Financial Services and Markets Act 2000

SupervisionU.K.

293 Notification requirements.U.K.

(1)The [F1appropriate 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 [F1appropriate 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 [F1appropriate regulator] may reasonably require for the exercise of its functions under this Act [F2or [F3for the purposes of] Directive 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] [F4as that directive had effect immediately before IP completion day].

(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 [F5appropriate regulator] without delay.

[F6(5A)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 [F7by 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 [F8services falling within section 285(2)(b)],

it must give written notice to [F9the 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 [F10or 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 [F11or services falling within section 285(3)(b)],

it must give written notice to [F12the Bank of England and the FCA] without delay.

[F13(7A)In subsections (1) and (2), “recognised body” includes [F14a third country CSD, in relation to any services referred to in the Annex to the CSD regulation which the third country CSD provides in the United Kingdom] [F15and a third country central counterparty].]

(8)Subsections (5) to (7) do not apply to an overseas investment exchange [F16, an overseas clearing house or a third country central counterparty].

(9)“Specified” means specified in [F17the appropriate regulator's] rules.

[F18293AInformation: compliance with [F19specified] requirementsU.K.

[F20(1)]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 [F21qualifying provision] that is specified, or of a description specified, for the purposes of this section by the Treasury by order.

[F22(2)The Bank of England may require [F23a third country 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 [F24, any EU regulation originally made under the CSD regulation which is [F25assimilated direct] legislation, or any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the CSD regulation on or after IP completion day].]]

294 Modification or waiver of rules.U.K.

(1)The [F26appropriate 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 [F27appropriate regulator] may direct.

(3)Subsections (4) to (6) apply to a direction given under subsection (1).

(4)The [F28appropriate 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 [F29appropriate 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.

[F30(7)In this section, “recognised body”, in relation to rules made under section 293, includes [F31a third country CSD].]

295 Notification: overseas investment exchanges and overseas clearing houses.U.K.

(1)At least once a year, every overseas investment exchange and overseas clearing house must provide [F32the appropriate regulator] with a report.

(2)The report must contain a statement as to whether any events have occurred which are [F33likely 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 [F34the appropriate regulator].

F35(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F36295A.On-site inspection of [F37United Kingdom branches of third country] CSDsU.K.

(1)For the purposes of [F38Article 25(11) of the CSD regulation], 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 [F39a third country CSD] in the United Kingdom.

F40(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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.]

296 [F41Appropriate regulator's] power to give directions.U.K.

(1)This section applies if it appears to [F42the 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.

[F43(1A)This section also applies [F44if 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 [F45or under] [F46any qualifying provision] specified (or of a description specified) [F47for the purposes of this subsection] in an order made by the Treasury.]

F48(1B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F49(1C)This section also applies if it appears to the Bank of England that a Tier 2 third country central counterparty has failed to comply with an obligation imposed on it by or under this Act, or by or under the EMIR regulation.]

(2)[F50The regulator concerned] may direct [F51the recognised body F52...] 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.

[F53(2ZA)Where this section applies by virtue of subsection (1C), the Bank of England may direct the Tier 2 third country central counterparty to take specified steps for the purpose of securing compliance with the obligations referred to in that subsection.]

[F54(2A)In the case of [F55a recognised body other than an overseas investment exchange or overseas clearing house], those steps may include—

(a)the granting to [F56the regulator concerned] of access to the premises of [F57the body] for the purpose of inspecting—

(i)those premises; or

(ii)any documents on the premises which appear to [F56the regulator concerned] to be relevant for the purpose mentioned in subsection (2);

(b)the suspension of the carrying on of any regulated activity by [F58the body] for the period specified in the direction.]

F59(2B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F60(2C)In the case of a Tier 2 third country central counterparty, those steps may include—

(a)the granting to the Bank of England of access to any premises of the Tier 2 third country central counterparty for the purposes of inspecting—

(i)those premises; or

(ii)any documents on the premises which appear to the Bank of England to be relevant for the purposes mentioned in subsection (2ZA);

(b)the suspension for the period specified in the direction of the carrying on in the United Kingdom by the Tier 2 third country central counterparty of any activity in respect of which the third country central counterparty is exempt from the general prohibition.

(2D)The Bank of England may not inspect the premises or documents on the premises of a Tier 2 third country central counterparty without first informing the relevant third country competent authority, and inspections must be conducted in accordance with cooperation arrangements established under Article 25.7 of the EMIR regulation.

(2E)In subsection (2D), relevant third country competent authority means a regulatory authority of a country other than the United Kingdom which is responsible for the authorisation and supervision of central counterparties in its territory.]

(3)A direction under this section [F61(except a direction made under subsection (2ZA))] is enforceable, on the application of [F62the regulator concerned], by an injunction or, in Scotland, by an order for specific performance under section 45 of the M1Court of Session Act 1988.

(4)The fact that a rule made by a recognised body has been altered in response to a direction given by [F63an appropriate regulator] does not prevent it from being subsequently altered or revoked by the recognised body.

[F64296AAdditional power to direct [F65recognised central counterparties]U.K.

(1)The Bank of England may direct a [F66recognised 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)maintaining the continuity of the F67... clearing services provided by the [F68recognised central counterparty], and

(d)maintaining and enhancing the financial resilience of the [F68recognised central counterparty].

(2)The direction may, in particular—

(a)specify the time for compliance with the direction,

(b)require the rules of the [F68recognised 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 [F68recognised 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 [F68recognised 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 [F68recognised 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.]

297 Revoking recognition.U.K.

(1)A recognition order [F69in respect of a recognised investment exchange or in respect of a recognised clearing house which is not a recognised central counterparty] may be revoked by an order made by [F70the appropriate regulator] at the request, or with the consent, of the recognised body concerned.

[F71(1A)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.]

[F72(1B)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 [F73the appropriate regulator] that a recognised body [F74which is not a recognised central counterparty] [F75or 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.

[F76(2A)If it appears to [F77the appropriate regulator] that a recognised body [F78which is not a recognised central counterparty] [F79or a recognised CSD] F80...—

(a)has not carried on the business of an investment exchange [F81or (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 [F82or (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 [F83any qualifying provision] specified (or of a description specified) [F84for the purposes of this subsection] 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 [F85or overseas clearing house].]

[F86(2D)If it appears to the Bank of England that a recognised central counterparty [F87or 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) [F88or (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 [F89the appropriate regulator] thinks necessary or expedient.

F90(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

298 Directions and revocation: procedure.U.K.

(1)Before giving a direction under section 296 [F91or 296A], or making a revocation order under section [F92297(1B), (2),] [F93(2A) or (2D)], [F94the appropriate regulator] must—

(a)give written notice of its intention to do so to the recognised body concerned;

F95(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F96(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)A notice under subsection (1) must—

(a)state why [F97the 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,

F98(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F99(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

may make representations to [F100the appropriate regulator].

[F101(4)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,

[F102the appropriate regulator] must have regard to any representations made in accordance with subsection (3).

(6)When [F103the appropriate regulator] has decided whether to give a direction under section 296 [F104or 296A] or to make the proposed revocation order, it must—

(a)give the recognised body written notice of its decision; F105... [F106and

(aa)in the case of a direction under section 296 given to a recognised CSD F107... or a revocation order under section 297(1B), give the recognised CSD F107... reasons for its decision.]

F105(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F108(6A)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;

[F109(aa)gives any other direction under section 296 to a recognised CSD;

F110(ab). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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 [F111the appropriate regulator] [F112reasonably considers it necessary] to do so, it may give a direction under section 296 [F113or 296A]—

(a)without following the procedure set out in this section; or

(b)if [F111the appropriate regulator] has begun to follow that procedure, regardless of whether the period for making representations has expired.

[F114(7A)Subsection (7) does not apply in relation to a direction given to a recognised CSD F115... under section 296.

F116(7B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(8)If [F117the 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).

F118(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

299 Complaints about recognised bodies.U.K.

(1)The [F119appropriate regulator] must make arrangements for the investigation of any relevant complaint about a recognised body.

(2)“Relevant complaint” means a complaint which the [F120appropriate regulator] considers is relevant to the question of whether the body concerned should remain a recognised body.

300 Extension of functions of Tribunal.U.K.

(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, F121...

(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 [F122or

(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 [F123, clearing house or central securities depository] in relation to [F124a 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 M2Human Rights Act 1998.