PART 1 U.K.General

Citation and commencementU.K.

1.—(1) These Regulations may be cited as the Uncertificated Securities (Amendment and EU Exit) Regulations 2019.

(2) Parts 1 to 4 come into force on the day after the day on which these Regulations are made.

(3) Part 5 comes into force on exit day.

PART 2 U.K.Amendment of primary legislation

Consequential amendments to the Companies Act 2006U.K.

2.—(1) The Companies Act 2006 is amended as follows.

(2) In paragraph 41 of Part 2 of Schedule 2 M6 (specified persons, descriptions of disclosures etc. for the purposes of section 948 of the Companies Act 2006), for “approved under the Uncertificated Securities Regulations 2001 (SI 2001/3755) as an operator of a relevant system (within the meaning of those Regulations)” substitute “ who is an operator of a relevant system for the purposes of the Uncertificated Securities Regulations 2001 (SI 2001/3755) ”.

(3) In paragraph 56 of Part 2 of Schedule 11A M7 (specified persons, descriptions, disclosures etc. for the purposes of section 1224A of the Companies Act 2006), for “approved under the Uncertificated Securities Regulations 2001 (SI 2001/3755) as an operator of a relevant system (within the meaning of those regulations)” substitute “ who is an operator of a relevant system for the purposes of the Uncertificated Securities Regulations 2001 (SI 2001/3755) ”.

Consequential amendments to the Financial Services (Banking Reform) Act 2013U.K.

3.—(1) The Financial Services (Banking Reform) Act 2013 M8 is amended as follows.

(2) In section 41(2)(d) (meaning of “payment system”), after “recognised clearing house” insert “ or a recognised CSD ”.

(3) In section 112(2)(b) (interpretation: infrastructure companies) omit “operating a securities settlement system”.

(4) In section 115(1A) (objective of FMI administration) omit “operating a securities settlement system”.

PART 3 U.K.Amendment of subordinate legislation

Amendments to the Uncertificated Securities Regulations 2001U.K.

4.—(1) The Uncertificated Securities Regulations 2001 M9 are amended as follows.

(2) In regulation 3(1) (interpretation)—

(a)in the appropriate place insert—

““CSD regulation” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories;”;

(b)for the definition of “Operator”M10 substitute—

““Operator” means a person operating or proposing to operate a relevant system subject to these Regulations, who is—

(a)a recognised CSD within the meaning of section 285(1)(e) of the 2000 Act M11,

(b)an EEA CSD within the meaning of section 285(1)(f) of the 2000 Act, or

(c)a third country CSD within the meaning of section 285(1)(g) of the 2000 Act;”;

(c)in the definition of “settlement”M12, omit “except in paragraph 28 of Schedule 1,”.

(3) Omit regulation 4 M13 (applications for approval).

(4) For regulation 5 M14 (grant and refusal of approval) substitute—

“Operating conditions for relevant system

5.  Schedule 1 M15 contains the requirements which must be satisfied with respect to the Operator, the Operator's rules and practices and the relevant system.”.

(5) In regulation 6 M16 (fees charged by the Bank of England)—

(a)omit paragraph (1);

(b)omit sub-paragraph (a) of paragraph (3).

(6) Omit regulation 7 M17 (withdrawal of approval).

(7) Omit regulation 12 M18 (international obligations).

(8) Omit regulation 13 M19 (prevention of excessive regulatory provision).

(9) In Schedule 1 (requirements for approval of a person as Operator)—

(a)for the heading substitute “ Requirements for operation of a relevant system ”;

(b)omit paragraphs 1 to 4;

(c)in paragraph 5—

(i)for sub-paragraph (1) substitute—

“(1) A relevant system must satisfy the requirements of sub-paragraphs (3) to (6).”;

(ii)omit sub-paragraph (2);

(iii)in sub-paragraph (3)—

(aa)for paragraph (a) substitute—

“(a)in accordance with the specifications of the Operator, and those specifications shall provide that each dematerialised instruction is identifiable as being from the computers of the Operator or of a particular system-participant; or”;

(bb)in paragraph (b) omit “and” at the end of sub-paragraph (i) and omit sub-paragraph (ii);

(iv)in sub-paragraph (7), in the definition of “depositary” after “ “depositary” means” insert “ a CSD within the meaning of the CSD regulation or ”;

(d)omit paragraphs 6 to 8;

(e)omit paragraphs 10 and 11;

(f)omit paragraphs 23 and 24;

(g)omit paragraph 25(a) and (d);

(h)omit paragraphs 27 and 28.

(10) Omit Schedule 2 (prevention of excessive regulatory provision).

(11) In Schedule 3 M20 (procedure for refusal or withdrawal of approval as Operator, or for giving directions etc.)—

(a)for the heading substitute “ Procedure for giving directions ”;

(b)in paragraph 1 omit sub-paragraphs (a) and (b);

(c)in paragraph 2(a) omit “refuse the application, withdraw the approval or”;

(d)in paragraph 5 omit “refuse the application, withdraw the approval, or”;

(e)in paragraph 6(1)—

(i)omit sub-paragraphs (a) and (b);

(ii)after “decision” insert “ and the reasons for its decision ”;

(f)after paragraph 6 insert—

“9.  If the Bank of England decides to give the direction, the Operator may refer the matter to the Upper Tribunal.

10.  Part 9 of the 2000 Act (hearings and appeals) applies to a reference to the Upper Tribunal under paragraph 9 as it applies to a reference to the Upper Tribunal under the 2000 Act, with the following modifications—

(a)a reference is a “disciplinary reference” for the purposes of section 133 of the 2000 Act M21 if it is in respect of a decision to give a direction under this Schedule;

(b)section 133(1)(a) and (c) of the 2000 Act does not apply.”;

(g)omit paragraphs 7 and 8.

Consequential amendment to the Stamp Duty Reserve Tax Regulations 1986U.K.

5.  In regulation 2 of the Stamp Duty Reserve Tax Regulations 1986 M22 (interpretation), for paragraph (a) of the definition of “operator” substitute—

“an Operator for the purposes of regulation 3(1) of the Treasury Regulations operating a relevant system within the United Kingdom;”

Consequential amendments to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001U.K.

6.  In article 45 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 M23 (sending dematerialised instructions)—

(a)in paragraph (1), for “in respect of which an Operator is approved under the 2001 Regulations” substitute “ within the meaning of the 2001 Regulations ”;

(b)in paragraph (3)(b) omit “ “Operator”,”.

Consequential amendment to the Financial Services and Markets Act 2000 (Exemption) Order 2001U.K.

7.  In Part 3 of the Schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001 M24 (persons exempt in respect of any regulated activity mentioned in article 5(1)), omit paragraph 37.

Consequential amendment to the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001U.K.

8.  In the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 M25, in Schedule 2, in the first column, for the entry commencing “A person approved” substitute—

“A person that is an Operator of a relevant system under the Uncertificated Securities Regulations 2001 M26 (within the meaning of those regulations)”.

Consequential amendment to the Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014U.K.

9.—(1) The Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014 M27 is amended as follows.

(2) In Article 13(11) (prohibitions: inter-bank payment systems), in paragraph (a) of the definition of “inter-bank payment system”—

(a)in sub-paragraph (i), after “a recognised clearing house” insert “ or recognised CSD, in each case ”;

(b)for sub-paragraph (ii) substitute—

“(ii)the Operator of a relevant system for the purposes of the Uncertificated Securities Regulations 2001;”.

PART 4 U.K.Transitional provisions and review

Transitional provisions: interpretationU.K.

10.  In this regulation and in regulations 11 and 12—

“the Act” means the Financial Services and Markets Act 2000;

“CSD Operator” means a person established in the United Kingdom who immediately before 30th March 2017—

“commencement” means the coming into force of this Part of these Regulations;

“CSD regulation” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23rd July 2014 on improving securities settlement in the European Union and on central securities depositories;

“Operator register of securities” has the meaning given in regulation 3 of the Uncertificated Securities Regulations 2001;

“recognised CSD” has the meaning given in section 285 of the 2000 Act.

Transitional and saving provisions for OperatorsU.K.

11.—(1) The transition period for a CSD Operator begins with commencement.

(2) The transition period for a CSD Operator ends immediately after—

(a)the Bank of England determines its application under section 288A of the 2000 Act in accordance with Article 17 of the CSD regulation and any directly applicable EU regulation made under that Article, or

(b)if the CSD Operator has not made an application under section 288A of the 2000 Act before the end of that period, the end of the six month period specified in Article 69(2) of the CSD regulation.

(3) Regulations 2 to 9 do not apply in respect of a CSD Operator during its transition period.

(4) Nothing in these Regulations affects the validity of a CSD Operator's approval as an Operator under the Uncertificated Securities Regulations 2001 during its transition period.

(5) Where—

(a)a CSD Operator has made an application under section 288A of the 2000 Act, and

(b)the Bank of England has determined that application in accordance with Article 17 of the CSD regulation and any directly applicable EU regulation made under that Article,

any previous approval as an Operator under the Uncertificated Securities Regulations 2001 shall cease to have effect.

(6) Following any decision of the Bank under paragraph (5)—

(a)such decision shall not itself invalidate or otherwise affect any act of the CSD Operator carried out in its capacity as an approved Operator before such decision, and

(b)unless the context requires otherwise, any such act shall be treated as an act of the CSD Operator in its capacity as an Operator as defined in regulation 3(1) of the Uncertificated Securities Regulations 2001.

Transitional and savings provisions for issuersU.K.

12.—(1) Paragraphs (2) and (3) apply where—

(a)title to units of a security to which Article 49(1) of the CSD regulation applies is recorded on the Operator register of securities of a CSD Operator immediately before the transition period for that CSD Operator ends (in accordance with regulation 11(2)), and

(b)the CSD Operator is recognised as a recognised CSD.

(2) The issuer of the security is not required to make a request under Article 49(2) of the CSD regulation for recording its securities in the relevant system.

(3) The fact that the issuer of the security has not made a request as described in paragraph (2) does not prevent—

(a)title to units of that security continuing to be evidenced otherwise than by a certificate by virtue of the Uncertificated Securities Regulations 2001, and

(b)transfer of title to units of that security continuing to be subject to those Regulations.

ReviewU.K.

F113.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART 5 U.K.Amendments in connection with exiting the European Union

Amendments to the Uncertificated Securities Regulations 2001U.K.

14.—(1) The Uncertificated Securities Regulations 2001 are amended as follows.

(2) In regulation 3(1) (interpretation), omit paragraph (b) of the definition of Operator.

(3) In Schedule 1 (requirements for approval of a person as Operator), in paragraph 5(7)—

(a)In paragraph (ba) M28 omit “an EEA central counterparty or ”;

(b)In the definition of “depositary” for “a CSD within the meaning of the CSD regulation” substitute “ a CSD or third-country CSD within the meaning of the CSD regulation as amended from time to time ”.

Amendment to Article 15 of Regulation EU No. 236/2012U.K.

15.  In Article 15 of Regulation EU No. 236/2012 of the European Parliament and of the Council of 14th March 2012 on short selling and certain aspects of credit default swaps, for “a Member State”, both times it occurs, substitute “ the United Kingdom ”.

Amendment to the Central Securities Depositories Regulations 2014U.K.

16.—(1) The Central Securities Depositories Regulations 2014 M29 are amended as follows.

(2) After regulation 5N (Part 8) insert—

“PART 8AU.K.Fees

Fees

5O.—(1) The Bank may, in connection with the discharge of any of its qualifying functions, require third country CSDs to pay fees to the Bank.

(2) The “qualifying functions” of the Bank are—

(a)its functions under or as a result of—

(i)the CSD regulation,

(ii)any EU regulation, originally made under the CSD regulation, which is retained direct EU legislation, or

(iii)any subordinate legislation (within the meaning of the Interpretation Act 1978 M30) made under the CSD regulation on or after [F2IP completion day],

so far as they are its functions by virtue of regulations made under section 8 of the European Union (Withdrawal) Act 2018 M31; and

(b)any other functions it has by virtue of regulations made under section 8 of the European Union (Withdrawal) Act 2018 in connection with the CSD regulation.

(3) The power of the Bank to set fees includes power to set fees for the purpose of meeting expenses incurred by it or the FCA—

(a)in preparation for the exercise by the Bank of the qualifying functions specified in paragraph (2), or

(b)for the purpose of facilitating the exercise by the Bank of those functions or otherwise in connection with their exercise by it.

(4) It is irrelevant when the expenses were incurred.

(5) Any fee which is owed to the Bank under this regulation may be recovered as a debt due to the Bank.”.

Explanatory Note

(This note is not part of the Regulations)