Financial Services and Markets Act 2000

Applications for recognitionU.K.

287 Application by an investment exchange.U.K.

(1)Any body corporate or unincorporated association may apply to [F1the 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 [F2the 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 [F2the 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 [F3by another person] of clearing services in respect of transactions effected on the exchange;

(b)if the applicant proposes to provide [F4services falling within section 285(2)(b)] in respect of transactions other than those effected on the exchange, particulars of the criteria which the applicant will apply when determining to whom it will provide those services [F5;

(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 [F6the 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 [F7the FCA] may reasonably require.]

[F8(4)Subsection (3)(c) to (e) does not apply to an application by an overseas applicant.]

F9287A.Application by an investment exchange: persons connected with an applicantU.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

288 Application by a clearing house.U.K.

[F10(A1)This section applies only in relation to an application by a clearing house.]

[F11(1)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)[F12An application under subsection (1A)] must be made in such manner as [F13the 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 [F14the 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 [F15or 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.

[F16288A.Application by a central securities depositoryU.K.

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 [F17, and any technical standards originally made or adopted under that Article which are [F18assimilated direct] legislation and any technical standards made under that Article by the Bank on or after IP completion day,] 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.U.K.

(1)At any time after receiving an application and before determining it, [F19the appropriate regulator] may require the applicant to provide such further information as it reasonably considers necessary to enable it to determine the application.

(2)Information which [F20the appropriate regulator] requires in connection with an application must be provided in such form, or verified in such manner, as [F20the appropriate regulator] may direct.

(3)Different directions may be given, or requirements imposed, by [F21the appropriate regulator] with respect to different applications.

[F22(4)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.]

[F23(5)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 [F24derive from any of the following—

(a)the CSD Regulation;

(b)any EU regulation, originally made under the CSD regulation, which is [F25assimilated direct] legislation;

(c)any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the CSD regulation on or after IP completion day.]]

290 Recognition orders.U.K.

[F26(1)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; F27...

(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 [F28; 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].]

[F29[F30(1A)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 of the following—

(a)any EU regulation, originally made under the markets in financial instruments directive, which is [F31assimilated direct] legislation;

(b)any EU regulation, originally made under the markets in financial instruments regulation, which is [F32assimilated direct] legislation;

(c)any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the markets in financial instruments regulation on or after IP completion day.]

(1B)In the case mentioned in subsection (1A), the application must be determined by [F33the 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.]

[F34(1D)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.]

[F35(1E)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.]

F36(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)In considering an application [F37made under section 287 or 288(1A)], [F38the appropriate regulator] may have regard to any information which it considers is relevant to the application.

(4)A recognition order must specify a date on which it is to take effect.

[F39(4A)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 [F40in 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.

[F41(5A)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.]

F42(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F43(7)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.]

[F44290ZA.Variation of central counterparty recognition orderU.K.

(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.]

[F45290ZB.Variation of CSD recognition orderU.K.

(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.]

[F46290ARefusal of recognition on ground of excessive regulatory provisionU.K.

(1)[F47The appropriate regulator must] not make a recognition order if it appears to [F48it that] an existing or proposed regulatory provision of the applicant in connection with—

(a)the applicant's business as an investment exchange, F49...

(b)the provision by the applicant of clearing services, [F50or

(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 [F51appropriate 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.

[F52(6)This section does not apply to an application for recognition as an overseas investment exchange, an overseas clearing house [F53, a recognised central counterparty or a recognised CSD].]]

291 Liability in relation to recognised body’s regulatory functions.U.K.

(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 M1Human 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.

F54292 Overseas investment exchanges and overseas clearing houses.U.K.

(1)An application under section 287 or [F55288(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 [F56the 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 [F57which is not a central counterparty].

(3)The requirements are that—

[F58(a)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)[F59requirements contained in any of the following—

(aa)any EU regulation, originally made under the markets in financial instruments directive, which is [F60assimilated direct] legislation;

(bb)any EU regulation, originally made under the markets in financial instruments regulation, which is [F61assimilated direct] legislation;

(cc)any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the markets in financial instruments regulation on or after IP completion day;]]

(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 [F62the appropriate regulator] by the sharing of information and in other ways;

(d)adequate arrangements exist for co-operation between [F63the 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), [F64the 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 [F65the appropriate regulator] arrangements of the kind mentioned in subsection (3)(d) no longer exist.

[F66(6)Where a recognised clearing house is F67... 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.]