EG 19.35 Data Reporting Services Regulations 2017

1The DRS Regulations implement MiFID. The FCA has investigation and enforcement powers in relation to both criminal and non-criminal breaches of the DRS Regulations (including requirements imposed on persons subject to the DRS Regulations by MiFIR and any directly applicable EU regulation made under MiFIR or MiFID). The DRS Regulations impose requirements on data reporting services providers (“DRSPs”) which are entities authorised or verified to provide services of:

1. (1)

   publishing trade reports (“APA”);

2. (2)

   reporting details of transactions (“ARM”); and

3. (3)

   collecting trade reports (“CTP”).

1The FCA’s approach to enforcing the DRS Regulations will mirror our general approach to enforcing the Act, as set out in EG 2. We will seek to exercise our enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with our publicly stated policies. We will also seek to ensure fair treatment when exercising our enforcement powers. Finally, we will aim to change the behaviour of the person who is the subject of our action, to deter future non-compliance by others, to eliminate any financial gain or benefit from non-compliance, and where appropriate, to remedy the harm caused by the non-compliance.

1The regulatory powers which the DRS Regulations provide to the FCA include:

1. (1)

   the power to require information and appoint investigators;

2. (2)

   powers of entry and inspection;

3. (3)

   the power of public censure;

4. (4)

   the power to impose financial penalties;

5. (5)

   the power to impose a limitation or other restrictions;

6. (6)

   the power to apply for an injunction;

7. (7)

   the power to require restitution; and

8. (8)

   the power to prosecute unauthorised providers.

1In addition, the DRS Regulations provide the power for the FCA to take criminal or non-criminal action for misleading the FCA.

1The DRS Regulations, for the most part, mirror the FCA’s investigative, sanctioning and regulatory powers under the Act. The FCA has decided to adopt procedures and policies in relation to the use of those powers akin to those we have under the Act. Key features of the FCA’s approach are described below.

1The DRS Regulations apply much of Part 11 of the Act. The effect of this is to apply the same procedures under the Act for appointing investigators and requiring information when investigating breaches of the DRS Regulations.

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the DRS Regulations and the reasons for the appointment, unless notification is likely to prejudice the investigation or otherwise result in it being frustrated. The FCA expects to carry out a scoping visit early on in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the DRS Regulations is to use powers to compel the provision of information in the same way as we would in the course of an investigation under the Act.

1The decision making procedures for those decisions under the DRS Regulations requiring the giving of a warning notice, decision notice or a supervisory notice are dealt with in DEPP.

1For decisions made by executive procedures the procedures to be followed will be those described in DEPP 4.

1The DRS Regulations do not require the FCA to have published procedures for commencing criminal prosecutions. However, in these situations the FCA expects that we will normally follow our decision making procedures for the equivalent decisions under the Act, as set out in EG 12.

1The DRS Regulations do not require the FCA to have published procedures to apply to the court for an injunction or restitution order. However, the FCA will normally follow our decision making procedure for the equivalent decisions under the Act, as set out in EG 10 and EG 11.

1The DRS Regulations require the FCA to give third party rights as set out in section 393 of the Act and to give access to certain material as set out in section 394 of the Act.

1Certain FCA decisions (for example the publication of a statement and the imposition of a penalty) may be referred to the Tribunal by an aggrieved party.

1When determining whether to take action to impose a penalty or to issue a public censure under the DRS Regulations the FCA’s policy includes having regard to the relevant factors in DEPP 6.2 and DEPP 6.4. The FCA’s policy in relation to determining the level of a financial penalty includes having regard, where relevant, to DEPP 6.5 to DEPP 6.5D.

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the DRS Regulations to assist us to exercise our functions under the DRS Regulations in the most efficient and economic way.

[Note: See DEPP 5, DEPP 6.7 and EG 5 for further information on the settlement process and the settlement discount scheme.]

1The FCA will apply the approach to publicity that is outlined in EG 6, read in light of applicable publicity provisions in section 391D of the Act.

1The DRS Regulations apply section 169 of the Act which requires the FCA to publish a statement of policy on the conduct of certain interviews in response to requests from overseas regulators. For the purposes of the DRS Regulations the FCA will follow the procedures described in DEPP 7.