REC 1
Introduction
REC 1.1
Application
- 01/12/2004
[Note: ESMA has also issued guidelines under article 16(3) of the ESMA Regulation covering various topics relating to automated trading and direct electronic access. See
REC 1.1.1
See Notes
- 22/12/2011
- Past version of REC 1.1.1 before 22/12/2011
REC 1.1.1A
See Notes
- 01/11/2007
REC 1.1.2
See Notes
- (1) Recognised bodies are exempt persons under section 285 of the Act (Exemption for recognised investment exchanges and clearing houses).
- (2) UK recognised bodies other than RAPs must satisfy recognition requirements prescribed by the Treasury (in certain cases with the approval of the Secretary of State) in the Recognition Requirements Regulations. UK RIEs must also satisfy the MiFID implementing requirements in the MiFID Regulation. RAPs must satisfy the recognition requirements prescribed by the Treasury in the RAP regulations, under the auction regulation and must also be UK RIEs and so are subject to requirements under the MiFID Regulation. Overseas recognised bodies must satisfy recognition requirements laid down in section 292 of the Act (Overseas investment exchanges and overseas clearing houses).
- (3) Recognised bodies must also comply with notification requirements in, and with notification rules made under, sections 293 (Notification requirements) and 295 (Notification: overseas investment exchanges and clearing houses) of the Act.
- 22/12/2011
- Past version of REC 1.1.2 before 22/12/2011
REC 1.1.3
See Notes
- (1) The recognition requirements for UK recognised bodies and the MiFID implementing requirements are set out, with guidance, in REC 2. The RAP recognition requirements (other than requirements under the auction regulation which are not reproduced in REC) are set out, with guidance, in REC 2A.
- (2) The notification rules for UK recognised bodies are set out in REC 3 together with guidance on those rules.
- (3) Guidance on the FSA's approach to the supervision of recognised bodies is given in REC 4.
- (4) Guidance for applicants (and potential applicants) for UK recognised body status is given in REC 5.
- (5) The recognition requirements, notification rules, and guidance for overseas recognised bodies and guidance for applicants (and potential applicants) for overseas recognised body status are set out in REC 6.
- (5A) Guidance for EEA market operators exercising their passporting rights in the United Kingdom is set out in REC 6A.
- (6) The fees rules for recognised bodies and applicants are set out in FEES 1, 2, 3 and 4.
- 22/12/2011
- Past version of REC 1.1.3 before 22/12/2011
REC 1.2
Purpose, status and quotations
- 01/11/2007
- Past version of REC 1.2 before 01/11/2007
Purpose
REC 1.2.1
See Notes
- 22/12/2011
- Past version of REC 1.2.1 before 22/12/2011
Status
REC 1.2.2
See Notes
- (1) Most of the provisions in this sourcebook are marked with a G (to indicate guidance) or an R (to indicate a rule). Quotations from UK statute or statutory instruments are marked with the letters "UK" unless they form part of a piece of guidance. Quotations from the directly applicable MiFID Regulation are marked with the letters "EU". For a discussion of the status of provisions marked with a letter, see Chapter 6 of the Reader's Guide.
- (2) Where the guidance states that the FSA may have regard to any factor in assessing or determining whether a recognised body requirement is satisfied, it means that the FSA will take that factor into account so far as it is relevant.
- (3) In determining whether a recognised body satisfies the recognised body requirements, the FSA will have regard to any relevant factor, including, but not limited to, the factors specifically discussed in the guidance.
- 22/12/2011
- Past version of REC 1.2.2 before 22/12/2011
Quotations
REC 1.2.3
See Notes
- (1) This sourcebook contains quotations from the Act, the Recognition Requirements Regulations, the RAP regulations and the Companies Act 1989 and the MiFID Regulation and, where necessary, words have been added to, or substituted for, the text of these provisions to facilitate understanding.
- (2) The additions and substitutions are enclosed in square brackets ([ ]). The omission of words within a quotation is indicated by three dots (...).
- (3) Any words in these quotations which have the same meaning as Handbook defined terms are shown in italics and their definitions may be found in the Glossary.
- (4) As these quotations contain provisions which impose obligations, they are printed in bold type. The use of bold type is not intended to indicate that these quotations are rules made by the FSA.
- (5) None of the editorial changes made by the FSA in these quotations can supersede or alter the meaning of the provision concerned.
- 22/12/2011
- Past version of REC 1.2.3 before 22/12/2011
REC 2
Recognition requirements
REC 2.1
Introduction
- 01/12/2004
REC 2.1.1
See Notes
- 22/12/2011
- Past version of REC 2.1.1 before 22/12/2011
REC 2.1.1A
See Notes
- 22/12/2011
REC 2.1.2
See Notes
- 01/11/2007
- Past version of REC 2.1.2 before 01/11/2007
REC 2.1.3
See Notes
- (1) The paragraphs in the Schedule to the Recognition Requirements Regulations are grouped in this sourcebook in sections which give guidance on the same subject for both UK RIEs and UK RCHs.
- (2) The table in REC 2.1.4 G indicates in which section each of those paragraphs (and the associated guidance) can be found.
- 01/11/2007
- Past version of REC 2.1.3 before 01/11/2007
REC 2.1.4
See Notes
Location of recognition requirements and guidance
Recognition Requirements Regulations | Subject | Section in REC 2 |
Regulation 6 | Method of satisfying recognition requirements | 2.2 |
Part I of the Schedule | UK RIE recognition requirements | |
Paragraph 1 | Financial resources | 2.3 |
Paragraph 2 | Suitability | 2.4 |
Paragraph 3 | Systems and controls | 2.5 |
Paragraphs 4(1) and 4(2)(aa) | General safeguards for investors | 2.6 |
Paragraph 4(2)(a) | Access to facilities | 2.7 |
Paragraph 4(2)(b) | Proper markets | 2.12 |
Paragraph 4(2)(c) | Availability of relevant information | 2.12 |
Paragraph 4(2)(d) | Settlement | 2.8 |
Paragraph 4(2)(e) | Transaction recording | 2.9 |
Paragraph 4(2)(ea) | Conflicts | 2.5 |
Paragraph 4(2)(f) | Financial crime and market abuse | 2.10 |
Paragraph 4(2)(g) | Custody | 2.11 |
Paragraph 4(3) | Definition of relevant information | 2.12 |
Paragraph 4A | Provision of pre-trade information about share trading | 2.6 |
Paragraph 4B | Provision of post-trade information about share trading | 2.6 |
Paragraph 6 | Promotion and maintenance of standards | 2.13 |
Paragraph 7 | Rules and consultation | 2.14 |
Paragraph 7A | Admission of financial instruments to trading | 2.12 |
Paragraph 7B and 7C | Access to facilities | 2.7 |
Paragraph 7D | Settlement | 2.8 |
Paragraph 7E | Suspension and removal of financial instruments from trading | 2.6 |
Paragraph 8 | Discipline | 2.15 |
Paragraph 9 | Complaints | 2.16 |
Paragraph 9A | Operation of a multilateral trading facility | 2.16A |
Part II of the Schedule | UK RIE default rules in respect of market contracts | 2.17 |
Part III of the Schedule | UK RCH recognition requirements | |
Paragraph 16 | Financial resources | 2.3 |
Paragraph 17 | Suitability | 2.4 |
Paragraph 18 | Systems and controls | 2.5 |
Paragraph 19(1) | General safeguards for investors | 2.6 |
Paragraph 19(2)(a) | Access to facilities | 2.7 |
Paragraph 19(2)(b) | Clearing services | 2.8 |
Paragraph 19(2)(c) | Transactions recording | 2.9 |
Paragraph 19(2)(d) | Financial crime and market abuse | 2.10 |
Paragraph 19(2)(e) | Custody | 2.11 |
Paragraph 20 | Promotion and maintenance of standards | 2.13 |
Paragraph 21 | Rules | 2.14 |
Paragraph 22 | Discipline | 2.15 |
Paragraph 23 | Complaints | 2.16 |
Part IV of the Schedule | UK RCH default rules in respect of market contracts | 2.17 |
- 01/11/2007
- Past version of REC 2.1.4 before 01/11/2007
REC 2.1.5
See Notes
- 01/11/2007
REC 2.2
Method of satisfying the recognition requirements
- 01/12/2004
REC 2.2.1
See Notes
Recognition Requirements Regulations, Regulation 6
(1) In considering whether a [UK recognised body] or applicant satisfies recognition requirements applying to it under these [Recognition Requirements Regulations], the [FSA] may take into account all relevant circumstances including the constitution of the person concerned and its regulatory provisions within the meaning of section 302(1) of the Act. |
(2) Without prejudice to the generality of paragraph (1), a [UK recognised body] or applicant may satisfy recognition requirements applying to it under these [Recognition Requirements Regulations] by making arrangements for functions to be performed on its behalf by any other person. |
(3) Where a [UK recognised body] or applicant makes arrangements of the kind mentioned in paragraph (2), the arrangements do not affect the responsibility imposed by the Act on the [UK recognised body] or applicant to satisfy recognition requirements applying to it under these [Recognition Requirements Regulations], but it is in addition a recognition requirement applying to the [UK recognised body] or applicant that the person who performs (or is to perform) the functions is a fit and proper person who is able and willing to perform them. |
- 01/11/2007
- Past version of REC 2.2.1 before 01/11/2007
Relevant circumstances
REC 2.2.2
See Notes
The FSA will usually expect:
- (1) the constitution, regulatory provisions and practices of the UK recognised body or applicant;
- (2) the nature (including complexity, diversity and risk) and scale of the UK recognised body's or applicant's business;
- (3) the size and nature of the market which is supported by the UK recognised body's or applicant's facilities;
- (4) the nature and status of the types of investor who use the UK recognised body's or applicant's facilities or have an interest in the market supported by the UK recognised body's or applicant's facilities; and
- (5) the nature and scale of the risks to the regulatory objectives associated with the matters described in (1) to (4);
- 21/06/2001
Outsourcing
REC 2.2.3
See Notes
- 21/06/2001
REC 2.2.4
See Notes
- 21/06/2001
REC 2.2.5
See Notes
- 21/06/2001
REC 2.2.6
See Notes
In determining whether the UK recognised body meets the recognition requirement in Regulation 6(3), the FSA may have regard to whether that body has ensured that the person who performs that function on its behalf:
- (1) has sufficient resources to be able to perform the function (after allowing for any other activities);
- (2) has adequate systems and controls to manage that function and to report on its performance to the UK recognised body;
- (3) is managed by persons of sufficient skill, competence and integrity;
- (4) understands the nature of the function it performs on behalf of the UK recognised body and its significance for the UK recognised body's ability to satisfy the recognition requirements and other obligations in or under the Act; and
- (5) undertakes to perform that function in such a way as to enable the UK recognised body to continue to satisfy the recognition requirements and other obligations in or under the Act.
- 21/06/2001
REC 2.2.7
See Notes
In determining whether a UK recognised body continues to satisfy the recognition requirements where it has made arrangements for any function to be performed on its behalf by any person, the FSA may have regard, in addition to any of the matters described in the appropriate section of this chapter, to the arrangements made to exercise control over the performance of the function, including:
- (1) the contracts (and other relevant documents) between the UK recognised body and the person who performs the delegated function;
- (2) the arrangements made to monitor the performance of that function; and
- (3) the arrangements made to manage conflicts of interest and protect confidential regulatory information.
- 21/06/2001
REC 2.3
Financial resources
- 01/12/2004
REC 2.3.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 1
(1) | The [UK RIE] must have financial resources sufficient for the proper performance of its [relevant functions] as a [UK RIE]. |
(2) | In considering whether this requirement is satisfied, the [FSA] must (without prejudice to the generality of regulation 6(1)) take into account all the circumstances, including the [UK RIE's] connection with any person, and any activity carried on by the [UK RIE], whether or not it is an exempt activity. |
- 01/11/2007
- Past version of REC 2.3.1 before 01/11/2007
REC 2.3.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 16
(1) | The [UK RCH] must have financial resources sufficient for the proper performance of its [relevant functions] as a [UK RCH]. |
(2) | In considering whether this requirement is satisfied, the [FSA] may (without prejudice to the generality of regulation 6(1)) take into account all the circumstances, including the [UK RCH's] connection with any person, and any activity carried on by the [UK RCH], whether or not it is an exempt activity. |
- 01/11/2007
- Past version of REC 2.3.2 before 01/11/2007
REC 2.3.3
See Notes
In determining whether a UK recognised body has financial resources sufficient for the proper performance of its relevant functions, the FSA may have regard to:
- (1) the operational and other risks to which the UK recognised body is exposed;
- (2) if the UK recognised body acts as a central counterparty or otherwise guarantees the performance of transactions in specified investments, the counterparty and market risks to which it is exposed in that capacity;
- (3) the amount and composition of the UK recognised body's capital;
- (4) the amount and composition of the UK recognised body's liquid financial assets;
- (5) the amount and composition of the UK recognised body's other financial resources (such as insurance policies and guarantees, where appropriate);
- (6) the financial benefits, liabilities, risks and exposures arising from the UK recognised body's connection with any person, including but not limited to, its connection with:
- (a) any undertaking in the same group as the UK recognised body;
- (b) any other person with a significant shareholding or stake in the UK recognised body;
- (c) any other person with whom the UK recognised body has made a significant investment whether in the form of equity, debt, or by means of any guarantee or other form of commitment;
- (d) any person with whom it has a significant contractual relationship.
- (7) in relation to a UK RIE, the nature and extent of the transactions concluded on the UK RIE.
- 01/11/2007
- Past version of REC 2.3.3 before 01/11/2007
Accounting information and standards
REC 2.3.4
See Notes
- 21/06/2001
Counterparty and market risks: principles
REC 2.3.5
See Notes
In assessing whether a UK recognised body has sufficient financial resources in relation to counterparty and market risks, the FSA may have regard to:
- (1) the amount and liquidity of its financial assets and the likely availability of liquid financial resources to the UK recognised body during periods of major market turbulence or other periods of major stress for the UK financial system; and
- (2) the nature and scale of the UK recognised body's exposures to counterparty and market risks and, where relevant, the counterparties to which it is exposed.
- 06/08/2010
- Past version of REC 2.3.5 before 06/08/2010
Operational and other risks: principles
REC 2.3.6
See Notes
In assessing whether a UK recognised body has sufficient financial resources in relation to operational and other risks, the FSA may have regard to the extent to which, after allowing for the financial resources necessary to cover counterparty and market risks, the UK recognised body's financial resources are sufficient and sufficiently liquid:
- (1) to enable the UK recognised body to continue carrying on properly the regulated activities that it expects to carry on; and
- (2) to ensure that it would be able to complete an orderly closure or transfer of its exempt activities without being prevented from doing so by insolvency or lack of available funds.
- 21/06/2001
Operational and other risks: standard approach
REC 2.3.7
See Notes
The FSA considers that a UK recognised body which (after allowing for the financial resources necessary to cover counterparty and market risks) has at any time:
- (1) liquid financial assets amounting to at least six months' operating costs; and
- (2) net capital of at least this amount;
will, at that time, have sufficient financial resources to meet the recognition requirement unless there are special circumstances indicating otherwise.
- 21/06/2001
- Future version of REC 2.3.7 after 01/02/2013
REC 2.3.8
See Notes
- (1) In this standard approach, the FSA assumes liquid financial assets are needed to cover the costs that would be incurred during an orderly run down of the UK recognised body's business as such, while continuing to satisfy all the recognition requirements and complying with any other obligations under the Act (including the obligations to pay periodic fees to the FSA under REC 7).
- (2) The calculation of operating costs may exclude non-cash costs (costs that do not involve an outflow of funds) and variable costs of the UK recognised body's exempt activities that would not be incurred if no exempt activities were performed. Fixed costs should be included in the assessment of operating costs. The FSA would normally expect the capital equal to the amount of liquid financial assets to be in the form of equity.
- 21/06/2001
- Future version of REC 2.3.8 after 01/02/2013
Operational and other risks: alternative approaches
REC 2.3.9
See Notes
- 21/06/2001
- Future version of REC 2.3.9 after 01/02/2013
REC 2.4
Suitability
- 01/12/2004
REC 2.4.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 2
(1) | The [UK RIE] must be a fit and proper person to perform the [relevant functions] of a [UK RIE]. |
(2) | In considering whether this requirement is satisfied, the [FSA] may (without prejudice to the generality of regulation 6(1)) take into account all the circumstances, including the [UK RIE's] connection with any person. |
(3) | The persons who effectively direct the business and operations of the [UK RIE] must be of sufficiently good repute and sufficiently experienced to ensure the sound and prudent management and operation of the financial markets operated by it. |
(4) | The persons who are in a position to exercise significant influence over the management of the [UK RIE], whether directly or indirectly must be suitable. |
- 01/11/2007
- Past version of REC 2.4.1 before 01/11/2007
REC 2.4.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 17
(1) | The [UK RCH] must be a fit and proper person to perform the [relevant functions] of a [UK RCH]. |
(2) | In considering whether this requirement is satisfied, the [FSA] may (without prejudice to the generality of regulation 6(1)) take into account all the circumstances including the [UK RCH's] connection with any person. |
- 01/11/2007
- Past version of REC 2.4.2 before 01/11/2007
REC 2.4.3
See Notes
In determining whether a UK recognised body is a fit and proper person, the FSA may have regard to any relevant factor including, but not limited to:
- (1) the commitment shown by the UK recognised body's governing body to satisfying the recognition requirements and to complying with other obligations in or under the Act;
- (2) its arrangements, policies and resources for fulfilling its obligations under the Act in relation to its activities as a UK recognised body;
- (3) the extent to which its constitution and organisation provide for effective governance;
- (4) the arrangements made to ensure that its governing body has effective oversight of the UK recognised body's relevant functions;
- (5) the access which its regulatory department has to the governing body;
- (6) the size and composition of its governing body, including:
- (a) the number of members of the governing body who represent members of the UK recognised body or other persons and the types of person whom they represent;
- (b) the number and responsibilities of any members of the governing body with executive roles within the UK recognised body; and
- (c) the number of independent members of the governing body;
- (7) the structure and organisation of its governing body, including any distribution of responsibilities among its members and committees;
- (8) the integrity and competence of its governing body and key individuals;
- (9) breaches of any relevant law, regulation or code of practice by the UK recognised body or its key individuals;
- (10) its arrangements for ensuring that it employs individuals who are honest and demonstrate high standards of integrity;
- (11) the effectiveness of its arrangements to control conflicts of interest (see also REC 2.5); and
- (12) the independence of its regulatory department from its commercial and marketing departments.
- 21/06/2001
REC 2.4.4
See Notes
In determining whether a UK recognised body is a fit and proper person, the FSA may have regard to its connections with:
- (1) any undertaking in the same group;
- (2) any owner or part-owner of the UK recognised body;
- (3) any person who has the right to appoint or remove members of the governing body or other key individuals;
- (4) any person who is able in practice to appoint or remove members of the governing body or other key individuals;
- (5) any person in accordance with whose instructions the governing body or any key individual is accustomed to act; and
- (6) any key individual in relation to the UK recognised body.
- 21/06/2001
REC 2.4.5
See Notes
In assessing whether its connection with any person could affect whether a UK recognised body is a fit and proper person, the FSA may have regard to:
- (1) the reputation and standing of that other person, including his standing with any relevant UK or overseas regulator;
- (2) breaches of any law or regulation by that other person;
- (3) the roles of any of the UK recognised body's key individuals who have a position within organisations under the control or influence of that other person, including their responsibilities in that organisation and the extent and type of their access to its senior management or governing body;
- (4) the extent to which the UK recognised body operates as a distinct entity notwithstanding its connection with that other person;
- (5) the extent to which the UK recognised body's governing body is responsible for its day-to-day management and operations;
but nothing in this paragraph should be taken to imply any restriction on the ability of a UK recognised body to outsource any function to any person in a manner consistent with Regulation 6 of the Recognition Requirements Regulations.
- 21/06/2001
REC 2.4.6
See Notes
- 01/11/2007
REC 2.5
Systems and controls and conflicts
- 01/11/2007
- Past version of REC 2.5 before 01/11/2007
REC 2.5.1
See Notes
Schedule to the Recognition Requirements Regulations, paragraph 3
(1) | The [UK RIE] must ensure that the systems and controls used in the performance of its [relevant functions] are adequate, and appropriate for the scale and nature of its business. | |
(2) | Sub-paragraph (1) applies in particular to systems and controls concerning - | |
(a) | the transmission of information; | |
(b) | the assessment, mitigation and management of risks to the performance of the [UK RIE's relevant functions]; | |
(c) | the effecting and monitoring of transactions on the [UK RIE]; | |
(ca) | the technical operation of the [ UK RIE], including contingency arrangements for disruption to its facilities; | |
(d) | the operation of the arrangements mentioned in paragraph 4(2)(d); and | |
(e) | (where relevant) the safeguarding and administration of assets belonging to users of the [UK RIE's] facilities. |
- 01/11/2007
- Past version of REC 2.5.1 before 01/11/2007
REC 2.5.1A
See Notes
Schedule to the Recognition Requirements Regulations, paragraph 4(2)(ea)
Without prejudice to the generality of sub-paragraph [4(1)], the [ UK RIE ] must ensure that - | |
appropriate arrangements are made to - | |
(i) | identify conflicts between the interests of the [ UK RIE ], its owners and operators and the interests of the persons who make use of its facilities or the interests of the financial markets operated by it; and |
(ii) | manage such conflicts so as to avoid adverse consequences for the operation of the financial markets operated by the [ UK RIE ] and for the persons who make use of its facilities. |
- 01/11/2007
REC 2.5.2
See Notes
Schedule to the Recognition Requirements Regulations, paragraph 18
(1) | The [UK RCH] must ensure that the systems and controls used in the performance of its [relevant functions] are adequate, and appropriate for the scale and nature of its business. | |
(2) | This requirement applies in particular to systems and controls concerning- | |
(a) | the transmission of information; | |
(b) | the assessment and management of risks to the performance of the [UK RCH's relevant functions]; | |
(c) | the operation of the arrangements mentioned in paragraph 19(2)(b); and | |
(c) | (where relevant) the safeguarding and administration of assets belonging to users of the [UK RCH's] facilities. |
- 01/11/2007
- Past version of REC 2.5.2 before 01/11/2007
REC 2.5.3
See Notes
In assessing whether the systems and controls used by a UK recognised body in the performance of its relevant functions are adequate and appropriate for the scale and nature of its business, the FSA may have regard to the UK recognised body's:
- (1) arrangements for managing, controlling and carrying out its relevant functions, including:
- (a) the distribution of duties and responsibilities among its key individuals and the departments of the UK recognised body responsible for performing its relevant functions;
- (b) the staffing and resources of the departments of the UK recognised body responsible for performing its relevant functions;
- (c) the arrangements made to enable key individuals to supervise the departments for which they are responsible;
- (d) the arrangements for appointing and supervising the performance of key individuals (and their departments); and
- (e) the arrangements by which the governing body is able to keep the allocation of responsibilities between, and the appointment, supervision and remuneration of, key individuals under review;
- (2) arrangements for the identification and management of conflicts of interest;
- (3) arrangements for internal and external audit; and
- (4) information technology systems.
- 01/11/2007
- Past version of REC 2.5.3 before 01/11/2007
REC 2.5.4
See Notes
- 21/06/2001
Information transmission
REC 2.5.5
See Notes
In assessing a UK recognised body's systems and controls for the transmission of information, the FSA may also have regard to the extent to which these systems and controls ensure that information is transmitted promptly and accurately:
- (1) within the UK recognised body itself;
- (2) to members; and
- (3) (where appropriate) to other market participants or other relevant persons.
- 21/06/2001
Risk management
REC 2.5.6
See Notes
In assessing a UK recognised body's systems and controls for assessing and managing risk, the FSA may also have regard to the extent to which these systems and controls enable the UK recognised body to:
- (1) identify all the general, operational, legal and market risks wherever they arise in its activities;
- (2) measure and control the different types of risk;
- (3) allocate responsibility for risk management to persons with appropriate knowledge and expertise; and
- (4) provide sufficient, reliable information to key individuals and, where relevant, the governing body of the UK recognised body.
- 21/06/2001
REC 2.5.7
See Notes
Where the UK recognised body assumes significant counterparty risk (for example, by acting as a central counterparty), the FSA may also have regard to:
- (1) the position of the risk management department within the UK recognised body, including its access to the governing body and its relationship with the commercial or marketing departments of the UK recognised body;
- (2) the frequency with which all exposures and risks incurred by the UK recognised body are monitored against risk or exposure limits or other appropriate control parameters;
- (3) the frequency with which risk or exposure limits (or other control parameters) are reviewed;
- (4) the reliability of the arrangements for monitoring and assessing intra-day movements in exposures and risks;
- (5) the robustness of the arrangements for calculating, collecting and holding margin payments and the allocation of losses; and
- (6) the arrangements for stress testing of the adequacy of the UK recognised body's financial resources to cover its exposures which may arise, for example, with substantial movements in market values or counterparty defaults.
- 21/06/2001
Effecting and monitoring of transactions and operation of settlement arrangements
REC 2.5.8
See Notes
In assessing a UK RIE's systems and controls for the effecting and monitoring of transactions, and the systems and controls used by a UK recognised body for the operation of settlement arrangements, the FSA may have regard to the totality of the arrangements and processes through which a transaction is effected, cleared and settled, including:
- (1) a UK RIE's arrangements under which orders are received and matched, and its arrangements for trade and transaction reporting, and (if relevant) for transmission to a settlement system or clearing house;
- (2) a UK recognised body's arrangements under which clearing and settlement instructions arising from a transaction are entered into its systems to the point at which any rights or liabilities arising from that transaction are discharged; and
- (3) the arrangements made by the UK recognised body for monitoring and reviewing the operation of these systems and controls.
- 21/06/2001
Safeguarding and administration of assets
REC 2.5.9
See Notes
In assessing a UK recognised body's systems and controls for the safeguarding and administration of assets belonging to users of its facilities, the FSA may have regard to the totality of the arrangements and processes by which the UK recognised body:
- (1) records the assets held and the identity of the owners of (and other persons with relevant rights over) those assets;
- (2) records any instructions given in relation to those assets;
- (3) records the carrying out of those instructions;
- (4) records any movements in those assets (or any corporate actions or other events in relation to those assets); and
- (5) reconciles its records of assets held with the records of any custodian or sub-custodian used to hold these assets, and with the records of beneficial or legal ownership of those assets.
- 21/06/2001
Management of conflicts of interest
REC 2.5.10
See Notes
- 21/06/2001
REC 2.5.11
See Notes
- 01/11/2007
- Past version of REC 2.5.11 before 01/11/2007
REC 2.5.12
See Notes
- 21/06/2001
REC 2.5.13
See Notes
The FSA may have regard to the arrangements a UK recognised body makes to structure itself and to allocate responsibility for decisions so that it can continue to take proper regulatory decisions notwithstanding any conflicts of interest, including:
- (1) the size and composition of the governing body and relevant committees;
- (2) the roles and responsibilities of key individuals, especially where they also have responsibilities in other organisations;
- (3) the arrangements for transferring decisions or responsibilities to alternates in individual cases; and
- (4) the arrangements made to ensure that individuals who may have a permanent conflict of interest in certain circumstances are excluded from the process of taking decisions (or receiving information) about matters in which that conflict of interest would be relevant.
- 21/06/2001
REC 2.5.14
See Notes
- 21/06/2001
REC 2.5.15
See Notes
The FSA may also have regard to the contracts of employment, staff rules, letters of appointment for members of the governing body, members of relevant committees and other key individuals and other guidance given to individuals on handling conflicts of interest. Guidance to individuals may need to cover:
- (1) the need for prompt disclosure of a conflict of interest to enable others, who are not affected by the conflict, to assist in deciding how it should be managed;
- (2) the circumstances in which a general disclosure of conflicts of interest in advance of any particular instance in which a conflict of interest arises may be sufficient;
- (3) the circumstances in which a general advance disclosure may not be adequate;
- (4) the circumstances in which it would be appropriate for a conflicted individual to withdraw from involvement in the matter concerned, without disclosing the interest; and
- (5) the circumstances in which safeguards in addition to disclosure would be required, such as the withdrawal of the individual from the decision-taking process, or from access to relevant information.
- 21/06/2001
REC 2.5.16
See Notes
- 21/06/2001
Internal and external audit
REC 2.5.17
See Notes
A UK recognised body's arrangements for internal and external audit will be an important part of its systems and controls. In assessing the adequacy of these arrangements, the FSA may have regard to:
- (1) the size, composition and terms of reference of any audit committee of the UK recognised body's governing body;
- (2) the frequency and scope of external audit;
- (3) the provision and scope of internal audit;
- (4) the staffing and resources of the UK recognised body's internal audit department;
- (5) the internal audit department's access to the UK recognised body's records and other relevant information; and
- (6) the position, responsibilities and reporting lines of the internal audit department and its relationship with other departments of the UK recognised body.
- 21/06/2001
Information technology systems
REC 2.5.18
See Notes
Information technology is likely to be a major component of the systems and controls used by any UK recognised body. In assessing the adequacy of the information technology used by a UK recognised body to perform or support its relevant functions, the FSA may have regard to:
- (1) the organisation, management and resources of the information technology department within the UK recognised body;
- (2) the arrangements for controlling and documenting the design, development, implementation and use of information technology systems; and
- (3) the performance, capacity and reliability of information technology systems.
- 21/06/2001
REC 2.5.19
See Notes
The FSA may also have regard to the arrangements for maintaining, recording and enforcing technical and operational standards and specifications for information technology systems, including:
- (1) the procedures for the evaluation and selection of information technology systems;
- (2) the arrangements for testing information technology systems before live operations;
- (3) the procedures for problem management and system change;
- (4) the arrangements to monitor and report system performance, availability and integrity;
- (5) the arrangements (including spare capacity and access to back-up facilities) made to ensure information technology systems are resilient and not prone to failure;
- (6) the arrangements made to ensure business continuity in the event that an information technology system does fail;
- (7) the arrangements made to protect information technology systems from damage, tampering, misuse or unauthorised access; and
- (8) the arrangements made to ensure the integrity of data forming part of, or being processed through, information technology systems.
- 21/06/2001
REC 2.5.20
See Notes
- 21/06/2001
REC 2.5A
Guidance on Public Interest Disclosure Act: Whistleblowing
- 01/12/2004
Application and Purpose: Application
REC 2.5A.1
See Notes
- 01/04/2003
Purpose
REC 2.5A.2
See Notes
- (1) The purposes of this section are to:
- (a) provide UK recognised bodies with guidance regarding the provisions of PIDA; and
- (b) Encourage UK recognised bodies to consider adopting and communicating to workers appropriate internal procedures for handling workers' concerns as part of an effective risk management system.
- (2) In this section "worker" includes, but is not limited to, an individual who has entered into a contract of employment.
- 01/04/2003
REC 2.5A.3
See Notes
- 01/04/2003
Practical Measures: Effect of PIDA
REC 2.5A.4
See Notes
- 01/04/2003
REC 2.5A.5
See Notes
In accordance with section 1 of PIDA:
- (1) a "protected disclosure" is a qualifying disclosure which meets the relevant requirements set out in that section;
- (2) a "qualifying disclosure" is a disclosure, made in good faith, of information which, in the reasonable belief of the worker making the disclosure, tends to show that one or more of the following (a "failure") has been, is being, or is likely to be, committed:
- (a) a criminal offence; or
- (b) a failure to comply with any legal obligation; or
- (c) a miscarriage of justice; or
- (d) the putting of the health and safety of any individual in danger; or
- (e) damage to the environment; or
- (f) deliberate concealment relating to any of (a) to (e);
- 01/04/2003
Internal Procedures
REC 2.5A.6
See Notes
- (1) UK recognised bodies are encouraged to consider adopting appropriate internal procedures which will encourage their workers with concerns to blow the whistle internally about matters which are relevant to the functions of the FSA.
- (2) In considering appropriate internal procedures, UK recognised bodies may find the guidance provided to firms in SYSC 18.2.2 G (2) and SYSC 18.2.2 G (3) helpful.
- 01/01/2007
- Past version of REC 2.5A.6 before 01/01/2007
Link to fitness and propriety
REC 2.5A.7
See Notes
- 01/04/2003
REC 2.6
General safeguards for investors, provision of pre and post-trade information about share trading and suspension and removal of financial instruments from trading
- 01/11/2007
- Past version of REC 2.6 before 01/11/2007
REC 2.6.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(1)
The [UK RIE] must ensure that business conducted by means of its facilities is conducted in an orderly manner and so as to afford proper protection to investors. |
- 01/11/2007
- Past version of REC 2.6.1 before 01/11/2007
REC 2.6.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(aa)
Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that - | |
it has transparent and non-discretionary rules and procedures - | |
(i) | to provide for fair and orderly trading, and |
(ii) | to establish objective criteria for the efficient execution of orders; |
- 01/11/2007
- Past version of REC 2.6.2 before 01/11/2007
REC 2.6.3
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4A
(1) | The [UK RIE] must make arrangements for- | |
(a) | current bid and offer prices for shares, and | |
(b) | the depth of trading interest in shares at the prices which are advertised through its systems, | |
to be made available to the public on reasonable commercial terms and on a continuous basis during normal trading hours, subject to the requirements contained in Chapter IV of the [MiFID Regulation] [(see REC 2.6.7 EU and REC 2.6.21 EU to REC 2.6.24 EU)]. | ||
(2) | If [a UK RIE] decides to give investment firms and credit institutions required to publish their quotes in shares- | |
(a) | in accordance with Article 27 of [MiFID], or | |
(b) | by the [FSA], | |
access to the arrangements referred to in sub-paragraph (1), it must do so on reasonable commercial terms and on a non-discriminatory basis. | ||
(3) | The [FSA] may waive the requirements of sub-paragraph (1) in the circumstances specified- | |
(a) | in the case of shares to be traded on a multilateral trading facility operated by the [UK RIE], in Article 29.2 of [MiFID] and Chapter IV of the [MiFID Regulation] [(see REC 2.6.10 EU and REC 2.6.13 EU)]; or | |
(b) | in the case of shares to be traded on a regulated market operated by the [UK RIE], in Article 44.2 of [MiFID] and Chapter IV of the [MiFID Regulation] [(see REC 2.6.10 EU and REC 2.6.13 EU)]. |
- 01/11/2007
- Past version of REC 2.6.3 before 01/11/2007
REC 2.6.4
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4B
(1) | The [UK RIE] must make arrangements for the price, volume and time of transactions executed in shares to be made available to the public as soon as possible after the time of the transaction on reasonable commercial terms, subject to the requirements contained in Chapter IV of the [MiFID Regulation] [(see REC 2.6.15 EU and REC 2.6.21 EU to REC 2.6.24 EU]). | |
(2) | If [a UK RIE] decides to give investment firms and credit institutions required to make public details of their transactions in shares- | |
(a) | in accordance with Article 28 of [MiFID], or | |
(b) | by the [FSA], | |
access to the arrangements referred to in sub-paragraph (1), it must do so on reasonable commercial terms and on a non discriminatory basis. | ||
(3) | The [FSA] may permit [UK RIEs] to defer the publication required by sub-paragraph (1) in the circumstances specified, and subject to the requirements contained- | |
(a) | in the case of shares traded on a multilateral trading facility operated by [a UK RIE], in Article 30.2 of [MiFID] and Chapter IV of the [MiFID Regulation] [(see REC 2.6.18 EU)]; or | |
(b) | in the case of shares traded on regulated market operated by [a UK RIE], in Article 45.2 of [MiFID] and Chapter IV of the [MiFID Regulation] [(see REC 2.6.18 EU)]. | |
(4) | If the [FSA] permits [UK RIEs] to defer the publication required by sub-paragraph (1), those [UK RIEs] must ensure that the existence of and the terms of the permission are disclosed to users and members of their facilities and to investors. |
- 01/11/2007
- Past version of REC 2.6.4 before 01/11/2007
REC 2.6.5
See Notes
- 01/11/2007
- Past version of REC 2.6.5 before 01/11/2007
REC 2.6.6
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 7E
The rules of the [UK RIE] must provide that the [UK RIE] must not exercise its power to suspend or remove from trading on a regulated market operated by it any financial instrument which no longer complies with its rules, where such step would be likely to cause significant damage to the interests of investors or the orderly functioning of the financial markets. |
- 01/11/2007
- Past version of REC 2.6.6 before 01/11/2007
REC 2.6.7
See Notes
Article 17 of the MiFID Regulation
Pre-trade transparency obligations | |
(1) | A ... market operator operating an MTF or a regulated market shall, in respect of each share admitted to trading on a regulated market that is traded within a system operated by it and specified in Table 1 of Annex II [(see REC 2.6.8 EU)], make public the information set out in paragraphs 2 to 6. |
(2) | Where one of the entities referred to in paragraph 1 operates a continuous auction order book trading system, it shall, for each share as specified in paragraph 1, make public continuously throughout its normal trading hours the aggregate number of orders and of the shares those orders represent at each price level, for the five best bid and offer price levels. |
(3) | Where one of the entities referred to in paragraph 1 operates a quote-driven trading system, it shall, for each share as specified in paragraph 1, make public continuously throughout its normal trading hours the best bid and offer by price of each market maker in that share, together with the volumes attaching to those prices. |
The quotes made public shall be those that represent binding commitments to buy and sell the shares and which indicate the price and volume of shares in which the registered market makers are prepared to buy or sell. | |
In exceptional market conditions, however, indicative or one-way prices may be allowed for a limited time. | |
(4) | Where one of the entities referred to in paragraph 1 operates a periodic auction trading system, it shall, for each share specified in paragraph 1, make public continuously throughout its normal trading hours the price that would best satisfy the system's trading algorithm and the volume that would potentially be executable at that price by participants in that system. |
(5) | Where one of the entities referred to in paragraph 1 operates a trading system which is not wholly covered by paragraphs 2 or 3 or 4, either because it is a hybrid system falling under more than one of those paragraphs or because the price determination process is of a different nature, it shall maintain a standard of pre-trade transparency that ensures that adequate information is made public as to the price level of orders or quotes for each share specified in paragraph 1, as well as the level of trading interest in that share. |
In particular, the five best bid and offer price levels and/or two-way quotes of each market maker in that share shall be made public, if the characteristics of the price discovery mechanism permit it. | |
(6) | A summary of the information to be made public in accordance with paragraphs 2 to 5 is specified in Table 1 of Annex II. [(see REC 2.6.8 EU)] |
- 01/11/2007
- Past version of REC 2.6.7 before 01/11/2007
REC 2.6.8
See Notes
Table 1 of Annex II to the MiFID Regulation: Information to be made public in accordance with Article 17 (see REC 2.6.9EU)
Type of system | Description of system | Summary of information to be made public, in accordance with Article 17 |
continuous auction order book trading system | a system that by means of an order book and a trading algorithm operated without human intervention matches sell orders with matching buy orders on the basis of the best available price on a continuous basis | the aggregate number of orders and the shares they represent at each price level, for at least the five best bid and offer price levels. |
quote-driven trading system | a system where transactions are concluded on the basis of firm quotes that are continuously made available to participants, which requires the market makers to maintain quotes in a size that balances the needs of members and participants to deal in a commercial size and the risk to which the market maker exposes itself | the best bid and offer by price of each market maker in that share, together with the volumes attaching to those prices |
periodic auction trading system | a system that matches orders on the basis of a periodic auction and a trading algorithm operated without human intervention | the price at which the auction trading system would best satisfy its trading algorithm and the volume that would potentially be executable at that price |
trading system not covered by first three rows | A hybrid system falling into two or more of the first three rows or a system where the price determination process is of a different nature than that applicable to the types of system covered by [the] first three rows | adequate information as to the level of orders or quotes and of trading interest; in particular, the five best bid and offer price levels and/or two way quotes of each market maker in the share, if the characteristics of the price discovery mechanism so permit |
- 01/11/2007
REC 2.6.9
See Notes
Recital 14 to the MiFID Regulation
A waiver from pre-transparency obligations arising under Articles 29 or 44 of [MiFID] [(see REC 2.6.3 UK)] ... should not enable [MiFID investment firms] to avoid such obligations in respect of those transactions in liquid shares which they conclude on a bilateral basis under the rules of a regulated market or an MTF where, if carried out outside the rules of the regulated market or MTF, those transactions would be subject to the requirements to publish quotes set out in Article 27 of [MiFID]. |
- 01/11/2007
REC 2.6.10
See Notes
Article 18 of the MiFID Regulation
Waivers based on market model and type of order or transaction | |||
(1) | Waivers in accordance with Article 29(2) and 44(2) of [MiFID] [(see REC 2.6.3 UK)] may be granted by the [FSA] for systems operated by an MTF or a regulated market, if those systems satisfy one of the following criteria: | ||
(a) | they must be based on a trading methodology by which the price is determined in accordance with a reference price generated by another system, where that reference price is widely published and is regarded generally by market participants as a reliable reference price; | ||
(b) | they formalise negotiated transactions [(see REC 2.6.11 EU)], each of which meets one of the following criteria: | ||
(i) | it is made at or within the current volume weighted spread reflected on the order book or the quotes of the market makers of the regulated market or MTF operating that system or, where the share is not traded continuously, within a percentage of a suitable reference price, being a percentage and a reference price set in advance by the system operator; | ||
(ii) | it is subject to conditions other than the current market price of the share [see REC 2.6.12 EU)]. | ||
For the purposes of point (b), the other conditions specified in the rules of the regulated market or MTF for a transaction of this kind must also have been fulfilled. | |||
In the case of systems having functionality other than as described in points (a) or (b), the waiver shall not apply to that other functionality. | |||
(2) | Waivers in accordance with Articles 29(2) and 44(2) of [MiFID] [(see REC 2.6.3 UK)], based on the type of orders may be granted only in relation to orders held in an order management facility maintained by the regulated market or the MTF pending their being disclosed to the market. |
- 01/11/2007
REC 2.6.11
See Notes
Article 19 of the MiFID Regulation
References to negotiated transaction | |
For the purpose of Article 18(1)(b) [(see REC 2.6.10 EU)] a negotiated transaction shall mean a transaction involving members or participants of a regulated market or an MTF which is negotiated privately but executed within the regulated market or MTF and where that member or participant in doing so undertakes one of the following tasks: | |
(a) | dealing on own account with another member or participant who acts for the account of a client; |
(b) | dealing with another member or participant, where both are executing orders on own account; |
(c) | acting for the account of both the buyer and seller; |
(d) | acting for the account of the buyer, where another member or participant acts for the account of the seller; |
(e) | trading for own account against a client order. |
- 01/11/2007
REC 2.6.12
See Notes
Article 3 of the MiFID Regulation
Transactions related to an individual share in a portfolio trade and volume weighted average price transactions | |
(1) | A transaction related to an individual share in a portfolio trade shall be considered, for the purposes of Article 18(1)(b)(ii) [(see REC 2.6.10 EU)], as a transaction subject to conditions other than the current market price. |
(2) | A volume weighted average price transaction shall be considered, for the purposes of Article 18(1)(b)(ii) [(see REC 2.6.10 EU)], as a transaction subject to conditions other than the current market price. |
- 01/11/2007
REC 2.6.13
See Notes
Article 20 of the MiFID Regulation
Waivers in relation to transactions which are large in scale |
An order shall be considered to be large in scale compared with normal market size if it is equal to or larger than the minimum size of order specified in Table 2 in Annex II [(see REC 2.6.14 EU)]. For the purposes of determining whether an order is large in scale compared to normal market size, all shares admitted to trading on a regulated market shall be classified in accordance with their average daily turnover, which shall be calculated in accordance with the procedure set out in Article 33. |
- 01/11/2007
REC 2.6.14
See Notes
Table 2 in Annex II to the MiFID Regulation: Orders large in scale compared with normal market size
Class in terms of average daily turnover (ADT) | ADT < €500 000 | €500 000 < ADT < €1 000 000 | €1 000 000 < ADT < €25 000 000 | €25 000 000 < ADT < €50 000 000 | ADT < €50 000 000 |
Minimum size of order qualifying as large in scale compared with normal market size | €50 000 | €100 000 | €250 000 | €400 000 | €500 000 |
- 01/11/2007
REC 2.6.15
See Notes
Article 27(1) of the MiFID Regulation
Post-trade transparency obligation | ||
1. | ... regulated markets, and ... market operators operating an MTF shall, with regard to transactions in respect of shares admitted to trading on regulated markets concluded ... within their systems, make public the following details: | |
(a) | the details specified in points 2, 3, 6, 16, 17, 18 and 21 of Table 1 of Annex I [(see REC 2.6.16 EU)] | |
(b) | an indication that the exchange of shares is determined by factors other than the current market valuation of the share, where applicable [(see REC 2.6.17 EU)]; | |
(c) | an indication that the trade was a negotiated trade, where applicable; | |
(d) | any amendments to previously disclosed information, where applicable. | |
Those details shall be made public either by reference to each transaction or in a form aggregating the volume and price of all transactions in the same share taking place at the same price at the same time. |
- 01/11/2007
REC 2.6.16
See Notes
Points 2, 3, 6, 16, 17, 18 and 21 of Table 1 of Annex I of the MiFID Regulation
2. | Trading Day | The trading day on which the transaction was executed. |
3. | Trading Time | The time at which the transaction was executed, reported in the local time of the competent authority to which the transaction will be reported, and the basis in which the transaction is reported expressed as Co-ordinated Universal Time (UTC) +/- hours. |
6. | Instrument Identification | This shall consist in: |
- a unique code to be decided by the competent authority (if any) to which the report is made identifying the [share] which is the subject of the transaction; | ||
- if the [share] in question does not have a unique identification code, the report must include the name of the [share] ... | ||
16. | Unit Price | The price per [share] excluding commission and (where relevant) accrued interest. ... |
17. | Price Notation | The currency in which the price is expressed ... |
18. | Quantity | The number of units of the [shares]. |
21. | Venue identification | Identification of the venue where the transaction was executed. That identification shall consist ... [of the regulated market or MTF's] ... unique harmonised identification code; |
... |
- 01/11/2007
REC 2.6.17
See Notes
Article 3 of the MiFID Regulation
Transactions related to an individual share in a portfolio trade and volume weighted average price transactions | |
1. | A transaction related to an individual share in a portfolio trade ... shall ... be considered, for the purposes of Article 27(1)(b) [(see REC 2.6.15 EU)] as a transaction where the exchange of shares is determined by factors other than the current market valuation of the share. |
2. | A volume weighted average price transaction ... shall be considered, for the purposes of Article 27(1)(b) [(see REC 2.6.15 EU)] as a transaction where the exchange of shares is determined by factors other than the current market valuation of the share. |
- 01/11/2007
REC 2.6.18
See Notes
Article 28 of the MiFID Regulation
Deferred publication of large transactions | |
The deferred publication of information in respect of transactions may be authorised, for a period no longer than the period specified in Table 4 in Annex II [(see REC 2.6.20 EU)] for the class of share and transaction concerned, provided the following criteria are satisfied: | |
(a) | the transaction is between [a MiFID investment firm] dealing on own account and a client of that firm; |
(b) | the size of that transaction is equal to or exceeds the relevant minimum qualifying size, as specified in Table 4 in Annex II [(see REC 2.6.20 EU)]. |
In order to determine the relevant minimum qualifying size for the purposes of point (b), all shares admitted to trading on a regulated market shall be classified in accordance with their average daily turnover to be calculated in accordance with Article 33. |
- 01/11/2007
REC 2.6.19
See Notes
Article 29(3), second sentence of the MiFID Regulation
Each constituent transaction [of a portfolio trade] shall be assessed separately for the purposes of determining whether deferred publication in respect of that transaction is available under Article 28 (see REC 2.6.18 EU). |
- 01/11/2007
REC 2.6.20
See Notes
Table 4 in Annex II to the MiFID Regulation: Deferred publication thresholds and delays
The table below shows, for each permitted delay for publication and each class of shares in terms of average daily turnover (ADT), the minimum qualifying size of transaction that will qualify for that delay in respect of a share of that type.
Class of shares in terms of average daily turnover (ADT) | |||||
ADT< €100 000 | €100 000 < ADT < €1 000 000 | €1 000 000 < ADT < €50 000 000 | ADT < €50 000 000 | ||
Minimum qualifying size of transaction for permitted delay | |||||
Permitted delay for publication | 60 minutes | €10 000 | Greater of 5% of ADT and €25 000 | Lower of 10% of ADT and €3 500 000 | Lower of 10% of ADT and €7 500 000 |
180 minutes | €25 000 | Greater of 15% of ADT and €75 000 | Lower of 15% of ADT and €5 000 000 | Lower of 20% of ADT and €15 000 000 | |
Until end of trading day (or roll-over to noon of next trading day if trade undertaken in final 12 hours of trading day) | €45 000 | Greater of 25% of ADT and €100 000 | Lower of 25% of ADT and €10 000 000 | Lower of 30% of ADT and €30 000 000 | |
Until end of trading day next after trade | €60 000 | Greater of 50% of ADT and €100 000 | Greater of 50% of ADT and €1 000 000 | 100% of ADT | |
Until end of second trading day next after trade | €80 000 | 100% of ADT | 100% of ADT | 250% of ADT | |
Until end of third trading day next after trade | 250% of ADT | 250% of ADT |
- 01/11/2007
REC 2.6.21
See Notes
Article 29 of the MiFID Regulation
Publication and availability of pre- and post-trade transparency data | |
1. | A regulated market [or] MTF ... shall be considered to publish pre-trade information on a continuous basis during normal trading hours if that information is published as soon as it becomes available during the normal trading hours of the regulated market [or] MTF concerned, and remains available until it is updated. |
2. | Pre-trade information, and post-trade information relating to transactions taking place on [regulated markets or MTFs] and within normal trading hours, shall be made available as close to real time as possible. Post-trade information relating to such transactions shall be made available in any case within three minutes of the relevant transaction. |
3. | Information relating to a portfolio trade shall be made available with respect to each constituent transaction as close to real time as possible, having regard to the need to allocate prices to particular shares. ... |
4. | Post-trade information referring to transactions taking place on a [regulated market or MTF] but outside its normal trading hours shall be made public before the opening of the next trading day of the [regulated market or MTF] on which the transaction took place. |
- 01/11/2007
REC 2.6.22
See Notes
Recital 18 to the MiFID Regulation
Information which is required to be made available as close to real time as possible should be made available as close to instantaneously as technically possible, assuming a reasonable level of efficiency and of expenditure on systems on the part of the person concerned. The information should only be published close to the three minute maximum limit in exceptional cases where the systems available do not allow for a publication in a shorter time |
- 01/11/2007
REC 2.6.23
See Notes
Article 30 of the MiFID Regulation
Public availability of pre- and post-trade information | |
... pre- and post-trade information shall be considered to be made public or available to the public if it is made available generally through one of the following to investors located in the Community: | |
(a) | the facilities of a regulated market or an MTF; |
(b) | the facilities of a third party; |
(c) | proprietary arrangements. |
- 01/11/2007
REC 2.6.24
See Notes
Article 32 of the MiFID Regulation
Arrangements for making information public | |
Any arrangement to make information public, adopted for the purposes of Article ... 30 [(see REC 2.6.23 EU)] ... , shall satisfy the following conditions: | |
(a) | it must include all reasonable steps necessary to ensure that the information to be published is reliable, monitored continuously for errors, and corrected as soon as errors are detected; |
(b) | it must facilitate the consolidation of the data with similar data from other sources; |
(c) | it must make the information available to the public on a non-discriminatory commercial basis at a reasonable cost. |
- 01/11/2007
REC 2.6.25
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 19(1)
The [UK RCH] must ensure that its facilities are such as to afford proper protection to investors. |
- 01/11/2007
REC 2.6.26
See Notes
In determining whether:
- (1) business conducted by means of a UK RIE's facilities is conducted so; or
- (2) a UK RCH's facilities are such;
as to afford proper protection to investors, the FSA may, in addition to the matters dealt with in REC 2.7 to REC 2.12, have regard to all the arrangements made by the UK recognised body concerning the operation of its facilities.
- 01/11/2007
REC 2.6.27
See Notes
The FSA may also have regard to the extent to which the UK recognised body's rules, procedures and the arrangements for monitoring and overseeing the use of its facilities:
- (1) include appropriate measures to prevent the use of its facilities for abusive or improper purposes;
- (2) provide appropriate safeguards for investors against fraud or misconduct, recklessness, negligence or incompetence by users of its facilities;
- (3) provide appropriate information to enable users of its facilities to monitor their use of the facilities;
- (4) include appropriate arrangements to enable users of its facilities to raise queries about any use of those facilities which they are reported to have made;
- (5) include appropriate arrangements to enable users of its facilities to comply with any relevant regulatory or legal requirements; and
- (6) include appropriate arrangements to reduce the risk that those facilities will be used in ways which are incompatible with relevant regulatory or legal requirements;
and in this paragraph "appropriate" should be taken to mean appropriate having regard to the nature and scale of the UK recognised body's facilities, the types of persons who will use the facilities and the use which they will make of those facilities.
- 01/11/2007
Orderly markets
REC 2.6.28
See Notes
In determining whether a UK RIE is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the FSA may have regard to the extent to which the UK RIE's rules and procedures:
- (1) are consistent with the Code of Market Conduct (see MAR 1);
- (2) prohibit abusive trading practices or the deliberate reporting or publication of false information about trades; and
- (3) prohibit or prevent:
- (a) trades in which a party is improperly indemnified against losses;
- (b) trades intended to create a false appearance of trading activity ("wash trades");
- (c) cross trades executed for improper purposes;
- (d) improperly prearranged or prenegotiated trades;
- (e) trades intended to assist or conceal any potentially identifiable trading abuse ("accommodation trades"); and
- (f) trades which one party does not intend to close out or settle.
- 01/11/2007
REC 2.6.29
See Notes
In determining whether a UK RIE is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the FSA may have regard to whether the UK RIE's arrangements and practices:
- (1) enable members and clients for whom they act to obtain the best price available at the time for their size and type of trade;
- (2) ensure:
- (a) sufficient pre-trade transparency in the UK RIE's markets taking account of the practices in those markets and the trading systems used; and
- (b) sufficient post-trade transparency in the UK RIE's markets taking into account the nature and liquidity of the specified investments traded, market conditions and the scale of transactions, the need (where appropriate) to preserve anonymity for members and clients for whom they act, and the needs of different market participants for timely price information;
- (2A) (2) does not apply to a UK RIE's markets for shares admitted to trading on a regulated market. For pre-trade and post-trade transparency for a UK RIE's markets for shares admitted to trading on a regulated market, see in particular REC 2.6.3 UK and REC 2.6.4 UK and REC 2.6.7 EU to REC 2.6.24 EU;
- (3) include procedures which enable the UK RIE to influence trading conditions or suspend trading promptly when necessary to maintain an orderly market; and
- (4) if they include arrangements to support or encourage liquidity:
- (a) are transparent;
- (b) are not likely to encourage any person to enter into transactions other than for proper trading purposes (which may include hedging, investment, speculation, price determination, arbitrage and filling orders from any client for whom he acts);
- (c) are consistent with a reliable, undistorted price-formation process; and
- (d) alleviate dealing or other identified costs associated with trading on the UK RIE's markets and do not subsidise a market position of a user of its facilities or subsidise any margin payments (or the provision of collateral) which such a user would have to make.
- 01/11/2007
REC 2.6.30
See Notes
- (1) The FSA accepts that block trading, upstairs trading and other types of specialist transactions (such as the "exchange of futures for physicals" in certain commodity markets) can have a legitimate commercial rationale consistent with the orderly conduct of business and proper protection for investors. They may therefore be permitted under the rules of a UK RIE, subject to any necessary safeguards, where appropriate.
- (2) (1) does not apply to a UK RIE's markets for shares admitted to trading on a regulated market. For pre-trade and post-trade transparency for a UK RIE's markets for shares admitted to trading on a regulated market, see in particular REC 2.6.3 UK and REC 2.6.4 UK and REC 2.6.7EU to REC 2.6.24 EU.
- 01/11/2007
Waiver of pre-trade transparency requirements and deferral of post-trade transparency requirements
REC 2.6.31
See Notes
- 01/11/2007
REC 2.6.32
See Notes
- 01/11/2007
Arrangements for making information public
REC 2.6.33
See Notes
- 01/11/2007
REC 2.6.34
See Notes
- (1) In respect of arrangements facilitating the consolidation of data as required in REC 2.6.24 EU(b), the FSA considers information as being made public in accordance with REC 2.6.24 EU(b), if it:
- (a) is accessible by automated electronic means in a machine-readable way;
- (b) utilises technology that facilitates consolidation of the data and permits commercially viable usage; and
- (c) is accompanied by instructions outlining how users can access the information.
- (2) The FSA considers that an arrangement fulfils the 'machine-readable' criteria where the data:
- (a) is in a physical form that is designed to be read by a computer;
- (b) is in a location on a computer storage device where that location is known in advance by the party wishing to access the data; and
- (c) is in a format that is known in advance by the party wishing to access the data.
- (3) The FSA considers that publication on a non-machine-readable website would not meet the MiFID requirements.
- (4) The FSA considers that information that is made public in accordance with REC 2.6.24 EU should conform to a consistent and structured format based on industry standards. Regulated markets or market operators operating an MTF can choose the structure that they use.
- 01/11/2007
REC 2.7
Access to facilities
- 01/12/2004
REC 2.7.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(a)
Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that - |
access to the [UK RIE's] facilities is subject to criteria designed to protect the orderly functioning of the market and the interests of investors and is in accordance with paragraph 7B; |
- 01/11/2007
- Past version of REC 2.7.1 before 01/11/2007
REC 2.7.1A
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 7B
(1) | The [UK RIE] must make transparent and non-discriminatory rules, based on objective criteria, governing access to, or membership of, its facilities. | ||
(2) | In particular those rules must specify the obligations for users or members of its facilities arising from - | ||
(a) | the constitution and administration of the [UK RIE]; | ||
(b) | rules relating to transactions on the market; | ||
(c) | its professional standards for staff of any investment firm or credit institution having access to or membership of a financial market operated by the [UK RIE]; | ||
(d) | conditions established under sub-paragraph (3)(c) for access to or membership of a financial market operated by the [UK RIE] by persons other than investment firms or credit institutions; and | ||
(e) | the rules and procedures for clearing and settlement of transactions concluded on a financial market operated by the [UK RIE]. | ||
(3) | Rules of the [UK RIE] about access to, or membership of, a financial market operated by it must permit the [UK RIE] to give access to or admit to membership (as the case may be) only - | ||
(a) | an investment firm, | ||
(b) | a credit institution, or | ||
(c) | a person who - | ||
(i) | is fit and proper, | ||
(ii) | has a sufficient level of trading ability and competence, | ||
(iii) | where applicable, has adequate organisational arrangements, and | ||
(iv) | has sufficient resources for the role he is to perform, taking into account the [UK RIE's] arrangements under paragraph 4(2)(d). | ||
(4) | Rules under this paragraph must enable - | ||
(a) | an investment firm authorised under Article 5 of [MiFID], or | ||
(b) | a credit institution authorised under the Banking Consolidation Directive, | ||
by the competent authority of another EEA State (including a branch established in the United Kingdom of such a firm or institution) to have direct or remote access to or membership of, any financial market operated by the [UK RIE] on the same terms as a UK firm. | |||
(5) | The [UK RIE] must make arrangements regularly to provide the [FSA] with a list of users or members of its facilities. | ||
(6) | This paragraph is without prejudice to the generality of paragraph 4. |
- 01/11/2007
REC 2.7.1B
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 7C
(1) | This paragraph applies to [a UK RIE] which provides central counterparty, clearing or settlement facilities. |
(2) | The [UK RIE] must make transparent and non-discriminatory rules based on objective criteria, governing access to those facilities. |
(3) | The rules under sub-paragraph (2) must enable an investment firm or a credit institution authorised by the competent authority of another EEA State (including a branch established in the United Kingdom of such a firm or institution) to have access to those facilities on the same terms as a UK firm for the purposes of finalising or arranging the finalisation of transactions in financial instruments. |
(4) | The [UK RIE] may refuse access to those facilities on legitimate commercial grounds. |
- 01/11/2007
REC 2.7.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 19(2)(a)
Without prejudice to the generality of sub-paragraph [19(1)], the [UK RCH] must ensure that - |
access to the [UK RCH's ] facilities is subject to criteria designed to protect the orderly functioning of those facilities and the interests of investors; |
- 01/11/2007
- Past version of REC 2.7.2 before 01/11/2007
REC 2.7.2A
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 21A
(1) | The [UK RCH] must make transparent and non-discriminatory rules, based on objective criteria, governing access to central counterparty, clearing or settlement facilities provided by it. |
(2) | The rules under sub-paragraph (1) must enable an investment firm or a credit institution authorised by the competent authority of another EEA State (including a branch established in the United Kingdom of such a firm or institution) to have access to those facilities on the same terms as a UK firm for the purposes of finalising or arranging the finalisation of transactions in financial instruments. |
(3) | The [UK RCH] may refuse access to those facilities on legitimate commercial grounds. |
- 01/11/2007
REC 2.7.3
See Notes
In assessing whether access to a UK recognised body's facilities is subject to criteria designed to protect the orderly functioning of the market, or of those facilities, and the interests of investors, the FSA may have regard to whether:
- (1) the UK recognised body limits access as a member to persons:
- (a) over whom it can with reasonable certainty enforce its rules contractually;
- (b) who have sufficient technical competence to use its facilities;
- (c) whom it is appropriate to admit to membership having regard to the size and sophistication of users of its facilities and the nature of the business effected by means of, or cleared through, its facilities; and
- (d) (if appropriate) who have adequate financial resources in relation to their exposure to the UK recognised body or its central counterparty;
- (2) [deleted]
- (3) indirect access to the UK recognised body's facilities is subject to suitable criteria, remains the responsibility of a member of the UK recognised body and is subject to its rules; and
- (4) where access is granted to members outside the United Kingdom, there are adequate safeguards against financial crime (see also REC 2.10).
- 01/11/2007
- Past version of REC 2.7.3 before 01/11/2007
REC 2.7.3A
See Notes
- 01/11/2007
Electronic access
REC 2.7.4
See Notes
The FSA may have regard to the arrangements made to permit electronic access to the UK recognised body's facilities and to prevent and resolve problems likely to arise from the use of electronic systems to provide indirect access to its facilities by persons other than its members, including:
- (1) the rules and guidance governing members' procedures, controls and security arrangements for inputting instructions into the system;
- (2) the rules and guidance governing the facilities members provide to clients to input instructions into the system and the restrictions placed on the use of those systems;
- (3) the rules and practices to detect, identify, and halt or remove instructions breaching any relevant restrictions;
- (4) the quality and completeness of the audit trail of any transaction processed through an electronic connection system; and
- (5) procedures to determine whether to suspend trading by those systems or access to them by or through individual members.
- 21/06/2001
REC 2.8
Settlement and clearing services
- 01/12/2004
REC 2.8.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(d)
Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that - |
satisfactory arrangements which comply with paragraph 7D are made for securing the timely discharge (whether by performance, compromise or otherwise) of the rights and liabilities of the parties to transactions effected on the [UK RIE] (being rights and liabilities in relation to those transactions); |
- 01/11/2007
- Past version of REC 2.8.1 before 01/11/2007
REC 2.8.1A
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 7D
(1) | The rules of the [UK RIE] must permit a user or member of a regulated market operated by it to use whatever settlement facility he chooses for a transaction. | |
(2) | Sub-paragraph (1) only applies where - | |
(a) | such links and arrangements exist between the chosen settlement facility and any other settlement facility as are necessary to ensure the efficient and economic settlement of the transaction; and | |
(b) | the [UK RIE] is satisfied that the smooth and orderly functioning of the financial markets will be maintained. |
- 01/11/2007
REC 2.8.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 19(2)(b)
Without prejudice to the generality of sub-paragraph [19(1)], the [UK RCH] must ensure that - |
its clearing services involve satisfactory arrangements for securing the timely discharge (whether by performance, compromise or otherwise) of the rights and liabilities of the parties to transactions in respect of which it provides such services, (being rights and liabilities in relation to those transactions); |
- 01/11/2007
- Past version of REC 2.8.2 before 01/11/2007
REC 2.8.3
See Notes
In determining whether there are satisfactory arrangements for securing the timely discharge of the rights and liabilities of the parties to transactions, the FSA may have regard to the UK recognised body's:
- (1) rules and practices relating to clearing and settlement;
- (2) arrangements for matching trades and ensuring that the parties are in agreement about trade details;
- (3) arrangements for making deliveries and payments and, where relevant, for collecting margin and holding collateral, in all relevant jurisdictions;
- (4) procedures to detect and deal with the failure of a member to settle in accordance with its rules;
- (5) arrangements for taking action to settle a trade if a member does not settle in accordance with its rules;
- (6) arrangements for monitoring its members' settlement performance; and
- (7) (where appropriate) default rules and default procedures.
- 21/06/2001
REC 2.8.4
See Notes
- 21/06/2001
REC 2.9
Transaction recording
- 01/12/2004
REC 2.9.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(e)
Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that- |
satisfactory arrangements are made for recording transactions effected on the [UK RIE], and transactions (whether or not effected on the [UK RIE]) which are cleared or to be cleared by means of its facilities; |
- 01/11/2007
- Past version of REC 2.9.1 before 01/11/2007
REC 2.9.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 19(2)(c)
Without prejudice to the generality of sub-paragraph [19(1)], the [UK RCH] must ensure that- |
satisfactory arrangements are made for recording transactions which are cleared or to be cleared by means of its facilities; |
- 01/11/2007
- Past version of REC 2.9.2 before 01/11/2007
REC 2.9.3
See Notes
In determining whether a UK recognised body has satisfactory arrangements for recording the transactions effected on, or cleared or to be cleared by means of, its facilities, the FSA may have regard to:
- (1) whether the UK recognised body has arrangements for creating, maintaining and safeguarding an audit trail of transactions for at least three years (five years in respect of transactions carried out by members who are not incorporated in the United Kingdom if the UK recognised body is a regulated market); and
- (2) the type of information recorded and the extent to which the record includes details for each transaction of:
- (a) the name of the investment (and, if relevant, the underlying asset) and the price, quantity and date of the transaction;
- (b) the identities and, where appropriate, the roles of the counterparties to the transaction;
- (c) if the UK recognised body's rules make provision for transactions to be effected, cleared or to be cleared in more than one type of facility, or under more than one part of its rules, the type of facility in which, or the part of its rules under which, the transaction was effected, cleared or to be cleared; and
- (d) the date and manner of settlement of the transaction.
- 21/06/2001
REC 2.9.4
See Notes
- 21/06/2001
REC 2.10
Financial crime and market abuse
- 01/12/2004
REC 2.10.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(f)
Without prejudice to the generality of sub-paragraph [4(1)], the [ UK RIE ] must ensure that- |
appropriate measures (including the monitoring of transactions effected on the [UK RIE]) are adopted to reduce the extent to which the [ UK RIE's ] facilities can be used for a purpose connected with market abuse or financial crime, and to facilitate their detection and monitor their incidence; |
- 01/11/2007
- Past version of REC 2.10.1 before 01/11/2007
REC 2.10.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 19(2)(d)
Without prejudice to the generality of sub-paragraph [19(1)], the [ UK RCH ] must ensure that- |
appropriate measures are adopted to reduce the extent to which the [ UK RCH's ] facilities can be used for a purpose connected with market abuse or financial crime, and to facilitate their detection and monitor their incidence; |
- 01/11/2007
- Past version of REC 2.10.2 before 01/11/2007
REC 2.10.3
See Notes
In determining whether a UK recognised body's measures are appropriate to reduce the extent to which its facilities can be used for a purpose connected with market abuse or financial crime, to facilitate their detection and to monitor their incidence, the FSA may have regard to:
- (1) whether the rules of the UK recognised body enable it to disclose any information to the FSA, or other appropriate bodies involved in the detection, prevention or pursuit of market abuse or financial crime in the United Kingdom or overseas; and
- (2) whether the arrangements, resources, systems, and procedures of the UK recognised body enable it to:
- (a) monitor the use made of its facilities so as to obtain information regarding possible patterns of normal, abnormal or improper use of those facilities;
- (b) detect possible instances of market abuse and financial crime, for example, by detecting suspicious patterns in the use of its facilities;
- (c) communicate information about market abuse and financial crime promptly and accurately to appropriate organisations; and
- (d) cooperate with all relevant bodies in the prevention, investigation and pursuit of market abuse and financial crime.
- 21/06/2001
REC 2.10.4
See Notes
- 21/06/2001
REC 2.11
Custody
- 01/12/2004
REC 2.11.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(g)
Without prejudice to the generality of sub-paragraph [4(1)], the [ UK RIE ] must ensure that- |
where the [ UK RIE's ] facilities include making provision for the safeguarding and administration of assets belonging to users of those facilities, satisfactory arrangements are made for that purpose. |
- 01/11/2007
- Past version of REC 2.11.1 before 01/11/2007
REC 2.11.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 19(2)(e)
Without prejudice to the generality of sub-paragraph [19(1)], the [ UK RCH ] must ensure that- |
where the [ UK RCH's ] facilities include making provision for the safeguarding and administration of assets belonging to users of those facilities, satisfactory arrangements are made for that purpose. |
- 01/11/2007
- Past version of REC 2.11.2 before 01/11/2007
REC 2.11.3
See Notes
In determining whether a UK recognised body has made satisfactory arrangements for the safeguarding and administration of assets belonging to the users of its facilities, the FSA may have regard to:
- (1) the level of protection which the arrangements provide against the risk of theft or other types or causes of loss;
- (2) whether the arrangements ensure that assets are only used or transferred in accordance with the instructions of the owner of those assets or in accordance with the terms of the agreement by which the UK recognised body undertook to safeguard and administer those assets;
- (3) whether the arrangements ensure that the assets are not transferred to the UK recognised body or to any other person to settle the debts of the owner (or other person with the appropriate rights over the assets) except in accordance with valid instructions from a person entitled to give those instructions, or in accordance with the terms of the agreement by which the UK recognised body undertook to safeguard and administer those assets;
- (4) whether the arrangements include satisfactory procedures to ensure that any rights arising in relation to the assets held as a result of any actions by the issuers of those assets (or other relevant persons) are held, transferred or acted upon in a timely and accurate manner in accordance with the instructions of the owner of those assets or in accordance with the terms of the agreement by which the UK recognised body undertook to safeguard and administer those assets;
- (5) whether there are adequate arrangements to ensure the proper segregation of assets belonging to the UK recognised body (or to undertakings in the same group) from those belonging to the users of its facilities for the safeguarding and administration of assets;
- (6) whether the arrangements include satisfactory procedures for the selection, oversight and review of custodians or sub-custodians used to hold the assets;
- (7) whether the agreements by which the UK recognised body undertakes to safeguard and administer assets belonging to users of its facilities include appropriate information regarding the terms and conditions of that service and the obligations of the UK recognised body to the user of the service and of the user of the service to the UK recognised body;
- (8) whether the records kept of those assets and the operation of the safeguarding services provide sufficient accurate and timely information:
- (a) to identify the legal and beneficial owners of the assets and of any persons who have charges over, or other interests, in the assets;
- (b) to record separately any additions, reductions and transfers in each account of assets held for safeguarding or administration; and
- (c) to identify separately the assets owned by (or, where appropriate, on behalf of) different persons, including, where appropriate, the assets owned by members of the UK recognised body and their clients;
- (9) the frequency of reconciliation of the assets held by (or on behalf of) the UK recognised body with the accounts held with the UK recognised body by the users of its safeguarding and administration services and the extent of the arrangements for resolving a shortfall identified in any reconciliation; and
- (10) the frequency with which statements of their holdings are provided to the users of the safeguarding and administration services, to the owners of the assets held and other appropriate persons in accordance with the terms of the agreement by which the UK recognised body undertook to safeguard and administer those assets.
- 21/06/2001
REC 2.11.4
See Notes
- 21/06/2001
REC 2.12
Availability of relevant information and admission of financial instruments to trading (UK RIEs only)
- 01/11/2007
- Past version of REC 2.12 before 01/11/2007
REC 2.12.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(c)
Without prejudice to the generality of sub-paragraph [4(1)], the [ UK RIE ] must ensure that - | ||
(c) | appropriate arrangements are made for relevant information to be made available (whether by the [ UK RIE ] or, where appropriate, by issuers of the [ specified investments ]) to persons engaged in dealing in [ specified investments ] on the [ UK RIE]; |
- 01/11/2007
- Past version of REC 2.12.1 before 01/11/2007
REC 2.12.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 4(3)
In sub-paragraph [4(2)(c)], |
"relevant information" means information which is relevant in determining the current value of the [specified investments]. |
- 01/11/2007
- Past version of REC 2.12.2 before 01/11/2007
REC 2.12.2A
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 7A
(1) | The [UK RIE] must make clear and transparent rules concerning the admission of financial instruments to trading on any financial market operated by it. | ||
(2) | The rules must ensure that all financial instruments admitted to trading on any regulated market operated by the [UK RIE] are capable of being traded in a fair, orderly and efficient manner (in accordance with Chapter V of the [MiFID Regulation], where applicable). | ||
(3) | The rules must ensure that - | ||
(a) | all transferable securities admitted to trading on a regulated market operated by the [UK RIE] are freely negotiable (in accordance with Chapter V of the [MiFID Regulation], where applicable); and | ||
(b) | all contracts for derivatives admitted to trading on a regulated market operated by the [UK RIE] are designed so as to allow for their orderly pricing as well as for the existence of effective settlement conditions. | ||
(4) | The [UK RIE] must maintain arrangements to provide sufficient publicly available information (or satisfy itself that sufficient information is publicly available) to enable the users of a multilateral trading facility operated by it to form investment judgments, taking into account both the nature of the users and the types of instrument traded. | ||
(5) | The [UK RIE] must maintain effective arrangements to verify that issuers of transferable securities admitted to trading on a regulated market operated by it comply with the disclosure obligations. | ||
(6) | The [UK RIE] must maintain arrangements to assist users of a regulated market operated by it to obtain access to information made public under the disclosure obligations. | ||
(7) | The [UK RIE] must maintain arrangements regularly to review whether the financial instruments admitted to trading on a regulated market operated by it comply with the admission requirements for those instruments. | ||
(8) | The rules must provide that where a [UK RIE], without obtaining the consent of the issuer, admits to trading on a regulated market operated by it a transferable security which has been admitted to trading on another regulated market, the [UK RIE] - | ||
(a) | must inform the issuer of that security as soon as is reasonably practicable; and | ||
(b) | may not require the issuer of that security to demonstrate compliance with the disclosure obligations. | ||
(9) | The rules must provide that where a [UK RIE], without obtaining the consent of the issuer, admits to trading on a multilateral trading facility operated by it a transferable security which has been admitted to trading on a regulated market, it may not require the issuer of that security to demonstrate compliance with the disclosure obligations. | ||
... | |||
(11) | This paragraph is without prejudice to the generality of paragraph 4. |
- 01/11/2007
REC 2.12.2B
See Notes
Article 35 of the MiFID Regulation
Transferable securities | ||
1. | Transferable securities shall be considered freely negotiable for the purposes of Article 40(1) of [MiFID] [(see REC 2.12.2A UK)] if they can be traded between the parties to a transaction, and subsequently transferred without restriction, and if all securities within the same class as the security in question are fungible. | |
2. | Transferable securities which are subject to a restriction on transfer shall not be considered as freely negotiable unless the restriction is not likely to disturb the market. | |
3. | Transferable securities that are not fully paid may be considered as freely negotiable, if arrangements have been made to ensure that the negotiability of such securities is not restricted and that adequate information concerning the fact that the securities are not fully paid, and the implications of that fact for shareholders, is publicly available. | |
4. | When exercising its discretion whether to admit a share to trading, a regulated market shall, in assessing whether the share is capable of being traded in a fair, orderly and efficient manner, take into account the following: | |
(a) | the distribution of those shares to the public; and | |
& | (b) | such historical financial information, information about the issuer, and information providing a business overview as is required to be prepared under [the PD], or is or will be otherwise publicly available. |
5. | A transferable security that is officially listed in accordance with [CARD], and the listing of which is not suspended, shall be deemed to be freely negotiable and capable of being traded in a fair, orderly and efficient manner. | |
6. | For the purposes of Article 40(1) of [MiFID] [(see REC 2.12.2A UK)], when assessing whether a transferable security referred to Article 4(1)(18)(c) of [MiFID] is capable of being traded in a fair, orderly and efficient manner, the regulated market shall take into account, depending on the nature of the security being admitted, whether the following criteria are satisfied: | |
(a) | the terms of the security are clear and unambiguous and allow for a correlation between the price of the security and the price or other value measure of the underlying; | |
(b) | the price or other value measure of the underlying is reliable and publicly available; | |
(c) | there is sufficient information publicly available of a kind needed to value the security; | |
(d) | the arrangements for determining the settlement price of the security ensure that this price properly reflects the price or other value measure of the underlying; | |
(e) | where the settlement of the security requires or provides for the possibility of the delivery of an underlying security or asset rather than cash settlement, there are adequate settlement and delivery procedures for that underlying as well as adequate arrangements to obtain relevant information about that underlying. |
- 01/11/2007
REC 2.12.2C
See Notes
Recital 19 to the MiFID Regulation
For the purposes of the provisions of [the MiFID Regulation] as to the admission to trading on a regulated market of a transferable security as defined in article 4(1)(18)(c) of [MiFID], [(see REC 2.12.2B EU6(c))], in the case of a security within the meaning of [the PD], there should be considered to be sufficient information publicly available of a kind needed to value that financial instrument. |
- 01/11/2007
REC 2.12.2D
See Notes
Article 36 of the MiFID Regulation
Units in collective investment undertakings | ||
1. | A regulated market shall, when admitting to trading units in a collective investment undertaking, whether or not that undertaking is constituted in accordance with [the UCITS Directive], satisfy itself that the collective investment undertaking complies or has complied with the registration, notification or other procedures which are a necessary precondition for the marketing of the collective investment undertaking in the jurisdiction of the regulated market. | |
2. | Without prejudice to [the UCITS Directive] or any other Community legislation or national law relating to collective investment undertakings, Member States may provide that compliance with the requirements referred to in paragraph 1 is not a necessary precondition for the admission of units in a collective investment undertaking to trading on a regulated market. | |
3. | When assessing whether units in an open-ended collective investment undertaking are capable of being traded in a fair, orderly and efficient manner in accordance with Article 40(1) of [MiFID] [(see REC 2.12.2A UK)], the regulated market shall take the following aspects into account: | |
(a) | the distribution of those units to the public; | |
(b) | whether there are appropriate market-making arrangements, or whether the management company of the scheme provides appropriate alternative arrangements for investors to redeem the units; | |
(c) | whether the value of the units is made sufficiently transparent to investors by means of the periodic publication of the net asset value. | |
4. | When assessing whether units in a closed-end collective investment undertaking are capable of being traded in a fair, orderly and efficient manner, in accordance with Article 40(1) of [MiFID] [(see REC 2.12.2A UK)], the regulated market shall take the following aspects into account: | |
(a) | the distribution of those units to the public; | |
(b) | whether the value of the units is made sufficiently transparent to investors, either by publication of information on the fund's investment strategy or by the periodic publication of net asset value. |
- 01/11/2007
REC 2.12.2E
See Notes
Article 37 of the MiFID Regulation
Derivatives | ||
1. | When admitting to trading a financial instrument of a kind listed in points 4 to 10 of Section C of Annex I to [MiFID], regulated markets shall verify that the following conditions are satisfied: | |
(a) | the terms of the contract establishing the financial instrument must be clear and unambiguous, and enable a correlation between the price of the financial instrument and the price or other value measure of the underlying; | |
(b) | the price or other value measure of the underlying must be reliable and publicly available; | |
(c) | sufficient information of a kind needed to value the derivative must be publicly available; | |
(d) | the arrangements for determining the settlement price of the contract must be such that the price properly reflects the price or other value measure of the underlying; | |
(e) | where the settlement of the derivative requires or provides for the possibility of the delivery of an underlying security or asset rather than cash settlement, there must be adequate arrangements to enable market participants to obtain relevant information about that underlying, as well as adequate settlement and delivery procedures for the underlying. | |
2. | Where the financial instruments concerned are of a kind listed in Sections C (5), (6), (7) or (10) of Annex I to [MiFID], point (b) of paragraph 1 shall not apply if the following conditions are satisfied: | |
(a) | the contract establishing that instrument must be likely to provide a means of disclosing to the market, or enabling the market to assess, the price or other value measure of the underlying, where the price or value measure is not otherwise publicly available; | |
(b) | the regulated market must ensure that appropriate supervisory arrangements are in place to monitor trading and settlement in such financial instruments; | |
(c) | the regulated market must ensure that settlement and delivery, whether physical delivery or by cash settlement, can be effected in accordance with the contract terms and conditions of those financial instruments. |
- 01/11/2007
Proper information
REC 2.12.11
See Notes
In determining whether appropriate arrangements have been made to make relevant information available to persons engaged in dealing in specified investments admitted to trading on the UK RIE, the FSA may have regard to:
- (1) the extent to which members and clients for whom they act are able to obtain information about those specified investments, either through accepted channels for dissemination of information or through other regularly and widely accessible communication media, to make a reasonably informed judgment about the value and the risks associated with those specified investments in a timely fashion;
- (2) what restrictions, if any, there are on the dissemination of relevant information to the UK RIE's members and clients for whom they act; and
- (3) whether relevant information is or can be kept to restricted groups of persons in such a way as to facilitate or encourage dealing in contravention of the Code of Market Conduct (see MAR 1).
- 21/06/2001
Own means of dissemination
REC 2.12.12
See Notes
- 21/06/2001
Rules concerning the admission of financial instruments to trading on a multilateral trading facility
REC 2.12.14
See Notes
In determining whether a UK RIE has clear and transparent rules concerning the admission of financial instruments to trading on any multilateral trading facility operated by it, the FSA considers that it is reasonable that the rules be based on criteria designed to promote fair and orderly trading (see REC 2.6.2 UK). In determining whether the rules are based on such criteria, the FSA may have regard to:
- (1) whether there is a sufficient range of persons already holding the financial instrument (or, where relevant, the underlying asset) or interested in dealing in it to bring about adequate forces of supply and demand;
- (2) the extent to which there are any limitations on the persons who may hold or deal in the financial instrument, or the amounts of the financial instrument which may be held; and
- (3) whether the UK RIE has adequate procedures for obtaining information relevant for determining whether or not to suspend or discontinue trading in that financial instrument.
- 01/11/2007
REC 2.13
Promotion and maintenance of standards
- 01/12/2004
REC 2.13.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 6
(1) The [UK RIE] must be able and willing to promote and maintain high standards of integrity and fair dealing in the carrying on of regulated activities by persons in the course of using the facilities provided by the [UK RIE]. |
(2) The [UK RIE] must be able and willing to cooperate by the sharing of information or otherwise, with the [FSA], with any other authority, body or person having responsibility in the United Kingdom for the supervision or regulation of any regulated activity or other financial service, or with an overseas regulator within the meaning of section 195 of the Act. |
- 01/11/2007
- Past version of REC 2.13.1 before 01/11/2007
REC 2.13.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 20
(1) The [UK RCH] must be able and willing to promote and maintain high standards of integrity and fair dealing in the carrying on of regulated activities by persons in the course of using the facilities provided by the [UK RCH]. |
(2) The [UK RCH] must be able and willing to cooperate, by the sharing of information or otherwise, with the [FSA], with any other authority, body or person having responsibility in the United Kingdom for the supervision or regulation of any regulated activity or other financial service, or with an overseas regulator within the meaning of section 195 of the Act. |
- 01/11/2007
- Past version of REC 2.13.2 before 01/11/2007
REC 2.13.3
See Notes
- 06/08/2010
- Past version of REC 2.13.3 before 06/08/2010
REC 2.13.4
See Notes
- 21/06/2001
REC 2.13.5
See Notes
In assessing the willingness of a UK recognised body to cooperate with the FSA and other appropriate bodies, the FSA may have regard to:
- (1) the extent to which the UK recognised body is willing to provide information about it and its activities to assist the FSA in the exercise of its functions;
- (2) the extent to which the UK recognised body is open with the FSA or other appropriate bodies in regulatory matters;
- (3) how diligently the UK recognised body investigates or pursues enquiries from the FSA or other appropriate bodies; and
- (4) whether the UK recognised body participates in appropriate international fora.
- 21/06/2001
REC 2.13.6
See Notes
- 21/06/2001
REC 2.14
Rules and consultation
- 01/12/2004
REC 2.14.1
See Notes
Schedule to the Recognition Requirements Regulations, paragraph 7
(1) The [UK RIE] must ensure that appropriate procedures are adopted for it to make rules, for keeping its rules under review and for amending them. |
(2) The procedures must include procedures for consulting users of the [UK RIE's] facilities in appropriate cases. |
(3) The [UK RIE] must consult users of its facilities on any arrangements it proposes to make for dealing with penalty income in accordance with paragraph 8(3) ... (or on any changes it proposes to make to those arrangements). |
- 01/11/2007
- Past version of REC 2.14.1 before 01/11/2007
REC 2.14.2
See Notes
Schedule to the Recognition Requirements Regulations, paragraph 21
(1) The [UK RCH] must ensure that appropriate procedures are adopted for it to make rules, for keeping its rules under review and for amending them. |
(2) The procedures must include procedures for consulting users of the [UK RCH's] facilities in appropriate cases. |
(3) The [UK RCH] must consult users of its facilities on any arrangements it proposes to make for dealing with penalty income in accordance with paragraph 22(3) ... (or on any changes it proposes to make to those arrangements). |
- 01/11/2007
- Past version of REC 2.14.2 before 01/11/2007
REC 2.14.3
See Notes
In determining whether a UK recognised body has appropriate procedures for it to make rules, for keeping its rules under review and for amending them, the FSA may have regard to:
- (1) the arrangements made for taking decisions about making and amending rules in the UK recognised body, including the level at which the decisions are taken and any provision for the delegation of decisions by the governing body;
- (2) the arrangements made for determining whether or not it is appropriate to consult members or other users of the UK recognised body's facilities;
- (3) the procedures for consulting members and other users of its facilities in appropriate cases; and
- (4) the arrangements for notifying members (and other appropriate persons) of rule changes.
- 21/06/2001
REC 2.14.4
See Notes
- (1) In determining whether a UK recognised body's procedures include procedures for consulting users of its facilities in appropriate cases, the FSA may have regard to whether those procedures include provision for consulting users of those facilities before changes are made to any rules relating to its regulatory functions.
- (2) In the FSA's view, a UK recognised body's procedures may not need to contain provision for consulting users of its facilities before making minor changes to any rules of an administrative or commercial character.
- 21/06/2001
REC 2.14.5
See Notes
- (1) In determining whether a UK recognised body's procedures for consulting members and other users of its facilities are appropriate, the FSA may have regard to the range of persons to be consulted by the UK recognised body under those procedures.
- (2) In the FSA's view, consultation with a smaller range of persons may be appropriate where limited, technical changes to a UK recognised body's rules are proposed.
- (3) In the FSA's view, a UK recognised body's procedures may include provision to restrict consultation where it is essential to make a change to the rules without delay in order to ensure continued compliance with the recognition requirements or other obligations under the Act.
- 21/06/2001
REC 2.14.6
See Notes
In determining whether a UK recognised body's procedures for consulting members and other users of its facilities are appropriate, the FSA may have regard to the extent to which the procedures include:
- (1) informal discussions at an early stage with users of its facilities or appropriate representative bodies;
- (2) publication to users of its facilities of a formal consultation paper which includes clearly expressed reasons for the proposed changes and an appropriately detailed assessment of the likely costs and benefits;
- (3) adequate time for users of its facilities to respond to the consultation paper and for the UK recognised body to take their responses properly into account;
- (4) adequate arrangements for making responses to consultation available for inspection by users of its facilities, unless the respondent requests otherwise;
- (5) adequate arrangements for ensuring that the UK recognised body has proper regard to the representations received; and
- (6) publication, no later than the publication of the amended rules, of a reasoned account of the UK recognised body's decision to amend its rules.
- 21/06/2001
REC 2.15
Discipline
- 01/12/2004
REC 2.15.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 8
(1) | The [UK RIE] must have - | |
(a) | effective arrangements (which include the monitoring of transactions effected on the [UK RIE]) for monitoring and enforcing compliance with its rules, including rules in relation to the provision of clearing services in respect of transactions other than transactions effected on the [UK RIE]); | |
(b) | effective arrangements for monitoring and enforcing compliance with the arrangements made by it as mentioned in paragraph 4(2)(d); and | |
(c) | effective arrangements for monitoring transactions effected on the [UK RIE] in order to identify disorderly trading conditions. | |
(2) | Arrangements made pursuant to sub-paragraph (1) must include procedures for - | |
(a) | investigating complaints made to the [UK RIE] about the conduct of persons in the course of using the [UK RIE's] facilities; and | |
(b) | the fair, independent and impartial resolution of appeals against decisions of the [UK RIE]. | |
(3) | Where arrangements made pursuant to sub-paragraph (1) include provision for requiring the payment of financial penalties, they must include arrangements for ensuring that any amount so paid is applied only in one or more of the following ways - | |
(a) | towards meeting expenses incurred by the [UK RIE] in the course of the investigation of the breach in respect of which the penalty is paid, or in the course of any appeal against the decision of the [UK RIE] in relation to that breach; | |
(b) | for the benefit of users of the [UK RIE's] facilities; | |
(c) | for charitable purposes. |
- 01/11/2007
- Past version of REC 2.15.1 before 01/11/2007
REC 2.15.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 22
(1) | The [UK RCH] must have effective arrangements for monitoring and enforcing compliance with its rules. | |
(2) | The arrangements must include procedures for - | |
(a) | investigating complaints made to the [UK RCH] about the conduct of persons in the course of using the [UK RCH's] facilities; and | |
(b) | the fair, independent and impartial resolution of appeals against decisions of the [UK RCH]. | |
(3) | Where the arrangements include provision for requiring the payment of financial penalties, they must include arrangements for ensuring that any amount so paid is applied only in one or more of the following ways - | |
(a) | towards meeting expenses incurred by the [UK RCH] in the course of the investigation of the breach in respect of which the penalty is paid, or in the course of any appeal against the decision of the [UK RCH] in relation to that breach; | |
(b) | for the benefit of users of the [UK RCH's] facilities; | |
(c) | for charitable purposes. |
- 01/11/2007
- Past version of REC 2.15.2 before 01/11/2007
REC 2.15.3
See Notes
In determining whether a UK recognised body has effective arrangements for monitoring and enforcing compliance with its rules (and, in the case of a UK RIE, its settlement arrangements), the FSA may have regard to:
- (1) the UK recognised body's ability to:
- (a) monitor and oversee the use of its facilities;
- (b) assess its members' compliance with its rules (and settlement arrangements, where appropriate);
- (c) assess the significance of any non-compliance;
- (d) take appropriate disciplinary action against members in breach of its rules (and settlement arrangements, where appropriate);
- (e) suspend a member's access to its facilities;
- (f) refer members' or others' conduct to other appropriate authorities for possible action or further investigation;
- (g) retain authority over a member for at least one year after he has ceased to be a member;
- (h) where appropriate, enforce its rules (and settlement arrangements, where appropriate) against users (other than members) of its facilities; and
- (i) take action against suppliers of services to members (for example, warehouses) whose performance or conduct may be critical to ensuring compliance with its rules (and settlement arrangements, where appropriate);
- (2) the position, management and resources of the departments responsible for monitoring and overseeing the use of the UK recognised body's facilities and for enforcing compliance with its rules (and settlement arrangements, where appropriate); and
- (3) the arrangements made for the determination of disciplinary matters including the arrangements for disciplinary hearings and the arrangements made for appeals from the UK recognised body's decisions in those matters.
- 21/06/2001
REC 2.15.4
See Notes
In assessing whether the procedures made by a UK recognised body to investigate complaints about the users of its facilities are satisfactory, the FSA may have regard to:
- (1) whether these procedures include arrangements which enable the UK recognised body to:
- (a) acknowledge complaints promptly;
- (b) consider and investigate these complaints objectively, promptly and thoroughly;
- (c) provide a timely reply to the complainant; and
- (d) keep adequate records of complaints and investigations;
- (2) the arrangements made to enable a person who is the subject of a complaint to respond in an appropriate manner to that complaint; and
- (3) the documentation of these procedures and the arrangements made to ensure that the existence of these procedures is brought to the attention of persons who might wish to make a complaint.
- 21/06/2001
REC 2.15.5
See Notes
In assessing whether the arrangements include procedures for the fair, independent and impartial resolution of appeals against decisions of a UK recognised body, the FSA may have regard to at least the following factors:
- (1) the appeal procedures of the UK recognised body, including the composition and roles of any appeal committees or tribunals, and their relationship to the governing body;
- (2) the arrangements made to ensure prompt hearings of appeals from decisions made by the UK recognised body;
- (3) the format, organisation and rules of procedure of those hearings;
- (4) the arrangements made to select the persons to preside over those hearings and to serve as members of any appeal tribunal;
- (5) the provision for determining whether or not such hearings should be in public;
- (6) the provision made to enable an appellant to be aware of the procedure at any appeal hearing and to have the opportunity to prepare and present his case at that hearing;
- (7) the provision made for an appeal tribunal to give an explanation of its decision;
- (8) the provision for publicity for any appeals or for determining whether or not publicity should be given to the outcome of any appeal.
- 21/06/2001
REC 2.15.6
See Notes
In assessing whether a UK recognised body's arrangements include appropriate provision for ensuring the application of any financial penalties in ways described in the recognition requirement, the FSA may have regard to:
- (1) the UK recognised body's policy regarding the application of financial penalties;
- (2) the arrangements made for applying that policy in individual cases;
but the FSA does not consider that it is necessary for UK recognised bodies to follow any specific policy in order to meet this recognition requirement.
- 21/06/2001
REC 2.16
Complaints
- 01/12/2004
REC 2.16.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 9
(1) | The [UK RIE] must have effective arrangements for the investigation and resolution of complaints arising in connection with the performance of, or failure to perform, any of its regulatory functions. | |
(2) | But sub-paragraph (1) does not extend to - | |
(a) | complaints about the content of rules made by the [UK RIE], or | |
(b) | complaints about a decision against which the complainant has the right to appeal under procedures of the kind mentioned in paragraph 8(2)(b). | |
(3) | The arrangements must include arrangements for a complaint to be fairly and impartially investigated by a person independent of the [UK RIE], and for him to report on the result of his investigation to the [UK RIE] and to the complainant. | |
(4) | The arrangements must confer on the person mentioned in sub-paragraph (3) the power to recommend, if he thinks appropriate, that the [UK RIE] - | |
(a) | makes a compensatory payment to the complainant, | |
(b) | remedies the matter complained of, | |
or takes both of those steps. | ||
(5) | Sub-paragraph (3) is not to be taken as preventing the [UK RIE] from making arrangements for the initial investigation of a complaint to be conducted by the [UK RIE]. |
- 01/11/2007
- Past version of REC 2.16.1 before 01/11/2007
REC 2.16.2
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 23
(1) | The [UK RCH] must have effective arrangements for the investigation and resolution of complaints arising in connection with the performance of, or failure to perform, any of its regulatory functions. | |
(2) | But sub-paragraph (1) does not extend to - | |
(a) | complaints about the content of rules made by the [UK RCH], or | |
(b) | complaints about a decision against which the complainant has the right to appeal under procedures of the kind mentioned in paragraph 22(2)(b). | |
(3) | The arrangements must include arrangements for a complaint to be fairly and impartially investigated by a person independent of the [UK RCH], and for him to report on the result of his investigation to the [UK RCH] and to the complainant. | |
(4) | The arrangements must confer on the person mentioned in sub-paragraph (3) the power to recommend, if he thinks it appropriate, that the [UK RCH] - | |
(a) | makes a compensatory payment to the complainant, | |
(b) | remedies the matter complained of, | |
or takes both of those steps. | ||
(5) | Sub-paragraph (3) is not to be taken as preventing the [UK RCH] from making arrangements for the initial investigation of a complaint to be conducted by the [UK RCH]. |
- 01/11/2007
- Past version of REC 2.16.2 before 01/11/2007
REC 2.16.3
See Notes
In determining whether a UK recognised body has effective arrangements for the investigation and resolution of complaints arising in connection with the performance of, or failure to perform, any of its regulatory functions, the FSA may have regard to the extent to which the UK recognised body's resources and procedures enable it to:
- (1) acknowledge complaints promptly;
- (2) make an objective, prompt and thorough initial investigation of complaints;
- (3) provide a timely reply to the complainant after that initial investigation;
- (4) inform the complainant of his right to apply to the UK recognised body's complaints investigator; and
- (5) keep adequate records of complaints and investigations.
- 21/06/2001
REC 2.16.4
See Notes
In determining whether a UK recognised body's arrangements for the investigation of complaints include appropriate arrangements for the complaint to be fairly and impartially investigated by an independent person (a "complaints investigator"), the FSA may have regard to:
- (1) the arrangements made for appointing (and removing) a complaints investigator, including the terms and conditions of such an appointment and the provision for remuneration of a complaints investigator;
- (2) the complaints investigator's access to, and relationship with, the UK recognised body's governing body and key individuals;
- (3) the arrangements made for giving complainants access to the complaints investigator;
- (4) the facilities made available to the complaints investigator to enable him to pursue his investigation and prepare his report and recommendations, including access to the UK recognised body's records, key individuals and other staff (including, where appropriate suppliers, contractors or other persons to whom any functions have been outsourced and their staff); and
- (5) the arrangements made for the UK recognised body to consider the complaints investigator's report and recommendations.
- 21/06/2001
REC 2.16A
Operation of a multilateral trading facility
- 01/11/2007
REC 2.16A.1
See Notes
Schedule to the Recognition Requirements Regulations, Paragraph 9A
(1) | [A UK RIE] operating a multilateral trading facility must also operate a regulated market. | |
(2) | [A UK RIE] operating a multilateral trading facility must comply with those requirements of- | |
(a) | Chapter I of Title II of [MiFID], and | |
(b) | MiFID implementing Directive, | |
which are applicable to a market operator ... operating such a facility. | ||
(3) | The requirements of this paragraph do not apply for the purposes of section 292(3)(a) of the Act (requirements for overseas investment exchanges and overseas clearing houses). |
- 01/11/2007
REC 2.16A.2
See Notes
- 01/11/2007
REC 2.17
Recognition requirements relating to the default rules of UK recognised bodies
- 01/12/2004
REC 2.17.1
See Notes
- 15/06/2009
- Past version of REC 2.17.1 before 15/06/2009
REC 2.17.1A
See Notes
- 15/06/2009
REC 2.17.2
See Notes
Schedule to the Recognition Requirements Regulations, Part II
Paragraph 10 (Default rules in respect of market contracts) | |||
(1) | The [UK RIE] must have default rules which, in the event of a member of the [UK RIE] being or appearing to be unable to meet his obligations in respect of one or more market contracts, enable action to be taken in respect of unsettled market contracts to which he is party. | ||
(2) | The [default rules] may authorise the taking of the same or similar action in relation to a member who appears to be likely to become unable to meet his obligations in respect of one or more market contracts. | ||
(3) | The [default rules] must enable action to be taken in respect of all unsettled market contracts, other than those entered into for the purposes of or in connection with the provision of clearing services for the [UK RIE]. | ||
(4) | Sub-paragraph (5) applies where the exchange has arrangements for transacting business with, or in relation to common members of, a [recognised clearing house] or another [recognised investment exchange]. | ||
(5) | A [UK RIE] must have [default rules] which in the event of the clearing house or the investment exchange being or appearing to be unable to meet its obligations in respect of one or more [market contracts], enable action to be taken in respect of unsettled [market contracts] to which that person is a party. | ||
Paragraph 11 (Content of rules) | |||
(1) | This paragraph applies as regards contracts falling within section 155(2)(a) of the Companies Act [1989]. | ||
(2) | The [default rules] must provide - | ||
(a) | for all rights and liabilities between those party as principal to unsettled market contracts to which the defaulter is party as principal to be discharged and for there to be paid by one party to the other such sum of money (if any) as may be determined in accordance with the [default rules]; | ||
(b) | for the sums so payable in respect of different contracts between the same parties to be aggregated or set off so as to produce a net sum; and | ||
(c) | for the certification by or on behalf of the [UK RIE] of the net sum payable or, as the case may be, of the fact that no sum is payable. | ||
(3) | The reference in sub-paragraph (2) to rights and liabilities between those party as principal to unsettled market contracts does not include rights and liabilities - | ||
(a) | in respect of margin; or | ||
(b) | arising out of a failure to perform a market contract. | ||
(4) | The [default rules] may make the same or similar provision, in relation to [designated non-members] designated in accordance with the procedures mentioned in sub-paragraph (5), as in relation to members of the [UK RIE]. | ||
(5) | If such provision is made as is mentioned in sub-paragraph (4), the [UK RIE] must have adequate procedures - | ||
(a) | for designating the persons, or descriptions of person, in respect of whom action may be taken; | ||
(b) | for keeping under review the question which persons or descriptions of person should be or remain so designated; and | ||
(c) | for withdrawing such designation. | ||
(6) | The procedures must be designed to secure that - | ||
(a) | a person is not, or does not remain, designated if failure by him to meet his obligations in respect of one or more market contracts would be unlikely adversely to affect the operation of the market; and | ||
(b) | a description of persons is not, or does not remain, designated if failure by a person of that description to meet his obligations in respect of one or more market contracts would be unlikely adversely to affect the operation of the market. | ||
(7) | The [UK RIE] must have adequate arrangements - | ||
(a) | for bringing a designation or withdrawal of designation to the attention of the person or description of persons concerned; and | ||
(b) | where a description of persons is designated, or the designation of a description of persons is withdrawn, for ascertaining which persons fall within that description. | ||
Paragraph 12 (Content of rules) | |||
(1) | This paragraph applies as regards contracts falling within section 155(2)(b) or (c) of the Companies Act [1989]. | ||
(2) | The [default rules] must provide - | ||
(a) | for all rights and liabilities of the defaulter under or in respect of unsettled market contracts to be discharged and for there to be paid by or to the defaulter such sum of money (if any) as may be determined in accordance with the [default rules]; | ||
(b) | for the sums so payable by or to the defaulter in respect of different contracts entered into by the defaulter in one capacity for the purposes of section 187 of the Companies Act [1989] to be aggregated or set off so as to produce a net sum; | ||
(bb) | if relevant, for that sum to be aggregated with, or set off against, any sum owed by or to the investment exchange by or to AP under an indemnity given or reimbursement or similar obligation in respect of a margin set off agreement in which the defaulter chose to participate so as to produce a net sum; | ||
(c) | for the net sum referred to in [(2)](b) or, if relevant, the net sum referred to in [(2)](bb) - | ||
(i) | if payable by the defaulter to the exchange, to be set off against - | ||
(aa) any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property); | |||
(bb) to the extent (if any) that any sum remains after set off under (aa), any default fund contribution provided by the defaulter remaining after any application of such contribution; | |||
(ii) | to the extent (if any) that any sum remains after set off under (i), to be paid from such other funds, including the default fund, or resources as the exchange may apply under its default rules; | ||
(iii) | if payable by the exchange to the defaulter, to be aggregated with - | ||
(aa) any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property); | |||
(bb) any default fund contribution provided by the defaulter remaining after any application of such contribution; and | |||
(d) | for the certification by or on behalf of the [UK RIE] of the sum finally payable or, as the case may be, of the fact that no sum is payable. | ||
(2A) | In sub-paragraph (2), "margin set off agreement" means an agreement between the exchange and AP permitting any eligible position to which the Participant Member is party with the exchange and any eligible position to which the Participant Member is party with AP to be taken into account in calculating a net sum owed by or to the Participant Member to either the exchange or AP and/or margin to be provided to, either or both, the exchange and AP. | ||
(2B) | In sub-paragraph (2) - "AP" means a [recognised clearing house] or another [recognised investment exchange] of whom a Participant Member is a member; "eligible position" means any position which may be included in the set off calculation; "Participant Member" means a person who (a) is a member of the exchange; (b) is a member or participant of AP; and (c) chooses to participate, in accordance with the rules of the exchange, in such agreement. |
||
(2C) | The property, contribution, funds or resources referred to in (2)(c), against which the net sum is to be set off (or with which it is to be aggregated) are subject to any unsatisfied claims arising out of the default of a defaulter before the default in relation to which the calculation is being made. | ||
(3) | The reference in sub-paragraph (2) to the rights and liabilities of a defaulter under or in respect of an unsettled market contract includes (without prejudice to the generality of that provision) rights and liabilities arising in consequence of action taken under provisions of the [default rules] authorising - | ||
(a) | the effecting by the [UK RIE] of corresponding contracts in relation to unsettled market contracts to which the defaulter is party; | ||
(b) | the transfer of the defaulter's position under an unsettled market contract to another member of the [UK RIE]; | ||
(c) | the exercise by the UK RIE of any option granted by an unsettled market contract. | ||
(4) | A "corresponding contract" means a contract on the same terms (except as to price or premium) as the market contract but under which the person who is the buyer under the market contract agrees to sell and the person who is the seller under the market contract agrees to buy. | ||
(5) | Sub-paragraph (4) applies with any necessary modifications in relation to a market contract which is not an agreement to sell. | ||
(6) | The reference in sub-paragraph (2) to the rights and liabilities of a defaulter under or in respect of an unsettled market contract does not include, where he acts as agent, rights or liabilities of his arising out of the relationship of principal and agent. | ||
Paragraph 12A (Content of rules) | |||
The rules of the [UK RIE] must provide that, in the event of a default, any default fund contribution provided by the defaulter shall only be used in accordance with paragraph 12(2)(c)(i) or (ii). | |||
Paragraph 13 (Notification to other parties affected) | |||
The [UK RIE] must have adequate arrangements for ensuring that - | |||
(a) | in the case of unsettled market contracts with a defaulter acting as principal, parties to the contract are notified as soon as reasonably practicable of the default and of any decision taken under the [default rules] in relation to contracts to which they are a party; and | ||
(b) | in the case of unsettled market contracts with a defaulter acting as agent, parties to the contract and the defaulter's principals are notified as soon as reasonably practicable of the default and of the identity of the other parties to the contract. | ||
Paragraph 14 (Cooperation with other authorities) | |||
The [UK RIE] must be able and willing to cooperate, by the sharing of information and otherwise, with the Secretary of State, any relevant office-holder and any other authority or body having responsibility for any matter arising out of, or connected with, the default of a member of the [UK RIE] or any [designated non-member] or the default of a [recognised clearing house] or another [recognised investment exchange]. | |||
Paragraph 15 (Margin) | |||
(1) | Where the [UK RIE] provides clearing services, the [default rules] of the [UK RIE] must provide that in the event of a default, margin provided by the defaulter for his own account is not to be applied to meet a shortfall on a client account other than a client account of the defaulter. | ||
(2) | This paragraph is without prejudice to the requirements of any rules relating to clients' money made by the [FSA] under sections 138 and 139 of the Act. | ||
(3) | For the purposes of this paragraph, "client account of the defaulter" means an account held by the [UK RIE] in the name of the defaulter in which relevant transactions effected by the defaulter have been recorded. | ||
(4) | In sub-paragraph (3) "relevant transaction" has the same meaning as in regulation 16(1) of the Financial Markets and Insolvency Regulations 1991. |
- 15/06/2009
- Past version of REC 2.17.2 before 15/06/2009
REC 2.17.3
See Notes
Schedule to the Recognition Requirements Regulations, Part IV
Paragraph 24 (Default rules in respect of market contracts) | |||
(1) | The [UK RCH] must have default rules which, in the event of a member of the [UK RCH] being or appearing to be unable to meet his obligations in respect of one or more market contracts, enable action to be taken to close out his position in relation to all unsettled market contracts to which he is a party. | ||
(2) | The [default rules] may authorise the taking of the same or similar action where a member appears to be likely to become unable to meet his obligations in respect of one or more market contracts. | ||
(3) | Sub-paragraph (4) applies where the clearing house has arrangements for transacting business with, or in relation to common members of, a [recognised investment exchange] or another [recognised clearing house]. | ||
(4) | A [UK RCH] must have [default rules] which in the event of the investment exchange or the clearing house being or appearing to be unable to meet its obligations in respect of one or more [market contracts], enable action to be taken in respect of unsettled [market contracts] to which that person is a party. | ||
Paragraph 25 (Content of rules) | |||
(1) | The [default rules] must provide - | ||
(a) | for all rights and liabilities of the defaulter under or in respect of unsettled market contracts to be discharged and for there to be paid by or to the defaulter such sum of money (if any) as may be determined in accordance with the [default rules]; | ||
(b) | for the sums so payable by or to the defaulter in respect of different contracts entered into by the defaulter in one capacity for the purposes of section 187 of the Companies Act [1989] to be aggregated or set off so as to produce a net sum; | ||
(bb) | if relevant, for that sum to be aggregated with, or set off against, any sum owed by or to the clearing house by or to AP under an indemnity given or reimbursement or similar obligation in respect of a margin set off agreement in which the defaulter chose to participate so as to produce a net sum; | ||
(c) | for the net sum referred to in [(1)](b) or, if relevant, the net sum referred to in [(1)](bb) | ||
(i) | if payable by the defaulter to the clearing house, to be set off against - | ||
(aa) any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property); | |||
(bb) to the extent (if any) that any sum remains after set off under (aa), any default fund contribution provided by the defaulter remaining after any application of such contribution; | |||
(ii) | to the extent (if any) that any sum remains after set off under (i), to be paid from such other funds, including the default fund, or resources as the clearing house may apply under its [default rules]; | ||
(iii) | if payable by the clearing house to the defaulter, to be aggregated with | ||
(aa) any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property); | |||
(bb) any default fund contribution provided by the defaulter remaining after any application of such contribution; and | |||
(d) | for the certification by or on behalf of the [UK RCH] of the sum finally payable or, as the case may be, of the fact that no sum is payable. | ||
(1A) | In sub-paragraph (1), "margin set off agreement" means an agreement between the clearing house and AP permitting any eligible position to which the Participant Member is party with the clearing house and any eligible position to which the Participant Member is party with AP to be taken into account in calculating a net sum owed by or to the Participant Member to or by either the clearing house or AP and/or margin to be provided to, either or both, the clearing house and AP. | ||
(1B) | In sub-paragraph (1A) - "AP" means a [recognised investment exchange] or another [recognised clearing house] of whom a Participant Member is a member; "eligible position" means any position which may be included in the set off calculation; "Participant Member" means a person who - (a) is a member of the clearing house; (b) is a member or participant of AP; and (c) chooses to participate, in accordance with the rules of the clearing house, in such agreement. |
||
(1C) | The property, contribution, funds or resources referred to in (1)(c), against which the net sum is to be set off (or with which it is to be aggregated) are subject to any unsatisfied claims arising out of the default of a defaulter before the default in relation to which the calculation is being made. | ||
(2) | The reference in sub-paragraph (1) to the rights and liabilities of a defaulter under or in respect of an unsettled market contract includes (without prejudice to the generality of that provision) rights and liabilities arising in consequence of action taken under provisions of the [default rules] authorising - | ||
(a) | the effecting by the UK RCH of corresponding contracts in relation to unsettled market contracts to which the defaulter is party; | ||
(b) | the transfer of the defaulter's position under an unsettled market contract to another member of the [UK RCH]; | ||
(c) | the exercise by the [UK RCH] of any option granted by an unsettled market contract. | ||
(3) | A "corresponding contract" means a contract on the same terms (except as to price or premium) as the market contract but under which the person who is the buyer under the market contract agrees to sell and the person who is the seller under the market contract agrees to buy. | ||
(4) | Sub-paragraph (3) applies with any necessary modifications in relation to a market contract which is not an agreement to sell. | ||
(5) | The reference in sub-paragraph (1) to the rights and liabilities of a defaulter under or in respect of an unsettled market contract does not include, where he acts as agent, rights or liabilities of his arising out of the relationship of principal and agent. | ||
Paragraph 25A (Content of rules) | |||
The rules of the [UK RCH] must provide that in the event of a default, any default fund contribution provided by the defaulter shall only be used in accordance with paragraph 25(1)(c)(i) or (ii). | |||
Paragraph 26 (Notification to other parties affected) The [UK RCH] must have adequate arrangements for ensuring that parties to unsettled market contracts with a defaulter are notified as soon as reasonably practicable of the default and of any decision taken under the [default rules] in relation to contracts to which they are a party. |
|||
Paragraph 27 (Cooperation with other authorities) The [UK RCH] must be able and willing to cooperate, by the sharing of information and otherwise, with the Secretary of State, any relevant office-holder and any other authority or body having responsibility for any matter arising out of or connected with the default of a member of the [UK RCH] or the default of a [recognised investment exchange] or another [recognised clearing house]. |
|||
Paragraph 28 (Margin) | |||
(1) | The [default rules] of the [UK RCH] must provide that in the event of a default, margin provided by the defaulter for his own account is not to be applied to meet a shortfall on a client account other than a client account of the defaulter. | ||
(2) | This paragraph is without prejudice to the requirements of any rules relating to clients' money made by the [FSA] under sections 138 and 139 of the Act. | ||
(3) | For the purposes of this paragraph, "client account of the defaulter" means an account held by the [UK RCH] in the name of the defaulter in which relevant transactions effected by the defaulter have been recorded. | ||
(4) | In sub-paragraph (3) "relevant transaction" has the same meaning as in regulation 16(1) of the Financial Markets and Insolvency Regulations 1991. |
- 15/06/2009
- Past version of REC 2.17.3 before 15/06/2009
REC 2.17.4
See Notes
- 15/06/2009
- Past version of REC 2.17.4 before 15/06/2009
REC 2.17.5
See Notes
- 15/06/2009
- Past version of REC 2.17.5 before 15/06/2009
REC 2.17.6
See Notes
- 21/06/2001
Export chapter as
REC 2A
Recognised Auction Platforms
REC 2A.1
Introduction
- 22/12/2011
REC 2A.1.1
See Notes
- 22/12/2011
REC 2A.1.2
See Notes
- 22/12/2011
REC 2A.1.3
See Notes
- 22/12/2011
REC 2A.2
Method of satisfying the RAP recognition requirements
- 22/12/2011
REC 2A.2.1
See Notes
(1) | In considering whether [an RAP] or applicant satisfies the [RAP recognition requirements], the [FSA] may- | |
(a) | treat compliance by the [RAP] or applicant with the [recognition requirements or MiFID implementing requirements] applying to it as a [UK RIE] as conclusive evidence that the [RAP] or applicant satisfies any equivalent [RAP recognition requirements] applying to it under these [RAP regulations], taking into account any arrangements that would be necessary to meet the [RAP recognition requirements], and | |
(b) | take into account all relevant circumstances including the constitution of the person concerned. | |
(2) | Without prejudice to the generality of paragraph (1), [an RAP] or applicant may satisfy [RAP recognition requirements] by making arrangements for functions to be performed on its behalf by any other person. | |
(3) | Where [an RAP] or applicant makes arrangements of the kind mentioned in paragraph (2), the arrangements do not affect the responsibility imposed by these [RAP regulations] on the [RAP] or applicant to satisfy the [RAP recognition requirements], but it is in addition [an RAP recognition requirement] applying to the [RAP] or applicant that the person who performs (or is to perform) the functions is a fit and proper person who is able and willing to perform them. |
- 22/12/2011
REC 2A.2.2
See Notes
- 22/12/2011
REC 2A.3
Guidance on RAP recognition requirements
- 22/12/2011
REC 2A.3.1
See Notes
- 22/12/2011
REC 2A.3.2
See Notes
Table: Guidance on RAP recognition requirements
Column A REC 2 guidance which applies to an RAP |
Column B Modification to REC 2 guidance for an RAP |
Column C Relevant RAP recognition requirement |
REC 2.2.2 G to REC 2.2.7 G (Relevant circumstances and Outsourcing) | Reg 13 | |
REC 2.3.3 G to REC 2.3.9 G (Financial resources) | Reg 14 | |
REC 2.4.3 G to REC 2.4.6 G (Suitability) | In addition to the matters set out in REC 2.4.3 G to REC 2.4.6 G, the FSA will have regard to whether a key individual has been allocated responsibility for overseeing the auction platform of the UK recognised body. | Reg 15 |
REC 2.5.3 G to REC 2.5.20 G (Systems and controls and conflicts) and REC 2.5A (Guidance on Public Interest Disclosure Act: Whistleblowing) | Reg 16 and 17(2)(f) | |
REC 2.6.26 G to REC 2.6.34 G (Safeguards for investors) | Reg 17 | |
REC 2.7.3 G to REC 2.7.4 G (Access to facilities) | The FSA shall have regard to whether an RAP provides access to bid at auctions only to those persons eligible to bid under article 18 of the auction regulation. | Reg 17(2)(a) and 20 |
REC 2.8.3 G to REC 2.8.4 G (Settlement and clearing services) | Reg 17(2)(d) and 21 | |
REC 2.9.3 G to REC 2.9.4 G (Transaction recording) | Reg 17(2)(e) | |
REC 2.10.3 G to REC 2.10.4 G (Financial crime and market abuse) | Reg 17(2)(g) | |
REC 2.11.3 G to REC 2.11.4 G (Custody) | REC 2.11.4 G is replaced with the following for an RAP: Where an RAP arranges for other persons to provide services for the safeguarding and administration services of assets belonging to users of its facilities, it will also need to satisfy the RAP recognition requirement in regulation 17(2)(h) of the RAP regulations (see REC 2A.2.1 UK). |
Reg 17(2)(h) |
REC 2.12.11 G to REC 2.12.12 G (Availability of relevant information) | REC 2.12.11 G to REC 2.12.12 G are replaced with the following for an RAP: REC 2.12.11 G In determining whether appropriate arrangements have been made to make relevant information available to persons engaged in dealing in emissions auction products the FSA may have regard to: (1) the extent to which auction bidders are able to obtain information in a timely fashion about the terms of those emissions auction products and the terms on which they will be auctioned, either through accepted channels for dissemination of information or through other regularly and widely accessible communication media; (2) what restrictions, if any, there are on the dissemination of relevant information to auction bidders; and (3) whether relevant information is, or can be, kept to restricted groups of persons in such a way as to facilitate or encourage market abuse. REC 2.12.12 G An RAP does not need to maintain its own arrangements for providing information on the terms of emissions auction products to auction bidders where it has made adequate arrangements for other persons to do so on its behalf or there are other effective and reliable arrangements for this purpose. |
Reg 17(2)(c) |
REC 2.13.3 G to REC 2.13.6 G (Promotion and maintenance of standards) | Reg 18 | |
REC 2.14.3 G to REC 2.14.6 G (Rules and consultation) | Reg 19 | |
REC 2.15.3 G to REC 2.15.6 G (Discipline) | Reg 22 | |
REC 2.16.3 G to REC 2.16.4 G (Complaints) | Reg 23 |
- 27/07/2012
- Past version of REC 2A.3.2 before 27/07/2012
Export chapter as
REC 3
Notification rules for UK recognised bodies
REC 3.1
Application and purpose
- 01/12/2004
Application
REC 3.1.1
See Notes
- (1) The notification rules in this chapter, which are made under section 293 of the Act (Notification requirements), apply to all UK recognised bodies.
- (2) The rules relating to the form and method of notification in REC 3.2 also apply to overseas recognised bodies.
- 21/06/2001
REC 3.1.2
See Notes
- 21/06/2001
REC 3.1.3
See Notes
- 21/06/2001
REC 3.1.3A
See Notes
- 22/12/2011
Purpose
REC 3.1.4
See Notes
- 21/06/2001
REC 3.2
Form and method of notification
- 01/12/2004
Form of notification
REC 3.2.1
See Notes
- 21/06/2001
Method of notification
REC 3.2.2
See Notes
Unless otherwise stated in the notification rule, a written notification required from a recognised body under any notification rule must be:
- (1) given to, or addressed for the attention of, the recognised body's usual supervisory contact at the FSA;
- (2) delivered to the FSA by one of the methods in REC 3.2.3 R.
- 21/06/2001
REC 3.2.3
See Notes
Methods of notification
Method of delivery | |
(1) | Post to the address in REC 3.2.4 R |
(2) | Leaving the notification at the address in REC 3.2.4 R and obtaining a time-stamped receipt |
(3) | Electronic mail to an address for the recognised body's usual supervisory contact at the FSA and obtaining an electronic confirmation of receipt |
(4) | Hand delivery to the recognised body's usual supervisory contact at the FSA |
(5) | Fax to a fax number for the recognised body's usual supervisory contact at the FSA, provided that the FSA receives a copy of the notification by one of methods (1) - (4) in this table within five business days after the date of the faxed notification |
- 21/06/2001
REC 3.2.4
See Notes
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
- 21/06/2001
Timely notification
REC 3.2.5
See Notes
If a notification rule requires notification within a specified period:
- (1) the recognised body must give the notification so as to be received by the FSA no later than the end of that period; and
- (2) if the end of that period falls on a day which is not a business day, the notification must be given so as to be received by the FSA no later than the first business day after the end of that period.
- 21/06/2001
Service of Notice Regulations
REC 3.2.6
See Notes
- 21/06/2001
REC 3.3
Waivers
- 01/12/2004
Statutory power
REC 3.3.1
See Notes
- 21/06/2001
- 21/06/2001
REC 3.3.3
See Notes
Under section 294(4) of the Act, before the FSA may give a waiver of notification rules, it must be satisfied that:
- (1) compliance by the recognised body with those notification rules, or with those rules as unmodified, would be unduly burdensome or would not achieve the purpose for which those rules were made; and
- (2) the waiver would not result in undue risk to persons whose interests those rules are designed to protect.
- 21/06/2001
Applications
REC 3.3.4
See Notes
- 21/06/2001
REC 3.3.5
See Notes
There is no application form, but applicants should make their application formally and in writing and in accordance with any direction the FSA may make under section 294(2) of the Act. Each application should set out at least:
- (1) full particulars of the waiver which is requested;
- (2) the reason why the recognised body believes that the criteria set out in section 294(4) (and described in REC 3.3.3 G) would be met, if this waiver were granted; and
- (3) where the recognised body believes that these criteria would be met if the FSA gave a waiver under section 294 subject to any condition, particulars of the kind of condition contemplated.
- 21/06/2001
REC 3.3.6
See Notes
- 21/06/2001
Waivers
REC 3.3.7
See Notes
Any waiver given by the FSA under section 294 of the Act will be made in writing, stating:
- (1) the name of the recognised body in respect of which the waiver is made;
- (2) the notification rules which are to be waived or modified in respect of that body;
- (3) where relevant, the manner in which any rule is to be modified;
- (4) any condition or time limit to which the waiver is subject; and
- (5) the date from which the waiver is to take effect.
- 21/06/2001
REC 3.3.8
See Notes
- 21/06/2001
REC 3.3.9
See Notes
- 21/06/2001
Reviews of waivers
REC 3.3.10
See Notes
- 21/06/2001
REC 3.4
Key individuals and internal organisation
- 01/12/2004
Purpose
REC 3.4.1
See Notes
- 21/06/2001
Key individuals
REC 3.4.2
See Notes
- 01/11/2007
- Past version of REC 3.4.2 before 01/11/2007
REC 3.4.2A
See Notes
Where, in relation to a UK RIE a proposal has been made to appoint or elect a person as a key individual, that UK RIE must at least 30 days before the date of the appointment or election give notice of that event, and give the information specified for the purposes of this rule in REC 3.4.4A R to the FSA.
[Note: Article 37(1), paragraph 1, second sentence of MiFID]
- 01/11/2007
REC 3.4.2B
See Notes
- 01/11/2007
REC 3.4.3
See Notes
- (1) Key individuals include the persons who, under the operational or managerial arrangements of the UK recognised body, are appointed to manage the departments responsible for carrying out its relevant functions, whether or not they are members of its governing body. A person appointed to carry out specific tasks, such as to conduct a particular investigation into a specific set of facts, would not usually be a key individual.
- (2) A key individual need not be an employee of a UK recognised body. For example, an employee of an undertaking in the same group or a self-employed contractor of a UK recognised body might be a key individual, depending on the role he plays in that body.
- (3) A department of a UK recognised body should be regarded as responsible for carrying out a relevant function if it is responsible for any activity or activities which form a significant part of a relevant function or which make a significant contribution to the performance of a relevant function.
- (4) The FSA does not need to be notified where minor changes are made to the responsibilities of a key individual, but where a major change in responsibilities is made which amounts to a new appointment, the FSA should be notified under REC 3.4.2 R.
- 21/06/2001
REC 3.4.4
See Notes
The following information is specified for the purposes of REC 3.4.2 R:
- (1) where a person has been appointed or elected as a key individual:
- (a) that person's name;
- (b) his date of birth;
- (c) a description of the responsibilities which he will have in the post to which he has been appointed or elected, including for a UK RIE which operates an RAP where the person has responsibilities both in the UK RIE and RAP, a description of the responsibilities he has in respect of each body; or
- (2) where a person has resigned as or otherwise ceased to be a key individual, that person's name.
- 22/12/2011
- Past version of REC 3.4.4 before 22/12/2011
REC 3.4.4A
See Notes
The following information is specified for the purposes of REC 3.4.2A R:
- (1) that person's name;
- (2) his date of birth;
- (3) a description of the responsibilities which he will have in the post to which he is to be appointed or elected.
[Note: Article 37(1), paragraph 1, second sentence of MiFID]
- 01/11/2007
Standing committees
REC 3.4.5
See Notes
Where the governing body of a UK recognised body delegates any of its functions (which relate to that UK recognised body's relevant functions) to a standing committee, or appoints a standing committee to manage or oversee the carrying out of any of that UK recognised body's relevant functions, that UK recognised body must immediately notify the FSA of that event and give the FSA the following information:
- (1) the names of the members of that standing committee; and
- (2) the terms of reference of that standing committee (including a description of any powers delegated to that committee and any conditions or limitations placed on the exercise of those powers).
- 21/06/2001
REC 3.4.6
See Notes
Where:
- (1) there is any change in the composition or the terms of reference of any standing committee referred to in REC 3.4.5 R; or
- (2) any such committee is dissolved;
the UK recognised body must immediately notify the FSA of that event and give particulars of any change referred to in (1) to the FSA.
- 21/06/2001
REC 3.4.7
See Notes
- (1) Standing committees include permanent committees with executive, supervisory, policy-making or rule-making responsibilities. Committees appointed for particular tasks or committees established for purely consultative or advisory purposes would not usually be considered to be standing committees.
- (2) Committees which include persons who are not members of the governing body can be standing committees.
- 21/06/2001
REC 3.5
Disciplinary action and events relating to key individuals
- 01/12/2004
Disciplinary action
REC 3.5.1
See Notes
Where any key individual of a UK recognised body:
- (1) is the subject of any disciplinary action because of concerns about his alleged misconduct;
- (2) resigns as a result of an investigation into his alleged misconduct; or
- (3) is dismissed for misconduct;
that body must immediately give the FSA notice of that event, and give the information specified for the purposes of this rule in REC 3.5.2 R.
- 21/06/2001
REC 3.5.2
See Notes
The following information is specified for the purposes of REC 3.5.1 R:
- (1) the name of the key individual and his responsibilities within the UK recognised body;
- (2) details of the acts or alleged acts of misconduct by that key individual; and
- (3) details of any disciplinary action which has been or is proposed to be taken by that body in relation to that key individual.
- 21/06/2001
Other events
REC 3.5.3
See Notes
Where a UK recognised body becomes aware that any of the following events has occurred in relation to a key individual, it must immediately give the FSA notice of that event:
- (1) a petition for bankruptcy is presented (or similar or analogous proceedings under the law of a jurisdiction outside the United Kingdom are commenced) against that key individual; or
- (2) a bankruptcy order (or a similar or analogous order under the law of a jurisdiction outside the United Kingdom) is made against him; or
- (3) he enters into a voluntary arrangement (or a similar or analogous arrangement under the law of a jurisdiction outside the United Kingdom) with his creditors.
- 21/06/2001
REC 3.6
Constitution and governance
- 01/12/2004
REC 3.6.1
See Notes
Where a UK recognised body is to circulate any notice or other document proposing any amendment to its memorandum or articles of association (or other similar agreement or document relating to its constitution) to:
that UK recognised body must give notice of that proposed amendment, and give the information specified for the purposes of this rule in REC 3.6.2 R to the FSA, at the same time as that notice or document is circulated.
- 21/06/2001
REC 3.6.2
See Notes
The following information is specified for the purposes of REC 3.6.1 R:
- (1) the proposed amendments referred to in REC 3.6.1 R;
- (2) the reasons for the proposal; and
- (3) a description of the group or class of persons to whom the proposal is to be circulated.
- 21/06/2001
REC 3.6.3
See Notes
- 21/06/2001
REC 3.6.4
See Notes
- 21/06/2001
REC 3.6.5
See Notes
- 21/06/2001
REC 3.6.6
See Notes
Where any change is made to an agreement which relates to the constitution or governance of a UK recognised body:
- (1) between that UK recognised body and another person; or
- (2) between the owners of that UK recognised body; or
- (3) between the owners of that UK recognised body and another person; or
- (4) between other persons;
that UK recognised body must give the FSA notice of that event as soon as it is aware of it, and give written particulars of that change and of the date on which it is to become or became effective.
- 21/06/2001
REC 3.6.7
See Notes
- 21/06/2001
REC 3.7
Auditors
- 01/12/2004
REC 3.7.1
See Notes
Where the auditors of a UK recognised body cease to act as such, that UK recognised body must immediately give the FSA notice of that event, and the following information:
- (1) whether the appointment of those auditors expired or was terminated;
- (2) the date on which they ceased to act; and
- (3) if it terminated, or decided not to renew, their appointment, its reasons for taking that action or decision.
- 21/06/2001
REC 3.7.2
See Notes
Where a UK recognised body appoints new auditors, that body must immediately give the FSA notice of that event, and the following information:
- (1) the name and business address of those new auditors; and
- (2) the date of their appointment as auditors.
- 21/06/2001
REC 3.8
Financial and other information
- 01/12/2004
REC 3.8.1
See Notes
A UK recognised body must give the FSA:
- (1) a copy of its annual report and accounts; and
- (2) a copy of the consolidated annual report and accounts:
- (a) of any group in which the UK recognised body is a subsidiary undertaking; or
- (b) (if the UK recognised body is not a subsidiary undertaking in any group) of any group of which the UK recognised body is a parent undertaking;
no later than the time specified for the purpose of this rule in REC 3.8.2 R.
- 21/06/2001
REC 3.8.2
See Notes
The time specified for the purpose of REC 3.8.1 R is the latest of:
- (1) four months after the end of the financial year to which the document which is to be given to the FSA relates; or
- (2) the time when the documents described in REC 3.8.1 R (1) or REC 3.8.1 R (2)(b) are sent to the members or shareholders of the UK recognised body; or
- (3) the time when the document described in REC 3.8.1 R (2)(a) are sent to the shareholders in a parent undertaking of the group to which that document relates.
- 21/06/2001
REC 3.8.3
See Notes
- 21/06/2001
REC 3.8.4
See Notes
A UK recognised body must give the FSA a copy of:
- (1) its quarterly management accounts; or
- (2) its monthly management accounts;
within one month of the end of the period to which they relate.
- 21/06/2001
REC 3.8.5
See Notes
- 21/06/2001
REC 3.8.6
See Notes
A UK recognised body must give the FSA:
- (1) a statement of its anticipated income, expenditure and cashflow for each financial year; and
- (2) an estimated balance sheet showing its position as it is anticipated at the end of each financial year;
before the beginning of that financial year.
- 21/06/2001
REC 3.8.7
See Notes
- 21/06/2001
REC 3.9
Fees and incentive schemes
- 01/12/2004
REC 3.9.1
See Notes
- 21/06/2001
REC 3.9.2
See Notes
A UK recognised body must give the FSA a summary of:
- 21/06/2001
REC 3.10
Complaints
- 01/12/2004
REC 3.10.1
See Notes
Where a UK recognised body's complaints investigator has investigated a complaint arising in connection with the performance of, or failure to perform, any of its regulatory functions, and that complaints investigator has made a recommendation in respect of that complaint that the UK recognised body should:
- (1) make a compensatory payment to any person; or
- (2) remedy the matter which was the subject of that complaint;
the UK recognised body must immediately notify the FSA of that event, and give the FSA a copy of the complaints investigator's report and particulars of his recommendations as soon as that report or those recommendations are available to it.
- 21/06/2001
REC 3.11
Insolvency events
- 01/12/2004
REC 3.11.1
See Notes
On:
- (1) the presentation of a petition for the winding up of a UK recognised body (or the commencement of any similar or analogous proceedings under the law of a jurisdiction outside the United Kingdom); or
- (2) the appointment of a receiver, administrator, liquidator, trustee or sequestrator of assets of that body (or of any similar or analogous appointment under the laws of a jurisdiction outside the United Kingdom); or
- (3) the making of a voluntary arrangement by that body with its creditors (or of any similar or analogous arrangement under the law of a jurisdiction outside the United Kingdom);
that body must immediately give the FSA notice of that event.
- 21/06/2001
REC 3.12
Legal proceedings
- 01/12/2004
REC 3.12.1
See Notes
If any civil or criminal legal proceedings are instituted against a UK recognised body, it must, unless REC 3.12.2 R applies, immediately give notice of that event and give the following information to the FSA:
- (1) in the case of civil proceedings, the name of the claimant, particulars of the claim, the amount of damages and any other remedy sought by the claimant, and particulars of any allegation that any act or omission of that body was in bad faith; and
- (2) in the case of criminal proceedings, particulars of the offence with which that body is charged.
- 21/06/2001
REC 3.12.2
See Notes
A UK recognised body is not required to give notice of civil legal proceedings or information about them to the FSA under REC 3.12.1 R, where:
- (1) the amount of damages claimed would not significantly affect that UK recognised body's financial resources, if the claim were successful;
- (2) the claim would not have a significant adverse effect on the reputation and standing of that body, if that claim were successful; and
- (3) the claim does not relate to that body's regulatory functions.
- 21/06/2001
REC 3.13
Delegation of relevant functions
- 01/12/2004
REC 3.13.1
See Notes
- (1) The purpose of REC 3.13 is to enable the FSA to monitor any significant instances where UK recognised bodies outsource their functions to other persons (as permitted under Regulation 6 of the Recognition Requirements Regulations or, in relation to an RAP, under regulation 13 of the RAP regulations. See REC 2.2 and REC 2A.2).
- (2) The FSA does not need to be notified of every instance of outsourcing by a UK recognised body, but only where an activity or activities which form a significant part of a relevant function or which make a significant contribution to the performance of a relevant function are outsourced.
- 22/12/2011
- Past version of REC 3.13.1 before 22/12/2011
REC 3.13.2
See Notes
Where a UK recognised body makes an offer or agrees to delegate any of its relevant functions to another person, it must immediately give the FSA notice of that event, and:
- (1) inform the FSA of the reasons for that delegation or proposed delegation;
- (2) inform the FSA of the reasons why it is satisfied that it will continue to meet the recognition requirements or (for an RAP) RAP recognition requirements following that delegation;
- (3) where it makes such an offer by issuing a written invitation to tender to another body or person, give the FSA a copy of that invitation to tender; and
- (4) where it makes such an agreement, give the FSA a copy of that agreement.
- 22/12/2011
- Past version of REC 3.13.2 before 22/12/2011
REC 3.13.3
See Notes
- 21/06/2001
REC 3.14
Products, services and normal hours of operation
- 01/12/2004
Purpose
REC 3.14.1
See Notes
- 21/06/2001
Products and services
REC 3.14.2
See Notes
Where a UK RIE proposes to admit to trading (or to cease to admit to trading) by means of its facilities:
it must give the FSA notice of that event, and the information specified for the purposes of this rule in REC 3.14.6 R to the FSA, at the same time as that proposal is first formally communicated to its members or shareholders (or any group or class of them).
- 21/06/2001
REC 3.14.2A
See Notes
When a UK RIE removes a financial instrument from trading on a regulated market, it must immediately give the FSA notice of that event and relevant information including particulars of that financial instrument and the reasons for the action taken.
[Note: Article 41(1), paragraph 2 of MiFID]
- 01/11/2007
REC 3.14.3
See Notes
Where a UK recognised body proposes to provide (or to cease to provide) clearing services in respect of:
it must, unless REC 3.14.4 R applies, give the FSA notice of that event and the information specified for the purposes of this rule in REC 3.14.6 R, at the same time as that proposal is first formally communicated to its members or shareholders (or any group or class of them).
- 21/06/2001
REC 3.14.4
See Notes
- 21/06/2001
REC 3.14.5
See Notes
- 21/06/2001
REC 3.14.6
See Notes
The following information is specified for the purposes of REC 3.14.2 R and REC 3.14.3 R:
- (1) a description of the specified investment to which the proposal relates;
- (2) where that specified investment is a derivative, the proposed terms of that derivative; and
- (3) in the case of a UK RIE which is admitting that specified investment to trading, the name of any RCH which will provide clearing services in respect of that specified investment under an agreement with that UK RIE.
- 21/06/2001
REC 3.14.7
See Notes
Where:
- (1) a UK RIE proposes to amend the standard terms of any derivative admitted to trading by means of its facilities; or
- (2) a UK recognised body proposes to amend the standard terms relating to the provision of clearing services for any derivative in respect of which it provides clearing services;
it must give the FSA notice of that event, and written particulars of those proposed amendments, at the same time as that proposal is first formally communicated to its members or shareholders (or any group or class of them).
- 21/06/2001
REC 3.14.8
See Notes
- 21/06/2001
REC 3.14.9
See Notes
The following information is specified for the purposes of REC 3.14.8 R:
- (1) a description of the assets (or types of assets) to which the proposal relates; and
- (2) the date or dates on which arrangements referred to in REC 3.14.8 R will be made (or cease to be made).
- 21/06/2001
REC 3.14.10
See Notes
- 21/06/2001
Hours of operation
REC 3.14.11
See Notes
REC 3.14A
Operation of a regulated market or MTF
- 01/11/2007
Purpose
REC 3.14A.1
See Notes
- 01/11/2007
Operation of a regulated market
REC 3.14A.2
See Notes
- 01/11/2007
REC 3.14A.3
See Notes
The following information is specified for the purposes of REC 3.14A.2 R:
- (1) where the UK RIE proposes to operate a new regulated market:
- (a) a description of the regulated market; and
- (b) a description of the specified investments which will be admitted to trading on that regulated market.
- (2) where the UK RIE proposes to close a regulated market, the name of that regulated market.
- 01/11/2007
Operation of an MTF
REC 3.14A.4
See Notes
- 01/11/2007
REC 3.14A.5
See Notes
The following information is specified for the purposes of REC 3.14A.4 R:
- 01/11/2007
Operation of a recognised auction platform
REC 3.14A.6
See Notes
- 22/12/2011
REC 3.15
Suspension of services and inability to operate facilities
- 01/12/2004
Purpose
REC 3.15.1
See Notes
- (1) The purpose of REC 3.15.2 R to REC 3.15.5 G is to enable the FSA to obtain information where a UK recognised body decides to suspend the provision of its services in relation to particular investments or (for an RAP) decides to cancel an auction. Planned changes to the provision of services should be notified to the FSA under REC 3.14.
- (2) REC 3.15.6 R to REC 3.15.7 R provide for notification to the FSA where a UK recognised body is unable to operate or provide its facilities for reasons outside its control or where it decides to extend its hours of operation in an emergency.
- (3) REC 3.15.8 R to REC 3.15.9 G provide for notification to the FSA where an RAP has to cancel an auction in specified circumstances.
- 22/12/2011
- Past version of REC 3.15.1 before 22/12/2011
Suspension of services
REC 3.15.2
See Notes
- 21/06/2001
REC 3.15.2A
See Notes
When a UK RIE suspends trading on a regulated market in any financial instrument, it must immediately give the FSA notice of that event and relevant information including particulars of that financial instrument and the reasons for the action taken.
[Note: Article 41(1), paragraph 2 of MiFID]
- 01/11/2007
REC 3.15.3
See Notes
- 21/06/2001
REC 3.15.4
See Notes
- 21/06/2001
REC 3.15.5
See Notes
- 21/06/2001
Inability to operate facilities
REC 3.15.6
See Notes
Where, because of the occurrence of any event or circumstances, a UK recognised body is unable to operate any of its facilities within its normal hours of operation, it must immediately give the FSA notice of that inability and inform the FSA:
- 21/06/2001
Extension of hours of operation
REC 3.15.7
See Notes
Where, because of the occurrence of any event or circumstances, a UK recognised body extends its hours of operation, it must immediately give the FSA notice of that event, and inform the FSA:
- (1) what event or circumstance has caused it to do so;
- (2) the new hours of operation; and
- (3) the date on which it expects to revert to its normal hours of operation.
- 21/06/2001
Recognised auction platforms - cancellation of auctions
REC 3.15.8
See Notes
- 22/12/2011
REC 3.15.9
See Notes
Under article 7(7) of the auction regulation, an RAP is required to notify the FSA of:
- (1) the methodology used to determine the application of article 7(6) of the auction regulation; and
- (2) modifications to that methodology made between bidding windows.
- 22/12/2011
REC 3.16
Information technology systems
- 01/12/2004
REC 3.16.1
See Notes
- 21/06/2001
REC 3.16.2
See Notes
- 21/06/2001
REC 3.16.3
See Notes
Where any reserve information technology system of a UK recognised body fails in such a way that, if the main information technology system of that body were also to fail, it would be unable to operate any of its facilities during its normal hours of operation, that body must immediately give the FSA notice of that event, and inform the FSA:
- (1) what action that UK recognised body is taking to restore the operation of the reserve information technology system; and
- (2) when it is expected that the operation of that system will be restored.
- 21/06/2001
REC 3.17
Inability to discharge regulatory functions
- 01/12/2004
REC 3.17.1
See Notes
Where, because of the occurrence of any event or circumstances, a UK recognised body is unable to discharge any regulatory function, it must immediately give the FSA notice of its inability to discharge that function, and inform the FSA:
- (1) what event or circumstance has caused it to become unable to do so;
- (2) which of its regulatory functions it is unable to discharge; and
- (3) what action, if any, it is taking or proposes to take to deal with the situation and, in particular, to enable it to recommence discharging that regulatory function.
- 21/06/2001
REC 3.18
Membership
- 01/12/2004
REC 3.18.1
See Notes
- (1) The purpose of REC 3.18 is to enable the FSA to monitor changes in the types of member admitted by UK recognised bodies and to ensure that the FSA has notice of foreign jurisdictions in which the members of UK recognised bodies are based. UK recognised bodies may admit persons who are not authorised persons or persons who are not located in the United Kingdom, provided that the recognition requirements or (for RAPs) RAP recognition requirements continue to be met.
- (2) REC 3.18.2 R focuses on the admission of persons who are not authorised persons (whether or not they are located in the United Kingdom) and on whether the specific recognition requirement or (for an RAP) RAP recognition requirement relating to access to facilities can still be met. REC 3.18.3 R focuses on the admission of members from outside the UK and whether all relevant recognition requirements or (for an RAP) RAP recognition requirements can be met.
- (3) The information required under REC 3.18 is relevant to the FSA's supervision of the UK recognised body's obligations in relation to the enforceability of compliance with the UK recognised body's rules. It is also relevant to the FSA's broader responsibilities concerning market confidence and financial stability and, in particular, its functions in relation to market abuse and financial crime. It may also be necessary in the case of members based outside the United Kingdom to examine the implications for the enforceability of default rules or collateral and the settlement of transactions, and thus the ability of the UK RIE or UK RCH to continue to meet the recognition requirements. It follows that the admission of a member from outside the United Kingdom who is not an authorised person could require notification under both REC 3.18.2 R and REC 3.18.3 R, although a single report from the UK recognised body covering both notifications would be acceptable to the FSA.
- 22/12/2011
- Past version of REC 3.18.1 before 22/12/2011
REC 3.18.2
See Notes
Where a UK recognised body admits a member who is not an authorised person of a type of which, immediately before that time, that UK recognised body had not admitted to membership, it must immediately give the FSA notice of that event, and:
- (1) a description of the type of person whom it is admitting to membership;
- (2) (in relation to a UK RIE or a UK RCH) particulars of its reasons for considering that, in admitting that type of person to membership, it is able to continue to satisfy the recognition requirement in paragraph 4(2)(a) or paragraph 19(2)(a) of the Schedule to the Recognition Requirements Regulations which applies to it; and
- (3) (in relation to an RAP) particulars of its reasons for considering that, in admitting that type of person to membership, it is able to continue to satisfy the RAP recognition requirement in regulation 20 (Access to auctions) which applies to it.
- 22/12/2011
- Past version of REC 3.18.2 before 22/12/2011
REC 3.18.3
See Notes
Where a UK recognised body admits for the first time a member whose head or registered office is in a jurisdiction from which that UK recognised body has not previously admitted members, it must immediately give the FSA notice of that event, and:
- (1) the name of that jurisdiction;
- (2) the name of any regulatory authority in that jurisdiction which regulates that member in respect of activities relating to specified investments or (for an RAP) relating to emissions auction products; and
- (3) particulars of its reasons for considering that, in admitting a member from that jurisdiction to membership, it is able to continue to satisfy the recognition requirements or (for an RAP) the RAP recognition requirements which apply to it.
- 27/07/2012
- Past version of REC 3.18.3 before 27/07/2012
REC 3.18.4
See Notes
- 21/06/2001
REC 3.19
Investigations
- 01/12/2004
REC 3.19.1
See Notes
Where a UK recognised body becomes aware that a person has been appointed by any regulatory body (other than the FSA or a UK recognised body) to investigate:
- (1) any business transacted by means of its facilities, if it is an RIE or RAP; or
- (2) any aspect of the clearing services which it provides;
it must immediately give the FSA notice of that event.
- 22/12/2011
- Past version of REC 3.19.1 before 22/12/2011
REC 3.19.2
See Notes
A UK recognised body need not give the FSA notice of:
- (1) routine inspections or visits undertaken in the course of regular monitoring, complaints handling or as part of a series of 'theme visits'; or
- (2) routine requests for information; or
- (3) investigations into the conduct of members of the UK recognised body or of other users of its facilities where the use of its facilities is a small or incidental part of the subject matter of the investigation.
- 21/06/2001
REC 3.20
Disciplinary action relating to members
- 01/12/2004
REC 3.20.1
See Notes
Where a UK recognised body has taken any disciplinary action against any member or any employee of a member, in respect of a breach of a rule relating to the carrying on by the UK recognised body of any of its regulatory functions, that body must immediately notify the FSA of that event, and give:
- (1) the name of the person concerned;
- (2) details of the disciplinary action taken by the UK recognised body; and
- (3) the UK recognised body's reasons for taking that disciplinary action.
- 21/06/2001
REC 3.20.2
See Notes
Where an appeal is lodged against any disciplinary action referred to in REC 3.20.1 R, the UK recognised body must immediately give the FSA notice of that event, and:
- (1) the name of the appellant and the grounds on which the appeal is based, immediately; and
- (2) the outcome of the appeal, when known.
- 21/06/2001
REC 3.21
Criminal offences and civil prohibitions
- 01/12/2004
REC 3.21.1
See Notes
Where a UK recognised body has evidence tending to suggest that any person has:
- (1) been carrying on any regulated activity in the United Kingdom in contravention of the general prohibition; or
- (2) been engaged in market abuse; or
- (3) committed a criminal offence under the Act or subordinate legislation made under the Act; or
- (4) committed a criminal offence under Part V of the Criminal Justice Act 1993 (Insider dealing); or
- (5) committed a criminal offence under the Money Laundering Regulations;
it must immediately give the FSA notice of that event, and full details of that evidence in writing.
[Note: Article 26(2), first sentence (part) and Article 43(2), first sentence (part) of MiFID. The rest of Article 26(2), first sentence (in so far as it relates to market operators operating an MTF) and Article 43(2), first sentence of MiFID is implemented by REC 3.25.1 R]
- 21/06/2001
REC 3.22
Restriction of, or instruction to close out, open positions
- 01/12/2004
REC 3.22.1
See Notes
- 21/06/2001
REC 3.22.2
See Notes
- 22/12/2011
REC 3.23
Default
- 01/12/2004
REC 3.23.1
See Notes
Where a UK recognised body decides to put a member into default, it must immediately give notice of that event, and give the following information to the FSA, at the same time as that decision is communicated to that member or to any other member (or group or class of them) of that body:
- (1) the name of the member and (where relevant) the class of membership;
- (2) the reasons for that decision; and
- (3) the names of any other exchange, clearing house or auction platform on which, to the best of that UK recognised body's knowledge, that member clears business or transacts for, or in respect of, its clients;
and as soon as practicable afterwards, give the FSA a summary of the member's open positions, margin liability, cash and collateral balances in respect of that member's accounts (including client accounts).
- 22/12/2011
- Past version of REC 3.23.1 before 22/12/2011
REC 3.24
Transfers of ownership
- 01/11/2007
REC 3.24.1
See Notes
When a UK RIE becomes aware of a transfer of ownership of the UK RIE which gives rise to a change in the persons who are in a position to exercise significant influence over the management of the UK RIE or (in the case of a UK RIE that is also an RAP) over the management of the RAP, whether directly or indirectly, it must immediately notify the FSA of that event, and:
- (1) give the name of the person(s) concerned; and
- (2) give details of the transfer.
[Note: Article 38(2)(b) of MiFID]
- 22/12/2011
- Past version of REC 3.24.1 before 22/12/2011
REC 3.24.2
See Notes
- 01/11/2007
REC 3.25
Significant breaches of rules and disorderly trading conditions
- 01/11/2007
REC 3.25.1
See Notes
A UK RIE and an RAP must immediately notify the FSA of:
- (1) significant breaches of its rules; or
- (2) disorderly trading conditions on any of its markets or auctions.
[Note: Article 26(2), first sentence (part) and Article 43(2), first sentence (part) of MiFID. The rest of Article 26(2), first sentence (in so far as it relates to market operators operating an MTF) and Article 43(2), first sentence of MiFID is implemented by REC 3.21.1 R (2)]
- 22/12/2011
- Past version of REC 3.25.1 before 22/12/2011
REC 3.26
Proposals to make regulatory provision
- 19/12/2007
Statutory power
REC 3.26.1
See Notes
- 22/12/2011
- Past version of REC 3.26.1 before 22/12/2011
REC 3.26.2
See Notes
Under section 300B(2) of the Act, the FSA may, by rules under section 293 (Notification requirements):
- (1) specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in section 300B(1) does not apply, or
- (2) provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.
- 19/12/2007
REC 3.26.3
See Notes
Under section 300B(3) of the Act, the FSA may also by rules under section 293:
- (1) make provision as to the form and contents of the notice required, and
- (2) require the UK recognised body to provide such information relating to the proposal as may be specified in the rules or as the FSA may reasonably require.
- 19/12/2007
Disapplication of duty to notify proposal to make regulatory provision
REC 3.26.4
See Notes
The duty in section 300B(1) of the Act does not apply to any of the following:
- (1) any regulatory provision which is required under EU law or any enactment or rule of law in the United Kingdom; or
- (2)
- (a) the specification of the standard terms of any derivative which a UK RIE proposes to admission to trading, or the amendment of the standard terms of any derivative already admitted to trading; or
- (b) the specification or any amendment of standard terms relating to the provision of clearing services for any derivative; or
- (c) the specification or any amendment of operating procedures which are reasonably consequential on any regulatory provision falling within (a) or (b); or
- (3) any regulatory provision which is expressed to have effect for no longer than three months which is made by a UK recognised body in response to an emergency event (including, without limitation, a war, terrorist attack or labour strike); or
- (4) any regulatory provision which does not impose a requirement (including any obligation or burden) on persons affected (directly or indirectly) by it; or
- (5) any other regulatory provision which has not been excluded under (1), (2), (3) or (4) other than any such provision which (taken together with any other regulatory provision not otherwise the subject of a notice under section 300B(1) of the Act):
- (a) materially increases disclosure, reporting or corporate governance requirements imposed on any person (whether directly or indirectly); or
- (b) imposes a material limitation affecting any person (whether directly or indirectly including, without limitation, through an amendment to fees or charges) on the type or nature of financial instruments which may be listed or the subject of admission to trading on the facilities operated by the UK RIE proposing to make the regulatory provision; or
- (c) materially limits access to, or use by, any person (whether directly or indirectly including, without limitation, through an amendment to fees or charges) of the facilities operated by the UK recognised body proposing to make the regulatory provision or
- (d) materially adds to the circumstances in which any person (whether directly or indirectly) may be liable to penalties or other sanctions or have liability in damages.
- 01/12/2009
- Past version of REC 3.26.4 before 01/12/2009
Notice to the FSA
REC 3.26.5
See Notes
A notice under section 300B(1) of the Act of a proposal to make a regulatory provision must be in writing and state expressly that it is a notice for the purpose of that section. To be effective, a notice must:
- (1) contain full particulars of the proposal to make a regulatory provision which is the subject of that notice; and
- (2) either be accompanied by sufficient supporting information to enable the FSA to assess the purpose and effect of the proposed regulatory provision or refer to such information in circumstances where such information has already been provided to the FSA.
- 19/12/2007
REC 3.26.6
See Notes
In determining whether a UK RIE or UK RCH has provided sufficient supporting information, the FSA may have regard to the extent to which the information includes:
- (1) clearly expressed reasons for the proposed regulatory provision; and
- (2) an appropriately detailed assessment of the likely costs and benefits of the proposed regulatory provision.
- 22/12/2011
- Past version of REC 3.26.6 before 22/12/2011
REC 3.26.7
See Notes
- 22/12/2011
- Past version of REC 3.26.7 before 22/12/2011
REC 3.26.8
See Notes
- 22/12/2011
- Past version of REC 3.26.8 before 22/12/2011
REC 3.26.9
See Notes
- 22/12/2011
- Past version of REC 3.26.9 before 22/12/2011
REC 4
Supervision
REC 4.1
Application and purpose
- 01/12/2004
Application
REC 4.1.1
See Notes
- 21/06/2001
Purpose
REC 4.1.2
See Notes
This chapter sets out the FSA's approach to the supervision of recognised bodies and contains guidance on:
- (1) the arrangements for investigating complaints about recognised bodies made under section 299 of the Act (Complaints about recognised bodies) (REC 4.4);
- (2) the FSA's approach to the exercise of its powers under:
- (a) (for RIEs and RCHs) section 296 of the Act (FSA's power to give directions) or (for RAPs) regulation 3 of the RAP regulations to give directions to recognised bodies (REC 4.6);
- (b) (for RIEs and RCHs) section 297 of the Act (Revoking recognition) or (for RAPs) regulation 4 of the RAP regulations to revoke recognition orders (REC 4.7);
- and the procedure to be followed in those cases and where the FSA decides to refuse an application for recognition as a recognised body (REC 4.8); and
- (3) the FSA's approach to, and procedures for, the exercise of its powers under sections 166 and 167 of the Companies Act 1989 to give directions to UK RIE or UK RCHs in relation to action under their default rules (REC 4.5).
- 22/12/2011
- Past version of REC 4.1.2 before 22/12/2011
REC 4.1.3
See Notes
The FSA's general approach to supervision is intended to ensure that:
- (1) the FSA has sufficient assurance that recognised bodies continue at all times to satisfy the recognised body requirements; and
- (2) the FSA's supervisory resources are allocated, and supervisory effort is applied, in ways which reflect the actual risks to the regulatory objectives.
- 22/12/2011
- Past version of REC 4.1.3 before 22/12/2011
REC 4.1.4
See Notes
- 21/06/2001
REC 4.1.5
See Notes
- 21/06/2001
REC 4.2
The supervisory relationship with UK recognised bodies
- 01/12/2004
REC 4.2.1
See Notes
- 22/12/2011
- Past version of REC 4.2.1 before 22/12/2011
REC 4.2.2
See Notes
- 22/12/2011
- Past version of REC 4.2.2 before 22/12/2011
REC 4.2.3
See Notes
- 22/12/2011
- Past version of REC 4.2.3 before 22/12/2011
REC 4.2.4
See Notes
- 22/12/2011
- Past version of REC 4.2.4 before 22/12/2011
REC 4.2A
Publication of information by UK RIEs and RAPs
- 22/12/2011
- Past version of REC 4.2A before 22/12/2011
REC 4.2A.1
See Notes
- 22/12/2011
- Past version of REC 4.2A.1 before 22/12/2011
REC 4.2A.2
See Notes
- 22/12/2011
- Past version of REC 4.2A.2 before 22/12/2011
REC 4.2A.3
See Notes
- 01/11/2007
REC 4.2B
Exercise of passport rights by a UK RIE
- 01/11/2007
REC 4.2B.1
See Notes
Under section 312C of the Act, if a UK RIE wishes to make arrangements in an EEA State other than the UK to facilitate access to or use of a regulated market, multilateral trading facility or auction platform operated by it, it must give the FSA written notice of its intention to do so. The notice must:
- 22/12/2011
- Past version of REC 4.2B.1 before 22/12/2011
REC 4.2B.2
See Notes
- 01/11/2007
REC 4.2B.3
See Notes
- 01/11/2007
REC 4.2B.4
See Notes
- 01/11/2007
REC 4.2C
Control over a UK RIE
- 01/11/2007
REC 4.2C.1
See Notes
- 28/03/2009
- Past version of REC 4.2C.1 before 28/03/2009
REC 4.2C.2
See Notes
- 22/12/2011
- Past version of REC 4.2C.2 before 22/12/2011
REC 4.2C.3
See Notes
- 28/03/2009
- Past version of REC 4.2C.3 before 28/03/2009
REC 4.2C.6
See Notes
- 28/03/2009
- Past version of REC 4.2C.6 before 28/03/2009
REC 4.2C.7
See Notes
- 28/03/2009
- Past version of REC 4.2C.7 before 28/03/2009
REC 4.2C.8
See Notes
- 28/03/2009
- Past version of REC 4.2C.8 before 28/03/2009
REC 4.2C.9
See Notes
- 28/03/2009
- Past version of REC 4.2C.9 before 28/03/2009
REC 4.2D
Suspension and removal of financial instruments from trading
- 01/11/2007
REC 4.2D.1
See Notes
- (1) Under section 313A of the Act, the FSA may for the purpose of protecting:
- (a) the interests of investors; or
- (b) the orderly functioning of the financial markets;
- require a UK RIE to suspend or remove a financial instrument from trading.
- (2) If the FSA exercises this power, the UK RIE concerned may refer the matter to the Tribunal.
- 01/11/2007
REC 4.2D.2
See Notes
- 06/04/2011
- Past version of REC 4.2D.2 before 06/04/2011
REC 4.2D.3
See Notes
Under section 313C(1) of the Act, if the FSA exercises its power to require a UK RIE to suspend or remove a financial instrument from trading, it must as soon as reasonably practicable:
- (1) publish its decision in such manner as it considers appropriate, unless the decision has already been published under section 313B(2)(b) of the Act; and
- (2) inform ESMA and the competent authorities of all other EEA States of its decision.
- 01/07/2012
- Past version of REC 4.2D.3 before 01/07/2012
REC 4.2D.4
See Notes
- 01/11/2007
REC 4.2D.5
See Notes
- 01/11/2007
REC 4.2D.6
See Notes
- 01/11/2007
REC 4.2E
Information: compliance of UK RIEs with the MiFID Regulation and Auction Regulation
- 22/12/2011
- Past version of REC 4.2E before 22/12/2011
REC 4.2E.1
See Notes
- 22/12/2011
- Past version of REC 4.2E.1 before 22/12/2011
REC 4.3
Risk assessments for UK recognised bodies
- 01/12/2004
REC 4.3.1
See Notes
- 21/06/2001
REC 4.3.2
See Notes
- 21/06/2001
REC 4.3.3
See Notes
- 21/06/2001
REC 4.4
Complaints
- 01/12/2004
Recognised body's arrangements
REC 4.4.1
See Notes
- 22/12/2011
- Past version of REC 4.4.1 before 22/12/2011
The FSA's arrangements
REC 4.4.2
See Notes
- 21/06/2001
REC 4.4.3
See Notes
- 21/06/2001
REC 4.4.4
See Notes
- 21/06/2001
REC 4.4.5
See Notes
- 21/06/2001
REC 4.4.6
See Notes
- 21/06/2001
REC 4.5
FSA supervision of action by UK recognised bodies under their default rules
- 01/12/2004
REC 4.5.1
See Notes
- 21/06/2001
REC 4.5.2
See Notes
- 21/06/2001
REC 4.5.3
See Notes
- 21/06/2001
REC 4.5.4
See Notes
The Companies Act 1989: section 166
The FSA may issue a "positive" direction (to take action) under section 166(2)(a) of the Companies Act 1989: | |
Where in any case a [ UK RIE ] or [ UK RCH ] has not taken action under its default rules - if it appears to [the FSA ] that it could take action, [the FSA may direct it to do so, | |
but under section 166(3)(a) of the Companies Act 1989: | |
Before giving such a direction the [ FSA ] shall consult the [ UK RIE ] or [ UK RCH ] in question; and [the FSA ] shall not give a direction unless [the FSA ] is satisfied, in the light of that consultation that failure to take action would involve undue risk to investors or other participants in the market, | |
The FSA may issue a "negative" direction (not to take action) under section 166(2)(b) of the Companies Act 1989: | |
Where in any case a [ UK RIE ] or [ UK RCH ] has not taken action under its default rules - if it appears to the [ FSA ] that it is proposing to take or may take action, [the FSA ] may direct it not to do so. | |
but under section 166(3)(b) of the Companies Act 1989: | |
Before giving such a direction the [ FSA ] shall consult the [ UK RIE ] or [ UK RCH ] in question; and the [ FSA ] shall not give a direction unless [the FSA ] is satisfied, in the light of that consultation that the taking of action would be premature or otherwise undesirable in the interests of investors or other participants in the market. |
- 21/06/2001
REC 4.5.5
See Notes
The FSA's view is that the exercise of these powers will only be justified in exceptional circumstances. The most likely case in which the FSA would consider exercising them is if there were a need to coordinate action by different UK recognised bodies because, for example:
- (1) the likelihood of a default may not be apparent to all UK recognised bodies; or
- (2) there was a need to avoid premature default action by one UK recognised body; or
- (3) significantly different settlement prices had been fixed by different UK recognised bodies.
- 21/06/2001
REC 4.5.6
See Notes
Under section 166(6) of the Companies Act 1989, a negative direction cannot be given if, in relation to the defaulter, either:
- (1) a bankruptcy order or an award of sequestration of the defaulter's estate has been made, or an interim receiver or interim trustee has been appointed; or
- (2) a winding-up order has been made, a resolution for voluntary winding-up has been passed or an administrator, administrative receiver or provisional liquidator has been appointed;
and any previous negative direction will cease to have effect on the making or passing of any such order, award or appointment.
- 21/06/2001
REC 4.5.7
See Notes
- 21/06/2001
REC 4.5.8
See Notes
- 21/06/2001
Section 167 of the Companies Act 1989
REC 4.5.9
See Notes
Where, in relation to a member (or designated non-member) of a UK RIE or a member of a UK RCH:
- (1) a bankruptcy order; or
- (2) an award of sequestration of his estate; or
- (3) an order appointing an interim receiver of his property; or
- (4) an administration or winding-up order; or
- (5) a resolution for a voluntary winding-up; or
- (6) an order appointing a provisional liquidator;
has been made or passed and the UK recognised body has not taken action under its default rules as a result of this event or of the matters giving rise to it, a relevant office-holder appointed in connection with the order, award or resolution may make an application to the FSA under section 167 of the Companies Act 1989 (Application to determine whether default proceedings to be taken).
- 21/06/2001
REC 4.5.10
See Notes
- 21/06/2001
REC 4.5.11
See Notes
The procedure is that the FSA must notify the UK recognised body of the application and, unless within three business days after receipt of that notice, the UK recognised body:
- (1) takes action under its default rules; or
- (2) notifies the FSA that it proposes to take action forthwith; or
- (3) is directed to take action by the FSA under section 166(2)(a) of the Companies Act 1989;
the provisions of sections 158 to 165 of the Companies Act 1989 do not apply in relation to market contracts to which the member or designated non-member is a party or to anything done by the UK recognised body for the purpose of, or in connection with, the settlement of any market contracts.
- 21/06/2001
REC 4.6
The section 296 power to give directions
- 01/12/2004
REC 4.6.1
See Notes
- 22/12/2011
- Past version of REC 4.6.1 before 22/12/2011
REC 4.6.2
See Notes
- 22/12/2011
- Past version of REC 4.6.2 before 22/12/2011
REC 4.6.3
See Notes
The FSA is likely to exercise its power under section 296 of the Act or regulation 3 of the RAP regulations if it considers that:
- (1) there has been, or was likely to be, a failure to satisfy one or more of the recognised body requirements which has serious consequences;
- (2) compliance with the direction would ensure that one or more of the recognised body requirements is satisfied; and
- (3) the recognised body is capable of complying with the direction.
- 22/12/2011
- Past version of REC 4.6.3 before 22/12/2011
REC 4.6.4
See Notes
Under section 298(7) of the Act (Directions and revocation: procedure), and (for RAPs) regulation 5(7) of the RAP regulations, the FSA need not follow the consultation procedure set out in the rest of section 298 (see REC 4.8) or (for RAPs) regulation 5 of the RAP regulations, or may cut short that procedure, if it considers it essential to do so. The FSA is likely to consider it essential to cut short the procedure if, in the absence of immediate action, there would be:
- (1) a serious risk of substantial losses to investors, particularly retail clients; or
- (2) a serious threat to market confidence or to the stability of the UK financial system; or
- (3) a serious risk of money laundering or other serious financial crime.
- 22/12/2011
- Past version of REC 4.6.4 before 22/12/2011
REC 4.7
The section 297 power to revoke recognition
- 01/12/2004
REC 4.7.1
See Notes
- 22/12/2011
- Past version of REC 4.7.1 before 22/12/2011
REC 4.7.2
See Notes
The FSA will revoke a recognition order if:
- (1) it is directed to do so by the Treasury under section 308 of the Act (Directions by the Treasury); or
- (2) the recognised body has asked the FSA to revoke the order.
- 21/06/2001
REC 4.7.2A
See Notes
- 22/12/2011
REC 4.7.3
See Notes
The FSA will usually consider revoking a recognition order if:
- (1) the recognised body is failing or has failed to satisfy one or more of the recognised body requirements and that failure has or will have serious consequences; or
- (2) it would not be possible for the recognised body to comply with a direction under section 296 of the Act (FSA's power to give directions) or (for RAPs) regulation 3 of the RAP regulations; or
- (3) for some other reason, it would not be appropriate for the FSA to give a direction under section 296 or (for RAPs) regulation 3 of the RAP regulations; or
- (4) in the case of a UK RIE, it has not carried on the business of an investment exchange during the 12 months beginning with the day on which the recognition order took effect in relation to it, or it has not carried on the business of an investment exchange at any time during the period of six months ending with the day the recognition order is revoked; or
- (5) in the case of an RAP in relation to its RAP recognition order, it has not carried on the business of an auction platform during the 12 months beginning with the day on which the RAP recognition order took effect in relation to it, or it has not carried on the business of an auction platform at any time during the period of six months ending with the day the RAP recognition order is revoked.
- 22/12/2011
- Past version of REC 4.7.3 before 22/12/2011
REC 4.7.4
See Notes
The FSA would be likely to consider the conditions in REC 4.7.3 G (2) or REC 4.7.3 G (3) to be triggered in the following circumstances:
- (1) the recognised body appears not to have the resources or management to be able to organise its affairs so as to satisfy one or more of the recognised body requirements; or
- (2) the recognised body does not appear to be willing to satisfy one or more of the recognised body requirements; or
- (3) the recognised body is failing or has failed to comply with a direction made under section 296 of the Act or (for RAPs) regulation 3 of the RAP regulations; or
- (4) the recognised body has ceased to carry out regulated activities in the United Kingdom, or has so changed the nature of its business that it no longer satisfies one or more of the recognised body requirements in respect of the regulated activities for which recognised body status is relevant.
- 22/12/2011
- Past version of REC 4.7.4 before 22/12/2011
REC 4.7.5
See Notes
- 01/11/2007
- Past version of REC 4.7.5 before 01/11/2007
REC 4.8
The section 298 procedure
- 01/12/2004
REC 4.8.1
See Notes
A decision to:
- (1) revoke a recognition order under section 297 of the Act (Revoking recognition) or (for RAPs) regulation 4 of the RAP regulations; or
- (2) make a direction under section 296 (FSA's powers to give directions) or (for RAPs) regulation 3 of the RAP regulations; or
- (3) refuse to make a recognition order under section 290 (Recognition orders) or 290A (Refusal of recognition on ground of excessive regulatory provision) or (for RAPs) regulation 2 of the RAP regulations;
is a serious one and section 298 of the Act (Directions and revocation: procedure) and (for RAPs) regulation 5 of the RAP regulations set out a procedure (see REC 4.8.9 G) which the FSA will follow unless, in the case of a revocation of a recognition order, the recognised body concerned has given its consent (see section 297(1) or regulation 4(1) of the RAP regulations) or, in a case where the FSA proposes to make a direction under section 296 or (for RAPs) under regulation 3 of the RAP regulations, it considers it is essential not to follow, or to cut short, the procedure (see REC 4.6.4 G and REC 4.8.7 G).
- 22/12/2011
- Past version of REC 4.8.1 before 22/12/2011
REC 4.8.2
See Notes
- 21/06/2001
REC 4.8.3
See Notes
In considering whether it would be appropriate to exercise the powers under section 296 or section 297 of the Act or (for RAPs) regulation 3 or 4 of the RAP regulations, the FSA will have regard to all relevant information and factors including:
- (1) its guidance to recognised bodies;
- (2) the results of its routine supervision of the body concerned;
- (3) the extent to which the failure or likely failure to satisfy one or more of the recognised body requirements may affect the regulatory objectives.
- 22/12/2011
- Past version of REC 4.8.3 before 22/12/2011
REC 4.8.4
See Notes
- 21/06/2001
REC 4.8.5
See Notes
- 22/12/2011
- Past version of REC 4.8.5 before 22/12/2011
REC 4.8.6
See Notes
- 22/12/2011
- Past version of REC 4.8.6 before 22/12/2011
REC 4.8.7
See Notes
- 22/12/2011
- Past version of REC 4.8.7 before 22/12/2011
REC 4.8.8
See Notes
- 22/12/2011
- Past version of REC 4.8.8 before 22/12/2011
REC 4.8.9
See Notes
Key steps in the section 298 and (for RAPs) regulation 5 procedure
The FSA will: | Guidance | |
(1) | give written notice to the recognised body (or applicant); | The notice will state why the FSA intends to take the action it proposes to take, and include an invitation to make representations, and the date by which representations should be made. |
(2) | take such steps as it considers reasonably practicable to bring the notice to the attention of the members of the recognised body or of the applicant, as the case may be; | The FSA will also notify persons individually (as far as it considers it reasonably practicable to do so) if it considers that the action it proposes to take would affect them adversely in a way which would be different from its effect on other persons of the same class. |
(3) | publish the notice so as to bring it to the attention of other persons likely to be affected; | |
(4) | receive representations from the recognised body or applicant concerned, any member of the recognised body or applicant, and any other person who is likely to be affected by the action the FSA proposes to take; | The FSA will not usually consider oral representations without first receiving written representations from the person concerned. It will normally only hear oral representations from the recognised body (or applicant) itself or of a person whom it has notified individually, on request. |
(5) | write promptly to any person who requests the opportunity to make oral representations if it decides not to hear that person's representations; | The FSA will indicate why it will not hear oral representations and the FSA will allow the person concerned further time to respond. |
(6) | have regard to representations made; | |
(7) | (when it has reached its decision) notify the recognised body (or applicant) concerned in writing. | |
(8) | (if it has decided to give a direction, or revoke or refuse to make a recognition order) take such steps as it considers reasonably practicable to bring its decision to the attention of members of the recognised body or applicant and to other persons likely to be affected. | The FSA will usually give notice of its decision to the same persons and in the same manner as it gave notice of its intention to act. |
- 22/12/2011
- Past version of REC 4.8.9 before 22/12/2011
REC 5
Applications for Recognition
(UK recognised bodies)
REC 5.1
Introduction and legal background
- 01/12/2004
REC 5.1.1
See Notes
- 21/06/2001
REC 5.1.1A
See Notes
- 22/12/2011
REC 5.1.2
See Notes
- 21/06/2001
REC 5.1.3
See Notes
- 22/12/2011
- Past version of REC 5.1.3 before 22/12/2011
REC 5.1.4
See Notes
- (1) Under section 303 of the Act (Initial report by the Director), the Director General of Fair Trading must issue a report on whether any of the applicant's regulatory provisions have a significantly adverse effect on competition. He must send copies of his report to the Treasury, the Competition Commission and the FSA.
- (2) If the Director General of Fair Trading concludes that any of the applicant's regulatory provisions have a significantly adverse effect on competition, or if the Director General of Fair Trading concludes that none of the applicant's regulatory provisions has a significantly adverse effect on competition, but he nonetheless asks the Competition Commission to consider his report, the Competition Commission must normally make its own report under section 306 of the Act (Consideration by Competition Commission) on whether any of the applicant's regulatory provisions would have a significantly adverse effect on competition, whether any such effect is justified and, if it is not justified, what action, if any, the Treasury should direct the FSA to take.
- (3) The Treasury's approval is required under section 307 of the Act (Recognition orders: role of the Treasury) before a recognition order (other than one relating to an RAP) can be made. (See also REC 5.2.11 G.)
- 22/12/2011
- Past version of REC 5.1.4 before 22/12/2011
REC 5.1.5
See Notes
- 21/06/2001
REC 5.1.6
See Notes
- 21/06/2001
REC 5.1.7
See Notes
- 21/06/2001
REC 5.2
Application process
- 01/12/2004
REC 5.2.1
See Notes
- 22/12/2011
- Past version of REC 5.2.1 before 22/12/2011
REC 5.2.1A
See Notes
- 19/12/2007
REC 5.2.2
See Notes
- (1) There is no standard application form. A prospective applicant should contact the Markets Division at the FSA at an early stage for advice on the preparation, scheduling and practical aspects of its application.
- (2) It is very important, if an application is to be processed smoothly and in a reasonable time, that it is comprehensively prepared and based on a well-developed and clear proposal.
- 21/06/2001
REC 5.2.3
See Notes
An application should:
- (1) be made in accordance with any directions the FSA may make under section 287 (Application by an investment exchange), section 288 (Application by a clearing house) of the Act or (for RAPs) regulation 2 of the RAP regulations;
- (2) in the case of an application under sections 287 or 288 of the Act, be accompanied by the applicant's regulatory provisions and in the case of an application under section 287 of the Act information required pursuant to sub-sections 287(3)(c), (d) and (e) of the Act (see REC 5.2.3A G) (the material specifically prescribed in section 287 or section 288);
- (3) be accompanied by the information, evidence and explanatory material (including supporting documentation) necessary to demonstrate to the FSA that the recognised body requirements will be met; and
- (4) be accompanied by the appropriate fee (see REC 7).
- 22/12/2011
- Past version of REC 5.2.3 before 22/12/2011
REC 5.2.3A
See Notes
The information required pursuant to sub-sections 287(c), (d) and (e) of the Act is:
- (1) a programme of operations which includes the types of business the applicant proposes to undertake and the applicant's proposed organisational structure;
- (2) particulars of the persons who effectively direct the business and operations of the exchange; and
- (3) particulars of the ownership of the exchange, and in particular the identity and scale of interests of the persons who are in a position to exercise significant influence over the management of the exchange, whether directly or indirectly.
- 01/11/2007
REC 5.2.4
See Notes
- 21/06/2001
REC 5.2.5
See Notes
- 21/06/2001
REC 5.2.5A
See Notes
- 22/12/2011
REC 5.2.6
See Notes
- 22/12/2011
- Past version of REC 5.2.6 before 22/12/2011
REC 5.2.6A
See Notes
- 22/12/2011
- Past version of REC 5.2.6A before 22/12/2011
REC 5.2.7
See Notes
- 22/12/2011
- Past version of REC 5.2.7 before 22/12/2011
REC 5.2.8
See Notes
- (1) The FSA will keep the applicant informed of the progress of the application.
- (2) It may be necessary to ask the applicant to clarify or amplify some aspects of its proposals. The FSA may wish to discuss various aspects of the application and may invite the applicant to attend one or more meetings for that purpose. When requested to do so, the FSA will explain the nature of the information which it has asked an applicant to supply in connection with its application.
- 21/06/2001
REC 5.2.9
See Notes
- (1) While the FSA is considering an application under section 287 or 288 of the Act, the Office of Fair Trading will be reviewing the regulatory provisions so that the Director General of Fair Trading is able to make the report required by section 303 of the Act.
- (2) When the Director General of Fair Trading has issued his report, if the circumstances described in REC 5.1.4 G apply, the Competition Commission must normally make its own report under section 306 of the Act.
- 22/12/2011
- Past version of REC 5.2.9 before 22/12/2011
REC 5.2.10
See Notes
- 22/12/2011
- Past version of REC 5.2.10 before 22/12/2011
REC 5.2.11
See Notes
- 22/12/2011
- Past version of REC 5.2.11 before 22/12/2011
REC 5.2.12
See Notes
- 22/12/2011
- Past version of REC 5.2.12 before 22/12/2011
REC 5.2.13
See Notes
- 22/12/2011
- Past version of REC 5.2.13 before 22/12/2011
REC 5.2.14
See Notes
Information and supporting documentation (see REC 5.2.4 G).
(1) | Details of the applicant's constitution, structure and ownership, including its memorandum and articles of association (or similar or analogous documents) and any agreements between the applicant, its owners or other persons relating to its constitution or governance (if not contained in the information listed in REC 5.2.3A G). An applicant for RAP status must provide details of the relationship between the governance arrangements in place for the UK RIE and the RAP. |
(2) | Details of all business to be conducted by the applicant, whether or not a regulated activity (if not contained in the information listed in REC 5.2.3A G). |
(3) | Details of the facilities which the applicant plans to operate, including details of the trading platform or (for an RAP) auction platform, settlement arrangements, clearing services and custody services which it plans to supply. An applicant for RAP status must provide details on the relationship between the auction platform and any secondary market in emissions auction products which it operates or plans to operate. |
(4) | Copies of the last three annual reports and accounts and, for the current financial year, quarterly management accounts. |
(5) | Details of its business plan for the first three years of operation as a UK recognised body (if not contained in the information listed in REC 5.2.3A G). |
(6) | A full organisation chart and a list of the posts to be held by key individuals (with details of the duties and responsibilities) and the names of the persons proposed for these appointments when these names are available (if not contained in the information listed in REC 5.2.3A G). |
(7) | Details of its auditors, bankers, solicitors and any persons providing corporate finance advice or similar services (such as reporting accountants) to the applicant. |
(8) | Details of any relevant functions to be outsourced or delegated, with copies of relevant agreements. |
(9) | Details of information technology systems and of arrangements for their supply, management, maintenance and upgrading, and security. |
(10) | Details of all plans to minimise disruption to operation of its facilities in the event of the failure of its information technology systems. |
(11) | Details of internal systems for financial control, arrangements for risk management and insurance arrangements to cover operational and other risks. |
(12) | Details of its arrangements for managing any counterparty risks, including details of margining systems, guarantee funds and insurance arrangements. |
(13) | Details of internal arrangements to safeguard confidential or privileged information and for handling conflicts of interest. |
(14) | Details of arrangements for complying with the notification rules and other requirements to supply information to the FSA. |
(15) | Details of the arrangements to be made for monitoring and enforcing compliance with its rules and with its clearing, settlement and default arrangements. |
(16) | A summary of the legal due diligence carried out in relation to ascertaining the enforceability of its rules (including default rules) and arrangements for margin against any of its members based outside the United Kingdom, and the results and conclusions reached. |
(17) | Details of the procedures to be followed for declaring a member in default, and for taking action after that event to close out positions, protect the interests of other members and enforce its default rules. |
(18) | Details of membership selection criteria, rules and procedures, including (for an RAP) details of how the rules of the UK RIE will change in order to reflect RAP status. |
(19) | Details of arrangements for recording transactions effected by, or cleared through, its facilities. |
(20) | Details of arrangements for detecting financial crime and market abuse, including arrangements for complying with money laundering law. |
(21) | Details of criteria, rules and arrangements for selecting specified investments to be admitted to trading on (or cleared by) an RIE, or to be cleared by an RCH and, where relevant, details of how information regarding specified investments will be disseminated to users of its facilities. |
(22) | Details of arrangements for cooperating with the FSA and other appropriate authorities, including draft memoranda of understanding or letters. |
(23) | Details of the procedures and arrangements for making and amending rules, including arrangements for consulting on rule changes. |
(24) | Details of disciplinary and appeal procedures, and of the arrangements for investigating complaints. |
- 27/07/2012
- Past version of REC 5.2.14 before 27/07/2012
REC 6
Overseas Investment Exchanges and Overseas Clearing Houses
REC 6.1
Introduction and legal background
- 01/12/2004
REC 6.1.1
See Notes
The Act prohibits any person from carrying on, or purporting to carry on, regulated activities in the United Kingdom unless that person is an authorised person or an exempt person. If an overseas investment exchange or overseas clearing house wishes to undertake regulated activities in the United Kingdom, it will need to:
- (1) obtain a Part IV permission from the FSA;
- (2) (in the case of an EEA firm or a Treaty firm) qualify for authorisation under Schedule 3 (EEA Passport Rights) or Schedule 4 (Treaty rights) to the Act, respectively; or
- (3) (in the case of an EEA market operator) obtain exempt person status by exercising its passport rights under Articles 31(5) and 31(6) of MiFID (in the case of arrangements relating to a multilateral trading facility) or Article 42(6) of MiFID (in the case of arrangements relating to a regulated market); or
- (4) obtain exempt person status by being declared by the FSA to be (in the case of an overseas investment exchange) an ROIE or (in the case of an overseas clearing house) an ROCH.
- 01/11/2007
- Past version of REC 6.1.1 before 01/11/2007
REC 6.1.2
See Notes
- 21/06/2001
REC 6.2
Applications
- 01/12/2004
REC 6.2.1
See Notes
- (1) Overseas investment exchanges and overseas clearing houses which are considering whether to seek authorisation or recognition should first consider whether they will be carrying on regulated activities in the United Kingdom. Overseas investment exchanges and overseas clearing houses which do not carry on regulated activities in the United Kingdom need take no action.
- (2) Prospective applicants should discuss authorisation and recognition with the FSA before deciding whether to seek authorisation or recognition.
- 21/06/2001
REC 6.2.2
See Notes
- 21/06/2001
REC 6.2.3
See Notes
25 The North Colonnade
Canary Wharf
London E14 5HS
- 06/10/2007
- Past version of REC 6.2.3 before 06/10/2007
REC 6.2.4
See Notes
There is no standard application form for application for recognition as an overseas recognised body. An application should be made in accordance with any direction the FSA may make under section 287 (Application by an investment exchange) or section 288 (Application by a clearing house) of the Act and should include:
- (1) the information, evidence and explanatory material necessary to demonstrate to the FSA that the recognition requirements (set out in REC 6.3) will be met;
- (2) the application fee (see REC 7);
- (3) the address of the applicant's head office in its home territory;
- (4) the address of a place in the United Kingdom for the service on the applicant of notices or other documents required or authorised to be served on it under the Act (see section 292(1));
- (5) the applicant's regulatory provisions;
- (6) one copy of each of the following documents:
- (a) its most recent annual report and accounts; and
- (b) the applicant's memorandum and articles of association or any similar or analogous documents; and
- (7) information identifying the following (if not contained in the documents listed in (5) or (6) or the material referred to in (1)):
- (a) any type of regulated activity which the applicant envisages carrying on in the United Kingdom;
- (b) any type of specified investment dealt in on, or cleared by, the applicant;
- (c) the date by which the applicant wishes the recognition order to take effect; and
- (d) any body or authority which supervises the applicant under the law of the home territory, the status of the applicant under that law, and the enactment or regulation under which the supervision is conducted.
- 21/06/2001
REC 6.2.5
See Notes
- 21/06/2001
REC 6.2.6
See Notes
- 21/06/2001
REC 6.3
Recognition requirements
- 01/12/2004
REC 6.3.1
See Notes
- 21/06/2001
REC 6.3.2
See Notes
Sections 292(3) and 292(4) state:
Section 292(3) | |
The requirements are that- | |
(a) | investors are afforded protection equivalent to that which they would be afforded if the body concerned were required to comply with recognition requirements ; |
(b) | there are adequate procedures for dealing with a person who is unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the [ROIE] or [ROCH]; |
(c) | the applicant is able and willing to co-operate with the [FSA] by the sharing of information and in other ways; and |
(d) | adequate arrangements exist for co-operation between the [FSA] and those responsible for the supervision of the applicant in the country or territory in which the applicant's head office is situated. |
Section 292(4) | |
In considering whether it is satisfied as to the requirements mentioned in subsections (3)(a) and (b), the [FSA] is to have regard to- | |
(a) | the relevant law and practice of the country or territory in which the applicant's head office is situated; |
(b) | the rules and practices of the applicant. |
- 01/11/2007
- Past version of REC 6.3.2 before 01/11/2007
REC 6.3.3
See Notes
- 21/06/2001
REC 6.4
Competition scrutiny
- 01/12/2004
REC 6.4.1
See Notes
- 21/06/2001
REC 6.4.2
See Notes
- 21/06/2001
REC 6.5
FSA decision on recognition
- 01/12/2004
REC 6.5.1
See Notes
- 21/06/2001
REC 6.5.2
See Notes
- 21/06/2001
REC 6.5.3
See Notes
- 21/06/2001
REC 6.6
Supervision
- 01/12/2004
REC 6.6.1
See Notes
An overseas recognised body is required to notify the FSA of certain events and give information to it on a regular basis and when certain specified events occur. Section 295 of the Act (Notification: overseas investment exchanges and overseas clearing houses) requires each overseas recognised body to provide the FSA, the Treasury and the Director General of Fair Trading with a report (at least once a year) which contains:
- (1) a statement as to whether any events have occurred which are likely:
- (a) to affect the assessment of whether it is satisfied that the overseas recognised body continues to satisfy the recognition requirements set out in section 292(3) of the Act (Overseas investment exchanges and overseas clearing houses) (see REC 6.3); and
- (b) to have any effect on competition;
- (2) the information specified in the FSA's notification rules for overseas recognised bodies (see REC 6.7).
- 21/06/2001
REC 6.6.2
See Notes
The following events are examples of events likely to affect an assessment of whether an overseas recognised body is continuing to satisfy the recognition requirements, or to have an effect on competition:
- (1) significant changes to any relevant law or regulation in its home territory, including laws or regulations:
- (a) governing exchanges or clearing houses;
- (b) designed to prevent insider dealing, market manipulation or other forms of market abuse or misconduct;
- (c) designed to protect the interests of clients of members of the overseas recognised body, or of a class of bodies which includes the overseas recognised body;
- (d) which affect:
- (i) the ability of the overseas recognised body to seek information (whether compulsorily or voluntarily) from its members, including information relating to the price and volume of transactions, the identity of parties to transactions, and the movement of funds associated with transactions;
- (ii) which affect the ability of the overseas recognised body to pass such information, on request, to UK authorities;
- (2) significant changes to its internal organisation or structure;
- (3) significant changes to the practices of the overseas recognised body applying to any regulated activities carried on by it in the United Kingdom;
- (4) any other event or series of events in relation to the body which:
- (a) affects or may significantly affect cooperation between the overseas recognised body, or its supervisor in its home territory, and the FSA; or
- (b) has or may have a substantial effect on the structure of the markets in which the body operates; or
- (c) brings about or may bring about a substantial change in the nature and composition of its membership in the United Kingdom; or
- (d) brings about or may bring about a substantial change in the regulated activities undertaken by it in the United Kingdom.
- 21/06/2001
REC 6.6.3
See Notes
- 21/06/2001
REC 6.6.4
See Notes
- 21/06/2001
REC 6.6.5
See Notes
- 21/06/2001
REC 6.6.6
See Notes
- 21/06/2001
REC 6.7
Notification rules for overseas recognised bodies
- 01/12/2004
Application
REC 6.7.1
See Notes
- 21/06/2001
Purpose
REC 6.7.2
See Notes
- 21/06/2001
Reports under section 295
REC 6.7.3
See Notes
- 21/06/2001
REC 6.7.4
See Notes
An overseas recognised body must include in its report submitted in compliance with section 295(1) of the Act:
- (1) particulars of any changes to:
- (a) its memorandum and articles of association or any similar or analogous documents;
- (b) its regulatory provisions;
- (c) its chairman or president, or chief executive (or equivalent);
- (2) particulars of any disciplinary action (or any similar or analogous action) taken against it by any supervisory authority in its home territory, whether or not that action has been made public in that territory; and
- (3) a copy of its annual report and accounts;
- 21/06/2001
First report
REC 6.7.5
See Notes
An overseas recognised body must include in the first report submitted under section 295(1) of the Act after the recognition order in relation to that overseas recognised body is made:
- (1) particulars of any events of the kind described in section 295(2) of the Act which occurred;
- (2) particulars of any change specified in REC 6.7.4 R (1) or disciplinary action specified in REC 6.7.4 R (2) which occurred; and
- (3) any annual report and accounts which covered a period ending;
after the application for recognition was submitted to the FSA but which were not included in the application or in any supplementary information submitted to the FSA before the recognition order was made.
- 21/06/2001
REC 6.7.6
See Notes
- 21/06/2001
Changes of address
REC 6.7.7
See Notes
Where an overseas recognised body proposes to change:
- (1) its address in the United Kingdom for the service of notices or other documents required or authorised to be served on it under the Act; or
- (2) the address of its head office;
it must give notice to the FSA and inform it of the new address at least 14 days before the change is effected.
- 21/06/2001
Revocation or modification of home territory licence, permission or authorisation
REC 6.7.8
See Notes
Where an overseas recognised body has notice that any licence, permission or authorisation which it requires to conduct any regulated activity in its home territory has been or is about to be:
- (1) revoked; or
- (2) modified in any way which would materially restrict the overseas recognised body in performing any regulated activity in its home territory or in the United Kingdom;
it must immediately notify the FSA of that fact and must give the FSA the information specified for the purposes of this rule in REC 6.7.9 R, as soon as that information is known to it.
- 21/06/2001
REC 6.7.9
See Notes
The following information is specified for the purposes of REC 6.7.8 R:
- (1) particulars of the licence, permission or authorisation which has been or is to be revoked or modified, including particulars of the overseas recognised body's regulated activities to which it relates;
- (2) an explanation of how the revocation or modification restricts or will restrict the overseas recognised body in carrying on any regulated activity in its home territory or in the United Kingdom;
- (3) the date on which the revocation or modification took, or will take, effect and, if it is a temporary measure, any date on which, or any conditions that must be met before which, it will cease to have effect; and
- (4) any reasons given for the revocation or modification.
- 21/06/2001
Language of notice
REC 6.7.10
See Notes
- 21/06/2001
REC 6.7.11
See Notes
- 21/06/2001
Form and method of notification
REC 6.7.12
See Notes
- 21/06/2001
Waivers
REC 6.7.13
See Notes
- 21/06/2001
REC 6.8
Powers of direction and revocation of recognition orders
- 01/12/2004
REC 6.8.1
See Notes
The FSA has similar powers to supervise overseas recognised bodies to those it has to supervise UK recognised bodies. It may (in addition to any other powers it might exercise):
- (1) give directions to an overseas recognised body under section 296 of the Act (Authority's power to give directions) if it has failed, or is likely to fail, to satisfy the recognition requirements or if it has failed to comply with any other obligation imposed by or under the Act; or
- (2) revoke a recognition order under section 297 of the Act (Revoking recognition) if an overseas recognised body is failing, or has failed, to comply with the recognition requirements or any other obligation in or under the Act.
- 21/06/2001
REC 6.8.2
See Notes
- 21/06/2001
REC 6A
EEA market operators in the United
Kingdom
REC 6A.1
Exercise of passport rights by EEA market operator
- 01/11/2007
REC 6A.1.1
See Notes
Under section 312A of the Act, an EEA market operator may make arrangements in the United Kingdom to facilitate access to, or use of, a regulated market or multilateral trading facility operated by it if:
- (1) the operator has given its Home State regulator notice of its intention to make such arrangements; and
- (2) the Home State regulator has given the FSA notice of the operator's intention.
- 01/11/2007
REC 6A.1.2
See Notes
- 01/11/2007
REC 6A.1.3
See Notes
- 01/11/2007
REC 6A.1.4
See Notes
- 22/12/2011
REC 6A.2
Removal of passport rights from EEA market operator
- 01/11/2007
REC 6A.2.1
See Notes
Under section 312B of the Act, the FSA may prohibit an EEA market operator from making or, as the case may be, continuing arrangements in the United Kingdom, to facilitate access to, or use of, a regulated market, or multilateral trading facility, operated by the operator if:
- 01/11/2007
REC 6A.2.2
See Notes
A requirement is relevant if it is imposed:
- (1) by the operator's Home State regulator in the implementation of MiFID or any EU legislation made under MiFID;
- (2) by provision implementing MiFID, or any EU legislation made under it, in the operator's Home State; or
- (3) by any directly applicable EU regulation made under MiFID.
- 01/12/2009
- Past version of REC 6A.2.2 before 01/12/2009
REC 6A.2.3
See Notes
- 01/11/2007
REC 6A.2.4
See Notes
- 01/07/2012
- Past version of REC 6A.2.4 before 01/07/2012
REC 6A.2.5
See Notes
- 01/11/2007
REC 6A.2.6
See Notes
- 01/11/2007
REC 6A.2.7
See Notes
- 22/12/2011
REC 7
Fees
REC 7.1
[deleted: the provisions in relation to Recognised Investment Exchanges and Recognised Clearing Houses are set out in FEES 1,2, 3 and 4]
- 01/01/2006
- Past version of REC 7.1 before 01/01/2006
REC 7.2
[deleted: the provisions in relation to Recognised Investment Exchanges and Recognised Clearing Houses are set out in FEES 1,2, 3 and 4]
- 01/01/2006
- Past version of REC 7.2 before 01/01/2006
REC 7.3
[deleted: the provisions in relation to Recognised Investment Exchanges and Recognised Clearing Houses are set out in FEES 1,2, 3 and 4]
- 01/01/2006
- Past version of REC 7.3 before 01/01/2006
REC 7 Annex 1
[deleted: the provisions in relation to Recognised Investment Exchanges and Recognised Clearing Houses are set out in FEES 4 Annex 6R]
REC 7 Annex 2
[deleted: the provisions in relation to Recognised Investment Exchanges and Recognised Clearing Houses are set out in FEES?3 Annex 3R]
Transitional Provisions and Schedules
REC TP 1
Transitional provisions
Introduction
1 | This schedule sets out the transitional provisions in REC. |
2 | The Recognition Requirements Regulations also contain transitional provisions applying to recognised bodies. |
3 | GEN also contains some technical transitional provisions that apply throughout the Handbook and which are designed to ensure a smooth transition at commencement. These include transitional provisions relevant to record keeping and notification requirements |
(overleaf)
(1) | (2) Material to which the transitional provision applies | (3) | (4) Transitional provision | (5) Transitional provision: dates in force | (6) Handbook provision: coming into force |
1 | REC 3 and REC 6 | R | Expired | ||
2 | REC 3 | R | Expired | ||
3 | REC 3 | R | Expired | ||
4 | REC 6.6.3 | G | Expired | ||
5 | REC 6.7.5 | R | Expired |
- 01/04/2005
- Past version of REC TP 1 before 01/04/2005
REC Sch 1
Record keeping requirements
- 01/12/2004
REC Sch 1.1
See Notes
There are no record keeping requirements as such in REC. |
UK recognised bodies have obligations under the
Recognition Requirements Regulations
to ensure that satisfactory arrangements are made for recording transactions effected by, or cleared through, their facilities. See REC
2.9 for guidance (in the case of RAPs, see REC
2.9 as applied by REC 2A.3.2 G). RAPs also have separate record keeping obligations under the auction regulation. |
REC Sch 2
Notification requirements
- 01/12/2004
REC Sch 2.1
See Notes
The following table summarises the notification requirements applicable to all recognised bodies. The notification rules are set out in detail in Notification rules for UK recognised bodies and REC 6.7 and, to avoid unnecessary repetition, are not set out in detail here. The notification rules for RAPs differ in some respects from the notification rules for UK RIEs (for example, due to requirements contained in the auction regulation). |
For completeness, summary details of the main notification requirements in the Act itself and the Companies Act 1989 are also included in the table. The summary of these statutory provisions here should not be taken to imply that these are obligations imposed by the FSA under its powers nor that the following summary supersedes or alters the meaning of these provisions. |
Guidance on the statutory notification requirements for overseas recognised bodies is given in REC 6.6. |
REC Sch 2.2
See Notes
Reference to legislation or Handbook | Matter to be notified | Contents of notification | Trigger event | Time allowed |
UK recognised bodies | ||||
The Act 293(5) | Changes to rules and guidance | Details of change | Change to rule or guidance | Without delay |
UK RIEs and UK RCHs | ||||
The Act s300B(1) | Proposal to make regulatory provision | Details of proposal | Proposal to make regulatory provision | Without delay |
Companies Act 1989 s157 | Proposed changes to default rules | Details of proposed change | Proposal to change default rules | 14 days in advance of change |
UK RIEs | ||||
The Act s293(6)(a) | Changes to arrangements for clearing on-exchange transactions | Details of change | Change to arrangements | Without delay |
The Act s293(6)(b) | Changes to criteria determining to whom it will provide clearing services | Details of change | Change to criteria | Without delay |
UK RCHs | ||||
The Act s293(7)(a) | Changes to RIEs for whom clearing services provided | Details of change | Change to RIE | Without delay |
The Act s293(7)(b) | Changes to criteria determining to whom (other than RIEs) it will provide clearing services | Details of change | Change to criteria | Without delay |
RAPs | ||||
The Act s293(6)(a) | Changes to arrangements for clearing transactions effected on the auction platform | Details of change | Change to arrangements | Without delay |
The auction regulation article 7(7) | Either a methodology or a modification to that methodology as specified by the auction regulation | See REC 3.15 | Event concerned | Without delay |
Notification rules for UK recognised bodies (see Notification rules for UK recognised bodies) | ||||
REC 3.4 | Key individuals and internal organisation | Details of change | See REC 3.4 | See REC 3.4 |
REC 3.5 | Disciplinary action and events relating to key individuals | Details of disciplinary action or event | Disciplinary action or awareness of event | Immediately |
REC 3.6 | Constitution and governance | Details of proposals to amend constitution, amendments to constitution and agreements relating to constitution | Communication of proposal to amend constitution, making amendment to constitution or awareness of agreement relating to constitution | Immediately |
REC 3.7 | Auditors | Details of removal or appointment of auditors | Removal or appointment of auditors | Immediately |
REC 3.8 | Financial and other information | See REC 3.8 | See REC 3.8 | See REC 3.8 |
REC 3.9 | Fees and incentive schemes | Summary of proposals to change fees and charges and changes to fees and charges | Communication to members | Immediately |
REC 3.10 | Complaints | Copy of adverse report and details of recommendations from complaints investigator | Availability of report or recommendations | Immediately |
REC 3.11 | Insolvency events | Notice of insolvency event | Insolvency event | Immediately |
REC 3.12 | Legal proceedings | Details of legal proceedings commenced against UK recognised body | Institution of proceedings | Immediately |
REC 3.13 | Delegation of relevant functions | Details of offers or agreements to delegate relevant functions and offers or agreements to undertake relevant functions on behalf of another recognised body | Making offer or agreement to delegate | Immediately |
REC 3.14 | Products, services and normal hours of operation or (for RAPs) the timing, frequency or duration of its bidding windows | See REC 3.14 | See REC 3.14 | Immediately |
REC 3.14A | Operation of a regulated market or MTF | Details of proposal to operate a new regulated market or MTF or close an existing regulated market or MTF | Communication of proposal to members or shareholders | Immediately |
REC 3.15 | Suspension of services and inability to operate facilities or (for RAPs) the cancellation of an auction | See REC 3.15 | Event concerned | Immediately |
REC 3.16 | Information technology systems | Details of business continuity plans and details of failure of reserve information technology system | Changes to business continuity plans and failure of reserve information technology system | Immediately |
REC 3.17 | Inability to discharge regulatory functions | Details of inability to discharge a regulatory functions | Event concerned | Immediately |
REC 3.18 | Membership | Information regarding new types of member and reasons for considering the recognition requirements or (for RAPs) the RAP recognition requirement in regulation 20 can still be met | Admission of new type of non-authorised person or person from new non-UK jurisdiction to membership | Immediately |
REC 3.19 | Investigations | Notice of appointment of person to investigate use of facilities or provision of services | Awareness of appointment | Immediately |
REC 3.20 | Disciplinary action | Details of person against whom disciplinary action taken | Taking disciplinary action | Immediately |
REC 3.21 | Criminal offences and civil prohibitions | Evidence tending to suggest contraventions of the general prohibition, certain criminal offences or market abuse | Having evidence concerned | Immediately |
REC 3.22 | Restriction or instruction to close out, open positions or (for RAPs) restriction on maximum bid size or other remedial measures | Details of decision to restrict member's open position or instruction to close out position or (for RAPs) details of the event and remedial measures proposed | Decision to take action or (for RAPs) proposal to take action | Immediately |
REC 3.23 | Default | Notice of decision to put member into default | Communicating decision to member concerned or any other member | Immediately |
REC 3.24 | Transfers of ownership | Details of transfer of ownership | When the UK RIE becomes aware of the transfer of ownership | Immediately |
REC 3.25 | Significant breaches of rules and disorderly trading conditions | Significant breaches of rules and disorderly trading conditions | Significant breaches of rules and disorderly trading conditions | Immediately |
REC 3.26 | Proposal to make regulatory provision | Details of proposal | Proposal to make regulatory provision | Without delay |
Overseas recognised bodies | ||||
The Act s295 | Report to FSA | Statement as to whether events have occurred which would affect the FSA's assessment of whether the recognition requirements are met or which might have an effect on competition | Not applicable | Once a year |
Notification rules for overseas recognised bodies (see REC 6.7) | ||||
REC 6.7.3 R | Events which might affect the FSA's assessment of whether the recognition requirements are met | Particulars of event | Not applicable | Include in report under s295 |
REC 6.7.4 R | Inclusion of certain matters in report | See REC 6.7.4 R | Not applicable | Include in report under s295 |
REC 6.7.5 R | First report | See REC 6.7.5 R | Not applicable | Include in report under s295 |
REC 6.7.7 R | Changes of address | Details of new addresses | Decision to change address | 14 days in advance of change of address |
REC 6.7.8 R and REC 6.7.9 R | Revocation or modification of home territory licence etc | Details of revocation or modification | Awareness of revocation or modification | Immediately |
REC Sch 3
Fees and other required payments
- 01/12/2004
REC Sch 3.1
See Notes
The aim of the guidance in the following table is to give the reader a quick over-all view of the relevant requirements for paying fees. |
It is not a complete statement of those requirements and should not be relied on as if it were. |
- 01/12/2004
REC Sch 3.2
See Notes
Type of fee | Trigger event | Date/Time for payment | Amount/rate | Handbook reference |
Periodic fee | See REC 7 Annex 1 R Part 1 | See REC 7 Annex 1 R Part 1 | See REC 7 Annex 1 R, Parts 1 and 2 | REC 7.2 |
Application fee | See REC 7 Annex 1 R, Part 2 | On or before making the relevant application | See REC 7 Annex 1 R, Parts 3 and 4 | REC 7.3 |
- 01/12/2004
REC Sch 4
Powers exercised
- 01/12/2004
REC Sch 4.1
See Notes
The following powers and related provisions in the Act have been exercised by the FSA to make the rules in REC: | |
Section 138 (General rule-making power) | |
Section 156 (General supplementary powers) | |
Section 178 (Obligation to notify the Authority: acquisitions of control) | |
Section 191D (Obligation to notify the Authority: dispositions of control) | |
Section 293 (Notification requirements) | |
Section 295 (Notification: overseas investment exchanges and overseas clearing houses) | |
Section 300B (Duty to notify proposal to make regulatory provision). | |
Paragraph 17(1) (Fees) of Schedule 1 (The Financial Services Authority) |
REC Sch 4.2
See Notes
- 03/09/2001
REC Sch 5
Rights of action for damages
- 01/12/2004
REC Sch 5.1
See Notes
There are no rights of action under section 150 of the Act in respect of any contravention by a recognised body of any rule made under the Act. |
- 01/12/2004
REC Sch 6
Rules that can be waived
- 01/12/2004
REC Sch 6.1
See Notes
- 01/12/2004