C7 Part XVIIIF172Recognised investment exchanges, clearing houses and CSDs
Pt. 18 applied in part (with modifications) (12.12.2011) by The Recognised Auction Platforms Regulations 2011 (S.I. 2011/2699), reg. 7, Sch. 2 (as amended (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 37 (with regs. 7(4), 9(1)))
Chapter I Exemption
General
285F173Exemption for recognised bodies etc.
1
In this Act—
a
“recognised investment exchange” means an investment exchange in relation to which a recognition order is in force;
F132b
“recognised clearing house” means—
i
a central counterparty in relation to which a recognition order is in force (in this Part referred to as a “recognised central counterparty”), or
ii
a clearing house which provides clearing services in the United Kingdom without doing so as a central counterparty, and in relation to which a recognition order is in force;
c
“EEA central counterparty” means a person established in an EEA State other than the United Kingdom who has been authorised by the competent authority of that State as a central counterparty pursuant to Article 17 of the EMIR regulation; F176...
d
“third country central counterparty” means a person established in a State which is not an EEA State who has been recognised by ESMA as a central counterparty pursuant to Article 25 of the EMIR regulation.
F177e
“recognised CSD” means a central securities depository in relation to which a recognition order is in force;
f
“EEA CSD” means a person established in an EEA State other than the United Kingdom who has been authorised by the competent authority of that State as a central securities depository pursuant to Article 16 of the CSD regulation; and
g
“third country CSD” means a central securities depository established in a State which is not an EEA State which has been recognised by ESMA pursuant to Article 25 of the CSD regulation.
2
A recognised investment exchange is exempt from the general prohibition as respects any regulated activity—
a
which is carried on as a part of the exchange’s business as an investment exchange; or
F129b
which is carried on for the purposes of, or in connection with, the provision by the exchange of services designed to facilitate the provision of clearing services by another person.
3
F130A recognised clearing house which is not a recognised central counterparty is exempt from the general prohibition as respects any regulated F131activity—
a
which is carried on for the purposes of, or in connection with, the provision of clearing services by the clearing house, or
b
which is carried on for the purposes of, or in connection with, the provision by the clearing house of services designed to facilitate the provision of clearing services by another person.
F2203ZA
Subsections (2) and (3) do not apply in respect of the regulated activity specified in article 63S of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (administering a benchmark).
F1273A
A recognised central counterparty is exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, the services or activities specified in its recognition order.
3B
An EEA central counterparty is exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, the services or activities specified in its authorisation granted pursuant to Article 17 of the EMIR regulation.
3C
A third country central counterparty is exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, the services or activities specified in its recognition by ESMA pursuant to Article 25 of the EMIR regulation.
F1753D
A recognised CSD is exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with—
a
the core services listed in Section A of the Annex to the CSD regulation which the central securities depository is authorised to provide pursuant to Article 16 or 19(1)(a) or (c) of that regulation, or
b
any non-banking-type ancillary services listed in or permitted under Section B of that Annex which the central securities depository is authorised to provide, including services notified under Article 19 of the CSD regulation.
3E
An EEA CSD is exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, the services and activities covered by its authorisation granted pursuant to Article 16 of the CSD regulation (including additional services authorised or notified under Article 19 of that regulation).
3F
But where Article 23(2) of the CSD regulation applies to an EEA CSD, the EEA CSD is exempt from the general prohibition as mentioned in subsection (3E) only if Article 23(6) of that regulation is complied with.
3G
A third country CSD is exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, the services and activities covered by its recognition by ESMA pursuant to Article 25 of the CSD regulation.
3H
But a recognised CSD, an EEA CSD or a third country CSD is not exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, any banking-type ancillary service listed in or permitted under Section C of the Annex to the CSD regulation.
F1284
The Treasury may by order amend paragraph (b) of subsection (2) or (3).
285AF15F174Powers exercisable in relation to recognised bodies
1
For the purposes of this Part, the FCA is “the appropriate regulator” in relation to recognised investment exchanges.
2
For the purposes of this Part, the Bank of England is “the appropriate regulator” in relation to recognised clearing houses F180, recognised CSDs and EEA CSDs.
3
In Schedule 17A—
a
b
Part 2 applies certain provisions of this Act in relation to the Bank of England in consequence of the conferring of functions on the Bank under this Part of this Act;
c
d
Part 4 makes provision about fees.
286 Qualification for recognition.
1
The Treasury may make regulations setting out the requirements—
a
b
which, if a recognition order is made, it must continue to satisfy if it is to remain a recognised body.
2
But if regulations contain provision as to the default rules of an investment exchange F182, clearing house or central securities depository, or as to proceedings taken under such rules by such a body, they require the approval of the Secretary of State.
3
“Default rules” means rules of an investment exchange F183, clearing house or central securities depository which provide for the taking of action in the event of a person’s appearing to be unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the exchange F183, clearing house or central securities depository.
4
“Market contract” means—
a
b
such other kind of contract as may be prescribed.
F2154A
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2154B
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2154C
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2154D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F2154E
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F164F
Regulations under subsection (1) may confer power on the appropriate regulator to make rules for the purposes of the regulations or of any specified provision made by the regulations.
5
Requirements resulting from this section are referred to in this Part as “recognition requirements”.
F16
In the case of an investment exchange, requirements resulting from this section are in addition to requirements which must be satisfied by the exchange as a result of section 290(1A) before F18the FCA may make a recognition order declaring the exchange to be a recognised investment exchange.
Applications for recognition
I1287 Application by an investment exchange.
1
Any body corporate or unincorporated association may apply to F19the FCA for an order declaring it to be a recognised investment exchange for the purposes of this Act.
2
The application must be made in such manner as F20the FCA may direct and must be accompanied by—
a
a copy of the applicant’s rules;
b
a copy of any guidance issued by the applicant;
c
the required particulars; and
d
such other information as F20the FCA may reasonably require for the purpose of determining the application.
3
The required particulars are—
a
particulars of any arrangements which the applicant has made, or proposes to make, for the provision F21by another person of clearing services in respect of transactions effected on the exchange;
b
c
a programme of operations which includes the types of business the applicant proposes to undertake and the applicant's proposed organisational structure;
d
such particulars of the persons who effectively direct the business and operations of the exchange as F23the FCA may reasonably require;
e
such particulars of the ownership of the exchange, and in particular of 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, as F24the FCA may reasonably require.
F34
Subsection (3)(c) to (e) does not apply to an application by an overseas applicant.
287AF216Application by an investment exchange: persons connected with an applicant
1
Subsection (2) applies where—
a
a body corporate or unincorporated association (“A”) makes an application under section 287 for an order declaring it to be a recognised investment exchange; and
b
A is—
i
connected with an EEA credit institution or EEA insurance undertaking; or
ii
controlled by a person who also controls an EEA credit institution or EEA insurance undertaking.
2
Before making a recognition order declaring A to be a recognised investment exchange under section 290, the FCA must consult the competent authority responsible for the supervision of the EEA credit institution or EEA insurance undertaking.
3
A is connected with an EEA credit institution or EEA insurance undertaking if—
a
A is a subsidiary undertaking of the EEA credit institution or EEA insurance undertaking; or
b
A is a subsidiary undertaking of a parent undertaking of the EEA credit institution or EEA insurance undertaking.
4
In this section—
“control” has the same meaning as in Article 4.1.35(b) (definitions) of the markets in financial instruments directive;
“EEA credit institution” means a credit institution (as defined by Article 4.1.27 of the markets in financial instruments directive) authorised in another EEA State under the capital requirements directive;
“EEA insurance undertaking” means an insurance undertaking (as defined by Article 13.1 of the Solvency 2 Directive) authorised in another EEA State.
I2288 Application by a clearing house.
F184A1
This section applies only in relation to an application by a clearing house.
F1341
A body corporate or unincorporated association which is established in the United Kingdom may, where it intends to provide clearing services as a central counterparty, apply to the Bank of England in accordance with Article 17 of the EMIR regulation for an order granting authorisation for the purposes of that Article and declaring it to be a recognised central counterparty for the purposes of this Act.
1A
A body corporate or unincorporated association may, where it intends to provide clearing services in the United Kingdom without doing so as a central counterparty, apply to the Bank of England for an order declaring it to be for the purposes of this Act a recognised clearing house which is not a recognised central counterparty.
2
F135An application under subsection (1A) must be made in such manner as F25the Bank of England may direct and must be accompanied by—
a
a copy of the applicant’s rules;
b
a copy of any guidance issued by the applicant;
c
the required particulars; and
d
such other information as F26the Bank may reasonably require for the purpose of determining the application.
3
The required particulars are—
a
if the applicant makes, or proposes to make, clearing arrangements with a recognised investment exchange, particulars of those arrangements;
b
if the applicant proposes to provide clearing services F27or services falling within section 285(3)(b) for persons other than recognised investment exchanges, particulars of the criteria which it will apply when determining to whom it will provide those services.
288AF169Application by a central securities depository
Where a legal person which is established in the United Kingdom intends—
a
to operate a securities settlement system referred to in point (3) of Section A of the Annex to the CSD regulation, and
b
to provide at least one other core service listed in Section A of that Annex,
it may apply to the Bank of England in accordance with Article 17 of the CSD regulation and any directly applicable EU regulation made under that Article for an order granting authorisation for the purposes of Article 16 of that regulation and declaring it to be a recognised CSD for the purposes of this Act.
289 Applications: supplementary.
1
At any time after receiving an application and before determining it, F28the appropriate regulator may require the applicant to provide such further information as it reasonably considers necessary to enable it to determine the application.
2
3
Different directions may be given, or requirements imposed, by F110the appropriate regulator with respect to different applications.
F1364
In relation to an application under section 288(1), this section does not apply to information which can be required under Article 17 of the EMIR regulation.
F1855
In relation to an application under section 288A, this section applies only in relation to information which the Bank of England may require in connection with recognition requirements which do not derive from the CSD regulation or any directly applicable EU regulation made under the CSD regulation.
I3290 Recognition orders.
F1381
If it appears to the appropriate regulator that the applicant satisfies the recognition requirements applicable in its case, the regulator may—
a
where the application is made under section 287, make a recognition order declaring the applicant to be a recognised investment exchange;
b
where the application is made under section 288(1) and Article 17 of the EMIR regulation allows authorisation to be granted, make a recognition order (“a central counterparty recognition order”) granting authorisation for the purposes of that Article and declaring the applicant to be a recognised central counterparty; F190...
c
where the application is made under section 288(1A), make a recognition order declaring the applicant to be a recognised clearing house which is not a recognised central counterparty F189; or
d
where the application is made under section 288A, make a recognition order (a “CSD recognition order”) granting authorisation for the purposes of Article 16 of the CSD regulation and declaring the applicant to be a recognised CSD.
F41A
In the case of an application for an order declaring the applicant to be a recognised investment exchange, the reference in subsection (1) to the recognition requirements applicable in its case includes a reference to requirements contained in any directly applicable F217EU regulation made under the markets in financial instruments directive F218or the markets in financial instruments regulation.
1B
In the case mentioned in subsection (1A), the application must be determined by F29the FCA before the end of the period of six months beginning with the date on which it receives the completed application.
1C
Subsection (1B) does not apply in the case of an application by an overseas applicant.
F1371D
A central counterparty recognition order must specify the services or activities linked to clearing which the applicant may provide or perform and the classes of financial instruments covered by the order.
F1861E
A CSD recognition order must specify—
a
the core services listed in Section A of the Annex to the CSD regulation which the applicant is authorised to provide pursuant to Article 16 or 19(1)(a) or (c) of that regulation, and
b
any non-banking-type ancillary services listed in or permitted under Section B of that Annex which the applicant is authorised to provide, including services notified under Article 19 of the CSD regulation.
1F
A CSD recognition order must also record the terms of any of the following authorisations granted to the CSD under the CSD regulation or notifications made by the CSD under that regulation—
a
an authorisation under Article 19(1) of the CSD regulation to outsource a core service under Article 30 of that regulation,
b
an authorisation under Article 19(1)(d) of the CSD regulation (settlement of cash leg of securities settlement system in the books of another settlement agent),
c
an authorisation under Article 19(1)(e) of the CSD regulation (setting up interoperable link),
d
a notification under Article 19(5) of the CSD regulation (other CSD links),
e
an authorisation under Article 54 or 56 of the CSD regulation to provide (in accordance with Article 54(2)(a) or (b)) any banking-type ancillary service listed in or permitted under Section C of the Annex to that regulation, and
f
an authorisation to provide investment services and activities in addition to the services explicitly listed in Sections A and B of the Annex to the CSD regulation.
F302
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3
4
A recognition order must specify a date on which it is to take effect.
F1874A
If the Bank of England has not made a decision in relation to an application under section 288A within six months of that application being complete, the applicant may refer the matter to the Tribunal.
4B
For the purposes of subsection (4A), an application is “complete” when the Bank of England informs the applicant that it is complete pursuant to Article 17(3) of the CSD regulation.
5
Section 298 has effect in relation to a decision to refuse to make a recognition order F140in respect of an investment exchange or a clearing house which is not a central counterparty—
a
as it has effect in relation to a decision to revoke such an order; and
b
as if references to a recognised body were references to the applicant.
F1885A
Section 298 has effect in relation to a decision to refuse an application under section 288A—
a
as it has effect in relation to a decision to make a revocation order under section 297(1B); and
b
as if references to a recognised body were references to the applicant.
F326
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1417
Where—
a
a body corporate or unincorporated association has made an application under section 288(1), and
b
the Bank of England has determined that application in accordance with Article 17 of the EMIR regulation,
any previous recognition order under section 290(1)(c) or 292(2)(b) shall cease to be valid.
290ZAF158Variation of central counterparty recognition order
1
On an application made to it in accordance with Article 15 of the EMIR regulation, the Bank of England may in accordance with Article 17 of that regulation vary a central counterparty recognition order by specifying an additional service or activity or class of financial instruments.
2
Where Article 20(5) of the EMIR regulation applies, the Bank of England may vary a central counterparty recognition order by removing a service or activity or class of financial instruments from those specified in the order.
3
The Bank of England may at any time vary a central counterparty recognition order for the purpose of correcting an error in, or omission from, the order.
290ZBF170Variation of CSD recognition order
1
Where the Bank of England—
a
grants an authorisation in accordance with Article 19(1), 54 or 56 of the CSD regulation,
b
receives a notification under Article 19 of that regulation, or
c
decides to withdraw authorisation for a service, activity or financial instrument in accordance with Article 20(4) or 57(4) of that regulation,
the Bank of England must vary the CSD recognition order accordingly.
2
Where an authorisation to provide investment services and activities in addition to the services explicitly listed in Sections A and B of the Annex to the CSD regulation is granted, varied or withdrawn, the Bank of England must vary the CSD recognition order accordingly.
3
The Bank of England may at any time vary a CSD recognition order for the purpose of correcting an error in, or omission from, the order.
290AF5Refusal of recognition on ground of excessive regulatory provision
1
F33The appropriate regulator must not make a recognition order if it appears to F34it that an existing or proposed regulatory provision of the applicant in connection with—
a
the applicant's business as an investment exchange, F35...
b
the provision by the applicant of clearing services, F36or
c
the provision by the applicant of services falling within section 285(2)(b) or (3)(b),
imposes or will impose an excessive requirement on the persons affected (directly or indirectly) by it.
2
The reference in section 290(1) (making of recognition order) to satisfying the applicable recognition requirements shall be read accordingly.
3
Expressions used in subsection (1) above that are defined for the purposes of section 300A (power of F37appropriate regulator to disallow excessive regulatory provision) have the same meaning as in that section.
4
The provisions of section 300A(3) and (4) (determination whether regulatory provision excessive) apply for the purposes of this section as for the purposes of section 300A.
5
Section 298 has effect in relation to a decision under this section to refuse a recognition order—
a
as it has effect in relation to a decision to revoke such an order, and
b
as if references to a recognised body were references to the applicant.
F1426
This section does not apply to an application for recognition as an overseas investment exchange, an overseas clearing house F191, a recognised central counterparty or a recognised CSD.
C1C2291 Liability in relation to recognised body’s regulatory functions.
1
A recognised body and its officers and staff are not to be liable in damages for anything done or omitted in the discharge of the recognised body’s regulatory functions unless it is shown that the act or omission was in bad faith.
2
But subsection (1) does not prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the M3Human Rights Act 1998.
3
“Regulatory functions” means the functions of the recognised body so far as relating to, or to matters arising out of, the obligations to which the body is subject under or by virtue of this Act.
I4C11292 Overseas investment exchanges and overseas clearing houses.
1
An application under section 287 or F144288(1A) by an overseas applicant must contain 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 this Act.
2
If it appears to F38the appropriate regulator that an overseas applicant satisfies the requirements of subsection (3) it may make a recognition order declaring the applicant to be—
a
a recognised investment exchange;
b
a recognised clearing house F145which is not a central counterparty.
3
The requirements are that—
F219a
investors are afforded protection equivalent to that which they would be afforded if the body concerned were required to comply with—
i
recognition requirements, other than any such requirements which are expressed in regulations under section 286 not to apply for the purposes of this paragraph, and
ii
requirements contained in any directly applicable EU regulation made under the markets in financial instruments directive or the markets in financial instruments regulation;
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 investment exchange or clearing house;
c
the applicant is able and willing to co-operate with F111the appropriate regulator by the sharing of information and in other ways;
d
adequate arrangements exist for co-operation between F112the appropriate regulator and those responsible for the supervision of the applicant in the country or territory in which the applicant’s head office is situated.
4
In considering whether it is satisfied as to the requirements mentioned in subsection (3)(a) and (b), F113the appropriate regulator 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.
5
In relation to an overseas applicant and a body or association declared to be a recognised investment exchange or recognised clearing house by a recognition order made by virtue of subsection (2)—
a
the reference in section 313(2) to recognition requirements is to be read as a reference to matters corresponding to the matters in respect of which provision is made in the recognition requirements;
b
sections 296(1) and 297(2) have effect as if the requirements mentioned in section 296(1)(a) and section 297(2)(a) were those of subsection (3)(a), (b), and (c) of this section;
c
section 297(2) has effect as if the grounds on which a recognition order may be revoked under that provision included the ground that in the opinion of F114the appropriate regulator arrangements of the kind mentioned in subsection (3)(d) no longer exist.
F1436
Where a recognised clearing house is authorised as an EEA central counterparty or recognised as a third country central counterparty, any previous recognition order under section 290(1)(c) or 292(2)(b) shall cease to be valid.
F12Publication of information by recognised investment exchange
S. 292A and cross-heading inserted (1.4.2007 for certain purposes and 1.11.2007 otherwise) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 (S.I. 2007/126), regs. 1(2), 3(2), Sch. 2 para. 5
292APublication of information by recognised investment exchange
1
A recognised investment exchange must as soon as practicable after a recognition order is made in respect of it publish such particulars of the ownership of the exchange as the F39FCA may reasonably require.
2
The particulars published under subsection (1) must include particulars of 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.
3
If an ownership transfer takes place in relation to a recognised investment exchange, the exchange must as soon as practicable after becoming aware of the transfer publish such particulars relating to the transfer as the F115FCA may reasonably require.
4
”Ownership transfer”, in relation to an exchange, means a transfer of ownership which gives rise to a change in the persons who are in a position to exercise significant influence over the management of the exchange, whether directly or indirectly.
5
A recognised investment exchange must publish such particulars of any decision it makes to suspend or remove a financial instrument from trading on a regulated market operated by it as the F116FCA may reasonably require.
6
The F117FCA may determine the manner of publication under subsections (1), (3) and (5) and the timing of publication under subsection (5).
7
This section does not apply to an overseas investment exchange.
Supervision
I5293 Notification requirements.
1
The F40appropriate regulator may make rules requiring a recognised body to give it—
a
notice of such events relating to the body as may be specified; and
b
such information in respect of those events as may be specified.
2
The rules may also require a recognised body to give the F40appropriate regulator, at such times or in respect of such periods as may be specified, such information relating to the body as may be specified.
3
An obligation imposed by the rules extends only to a notice or information which the F40appropriate regulator may reasonably require for the exercise of its functions under this Act F194or F221for the purposes ofDirective 2016/1148/EU of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security network and information systems across the Union.
4
The rules may require information to be given in a specified form and to be verified in a specified manner.
5
If a recognised body—
a
alters or revokes any of its rules or guidance, or
b
makes new rules or issues new guidance,
it must give written notice to the F41appropriate regulator without delay.
F1925A
In relation to a recognised CSD, in subsection (5), “guidance” means guidance issued, or any recommendation made, in writing or other legible form and intended to have continuing effect, by the recognised CSD to—
a
all or any class of its members, or
b
persons using or seeking to use its services,
with respect to any of the services or activities specified in its recognition order.
6
If a recognised investment exchange makes a change—
a
in the arrangements it makes for the provision F42by another person of clearing services in respect of transactions effected on the exchange, or
b
in the criteria which it applies when determining to whom it will provide F43services falling within section 285(2)(b),
it must give written notice to F44the FCA and the Bank of England without delay.
7
If a recognised clearing house makes a change—
a
in the recognised investment exchanges for whom it provides clearing services F45or services falling within section 285(3)(b), or
b
in the criteria which it applies when determining to whom (other than recognised investment exchanges) it will provide clearing services F46or services falling within section 285(3)(b),
it must give written notice to F47the Bank of England and the FCA without delay.
F1937A
In subsections (1) and (2), “recognised body” includes an EEA CSD.
8
Subsections (5) to (7) do not apply to an overseas investment exchange or an overseas clearing house.
9
“Specified” means specified in F48the appropriate regulator's rules.
293AF49Information: compliance with EU requirements
F1951
The appropriate regulator may require a recognised body to give the appropriate regulator such information as the appropriate regulator reasonably requires in order to satisfy itself that the body is complying with any qualifying EU provision that is specified, or of a description specified, for the purposes of this section by the Treasury by order.
F1962
The Bank of England may require an EEA CSD which provides any services referred to in the Annex to the CSD regulation in the United Kingdom to give the Bank reports on those services and statistical information relating to those services, at such times or in respect of such periods as may be specified by the Bank.
3
A requirement under subsection (2) extends only to information which the Bank may reasonably require for the exercise of its functions under the CSD regulation or any directly applicable EU regulation made under the CSD regulation.
C3I6294 Modification or waiver of rules.
1
The F50appropriate regulator may, on the application or with the consent of a recognised body, direct that rules made under section 293 or 295—
a
are not to apply to the body; or
b
are to apply to the body with such modifications as may be specified in the direction.
2
An application must be made in such manner as the F118appropriate regulator may direct.
3
Subsections (4) to (6) apply to a direction given under subsection (1).
4
The F119appropriate regulator may not give a direction unless it is satisfied that—
a
compliance by the recognised body with the rules, or with the rules as unmodified, would be unduly burdensome or would not achieve the purpose for which the rules were made; and
b
the direction would not result in undue risk to persons whose interests the rules are intended to protect.
5
A direction may be given subject to conditions.
6
The F120appropriate regulator may—
a
revoke a direction; or
b
vary it on the application, or with the consent, of the recognised body to which it relates.
F1977
In this section, “recognised body”, in relation to rules made under section 293, includes an EEA CSD.
I7295 Notification: overseas investment exchanges and overseas clearing houses.
1
At least once a year, every overseas investment exchange and overseas clearing house must provide F51the appropriate regulator with a report.
2
The report must contain a statement as to whether any events have occurred which are F52likely to affect the appropriate regulator's assessment of whether it is satisfied as to the requirements set out in section 292(3).
3
The report must also contain such information as may be specified in rules made by F53the appropriate regulator.
F544
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
295AF171On-site inspection of EEA CSDs
1
For the purposes of Article 24(1) of the CSD regulation (co-operation in relation to branches of EEA CSDs), the Bank of England may, on giving reasonable notice and at any reasonable time, carry out an on-site inspection of any branch maintained by an EEA CSD in the United Kingdom.
2
Before carrying out an on-site inspection under subsection (1), the Bank of England must inform the competent authority of the EEA State in which the EEA CSD is established.
3
The Bank of England’s power under subsection (1) is enforceable, on the application of the Bank of England, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
C4C9296F65Appropriate regulator's power to give directions.
1
This section applies if it appears to F55the appropriate regulator that a recognised body—
a
has failed, or is likely to fail, to satisfy the recognition requirements; or
b
has failed to comply with any other obligation imposed on it by or under this Act.
F61A
This section also applies F56if it appears to the appropriate regulator that a recognised body has failed, or is likely to fail, to comply with any obligation imposed on it by F200or under any F57directly applicable EU regulation specified (or of a description specified) in an order made by the Treasury.
F1981B
This section also applies in the circumstances described in the second sub-paragraph of Article 24(5) of the CSD regulation if it appears to the Bank of England that it is appropriate to give a direction to an EEA CSD in relation to any services referred to in the Annex to the CSD regulation which the EEA CSD provides in the United Kingdom, in order to ensure its compliance with obligations arising from the CSD regulation or any directly applicable EU regulation made under the CSD regulation.
2
F58The regulator concerned may direct F201the recognised body or EEA CSD to take specified steps for the purpose of securing the body’s compliance with—
a
the recognition requirements; or
b
any obligation of the kind in question.
F72A
In the case of F59a recognised body other than an overseas investment exchange or overseas clearing house, those steps may include—
a
the granting to F60the regulator concerned of access to the premises of F61the body for the purpose of inspecting—
i
those premises; or
ii
any documents on the premises which appear to F60the regulator concerned to be relevant for the purpose mentioned in subsection (2);
b
the suspension of the carrying on of any regulated activity by F62the body for the period specified in the direction.
F1992B
In the case of an EEA CSD, the steps mentioned in subsection (2) may include—
a
the granting to the Bank of England of access to any premises of the EEA CSD situated in the United Kingdom for the purpose of inspecting—
i
those premises; or
ii
any documents on the premises which appear to the Bank of England to be relevant for the purpose mentioned in subsection (2)(b);
b
the suspension for the period specified in the direction of the carrying on in the United Kingdom by the EEA CSD of any activity in respect of which the EEA CSD is exempt from the general prohibition.
3
4
The fact that a rule made by a recognised body has been altered in response to a direction given by F64an appropriate regulator does not prevent it from being subsequently altered or revoked by the recognised body.
296AF159Additional power to direct F160recognised central counterparties
1
The Bank of England may direct a F161recognised central counterparty to take, or refrain from taking, specified action if the Bank is satisfied that it is necessary to give the direction, having regard to the public interest in—
a
protecting and enhancing the stability of the UK financial system,
b
maintaining public confidence in the stability of the UK financial system,
c
d
maintaining and enhancing the financial resilience of the F163recognised central counterparty.
2
The direction may, in particular—
a
specify the time for compliance with the direction,
b
require the rules of the F163recognised central counterparty to be amended, and
c
override such rules (whether generally or in their application to a particular case).
3
The direction may not require the F163recognised central counterparty—
a
to take any steps for the purpose of securing its compliance with—
i
the recognition requirements, or
ii
any obligation of a kind mentioned in section 296(1)(b) or (1A), or
b
to accept a transfer of property, rights or liabilities of another F163recognised central counterparty.
4
If the direction is given in reliance on section 298(7) the Bank must, within a reasonable time of giving the direction, give the F163recognised central counterparty a statement of its reasons—
a
for giving the direction, and
b
for relying on section 298(7).
5
The direction is enforceable, on the application of the Bank, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
6
The Bank may revoke a direction given under this section.
C5297 Revoking recognition.
1
F1461A
A central counterparty recognition order may be revoked by an order made by the Bank of England in accordance with Article 20 of the EMIR regulation.
F2021B
A CSD recognition order may be revoked by an order made by the Bank of England in accordance with Article 20 of the CSD regulation.
2
If it appears to F67the appropriate regulator that a recognised body F149which is not a recognised central counterpartyF204or a recognised CSD—
a
is failing, or has failed, to satisfy the recognition requirements, or
b
is failing, or has failed, to comply with any other obligation imposed on it by or under this Act,
it may make an order revoking the recognition order for that body even though the body does not wish the order to be made.
F82A
If it appears to F68the appropriate regulator that a recognised body F147which is not a recognised central counterpartyF203or a recognised CSDF69...—
a
has not carried on the business of an investment exchange F70or (as the case may be) of a clearing house during the period of twelve months beginning with the day on which the recognition order took effect in relation to it,
b
has not carried on the business of an investment exchange F71or (as the case may be) of a clearing house at any time during the period of six months ending with the relevant day, or
c
has failed, or is likely to fail, to comply with any obligation imposed on it by a F72directly applicable EU regulation specified (or of a description specified) in an order made by the Treasury,
it may make an order revoking the recognition order for that body even though the body does not wish the order to be made.
2B
The “relevant day”, for the purposes of paragraph (b) of subsection (2A), is the day on which the power to make an order under that subsection is exercised.
2C
Subsection (2A) does not apply to an overseas investment exchange F73or overseas clearing house.
F1652D
If it appears to the Bank of England that a recognised central counterparty F205or a recognised CSD has failed, or is likely to fail, to comply with an obligation imposed on it by or under Article 4 or 15 of the SFT regulation it may make an order revoking the recognition order for that body even though the body does not wish the order to be made.
3
An order under this section (“a revocation order”) must specify the date on which it is to take effect.
4
In the case of a revocation order made under subsection (2) F9or (2A), the specified date must not be earlier than the end of the period of three months beginning with the day on which the order is made.
5
A revocation order may contain such transitional provisions as F74the appropriate regulator thinks necessary or expedient.
F146
Where F75the appropriate regulator makes an order revoking the recognition order for a body that is a recognised investment exchange, it must notify ESMA.
C6I8C8C10298 Directions and revocation: procedure.
1
Before giving a direction under section 296 F76or 296A, or making a revocation order under section F209297(1B), (2),F167(2A) or (2D), F79the appropriate regulator must—
a
give written notice of its intention to do so to the recognised body concerned;
F150b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F151c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
A notice under subsection (1) must—
a
state why F80the appropriate regulator intends to give the direction or make the order; and
b
draw attention to the right to make representations conferred by subsection (3).
3
Before the end of the period for making representations—
a
the recognised body,
F152b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F153c
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
may make representations to F81the appropriate regulator.
F1544
The period for making representations is such period as is specified in the notice (which may, in any particular case, be extended by the appropriate regulator).
5
In deciding whether to—
a
give a direction, or
b
make a revocation order,
F82the appropriate regulator must have regard to any representations made in accordance with subsection (3).
6
When F83the appropriate regulator has decided whether to give a direction under section 296 F77or 296A or to make the proposed revocation order, it must—
aa
in the case of a direction under section 296 given to a recognised CSD or an EEA CSD or a revocation order under section 297(1B), give the recognised CSD or EEA CSD reasons for its decision.
F155b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F1666A
If the appropriate regulator—
a
gives a direction under section 296 to a recognised body because it has failed, or is likely to fail, to comply with an obligation imposed on it by or under Article 4 or 15 of the SFT regulation;
F211aa
gives any other direction under section 296 to a recognised CSD;
ab
gives a direction under section 296 to an EEA CSD;
ac
makes a revocation order under section 297(1B);
b
makes a revocation order under section 297(2A)(c) because a recognised body has failed, or is likely to fail, to comply with an obligation imposed on it by or under Article 4 or 15 of the SFT regulation; or
c
makes a revocation order under section 297(2D),
the body concerned may refer the matter to the Tribunal.
7
If F84the appropriate regulatorF156reasonably considers it necessary to do so, it may give a direction under section 296 F78or 296A—
a
without following the procedure set out in this section; or
b
if F84the appropriate regulator has begun to follow that procedure, regardless of whether the period for making representations has expired.
F2077A
Subsection (7) does not apply in relation to a direction given to a recognised CSD or EEA CSD under section 296.
7B
But in the circumstances described in the second sub-paragraph of Article 24(5) of the CSD regulation, the Bank of England may give a direction to an EEA CSD under section 296 without following the procedure set out in subsections (1) to (5).
8
If F85the appropriate regulator has, in relation to a particular matter, followed the procedure set out in subsections (1) to (5), it need not follow it again if, in relation to that matter, it decides to take action other than that specified in its notice under subsection (1).
F2089
In this section, “recognised body” includes an EEA CSD.
299 Complaints about recognised bodies.
1
The F86appropriate regulator must make arrangements for the investigation of any relevant complaint about a recognised body.
2
“Relevant complaint” means a complaint which the F121appropriate regulator considers is relevant to the question of whether the body concerned should remain a recognised body.
300 Extension of functions of Tribunal.
1
If the Treasury are satisfied that the condition mentioned in subsection (2) is satisfied, they may by order confer functions on the Tribunal with respect to disciplinary proceedings—
a
of one or more investment exchanges in relation to which a recognition order under section 290 is in force or of such investment exchanges generally, F214...
b
of one or more clearing houses in relation to which a recognition order under that section is in force or of such clearing houses generally F213or
c
of one or more central securities depositories in relation to which a recognition order under that section is in force or of such central securities depositories generally.
2
The condition is that it is desirable to exercise the power conferred under subsection (1) with a view to ensuring that—
a
decisions taken in disciplinary proceedings with respect to which functions are to be conferred on the Tribunal are consistent with—
i
decisions of the Tribunal in cases arising under Part VIII; and
ii
decisions taken in other disciplinary proceedings with respect to which the Tribunal has functions as a result of an order under this section; or
b
the disciplinary proceedings are in accordance with the Convention rights.
3
An order under this section may modify or exclude any provision made by or under this Act with respect to proceedings before the Tribunal.
4
“Disciplinary proceedings” means proceedings under the rules of an investment exchange F212, clearing house or central securities depository in relation to F164a contravention of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation by a person subject to the rules.
5
“The Convention rights” has the meaning given in section 1 of the M5Human Rights Act 1998.
F13Power to disallow excessive regulatory provision
S. 300A and cross-heading inserted (20.12.2006) by Investment Exchanges and Clearing Houses Act 2006 (c. 55), ss. 1, 5(2) (with s. 5(3))
300APower of F88appropriate regulator to disallow excessive regulatory provision
1
This section applies where a recognised body proposes to make any regulatory provision in connection F87with—
a
its business as an investment exchange,
b
the provision by it of clearing services, or
c
the provision by it of services falling within section 285(2)(b) or (3)(b).
2
If it appears to the F89appropriate regulator—
a
that the proposed provision will impose a requirement on persons affected (directly or indirectly) by it, and
b
that the requirement is excessive,
the F89appropriate regulator may direct that the proposed provision must not be made.
3
A requirement is excessive if—
a
it is not required under F10EU law or any enactment or rule of law in the United Kingdom, and
b
either—
i
it is not justified as pursuing a reasonable regulatory objective, or
ii
it is disproportionate to the end to be achieved.
4
In considering whether a requirement is excessive the F90appropriate regulator must have regard to all the relevant circumstances, including—
a
the effect of existing legal and other requirements,
b
the global character of financial services and markets and the international mobility of activity,
c
the desirability of facilitating innovation, and
d
the impact of the proposed provision on market confidence.
5
In this section “requirement” includes any obligation or burden.
6
Any provision made in contravention of a direction under this section is of no effect.
300BF11Duty to notify proposal to make regulatory provision
1
A recognised body that proposes to make any regulatory provision must give written notice of the proposal to the F91appropriate regulator without delay.
2
The F91appropriate regulator may by rules under section 293 (notification requirements)—
a
specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in subsection (1) above does not apply, or
b
provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.
3
The F91appropriate regulator may also by rules under that section—
a
make provision as to the form and contents of the notice required, and
b
require the body to provide such information relating to the proposal as may be specified in the rules or as the F91appropriate regulator may reasonably require.
300CRestriction on making provision before F92appropriate regulator decides whether to act
1
Where notice of a proposal to make regulatory provision is required to be given to the F122appropriate regulator under section 300B, the provision must not be made—
a
before that notice is given, or
b
subject to the following provisions of this section, before the end of the initial period.
2
The initial period is—
a
the period of 30 days beginning with the day on which the F123appropriate regulator receives notice of the proposal, or
b
if any consultation period announced by the body in relation to the proposal ends after that 30-day period, the end of the consultation period.
3
4
If—
a
before the end of the initial period the F125appropriate regulator notifies the body that it is not calling in the proposal, or
b
the initial period ends without the F126appropriate regulator having notified the body that it is calling in the proposal,
the body may then make the proposed provision.
5
Any provision made in contravention of this section is of no effect.
300DConsideration by F101appropriate regulator whether to disallow proposed provision
1
This section applies where the F93appropriate regulator notifies a recognised body that it is calling in a proposal to make regulatory provision.
2
The F93appropriate regulator must publish a notice—
a
giving details of the proposed provision,
b
stating that it has called in the proposal in order to consider whether to disallow it, and
c
specifying a period during which representations with respect to that question may be made to it.
3
The F93appropriate regulator may extend the period for making representations.
4
The F93appropriate regulator must notify the body of its decision whether to disallow the provision not later than 30 days after the end of the period for making representations, and must publish the decision and the reasons for it.
5
The body must not make the provision unless and until—
a
the F94appropriate regulator notifies it of its decision not to disallow it, or
b
the 30-day period specified in subsection (4) ends without the F95appropriate regulator having notified any decision.
6
If F96the appropriate regulator notifies the body of its decision to disallow the provision and that decision is questioned in legal proceedings—
a
the body must not make the provision until those proceedings, and any proceedings on appeal, are finally determined,
b
7
Any provision made in contravention of subsection (5) or (6) is of no effect.
300EPower to disallow excessive regulatory provision: supplementary
1
In sections 300A to 300D—
a
“regulatory provision” means any rule, guidance, arrangements, policy or practice, and
b
references to making provision shall be read accordingly as including, as the case may require, issuing guidance, entering into arrangements or adopting a policy or practice.
2
For the purposes of those sections a variation of a proposal is treated as a new proposal.
3
Other matters
301 Supervision of certain contracts.
1
The Secretary of State and the Treasury, acting jointly, may by regulations provide for—
a
Part VII of the M6Companies Act 1989 (financial markets and insolvency), and
b
Part V of the M7Companies (No. 2)(Northern Ireland) Order 1990,
to apply to relevant contracts as it applies to contracts connected with a recognised body.
2
“Relevant contracts” means contracts of a prescribed description in relation to which settlement arrangements are provided by a person for the time being included in a list (“the list”) maintained by F102the Bank of England for the purposes of this section.
3
Regulations may be made under this section only if the Secretary of State and the Treasury are satisfied, having regard to the extent to which the relevant contracts concerned are contracts of a kind dealt in by persons supervised by F103the FCA or the Bank of England, that it is appropriate for the arrangements mentioned in subsection (2) to be supervised by F104the Bank.
4
The approval of the Treasury is required for—
a
the conditions set by the F105Bank of England for admission to the list; and
b
the arrangements for admission to, and removal from, the list.
5
If the Treasury withdraw an approval given by them under subsection (4), all regulations made under this section and then in force are to be treated as suspended.
6
But if—
a
the F106Bank of England changes the conditions or arrangements (or both), and
b
the Treasury give a fresh approval under subsection (4),
the suspension of the regulations ends on such date as the Treasury may, in giving the fresh approval, specify.
7
The F107Bank of England must—
a
publish the list as for the time being in force; and
b
provide a certified copy of it to any person who wishes to refer to it in legal proceedings.
8
A certified copy of the list is evidence (or in Scotland sufficient evidence) of the contents of the list.
9
A copy of the list which purports to be certified by or on behalf of the F108Bank of England is to be taken to have been duly certified unless the contrary is shown.
10
Regulations under this section may, in relation to a person included in the list—
a
apply (with such exceptions, additions and modifications as appear to the Secretary of State and the Treasury to be necessary or expedient) such provisions of, or made under, this Act as they consider appropriate;
Pt. 18 heading substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), regs. 1, 2(8) (with regs. 7(4), 9(1))