EG 19.41 Securities Financing Transactions Regulation

1Supervisory and enforcement functions in respect of trade repositories under the Securities Financing Transactions Regulation were transferred from ESMA to the FCA through the SFTR (EU Exit) Regulations on IP completion day2.

1The FCA’s approach to enforcing under the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations will mirror our general approach to enforcing the Act, as set out in EG. 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 SFTR (EU Exit) 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 Securities Financing Transactions Regulation, the SFTR (EU Exit) Regulations and the TRATP Regulations.

1The FCA will notify the subject of the investigation that we have appointed investigators to carry out an investigation under the SFTR (EU Exit) 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 in the enforcement process in most cases. The FCA’s policy in non-criminal investigations under the SFTR (EU Exit) Regulations is to use powers to compel the provision of information in the same way as we would during an investigation under the Act.

1The decision-making procedures for those decisions under the Securities Financing Transactions Regulation and SFTR (EU Exit) Regulations requiring the giving of a warning notice, decision notice or supervisory notice are dealt with within DEPP.

1The SFTR (EU Exit) 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, as applied by the SFTR (EU Exit) Regulations.

1When determining whether to take action to impose a penalty or to issue a public censure under the SFTR (EU Exit) 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, DEPP 6.5A, DEPP 6.5B and DEPP 6.5D.

1As with cases under the Act, the FCA may settle or mediate appropriate cases involving non-criminal breaches of the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations to assist us to exercise our functions under the Securities Financing Transactions Regulation and the SFTR (EU Exit) Regulations in the most efficient and economical way. 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 the light of regulation 37 of the SFTR (EU Exit) Regulations.

1The SFTR (EU Exit) 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 SFTR (EU Exit) Regulations, the FCA will follow the procedures described in DEPP 7.