The rules and guidance in this chapter are intended to promote confidence in the market at Lloyd's, and to protect certain consumers of services provided by the Society in carrying on, or in connection with or for the purposes of, its regulated activities. They do this by ensuring that the Society appropriately and effectively regulates the capacity transfer market so that it operates in a fair and transparent manner.

The byelaws referred to in LLD 4.2.1 R should:

1. (1)

   ensure that adequate and effective arrangements are in place to enable members and persons applying to be admitted as members to enter into transactions to transfer syndicate capacity and settle these transactions in a timely manner;

2. (2)

   give clear and comprehensive guidance about the dissemination of information that is, or may be, relevant to the price of syndicate capacity and the transparency of the capacity transfer market; and

3. (3)

   prohibit unfair and abusive practices (including market manipulation), the misuse of information not generally available, and the dissemination of false or misleading information.

The Society should have adequate and effective arrangements to:

1. (1)

   record and monitor transactions in the capacity transfer market, and maintain adequate audit trails; and

2. (2)

   suspend or annul transactions where appropriate.

The Society should have adequate and effective arrangements to monitor and enforce compliance with the byelaws referred to in LLD 4.2.1 R.

The Society should regularly review the byelaws referred to in LLD 4.2.1R, taking account of the standards of conduct required in other UK financial markets.

The Society's arrangements for reviewing and amending the byelaws referred to in LLD 4.2.1 R should be timely, effective and impartial and should take into account the guidance about conflicts of interest in LLD 1.3.

The Society should consult members and underwriting agents before it finalises material changes in the byelaws referred to in LLD 4.2.1 R, and should have timely and effective arrangements for notifying them of changes in these byelaws.

The Society should give the FSA adequate notice of all changes it proposes to make in its byelaws governing conduct in the capacity transfer market.

The FSA will take account of the standards of conduct required in other UK financial markets when it reviews proposed changes in the Society'sbyelaws governing the capacity transfer market.

The report referred to in LLD 4.3.1 R must be submitted in writing in accordance with SUP 16.3.7 to SUP 16.3.10 (see SUP 16.3.6).1