312FA Central securities depositories: further disciplinary measures
(1) If the Bank of England considers that a contravention by a recognised CSD of a relevant requirement occurred with the consent or connivance of, or was attributable to any neglect on the part of, a member of the management body or other person who effectively controls the business of the recognised CSD, the Bank of England may do one or both of the following—
(a) publish a statement to that effect;
(b) impose on that person a penalty, in respect of the contravention, of such amount as it considers appropriate.
(2) If the Bank of England considers that a member of the management body or other person who effectively controls the business of a recognised CSD is responsible for a contravention by the central securities depository of a relevant requirement, it may do one or more of the following—
(a) publish a statement to that effect;
(b) impose on that person a penalty, in respect of the contravention, of such amount as it considers appropriate;
(c) prohibit that person from holding an office or position involving responsibility for taking decisions about the management of the recognised CSD.
(3) A prohibition under subsection (2)(c) may apply—
(a) for a specified period,
(b) until further notice, or
(c) for repeated serious contraventions, permanently.
(4) The Bank of England may, on the application of the person subject to a prohibition under subsection (2)(c), vary or revoke the prohibition.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) If the appropriate regulator proposes to impose a sanction—
(a) on a recognised body or data reporting service provider under section 312E or 312F, or
(b) on a person under section 312FA,
it must give the body , provider or person (as the case may be) a warning notice.
(2) A warning notice about a proposal to publish a statement must set out the terms of the statement.
(3) A warning notice about a proposal to impose a penalty must state the amount of the penalty.
(4) A warning notice about a proposal to impose a prohibition must specify the extent of the prohibition.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) If the appropriate regulator decides to impose a sanction—
(a) on a recognised body or data reporting service provider under section 312E or 312F, or
(b) on a person under section 312FA,
it must give the body , provider or person (as the case may be) a decision notice.
(2) In the case of a statement, the decision notice must set out the terms of the statement.
(3) In the case of a penalty, the decision notice must state the amount of the penalty.
(3A) In the case of a prohibition, the decision notice must specify the extent of the prohibition.
(3B) The sanction which the appropriate regulator decides to impose may differ from that proposed in the warning notice.
(4) If the appropriate regulator decides to impose a sanction—
(a) on a recognised body or data reporting service provider under section 312E or 312F, or
(b) on a person under section 312FA,
the body , provider or person (as the case may be) may refer the matter to the Tribunal.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
After an appropriate regulator publishes a statement under section 312E or 312FA, it must send a copy of the statement to—
(a) the recognised body , data reporting service provider ... or person concerned, and
(b) any person to whom a copy of the decision notice was given under section 393(4).
(1) Each appropriate regulator must prepare and issue a statement of its policy with respect to—
(a) the imposition of penalties under sections 312F and 312FA and prohibitions under section 312FA, ...
(b) the amount of penalties under those sections ; and
(c) the period for which prohibitions under section 312FA are to have effect.
(2) An appropriate regulator's policy in determining what the amount of a penalty should be , or what the period for which a prohibition is to have effect should be, must include having regard to—
(a) the seriousness of the contravention in question in relation to the nature of the requirement concerned, ...
(b) the extent to which that contravention was deliberate or reckless ; and
(c) whether the person against whom action is to be taken is an individual.
(3) An appropriate regulator may at any time alter or replace a statement issued by it under this section.
(4) If a statement issued by an appropriate regulator under this section is altered or replaced, the regulator must issue the altered or replacement statement.
(5) In exercising, or deciding whether to exercise, its power under section 312F or 312FA in the case of any particular contravention, an appropriate regulator must have regard to any statement of policy published by it under this section and in force at a time when the contravention in question occurred.
(6) A statement issued by an appropriate regulator under this section must be published by the regulator in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(7) An appropriate regulator may charge a reasonable fee for providing a person with a copy of the statement.
(8) An appropriate regulator must, without delay, give the Treasury a copy of any statement which it publishes under this section.
(1) Before issuing a statement under section 312J, an appropriate regulator must publish a draft of the proposed statement in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(2) The draft must be accompanied by notice that representations about the proposal may be made to the regulator within a specified time.
(3) Before issuing the proposed statement, the regulator must have regard to any representations made to it in accordance with subsection (2).
(4) If the regulator issues the proposed statement it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (2), and
(b) its response to them.
(5) If the statement differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant, the regulator must (in addition to complying with subsection (4)) publish details of the difference.
(6) An appropriate regulator may charge a reasonable fee for providing a person with a copy of a draft published under subsection (1).
(7) This section also applies to a proposal to alter or replace a statement.
(1) The Treasury may by regulations designate a person who provides services to one or more authorised persons, relevant service providers or FMI entities as a “critical third party”.
(2) The Treasury may designate a person under subsection (1) only if in the Treasury’s opinion a failure in, or disruption to, the provision of those services (either individually or, where more than one service is provided, taken together) could threaten the stability of, or confidence in, the UK financial system.
(3) The Treasury must have regard to the following factors when forming an opinion for the purposes of subsection (2)—
(a) the materiality of the services provided to the delivery, by any person, of essential activities, services or operations (wherever carried out);
(b) the number and type of authorised persons, relevant service providers or FMI entities to which the person provides services.
(4) Before making regulations under subsection (1) the Treasury must—
(a) consult each of the relevant regulators and such other persons as the Treasury consider appropriate,
(b) give notice in writing to the person to be designated specifying a reasonable period within which that person may make representations in writing about the proposal to the Treasury, and
(c) have regard to any representations made to them in accordance with paragraph (b).
(5) The Treasury may not designate the Bank of England under subsection (1).
(6) Each of the following is a relevant regulator for the purposes of this Chapter—
(a) the FCA,
(b) the PRA, and
(c) the Bank of England.
(7) Activities, services or operations are “essential” for the purposes of subsection (3) if they are essential to—
(a) the economy of the United Kingdom, or
(b) the stability of, or confidence in, the UK financial system.
(8) In this Chapter—
“critical third party” means a person designated under subsection (1);
“FMI entity” means—
a recognised clearing house;
a recognised CSD;
a recognised investment exchange which is not an overseas investment exchange;
a recognised payment system under section 184 of the Banking Act 2009;
a person specified as a service provider in relation to a recognised payment system under section 206A of the Banking Act 2009;
“relevant service provider” means—
an electronic money institution as defined by regulation 2(1) of the Electronic Money Regulations 2011 (S.I. 2011/99);
an authorised payment institution, small payment institution or registered account information services provider as defined by regulation 2(1) of the Payment Services Regulations 2017 (S.I. 2017/752);
“service” includes facility.
(1) A relevant regulator may make such rules imposing duties on critical third parties in connection with the provision of services to authorised persons, relevant service providers and FMI entities as appear to the regulator to be necessary or expedient for the purpose of advancing any of its objectives.
(2) The reference in subsection (1) to a relevant regulator’s objectives is a reference to—
(a) where the regulator is the FCA, one or more of its operational objectives;
(b) where the regulator is the PRA, one or more of its objectives;
(c) where the regulator is the Bank, the Bank’s Financial Stability Objective.
(3) In the application of Part 9A to rules made by the FCA or the PRA under this section, the following provisions apply with the modifications specified in this subsection—
(a) section 137T (general supplementary powers) applies as if—
(i) the reference in paragraph (a) to “authorised persons, activity or investment” were a reference to “critical third parties or services”, and
(ii) in paragraph (b) for the words from “as” to the end there were substituted “or the Bank, or standards issued by any other person, as those rules or standards have effect from time to time,”;
(b) section 138B (publication of directions) applies as if subsection (4) were omitted;
(c) section 138F (notification of rules) applies as if subsections (1A) and (2) were omitted;
(d) section 138I (consultation) applies as if the reference in subsection (1)(a) to the “PRA” were a reference to the “PRA and the Bank”;
(e) section 138J (consultation) applies as if the reference in subsection (1)(a) to the “FCA” were a reference to the “FCA and the Bank”.
(1) A relevant regulator may, if it appears to the regulator to be necessary or expedient for the purpose of advancing any of its objectives, direct a critical third party to—
(a) do anything specified in the direction, or
(b) refrain from doing anything specified in the direction.
(2) A direction under this section—
(a) must be given by notice in writing,
(b) may be expressed to have effect during a specified period or until revoked, and
(c) may specify the way in which, and the time by which, a thing is to be done.
(3) Subsection (4) applies if a direction is given to a critical third party for the purpose of resolving or reducing a threat to the stability or integrity of the UK financial system.
(4) The critical third party (including the critical third party’s officers and staff) has immunity from liability in damages in respect of action or inaction in accordance with the direction.
(5) A direction given for the purpose mentioned in subsection (3) must—
(a) include a statement that it is given for that purpose, and
(b) inform the critical third party of the effect of subsection (4).
(6) An immunity conferred by this section does not extend to action or inaction—
(a) in bad faith, or
(b) in contravention of section 6(1) of the Human Rights Act 1998.
(7) A relevant regulator may at any time revoke a direction under this section by giving notice in writing to the critical third party to which the direction relates.
(8) The revocation of the direction does not affect the validity of anything previously done in accordance with it.
(9) For the purposes of this section the objectives of a relevant regulator are as described in section 312M(2).
(1) If a relevant regulator proposes to give a direction under section 312N, or gives such a direction with immediate effect, it must give written notice to the critical third party to which the direction is given (or is to be given) (the “relevant critical third party”).
(2) A direction under section 312N takes effect—
(a) immediately, if the notice under subsection (1) states that this is the case,
(b) on such other date as may be specified in the notice, or
(c) if neither paragraph (a) or (b) applies, when the matter to which the notice relates is no longer open to review.
(3) A direction may be expressed to take effect immediately, or on a specified date, only if the relevant regulator reasonably considers that it is necessary for the direction to take effect immediately or on that date.
(4) The notice under subsection (1) must—
(a) give details of the direction,
(b) state the relevant regulator’s reasons for the direction and for its determination as to when the direction takes effect,
(c) inform the relevant critical third party that it may make representations to the regulator within such period as may be specified in the notice (whether or not the critical third party has referred the matter to the Tribunal), and
(d) inform the relevant critical third party of its right to refer the matter to the Tribunal (including giving an indication of the procedure on such a reference).
(5) The relevant regulator may extend the period allowed under the notice for making representations.
(6) If, having considered any representations made by the relevant critical third party, the regulator decides—
(a) to give the direction proposed, or
(b) if the direction has been given, not to revoke the direction,
it must give the critical third party written notice.
(7) If, having considered any representations made by the relevant critical third party, the regulator decides—
(a) not to give the direction proposed,
(b) to give a different direction, or
(c) to revoke a direction which has effect,
it must give the critical third party written notice.
(8) A notice given under subsection (6) must inform the relevant critical third party of its right to refer the matter to the Tribunal (including giving an indication of the procedure on such a reference).
(9) A notice under subsection (7)(b) must comply with subsection (4).
(10) For the purposes of subsection (2)(c), whether a matter is open to review is to be determined in accordance with section 391(8).
(1) The provisions of Part 11 (information gathering and investigations) mentioned in this section are to apply in relation to this Chapter in accordance with the provision made by this section.
(2) In any case where subsection (1) applies—
(a) any reference in Part 11 to the FCA or PRA which is contained in, or relates to, any of those provisions (however expressed) is to be read as a reference to a relevant regulator, and
(b) Part 11 has effect with any other necessary modifications.
(3) The powers conferred by section 165(1) and (3) (power to require information) are exercisable by a relevant regulator or (as the case may be) a relevant regulator’s officers to impose requirements on a critical third party or a person connected with a critical third party.
(4) The information or documents that a relevant regulator may require to be produced or provided in accordance with subsection (3) are limited to information and documents reasonably required in connection with the exercise by the relevant regulator of functions conferred on it by or under this Chapter (and accordingly section 165(4) does not apply).
(5) The power conferred by section 166 (reports by skilled person) is exercisable by a relevant regulator in relation to a critical third party or a person connected with a critical third party.
(6) The power conferred by section 166A (appointment of skilled person) is exercisable by a relevant regulator in relation to a critical third party.
(7) The power conferred by section 168(5) (appointment of persons to carry out investigations in particular cases) is exercisable by a relevant regulator if it appears to the relevant regulator that there are circumstances suggesting that a person may have contravened any requirement imposed by or under this Chapter.
(8) In addition to the powers conferred by section 171, a person conducting an investigation under section 168(5) as a result of subsection (7) is to have the powers conferred by sections 172 and 173 (and for this purpose any references in those sections to an investigator are to be read accordingly).
(9) The power under section 176(1) (entry of premises under warrant) is exercisable on information on oath given by or on behalf of a relevant regulator, or an investigator appointed by a relevant regulator, as if the reference to the third set of conditions were omitted.
(10) For the purposes of this section a person is connected with a critical third party if that person is or has at any relevant time been—
(a) a member of the critical third party’s group,
(b) a controller of the critical third party, or
(c) in relation to the critical third party, a person mentioned in Part 1 of Schedule 15 (reading references in that Part to the authorised person as references to the critical third party).
If a relevant regulator considers that a critical third party has contravened a requirement imposed by or under this Chapter the regulator may publish a statement to that effect.
(1) This section applies if a relevant regulator considers that a critical third party has contravened a requirement imposed by or under this Chapter.
(2) The relevant regulator may publish a notice—
(a) prohibiting the critical third party from entering into arrangements, or continuing, to provide services to authorised persons, relevant service providers or FMI entities;
(b) prohibiting authorised persons, relevant service providers or FMI entities who receive services from the critical third party from continuing to receive those services from that party;
(c) prohibiting authorised persons, relevant service providers or FMI entities from entering into arrangements for receipt of services from the critical third party;
(d) providing for the provision of any services by the critical third party to be subject to such conditions or limitations as are specified in the notice;
(e) providing for any receipt of services by authorised persons, relevant service providers or FMI entities from the critical third party to be subject to such conditions or limitations as are specified in the notice.
(3) A notice under subsection (2) may make different provision for different cases and may in particular make different provision in respect of different descriptions of services, authorised persons, FMI entities or relevant service providers.
(4) A relevant regulator may only exercise the powers under subsection (2) if the regulator is satisfied that—
(a) it is appropriate in the circumstances to take action against the critical third party,
(b) the exercise of the power will not threaten the stability of, or confidence in, the UK financial system, and
(c) it is desirable to exercise the power in order to advance one or more of the regulator’s objectives.
(5) A relevant regulator may either on its own initiative or on an application by the critical third party concerned withdraw or vary a notice given by it under subsection (2) by publishing a further notice.
(6) Publication under this section is to be made in such manner as the relevant regulator considers best designed to bring the publication to the attention of the public.
(7) Where a notice includes a prohibition, condition or limitation imposed under subsection (2), publication of a notice under this section must in particular be made in a manner appearing to the relevant regulator to be best designed to bring the notice to the attention of the persons to whom the prohibition, condition or limitation applies.
(8) A person who breaches a prohibition, condition or limitation imposed by a notice under this section is to be taken to have contravened a requirement imposed on the person under this Act.
(9) For the purposes of this section the objectives of a relevant regulator are as described in section 312M(2).
(1) If a relevant regulator proposes to publish a statement or notice under section 312Q or 312R, it must give the critical third party, authorised persons, relevant service providers or FMI entities to whom the statement or notice would relate a warning notice.
(2) A warning notice must set out the terms of the proposed statement or notice.
(3) If a relevant regulator decides to publish a statement or notice under section 312Q or 312R it must give the critical third party, authorised persons, relevant service providers or FMI entities to whom the statement or notice relates a decision notice.
(4) A decision notice must set out the terms of the statement or notice.
(5) If a relevant regulator decides to act under section 312N or 312Q a critical third party who is aggrieved may refer the matter to the Tribunal.
(6) If a relevant regulator decides to act under section 312R a critical third party, authorised person, relevant service provider or FMI entity who is aggrieved may refer the matter to the Tribunal.
312T Statement of policy relating to disciplinary measures
(1) The relevant regulators must prepare and publish a statement of policy with respect to the exercise of powers under section 312Q and section 312R.
(2) The relevant regulators may alter or replace a statement published under this section.
(3) The relevant regulators must publish a statement as altered or replaced under subsection (2).
(4) Publication under this section is to be made in such manner as the relevant regulators consider best designed to bring the publication to the attention of the public.
312U Duty to ensure co-ordinated exercise of functions etc
(1) The relevant regulators must co-ordinate the exercise of their respective functions conferred by or under this Chapter.
(2) In complying with the duty in subsection (1) each relevant regulator must obtain information and advice from any of the other relevant regulators who may be expected to have relevant information or relevant expertise.
(3) The duty in subsection (1) applies only to the extent that compliance with the duty does not impose a burden on the relevant regulators that is disproportionate to the benefits of compliance.
(4) Before exercising any power conferred by or under this Chapter a relevant regulator must consult each of the other relevant regulators (where not otherwise required to do so).
(1) The relevant regulators must prepare and maintain a memorandum which describes in general terms—
(a) the role of the relevant regulators in relation to the exercise of functions conferred by or under this Chapter, and
(b) how they intend to comply with section 312U in relation to the exercise of such functions.
(2) The relevant regulators must review the memorandum at least once in each calendar year.
(3) The relevant regulators may revise a memorandum under this section.
(4) The relevant regulators must give the Treasury a copy of the memorandum and any revised memorandum.
(5) The Treasury must lay before Parliament a copy of any document received by them under this section.
(6) The relevant regulators must ensure that the memorandum as in force for the time being is published in the way appearing to them to be best calculated to bring it to the attention of the public.
(7) The memorandum need not relate to any aspect of compliance with section 312U if the relevant regulators consider—
(a) that publication of information about that aspect would be against the public interest, or
(b) that aspect is a technical or operational matter not affecting the public.
312W Application of provisions of this Act to this Chapter
The following provisions do not apply for the purposes of this Chapter—
(a) section 3D (duty to ensure co-ordinated exercise of functions);
(b) section 3E (memorandum of understanding);
(c) section 138D (actions for damages).
(1) In this Part—
“application” means an application for a recognition order made under section 287 , 288 or 288A;
“applicant” means a person who has applied for a recognition order;
...
“central counterparty” means a body corporate or unincorporated association which interposes itself between the counterparties to the contracts traded on one or more financial markets, becoming the buyer to every seller and the seller to every buyer;
“central counterparty recognition order” means a recognition order made under section 290(1)(b);
“clearing”, in relation to a central counterparty, means the process of establishing positions, including the calculation of net obligations and ensuring that financial instruments, cash, or both, are available to secure the exposures arising from those positions; and “clearing services”, in relation to a central counterparty, is to be read accordingly;
“critical third party” has the same meaning as in Chapter 3C (see section 312L(8);
“CSD recognition order” means a recognition order made under section 290(1)(d);
...
“the EMIR regulation” means Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories as it forms part of assimilated law, and any reference to requirements contained in or to functions under the EMIR regulation includes a reference (as the case may be) to requirements contained in or to functions under—
any EU regulation, originally made under the EMIR regulation, which is assimilated direct legislation; or
any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the EMIR regulation on or after IP completion day;
“FMI functions”, in relation to the Bank of England, has the meaning given by section 30D(3) of the Bank of England Act 1998;
“multilateral trading facility” means a UK multilateral trading facility as defined by Article 2(1)(14A) of the markets in financial instruments regulation;
“organised trading facility” means a UK organised trading facility as defined by Article 2(1)(15A) of the markets in financial instruments regulation;
...
“overseas applicant” means a body corporate or association which has neither its head office nor its registered office in the United Kingdom and which has applied for a recognition order;
“overseas investment exchange” means a body corporate or association which has neither its head office nor its registered office in the United Kingdom and in relation to which a recognition order is in force;
“overseas clearing house” means a body corporate or association which is not a central counterparty and has neither its head office nor its registered office in the United Kingdom and in relation to which a recognition order is in force;
“recognised body” means a recognised investment exchange , a recognised clearing house or a recognised CSD , and in Chapter 3B also includes a third country central counterparty;
“recognised central counterparty” has the meaning given in section 285;
“recognised clearing house” has the meaning given in section 285;
“recognised CSD” has the meaning given in section 285;
“recognised investment exchange” has the meaning given in section 285;
“recognition order” means an order made under section 290 or 292;
“recognition requirements” has the meaning given by section 286;
“regulated market” means a UK regulated market as defined by Article 2(1)(13A) of the markets in financial instruments regulation;
“remedial direction” has the meaning given in section 308(8);
“revocation order” has the meaning given in section 297.
“Tier 2 third country central counterparty” means a third country central counterparty which has been determined by the Bank of England to be systemically important or likely to become systemically important in accordance with Article 25.2a of the EMIR regulation;
“trading venue” means a multilateral trading facility, a regulated market or an organised trading facility.
...
(1A) For the purposes of this Part, a clearing house does not include a central securities depository.
(2) References in this Part to rules of an investment exchange (or a clearing house or central securities depository) are to rules made, or conditions imposed, by the investment exchange (or the clearing house or central securities depository) with respect to—
(a) recognition requirements;
(b) admission of persons to, or their exclusion from the use of, its facilities; or
(c) matters relating to its constitution.
(3) References in this Part to guidance issued by an investment exchange are references to guidance issued, or any recommendation made, in writing or other legible form and intended to have continuing effect, by the investment exchange to—
(a) all or any class of its members or users, or
(b) persons seeking to become members of the investment exchange or to use its facilities,
with respect to any of the matters mentioned in subsection (2)(a) to (c).
(4) References in this Part to guidance issued by a clearing house are to guidance issued, or any recommendation made, in writing or other legible form and intended to have continuing effect, by the clearing house to—
(a) all or any class of its members, or
(b) persons using or seeking to use its services,
with respect to the provision by it or its members of clearing services or services falling within section 285(3)(b).
313A FCA's power to require suspension or removal of financial instruments from trading
(1) The FCA may, for the purpose of protecting—
(a) the interests of investors, or
(b) the orderly functioning of the financial markets,
require an institution or a class of institutions to suspend or remove a financial instrument from trading.
(2) If the FCA exercises the power conferred by subsection (1), the matter may be referred to the Tribunal by—
(a) the institution or, as the case may be, any institution in the class, or
(b) the issuer of the financial instrument (if any).
(3) In this section, “trading” includes trading otherwise than on a trading venue .
313B Suspension or removal of financial instruments from trading: procedure
(1) A requirement imposed on an institution under section 313A (a “relevant requirement”) takes effect—
(a) immediately, if the notice given under subsection (2) states that this is the case;
(b) in any other case, on such date as may be specified in the notice.
(2) If the FCA proposes to impose a relevant requirement on an institution, or a class of institutions, or imposes such a requirement with immediate effect, it must give written notice to give notice—
(a) by written notice to—
(i) the institution or, as the case may be, each institution in the class, and
(ii) the issuer of the financial instrument in question (if any); or
(b) by publishing a notice by means of a regulatory information service.
(3) A notice given under subsection (2)(a) must—
(a) give details of the relevant requirement;
(b) state the FCA's reasons for imposing the requirement and choosing the date on which it took effect or takes effect;
(c) inform the recipient that he may make representations to the FCA within such period as may be specified by the notice (whether or not he has referred the matter to the Tribunal);
(d) inform him of the date on which the requirement took effect or takes effect; and
(e) inform him of his right to refer the matter to the Tribunal and give an indication of the procedure on such a reference.
(3A) A notice published under subsection (2)(b) must—
(a) give details of the relevant requirement;
(b) specify the institution, or the class of institutions, to which it applies;
(c) state the FCA's reasons for imposing the requirement and choosing the date on which it took effect or takes effect;
(d) state that any institution to which the requirement applies or the issuer of the financial instrument in question may make representations to the FCA within such period as may be specified by the notice (whether or not the institution or the issuer has referred the matter to the Tribunal);
(e) state the date on which the requirement took effect or takes effect; and
(f) state that any institution to which the requirement applies or the issuer of the financial instrument in question has a right to refer the matter to the Tribunal, and give an indication of the procedure on such a reference.
(4) The FCA may extend the period within which representations may be made to it.
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313BA Procedure following consideration of representations
(1) This section applies where, within the period specified under section 313B(3), (3A) or (4), representations are made to the FCA in relation to a requirement that it has proposed to impose or has imposed under section 313A.
(2) The FCA must decide whether to impose the requirement or (in the case of a requirement that has been imposed) whether to revoke it.
(3) In the case of a requirement that the FCA has proposed to impose on a class of institutions, the FCA may decide to impose the requirement—
(a) on the class;
(b) on the class apart from one or more specified members of it; or
(c) only on one or more specified members of the class.
(4) In the case of a requirement that the FCA has imposed on a class of institutions, the FCA may decide to revoke it in relation to—
(a) the class;
(b) the class apart from one or more specified members of it; or
(c) one or more specified members of the class only.
(5) The FCA must give written notice of its decision to—
(a) any institution which has made representations, and
(b) the issuer of the financial instrument in question (if any).
(6) In the case of a requirement that the FCA has proposed to impose or has imposed on a class, the FCA must also give notice of its decision by publishing it by means of a regulatory information service unless the decision is—
(a) to impose the requirement on the class, or
(b) not to revoke the requirement in relation to the class or any member of it.
(7) An institution to which notice is required to be given under subsection (5) may refer the matter to the Tribunal if the FCA's decision is that the requirement will be imposed on, or will continue to apply to, the institution.
(8) An issuer to whom notice is required to be given under subsection (5) may refer the matter to the Tribunal if the FCA's decision is that the requirement will be imposed on, or will continue to apply to, the institution or (in the case of a requirement relating to a class) any of the institutions in the class.
(9) A notice given under subsection (5) must inform the recipient if the recipient has a right to refer the matter to the Tribunal.
313BB Revocation of requirements: applications by institutions
(1) This section applies where the FCA has imposed a requirement on an institution or a class of institutions under section 313A.
(2) The institution or any of the institutions in the class may apply to the FCA for the revocation of the requirement.
(3) The FCA must decide whether to revoke the requirement.
(4) In the case of a requirement imposed on a class of institutions, the FCA may decide to revoke it in relation to—
(a) the class;
(b) the class apart from one or more specified members of it; or
(c) one or more specified members of the class only.
(5) The FCA must give a warning notice if—
(a) in the case of a requirement imposed on an institution, the FCA proposes not to revoke the requirement, or
(b) in the case of a requirement imposed on a class, the FCA proposes to make a decision which would have the effect that the requirement continues to apply to the applicant (whether or not it would have the effect that it continues to apply to other members of the class).
(6) The warning notice must be given to—
(a) the applicant, and
(b) the issuer of the financial instrument in question (if any).
313BC Decisions on applications for revocation by institutions
(1) This section applies where, having considered any representations made in response to a warning notice, the FCA has decided whether to grant an application for revocation made under section 313BB.
(2) The FCA must give written notice in accordance with subsection (3) if—
(a) in the case of a requirement imposed on an institution, the FCA decides to revoke the requirement, or
(b) in the case of a requirement imposed on a class, the FCA makes a decision which has the effect that the requirement will no longer apply to the applicant (whether or not it will continue to apply to other members of the class).
(3) The written notice must be given to—
(a) the applicant, and
(b) the issuer of the financial instrument in question (if any).
(4) If the FCA is required to give written notice under subsection (2) in relation to a requirement imposed on a class, the FCA must also give notice of its decision by publishing it by means of a regulatory information service.
(5) The FCA must give a decision notice in accordance with subsection (6) if—
(a) in the case of a requirement imposed on an institution, the FCA decides not to revoke the requirement, or
(b) in the case of a requirement imposed on a class, the FCA makes a decision which has the effect that the requirement will continue to apply to the applicant (whether or not it will continue to apply to other members of the class).
(6) The decision notice must be given to—
(a) the applicant, and
(b) the issuer of the financial instrument in question (if any).
(7) If the FCA is required to give a decision notice in relation to a requirement imposed on a class, the FCA must also give notice of its decision by publishing it by means of a regulatory information service.
(8) If the FCA gives a decision notice, the recipient may refer the matter to the Tribunal.
313BD Revocation of requirements: applications by issuers
(1) This section applies where the FCA has imposed a requirement on an institution or a class of institutions under section 313A.
(2) The issuer of the financial instrument may apply to the FCA for the revocation of the requirement.
(3) The FCA must decide whether to revoke the requirement.
(4) In the case of a requirement imposed on a class of institutions, the FCA may decide to revoke it in relation to—
(a) the class;
(b) the class apart from one or more specified members of it; or
(c) one or more specified members of the class only.
(5) The FCA must give the issuer a warning notice if—
(a) in the case of a requirement imposed on an institution, the FCA proposes not to revoke the requirement, or
(b) in the case of a requirement imposed on a class, the FCA proposes not to revoke the requirement or to revoke it in relation to—
(i) the class apart from one or more specified members of it, or
(ii) one or more specified members of the class only.
313BE Decisions on applications for revocation by issuers
(1) This section applies where, having considered any representations made in response to a warning notice, the FCA has decided whether to grant an application for revocation made under section 313BD.
(2) The FCA must give written notice to the issuer if the FCA decides to revoke the requirement.
(3) If the FCA is required to give written notice under subsection (2) in relation to a requirement imposed on a class, the FCA must also give notice of its decision by publishing it by means of a regulatory information service.
(4) The FCA must give the issuer a decision notice if—
(a) in the case of a requirement imposed on an institution, the FCA decides not to revoke the requirement, or
(b) in the case of a requirement imposed on a class, the FCA decides not to revoke the requirement or makes a decision to revoke the requirement in relation to—
(i) the class apart from one or more specified members of it, or
(ii) one or more specified members of the class only.
(5) If the FCA is required to give a decision notice under subsection (4)(b), it must also give notice of its decision by publishing it by means of a regulatory information service.
(6) If the FCA gives a decision notice under subsection (4), the issuer may refer the matter to the Tribunal.
313CA Suspension or removal of financial instruments from trading: notification and trading on other venues
(1) The FCA must take the steps in subsection (2) to (4) if it imposes a requirement on an institution under section 313A to—
(a) suspend or remove a financial instrument from trading; or
(b) suspend or remove a derivative which relates, or is referenced, to the financial instrument from trading to support the objectives of a suspension or removal mentioned in paragraph (a).
(2) The FCA must require any trading venue or systematic internaliser which falls under its jurisdiction and trades the same instrument or derivative to suspend or remove the instrument or derivative from trading if a suspension or removal mentioned in subsection (1) was due to—
(a) suspected market abuse;
(b) a take-over bid; or
(c) the non-disclosure of inside information about the issuer or the instrument.
(3) But the FCA is not obliged to impose a requirement under subsection (2) if it could cause significant damage to the interests of investors or the orderly functioning of the market.
(4) The FCA must publish a decision of any of the following kinds in such a manner as the FCA considers appropriate—
(a) a decision to impose a requirement under section 313A;
(b) a decision to revoke a requirement imposed under section 313A;
(c) a decision to impose, or to revoke or not to impose, a requirement under subsection (2).
(5) Subsection (4) does not require a decision to be published if it has already been published under section 313B(2)(b) or 313BE(5).
313CB Suspension or removal of a financial instrument from a trading by a trading venue: FCA duties
(1) The FCA must take the steps in subsections (2), (4), and (5)if a person specified in subsection (6) operating a trading venue in the United Kingdom informs the FCA it has made a decision—
(a) to suspend or remove a financial instrument from trading on the trading venue because the instrument no longer complies with the venue’s rules, or
(b) to suspend or remove a derivative which relates, or is referenced, to the financial instrument from trading on the trading venue to support the objectives of a suspension or removal mentioned in paragraph (a).
(2) The FCA must require any other trading venue or any systematic internaliser which falls under its jurisdiction and trades the same instrument or derivative to suspend or remove the instrument or derivative from trading if a suspension or removal mentioned in subsection (1) was due to—
(a) suspected market abuse;
(b) a take-over bid; or
(c) the non-disclosure of inside information about the issuer or the instrument.
(3) But the FCA is not obliged to impose a requirement under subsection (2) if it could cause significant damage to the interests of investors or the orderly functioning of the market.
(4) The FCA must revoke a requirement imposed under subsection (2) if the person mentioned in subsection (1) informs the FCA it has lifted the suspension mentioned in that subsection.
(5) The FCA must publish any decision to impose, or to revoke or not to impose, a requirement under subsection (2) in such a manner as the FCA considers appropriate.
(6) The specified persons for the purposes of subsection (6) are—
(a) a recognised investment exchange,
(b) an investment firm with a Part 4A permission to carry on a regulated activity which is any of the investment services and activities,
(c) a qualifying credit institution that has Part 4A permission to carry on the regulated activity of accepting deposits.
313CBA Significant damage to investors’ interests or orderly functioning of market
(1) This section applies for the purposes of sections 313CA(3) and 313CB(3).
(2) The following are circumstances in which a suspension or removal from trading of a financial instrument could cause significant damage to the interests of investors or the orderly functioning of the market—
(a) where it would create a systemic risk undermining financial stability, such as where the need exists to unwind a dominant market position, or where settlement obligations would not be met in a significant volume;
(b) where the continuation of trading on the market is necessary to perform critical post-trade risk management functions when—
(i) as a result of the default of a clearing member there is a need for the liquidation of financial instruments under the default procedures of a central counterparty, and
(ii) a central counterparty would be exposed to unacceptable risks as a result of an inability to calculate margin requirements;
(c) where the financial viability of the issuer would be threatened, such as where it is involved in a corporate transaction or capital raising.
(3) In determining in any other circumstance whether a suspension or removal could cause significant damage to the interests of investors or the orderly functioning of the market, the FCA must have regard (among other things) to the following—
(a) the liquidity of the market concerned, taking account of the fact that the consequences of a suspension or removal are likely to be greater where the market is more liquid;
(b) the nature of the suspension or removal, where actions with a sustained or lasting impact on the ability of investors to trade a financial instrument on trading venues, such as removals, are likely to have a greater impact on investors than other actions;
(c) the knock-on effects of a suspension or removal on sufficiently related derivatives, indices or benchmarks for which the removed or suspended instrument serves as an underlying or constituent;
(d) the effects of a suspension on the interests of market end-users who are not financial counterparties, such as entities trading in financial instruments to hedge commercial risks.
(4) In this section—
“central counterparty” has the same meaning as in Part 18 (see section 313(1));
“clearing member”, in relation to a central counterparty, means an undertaking which participates in the central counterparty and which is responsible for discharging the financial obligations arising from that participation;
“financial counterparty” has the meaning given in Article 2(8) of Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.
(1) In this Part—
...
“derivative” means a derivative referred to in paragraphs 4 to 10 of Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544);
“financial instrument” means an instrument specified in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;
“institution” means—
a recognised investment exchange, other than an overseas investment exchange (within the meaning of Part 18);
an investment firm;
a qualifying credit institution that has Part 4A permission to carry on the regulated activity of accepting deposits, when carrying out investment services or activities; or
a qualifying credit institution other than one that has Part 4A permission to carry on the regulated activity of accepting deposits;
...
“issuer”, in relation to a financial instrument, means the person who issued the instrument;
“market abuse” means a contravention of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or 15 (prohibition of market manipulation) of the market abuse regulation;
...
“non-disclosure of inside information” means a failure to disclose inside information, as defined by Article 7 (inside information) of the market abuse regulation, in contravention of Article 17 (public disclosure of inside information) of that Regulation;
“regulated information” has the meaning given in Article 2(1)(k) of the transparency obligations directive (as defined in section 103 of this Act);
“regulatory information service” means—
a service approved by the FCA to disseminate regulated information in accordance with rules made under section 89A of this Act, ...
...
...
“systematic internaliser” has the meaning given in Article 2(1)(12) of the markets in financial instruments regulation;
“trading venue” means a UK trading venue, as defined by Article 2(1)(16A) of the markets in financial instruments regulation.
(2) In this Part a trading venue or systematic internaliser falls under the FCA’s jurisdiction if—
(a) it is established in the United Kingdom; or
(b) in the case of a systematic internaliser which does not fall within the FCA’s jurisdiction by virtue of paragraph (a)—
(i) it has established a branch (as defined by Article 2(1)(20) of the markets in financial instruments regulation) in the United Kingdom; and
(ii) the FCA considers that it is necessary to impose a requirement on the systematic internaliser under section section 313CA(2) or 313CB(2).
(1) So far as it is appropriate to do so for the purpose of advancing one or more of its operational objectives, the FCA must keep itself informed about—
(a) the way in which the Council supervises and regulates the market at Lloyd's, and
(b) the way in which regulated activities are being carried on in that market.
(1A) So far as it is appropriate to do so for the purpose of advancing its general objective or (if section 2C applies) its insurance objective, the PRA must keep itself informed about—
(a) the way in which the Council supervises and regulates the market at Lloyd's, and
(b) the way in which any PRA-regulated activities are being carried on in that market.
(2) Each regulator must keep under review the desirability of exercising—
(a) any of its powers under this Part;
(b) any powers which it has in relation to the Society as a result of provision made by or under this Act.
314A The PRA's objectives in relation to Lloyd's etc
(1) This section modifies—
(a) the effect of sections 2B and 2C (the PRA's general objective and insurance objective), and
(b) the effect of section 3I (power of PRA to require FCA to refrain from specified action),
in relation to anything done, or proposed to be done, by the PRA under or for the purposes of this Part.
(2) This section applies only if PRA-authorised persons include—
(a) the Society, or
(b) other persons who carry on regulated activities in relation to anything done at Lloyd's.
(3) Section 2B(2) and (3) have effect as if references to PRA-authorised persons (or a PRA-authorised person) were references to the Society, and the members of the Society, taken together (and sections 2G and 2J(3) are to be read accordingly).
(4) Section 2C(1) has effect as if the reference to the discharge of the PRA's general functions so far as relating to the activity mentioned there were a reference to the discharge of its general functions so far as relating to the carrying on by the Society or other persons of PRA-regulated activities in relation to anything done at Lloyd's.
(5) Section 3I(4)(b) has effect as if the reference to a PRA-authorised person were a reference to the Society, and the members of the Society, taken together.
(1) This section applies if an activity carried on by the Society is of a kind specified in an order made under section 22 (regulated activities).
(2) The order may provide that the Society is not to be subject to any requirement of this Act concerning the registered office of a body corporate.
(1) The general prohibition or (if the general prohibition is not applied under this section) a core provision applies to the carrying on of an insurance market activity by—
(a) a member of the Society, or
(b) the members of the Society taken together,
only if a regulator so directs.
(1A) A direction under subsection (1)—
(a) may be given by the FCA only if it considers that giving the direction is necessary or expedient for the purpose of advancing one or more of its operational objectives, and
(b) may be given by the PRA only if it considers that giving the direction is necessary or expedient for the purpose of advancing its general objective or (if section 2C applies) the insurance objective.
(1B) A direction under subsection (1) which applies the general prohibition to a member of the Society, or to the members of the Society taken together, may be given by a regulator only with the consent of the other regulator.
(2) A direction given under subsection (1) which applies a core provision is referred to in this Part as “an insurance market direction”.
(3) In subsection (1)—
“core provision” means a provision of this Act mentioned in section 317; and
“insurance market activity” means a regulated activity relating to contracts of insurance written at Lloyd’s.
(4) In deciding whether to give a direction under subsection (1), the regulator concerned must have particular regard to—
(a) the interests of policyholders and potential policyholders;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) the need to ensure the effective exercise of the functions which the regulator concerned has in relation to the Society as a result of provision made by or under this Act.
(5) A direction under subsection (1) must be in writing.
(6) A direction under subsection (1) applying the general prohibition may apply it in relation to different classes of person.
(7) An insurance market direction—
(a) must specify each core provision, class of person and kind of activity to which it applies;
(b) may apply different provisions in relation to different classes of person and different kinds of activity.
(8) A direction under subsection (1) has effect from the date specified in it, which may not be earlier than the date on which it is made.
(9) A direction under subsection (1) given by a regulator must be published in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(10) A regulator who gives a direction under subsection (1) may charge a reasonable fee for providing a person with a copy of the direction.
(11) A regulator who gives a direction under subsection (1) must, without delay, give the Treasury a copy of the direction.
(1) The core provisions are Parts V, 9A, XI, XII, XIV, XV, XVI, XXII and XXIV, sections 384 to 386 and Part XXVI.
(2) References in an applied core provision to an authorised person are (where necessary) to be read as references to a person in the class to which the insurance market direction applies.
(3) An insurance market direction may provide that a core provision is to have effect, in relation to persons to whom the provision is applied by the direction, with modifications.
(1) A regulator may give a direction under this subsection to the Council or to the Society (acting through the Council) or to both.
(2) A direction under subsection (1) is one given to the body concerned—
(a) in relation to the exercise of its powers generally with a view to achieving, or in support of, a specified objective; or
(b) in relation to the exercise of a specified power which it has, whether in a specified manner or with a view to achieving, or in support of, a specified objective.
(3) “Specified” means specified in the direction.
(3A) A direction under subsection (1)—
(a) may be given by the FCA only if it considers that giving the direction is necessary or expedient for the purpose of advancing one or more of its operational objectives, and
(b) may be given by the PRA only if it considers that giving the direction is necessary or expedient for the purpose of advancing its general objective or (if section 2C applies) the insurance objective.
(4) A direction under subsection (1) may be given—
(a) instead of giving a direction under section 316(1); or
(b) if the regulator concerned considers it necessary or expedient to do so, at the same time as, or following, the giving of such a direction.
(5) A direction may also be given under subsection (1) in respect of underwriting agents as if they were among the persons mentioned in section 316(1).
(6) A direction under this section—
(a) does not, at any time, prevent the exercise by a regulator of any of its powers;
(b) must be in writing.
(7) A direction under subsection (1) given by a regulator must be published in the way appearing to the regulator to be best calculated to bring it to the attention of the public.
(8) A regulator who gives a direction under subsection (1) may charge a reasonable fee for providing a person with a copy of the direction.
(9) A regulator who gives a direction under subsection (1) must, without delay, give the Treasury a copy of the direction.
(1) Before a regulator gives a direction under section 316 or 318, it must—
(a) in a case where section 316(1B) requires the regulator to obtain the consent of the other regulator, obtain that consent,
(b) in any other case, consult the other regulator, and
(c) after complying with paragraph (a) or (b), publish a draft of the proposed direction.
(2) The draft must be accompanied by—
(a) a cost benefit analysis; and
(b) notice that representations about the proposed direction may be made to the regulator within a specified time.
(3) Before a regulator gives the proposed direction—
(a) it must have regard to any representations made to it in accordance with subsection (2)(b), and
(b) if it was required by subsection (1)(b) to consult the other regulator and proposes to give a direction which differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant, it must again consult the other regulator.
(4) If the regulator gives the proposed direction it must publish an account, in general terms, of—
(a) the representations made to it in accordance with subsection (2)(b); and
(b) its response to them.
(5) If the direction differs from the draft published under subsection (1) in a way which is, in the opinion of the regulator, significant—
(a) the regulator must (in addition to complying with subsection (4)) publish details of the difference; and
(b) those details must be accompanied by a cost benefit analysis.
(6) Subsections (1)(c) and (2) to (5) do not apply in relation to—
(a) a direction given by the FCA if it considers that the delay involved in complying with them would be prejudicial to the interests of consumers, as defined in section 425A, or
(b) a direction given by the PRA if it considers that the delay involved in complying with them would—
(i) be prejudicial to the safety and soundness of the Society, and the members of the Society, taken together, or
(ii) in a case where section 2C applies, be prejudicial to securing the appropriate degree of protection for policyholders.
(7) Neither subsection (2)(a) nor subsection (5)(b) applies if the regulator concerned considers—
(a) that, making the appropriate comparison, there will be no increase in costs; or
(b) that, making that comparison, there will be an increase in costs but the increase will be of minimal significance.
(8) A regulator who publishes a draft under subsection (1) may charge a reasonable fee for providing a person with a copy of the draft.
(9) When a regulator is required to publish a document under this section it must do so in the way appearing to it to be best calculated to bring it to the attention of the public.
(10) “Cost benefit analysis” means—
(a) an analysis of the costs together with an analysis of the benefits that will arise—
(i) if the proposed direction is given, or
(ii) if subsection (5)(b) applies, from the direction that has been given, and
(b) subject to subsection (10A), an estimate of those costs and of those benefits.
(10A) If, in the opinion of the regulator concerned—
(a) the costs or benefits referred to in subsection (10) cannot reasonably be estimated, or
(b) it is not reasonably practicable to produce an estimate,
the cost benefit analysis need not estimate them, but must include a statement of the opinion of the regulator concerned and an explanation of it.
(11) “The appropriate comparison” means—
(a) in relation to subsection (2)(a), a comparison between the overall position if the direction is given and the overall position if it is not given;
(b) in relation to subsection (5)(b), a comparison between the overall position after the giving of the direction and the overall position before it was given.
(1) A former underwriting member may carry out each contract of insurance that he has underwritten at Lloyd’s whether or not he is an authorised person.
(2) If he is an authorised person, any Part 4A permission that he has does not extend to his activities in carrying out any of those contracts.
(3) The PRA may impose on a former underwriting member such requirements as appear to it to be appropriate for the purpose of protecting policyholders against the risk that he may not be able to meet his liabilities.
(4) A person on whom a requirement is imposed may refer the matter to the Tribunal.
(5) In the event that the activity of effecting or carrying out contracts of insurance as principal is not to any extent a PRA-regulated activity, the function conferred on the PRA by subsection (3) is exercisable instead by the FCA.
(6) Accordingly, in that case—
(a) references in section 321 to the PRA are to be read as references to the FCA, and
(b) the reference in section 321(13) to the FCA is to be read as a reference to the PRA.