e-money issuer certificate
- 01/12/2004
ELM 8.5.1
See Notes
- (1) An applicant for a small e-money issuer certificate, except in so far as the FSA may direct in an individual case, must apply in writing in the manner directed, and with the information required, on the form provided by the FSA.
- (2) The application for a small e-money issuer certificate must be:
- (a) given to a member of, or addressed for the attention of, the Authorisation Enquiries department of the FSA; and
- (b) delivered to the FSA by one of the methods in (3).
- (3) The application may be delivered by:
- (a) post to the address in (4); or
- (b) leaving the application at the address in (4) and obtaining a date-stamped receipt; or
- (c) hand delivery to a member of the Authorisation Enquiries department.
- (4) The address for applications is: The Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.
- (5) Until the application has been determined, an applicant which submits an application for a small e-money issuer certificate must inform the FSA of any significant change to the information given in the application immediately it becomes aware of the change.
- 27/04/2002
ELM 8.5.2
See Notes
- 27/04/2002
ELM 8.5.3
See Notes
The application form is available on www.fsa.gov.uk or from the Authorisation Enquiries department of the FSA. To contact the department:
- (1) telephone on 020 7066 1000; or
- (2) write to the Authorisation Enquiries department at the address in ELM 8.5.1 D (4); or
- (3) email to AuthorisationEnquiries@fsa.gov.uk.
- 27/04/2002
ELM 8.5.4
See Notes
- 27/04/2002
ELM 8.6
Revocation of a small e-money issuer certificate
- 01/12/2004
Revocation on the FSA's own initiative
ELM 8.6.1
See Notes
The FSA may revoke a small e-money issuer certificate if:
- (1) it appears to it that the small e-money issuer does not meet the relevant conditions, or has failed to meet the relevant conditions at any time since the small e-money certificate issuer certificate was given; or
- (2) the small e-money issuer has contravened any rule or requirement to which he is subject as a result of the provisions in ELM 8.7 (Provision of information).
- 27/04/2002
ELM 8.6.2
See Notes
- 27/04/2002
Revocation for failure to meet the conditions referred to in ELM 8.4
ELM 8.6.3
See Notes
When determining whether it is appropriate to use the power referred to in ELM 8.6.1 G (1), the FSA will take account of all the relevant circumstances of the case. The FSA may consider that it is not appropriate to revoke where, for example, the failure to meet the conditions:
- (1) was inadvertent;
- (2) lasted for a short period only; and
- (3) was not serious in nature.
- 27/04/2002
Revocation for contravention of a rule or requirement
ELM 8.6.4
See Notes
In determining whether to revoke a small e-money issuer certificate under the power referred to in ELM 8.6.1 G (2), the FSA will consider all the relevant circumstances, including the nature and seriousness of the contravention or failure to provide information or produce documents. Amongst other factors, the FSA may consider:
- (1) whether there is information which suggests the contravention or failure was deliberate or reckless;
- (2) the length of any delay in providing a report, document or other required information;
- (3) the seriousness of any factual inaccuracies or other deficiencies in the information provided to the FSA;
- (4) whether the small e-money issuer has previously failed to comply with a rule or requirement;
- (5) the record of its compliance with the conditions referred to in ELM 8.4.
- 27/04/2002
Procedure
ELM 8.6.5
See Notes
- 28/08/2007
- Past version of ELM 8.6.5 before 28/08/2007
ELM 8.6.6
See Notes
- 28/08/2007
- Past version of ELM 8.6.6 before 28/08/2007
Revocation on request
ELM 8.6.7
See Notes
- 27/04/2002
ELM 8.6.8
See Notes
- 27/04/2002
ELM 8.6.9
See Notes
- 27/04/2002
ELM 8.7
Provision of information
- 01/12/2004
Periodic reports
ELM 8.7.1
See Notes
A small e-money issuer must:
- (1) complete a Form ELM-SI (see ELM 8 Annex 2 R) as at the end of each financial year and half financial year; and
- (2) within 10 business days of that date, deliver it to the FSA in the manner indicated in the form.
- 27/04/2002
- Future version of ELM 8.7.1 after 31/08/2008
Change reports
ELM 8.7.2
See Notes
If none of the conditions referred to in ELM 8.4 continue to apply to a small e-money issuer, it must, within two business days of the change occurring:
- (1) complete a Form ELM-SI; and
- (2) deliver it to the FSA in the manner indicated in the form.
- 27/04/2002
- Future version of ELM 8.7.2 after 31/08/2008
ELM 8.7.3
See Notes
- (1) If the total liabilities of a small e-money issuer with respect to issuing e-money exceed 5 million euro, it must, within two business days of the excess occurring:
- (a) complete a Form ELM-SI; and
- (b) deliver it to the FSA in the manner indicated in the form.
- (2) ELM 8.7.3 R (1) applies only if neither of the conditions referred to in ELM 8.4.9 G and ELM 8.4.10 G (that is the second and third conditions) apply to the small e-money issuer.
- 27/04/2002
- Future version of ELM 8.7.3 after 31/08/2008
FORM ELM-SI
ELM 8.7.4
See Notes
- 27/04/2002
ELM 8.7.5
See Notes
- 27/04/2002
Other powers
ELM 8.7.6
See Notes
- 27/04/2002
ELM 8.7.7
See Notes
- 27/04/2002
ELM 8.7.8
See Notes
The following sections in the Act apply to a requirement referred to in ELM 8.7.6 G (see article 9G(9) of the Regulated Activities Order) (Obtaining information from certified persons etc.):
- (1) section 175 (Information and documents: supplemental provisions);
- (2) section 176 (Entry of premises under warrant), the reference in section 176(3)(a) to an authorised person being read as a reference to a small e-money issuer; and
- (3) section 177 (Offences).
- 27/04/2002
ELM 8.7.9
See Notes
- 27/04/2002
- Future version of ELM 8.7.9 after 06/08/2010
ELM 8.7.10
See Notes
- 27/04/2002
ELM 8.7.11
See Notes
- 28/08/2007
- Past version of ELM 8.7.11 before 28/08/2007
Accurate and complete reports
ELM 8.7.12
See Notes
A small e-money issuer must take reasonable steps to ensure that all information it gives to the FSA on its activities relating to e-money is:
- (1) factually accurate or, in the case of estimates and judgements, fairly and properly based after appropriate enquiries have been made by the small e-money issuer; and
- (2) complete, in that it should include anything of which the FSA would reasonably expect notice.
- 27/04/2002
Correcting information which has been provided
ELM 8.7.13
See Notes
- (1) If a small e-money issuer becomes aware, or has information that reasonably suggests that it has or may have provided the FSA with information which was or may have been false, misleading, incomplete or inaccurate, or has or may have changed in a material particular, it must notify the FSA immediately.
- (2) The notification must include:
- (a) details of the information which is or may be false, misleading, incomplete or inaccurate, or has or may have changed;
- (b) an explanation why such information was or may have been provided; and
- (c) the correct information;
- unless ELM 8.7.14 R applies.
- 27/04/2002
Availability of information
ELM 8.7.14
See Notes
- 27/04/2002
ELM 8.7.15
See Notes
- 27/04/2002
Unobtainable information
ELM 8.7.16
See Notes
- 27/04/2002
Administrative and civil enforcement powers
ELM 8.7.17
See Notes
Where a small e-money issuer contravenes a rule in ELM 8.7 (Provision of information), or a requirement imposed under the powers referred to in ELM 8.7.6 G to ELM 8.7.11 G, the FSA may, among its other enforcement powers:
- (1) apply to the courts for an injunction (see EG 10 (Injunctions));
- (2) apply to the courts for a restitution order (see EG 11 (Restitution and redress)); and
- (3) revoke the small e-money issuer certificate (see ELM 8.6).
- 28/08/2007
- Past version of ELM 8.7.17 before 28/08/2007
Criminal offences relating to the provision of information
ELM 8.7.18
See Notes
- 27/04/2002
ELM 8.7.19
See Notes
- 27/04/2002
ELM 8.7.20
See Notes
- 28/08/2007
- Past version of ELM 8.7.20 before 28/08/2007
ELM 8.7.21
See Notes
- 27/04/2002
ELM 8 Annex 1
Small E-Money Issuer Certificate
- 01/12/2004
See Notes
Small E-Money Issuer Certificate - FSA/docs/elm/elm_8_annex1g.pdf
- 27/04/2002
ELM 8 Annex 2
FORM ELM-SI Provision of information from a small electronic money issuer
- 01/12/2004
See Notes
FORM ELM-SI Provision of information from a small electronic money issuer - FSA/docs/elm/elm_8_annex2r.pdf
Transitional Provisions and Schedules
ELM TP 1
Transitional Provisions
Transitional Provisions
(1) | (2) | (3) | (4) | (5) | (6) |
Material to which the transitional provision applies | Transitional provision | Transitional provision: dates in force | Handbook provision: coming into force | ||
1 | Every provision in ELM | R | The transitional provisions in GEN apply in relation to the provisions in ELM except that a reference to "commencement" is to be treated as a reference to "e-money issuer day" (note). | From "e-money issuer day" (note) | 27 April 2002 |
2 | Every provision in the Handbook which applies to an ELMI | R | Where a transitional provision in the Handbook refers to "commencement", in relation to an ELMI, it means "e-money issuer day" (note). | From "e-money issuer day" (note) | Varies depending on provision concerned |
3 | As for 2 | G | Where a provision applies to an ELMI, its related transitional provision will also apply. The effect of paragraph 2 is to ensure that the transitional provision applies from "e-money issuer day" (note) (and not from the earlier date of commencement). | As for 2 | As for 2 |
Note For the purposes of these transitional provisions, "e-money issuer day" means: | |
(1) | the beginning of 27 April 2002 unless (2) applies; |
(2) | in relation to an "existing issuer": |
(a) the beginning of 27 October 2002; or | |
(b) if earlier, the beginning of the day on which the issuer is given permission to issue electronic money. | |
"Existing issuer" means a body corporate or partnership which, immediately before 27 April 2002: | |
(a) has its head office in the United Kingdom, and is carrying on by way of business in the United Kingdom the activity of issuing electronic money; or | |
(b) has its head office in an EEA State other than the United Kingdom, and is carrying on such an activity by way of business in the United Kingdom without contravening the law of that other EEA State. |
- 01/12/2004
- Future version of ELM TP 1 after 30/04/2011
ELM Sch 1
Record keeping requirements
- 01/12/2004
ELM Sch 1.1
See Notes
1 | The aim of the guidance in the following table is to give the reader a quick overall view of the relevant record keeping requirements. |
2 | It is not a complete statement of those requirements and should not be relied on as if it were. |
- 01/12/2004
ELM Sch 1.2
See Notes
Handbook reference | Subject of record | Contents of record | When record must be made | Retention period |
ELM 3.5.11 R | Closely related persons | Record of steps taken to prove persons not closely related | In anticipation of taking and while persons takes advantage of ELM 3.5.10 R | Three years after the firm ceases to take advantage of ELM 3.5.10 R |
ELM 6.9.7 R | Systems requirements that have to be fulfilled in order to be allowed to have customer e-money balances in excess of the purse limits | Identity of persons entitled to e-money, the amount to which entitled, identity of persons with redemption right and redemption amount | On-going as a condition of issuing e-money outside the purse limits | Not specified |
- 01/12/2004
ELM Sch 2
Notification requirements
- 01/12/2004
ELM Sch 2.1
See Notes
1 | The aim of the guidance in the following table is to give the reader a quick overall view of the relevant requirements for notification and reporting. |
2 | It is not a complete statement of those requirements and should not be relied on as if it were. |
- 01/12/2004
ELM Sch 2.2
See Notes
Handbook reference | Matter to be notified | Contents of notification | Trigger event | Time allowed |
ELM 2.5.5 R | Projected amounts of e-money outstandings | Revised projections under ELM 2.5.4 R | Original projections significantly incorrect | Within ten business days of need for revised projections having been established |
ELM 3.5.21 R | Reportable large exposure | Pending or existing reportable large exposure not already notified | A proposal to enter into a transaction or transactions that would result in a reportable large exposure or, if not notified at the proposal stage, once a reportable large exposure exists | Immediate |
ELM 4.4.5 G | Intention to launch a promotion under which the price paid by purchasers of e-money is less than its monetary value | Intention and details about the promotion | Decision to launch such a promotion | Immediate |
ELM 4.4.6 G | As above | Changes in expectations and any substantial difference between expectations and actual outcome | Fact of change or difference in outcome | Immediate |
ELM 8.7.1 R | Periodic reports | Form ELM-SI | End of each half financial year | Within ten business days of the end of each half financial year |
ELM 8.7.2 R | Change reports | Change in conditions in ELM 8.4 | Fact of change | Within two business days of the change occurring |
ELM 8.7.3 R | Where small e-money issuer's total liabilities exceed 5 million euro | Form ELM-SI | Fact of excess | Within two business days of the excess occurring |
ELM 8.7.13 R | Corrections to information provided | Full details, an explanation for the error and the correct information. | On small e-money issuer's becoming aware of the need to correct the information | Immediately |
ELM Sch 3
Fees and other required payments
- 01/12/2004
ELM Sch 3.1
See Notes
There are no requirements for fees or other payments in ELM. |
- 01/12/2004
ELM Sch 4
Powers exercised
- 01/12/2004
ELM Sch 4.1
See Notes
The following powers and related provisions in or under the Act have been exercised by the FSA to make the rules in ELM: | |
Section 138 (General rule-making power) | |
Section 150(2) (Actions for damages) | |
Section 156 (General supplementary powers) | |
Article 9G(1) (Obtaining information from certified persons etc) of the Regulated Activities Order | |
Article 9H(1) (Rules prohibiting the issue of electronic money at a discount) of the Regulated Activities Order |
- 01/12/2004
ELM Sch 4.2
See Notes
- 01/12/2004
ELM Sch 4.3
See Notes
The following powers and related provisions in or under the Act have been exercised by the FSA in ELM to direct or require: | |
Section 51 (Applications under this Part) | |
Article 9D(a) (Applications for certificates) of the Regulated Activities Order | |
Article 9F(2) (Revocation of certificate on request) of the Regulated Activities Order |
- 01/12/2004
ELM Sch 5
Rights of action for damages
- 01/12/2004
ELM Sch 5.1
See Notes
1 | The table below sets out the rules in ELM contravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention. |
2 | If a "Yes" appears in the column headed "For private person?", the rule may be actionable by a "private person" under section 150 (or, in certain circumstances, his fiduciary or representative). A "Yes" in the column headed "Removed?" indicates that the FSA has removed the right of action under section 150(2) of the Act. If so, a reference to the rule in which it is removed is also given. |
3 | The column headed "For other person?" indicates whether the rule is actionable by a person other than a private person (or his fiduciary or representative). If so, an indication of the type of person by whom the rule is actionable is given. |
- 01/12/2004
ELM Sch 5.2
See Notes
Chapter/Appendix | Section/Annex | Paragraph | Rights of action under section 150 | |||
For private person? | Removed? | For other person | ||||
All rules in ELM 6 | Yes | No | No | |||
All rules in ELM 8 | Yes (note) | No | No | |||
All other rules in ELM | No | Yes, ELM 1.6.1 R | No | |||
Note: the effect of article 9G(3) of the Regulated Activities Order is that the rules in ELM 8.7 are also actionable against a small e-money issuer (which is not an authorised person). |
- 01/12/2004
ELM Sch 6
Rules that can be waived
- 01/12/2004
ELM Sch 6.1
See Notes
1. | The rules in may be waived by the FSA under section 148 of the Act (Modification or waiver of rules). | |
2. | Article 9G(2) of the Regulated Activities Order provides that section 148 of the Act applies in relation to rules made under article 9G(1) (Obtaining information from certified persons etc.) as if references in that section to an authorised person were references to a certified person (referred to in ELM as a small e-money issuer). | |
3. | Article 9H(2) of the Regulated Activities Order provides that section 148 of the Act applies in relation to rules made under article 9H(1) (Rules prohibiting the issue of electronic money at a discount). |
- 01/12/2004