1This chapter applies to an issuer of:

1. (1)

   retail securitised derivatives;

2. (2)

   specialist securitised derivatives; and

3. (3)

   other derivative products if the FSA has specifically approved their listing under this chapter.

For the purposes of this chapter, an issuer of other derivative products that have received the specific approval of the FSA to be listed under this chapter must comply with the rules applicable to an issuer of specialist securitised derivatives unless otherwise stated.

The FSA will not admit to listing, under this chapter, other derivative products that are likely to be bought and traded by investors who are not specialist investors, unless the derivative product falls within the scope of specified investments in Part III of the Regulated Activities Order.

An applicant for the admission of securitised derivatives must comply with LR 2 (Requirements for listing - all securities) and the following requirements.

An applicant for the admission of securitised derivatives must either:

1. (1)

   have permission under the Act to carry on its activities relating to securitised derivatives and be either a bank or a securities and futures firm;

2. (2)

   if the applicant is an overseas company:

   1. (a)

      be regulated by an overseas regulator responsible for the regulation of banks, securities firms or futures firms and which has a lead regulation agreement for financial supervision with the FSA; and

   2. (b)

      be carrying on its activities relating to securitised derivatives within the approved scope of its business; or

3. (3)

   arrange for its obligations in relation to the securitised derivatives, to be unconditionally and irrevocably guaranteed by, or benefit from an arrangement which is equivalent in its effect to such a guarantee provided by, an entity which satisfies (1) or (2).

For a securitised derivative to be listed, its underlying instrument must be traded on a regulated, regularly operating, recognised open market, unless it is:

1. (1)

   a currency; or

2. (2)

   an index; or

3. (3)

   an interest rate; or

4. (4)

   a basket of any of the above.

The FSA may modify or dispense with the requirement in LR 19.2.3 R for other derivative products.

To be listed, a retail securitised derivative must:

1. (1)

   satisfy the requirements set out in LR 19.2.3 R; and

2. (2)

   not be a contingent liability investment.

To be listed, if a retail securitised derivative gives its holder a right of exercise, its terms and conditions must provide that:

1. (1)

   for cash settled securitised derivatives that are in the money at the exercise time on the expiration date, the exercise of the securitised derivative is automatic; or

2. (2)

   for physically settled securitised derivatives that are in the money at the exercise time on the expiration date, if the holder fails to deliver an exercise notice by the time stipulated in the terms and conditions, the issuer will, irrespective of the failure to exercise, pay to the holder an amount in cash in lieu of the holders failure to deliver the exercise notice, the amount and method of calculation of this amount to be determined by the issuer.

An applicant for admission of securitised derivatives must comply with:

1. (1)

   LR 3.2 (Application for admission to listing); and

2. (2)

   LR 3.4.4 R to LR 3.4.10 R

subject to the following modification.

An issuer must submit a copy of the securitised derivatives agreement or securitised derivative instrument or equivalent document (as appropriate) as soon as possible after the date on which admission becomes effective.

An issuer that has only securitised derivativelisted is subject to the continuing obligations set out in this chapter.

An issuer that has both securitised derivatives and other securitieslisted is subject to the continuing obligations set out in this chapter and the continuing obligations that are applicable to the other securities so listed.

1. (1)

   An issuer'slistedsecuritised derivatives must be admitted to trading on a RIE's market for listed securities at all times.

2. (2)

   An issuer must inform the FSA in writing as soon as possible if it has:

   1. (a)

      requested a RIE to admit or re-admit any of its listedsecuritised derivatives to trading; or

   2. (b)

      requested a RIE to cancel or suspend trading of any of its listedsecuritised derivatives; or

   3. (c)

      been informed by a RIE that the trading of any of its listedsecuritised derivatives will be cancelled or suspended.

An issuer must ensure equal treatment for all holders of listedsecuritised derivatives of the same series in respect of all rights attaching to such securitised derivatives.

1. (1)

   An issuer must publish its annual accounts as soon as possible after they have been approved.

2. (2)

   An issuer must approve and publish its annual accounts within six months of the end of the financial period to which they relate.

1. (1)

   Annual accounts must be drawn up and be independently audited.

2. (2)

   If an issuer prepares both own and consolidated annual accounts, it may publish either form provided that the unpublished accounts do not contain any significant additional information.

If an issue is guaranteed by an unlisted company, an issuer must submit the guarantor's accounts to the FSA.

The FSA may dispense with LR 19.4.5 R and LR 19.4.6 R if:

1. (1)

   the issue is guaranteed;

2. (2)

   the guarantor is a listed company;

3. (3)

   the issuer is included in the consolidated accounts of the guarantor;

4. (4)

   no other requirement for the preparation of annual reports and accounts exists; and

5. (5)

   non-publication of the issuer's accounts would not be likely to mislead the public with regard to facts and circumstances, knowledge of which is essential for the assessment of the securitised derivatives in question.

An issuer must maintain a paying agent in the United Kingdom until the maturity date of the securitised derivatives unless the issuer:

1. (1)

   provides financial services; and

2. (2)

   itself performs the function of a paying agent in the United Kingdom.

1. (1)

   An issuer must ensure that appropriate settlement arrangements for its listedsecuritised derivatives are in place.

2. (2)

   Listedsecuritised derivatives must be eligible for electronic settlement, which includes settlement by a relevant system, as that term is defined in the Uncertificated Securities Regulations 1995 (SI 1995/3272).

An issuer must comply with DTR 2.1 to DTR 2.7 as if it were an issuer for the purposes of the disclosure rules and transparency rules.

An issuer must comply with the requirements in LR 9.5.15 R (temporary documents of title) and LR 9.5.16 R (definitive documents of title) so far as relevant to securitised derivatives.

An issuer must submit to the FSA two copies of any document required by LR 19.5.2 R to LR 19.5.10 R at the same time as the document is issued.

Any change in the rights attaching to listedsecuritised derivatives must be notified to a RIS as soon as possible.

An issuer must notify a RIS as soon as possible of:

1. (1)

   any new issues and guarantee or security related to such new issues; and

2. (2)

   any change of guarantor or security for the securitised derivatives where this information is important for the purposes of assessing the securities in question.

Immediately following the publication of its annual accounts an issuer must notify a RIS of where securitised derivative holders can obtain a copy of the annual accounts free of charge.

Where an issuer has been granted a dispensation under LR 19.4.8 R from publishing annual accounts, it must notify a RIS once the accounts have been published of where securitised derivative holders can obtain a copy of the guarantors accounts free of charge.

All notices to holders must be made either by:

1. (1)

   publishing an advertisement in at least one national newspaper circulating in the United Kingdom;

2. (2)

   despatch of the notice to the holders registered address; or

3. (3)

   sending the notice electronically to the holders e-mail address.

An issuer must notify a RIS of all notices to holders of listedsecuritised derivatives no later than the date of despatch or publication.

Any change of paying agent within the United Kingdom must be notified to a RIS as soon as possible.

An issuer must notify a RIS of any adjustment or modification it makes to the securitised derivative as a result of any change in or to the underlying instrument including details of the underlying event that necessitated the adjustment or modification.

An issuer must inform the FSA immediately if it becomes aware that an underlying instrument that is listed or traded outside the United Kingdom has been suspended.

Note: LR 5.1.2G (7) and (8) and LR 5.4.6 G are of relevance to an issuer of securitised derivatives.