REC 5.2 Application process

An applicant for recognised body status needs to demonstrate to the FCA5 that it is able to meet the recognised body requirements31before a recognition order can be made. Once it has been recognised, a recognised body has to comply with the recognised body requirements31at all times. (Guidance on the recognised body requirements3 applicable to UK recognised bodies (and applicants) is given in REC 2 and REC 2A).3

In addition, under section 290A of the Act (Refusal of recognition on ground of excessive regulatory provision), the FCA5 must refuse to make a recognition order in relation to a body applying for recognition as a UK RIE if it appears to the FCA5 that an existing or proposed regulatory provision of the applicant in connection with the applicant's business as an investment exchange or the provision by the applicant of clearing facilitation services5 imposes, or will impose, an excessive requirement (as defined in section 300A of the Act) on persons directly or indirectly affected by it.2

1. (1)

   There is no standard application form. A prospective applicant should contact the Markets Division at the FCA5 at an early stage for advice on the preparation, scheduling and practical aspects of its application.

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2. (2)

   It is very important, if an application is to be processed smoothly and in a reasonable time, that it is comprehensively prepared and based on a well-developed and clear proposal.

An application should:

1. (1)

   be made in accordance with any directions the FCA5 may make under section 287 (Application by an investment exchange) of the Act6;

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2. (2)

   in the case of an application under section5 287 of the Act, 3be accompanied by the applicant's regulatory provisions and in the case of an application under section 287 of the Act information required pursuant to sub-sections 287(3)(c), (d) and (e) of the Act (see REC 5.2.3A G) 1(the material specifically prescribed in section 287 or section 288);

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3. (3)

   be accompanied by the information, evidence and explanatory material (including supporting documentation) necessary to demonstrate to the FCA5 that the recognised body requirements31will be met; and

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4. (4)

   be accompanied by the appropriate fee (see REC 7).

1The information required pursuant to sub-sections 287(c), (d) and (e) of the Act is:

1. (1)

   a programme of operations which includes the types of business the applicant proposes to undertake and the applicant's proposed organisational structure;

2. (2)

   particulars of the persons who effectively direct the business and operations of the exchange; and

3. (3)

   particulars of the ownership of the exchange, and in particular the identity and scale of interests of the persons who are in a position to exercise significant influence over the management of the exchange, whether directly or indirectly.

Other information and documentation which should normally accompany an application is listed in more detail in REC 5.2.14 G.

A prospective applicant who is an authorised person may wish to consult the FCA5 about the extent to which information which it has already supplied in connection with its status as an authorised person can be used to support an application to become a UK recognised body.

Under section 289 of the Act (Applications: supplementary)6 the FCA5 may require the applicant to provide additional information, and may require the applicant to verify any information in any manner. In view of their likely importance for any application, the FCA5 will normally wish to arrange for its own inspection of an applicant's information technology systems.

1In the case of an application to become a UK RIE6 under subsection 290(1B) of the Act6, the application must be determined by the FCA5 before the end of the period of six months beginning with the date on which it receives the completed application.

At any time after making a formal application, the applicant may make amendments to its rules, guidance or any other part of its application submitted to the FCA.5

1. (1)

   The FCA5 will keep the applicant informed of the progress of the application.

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2. (2)

   It may be necessary to ask the applicant to clarify or amplify some aspects of its proposals. The FCA5 may wish to discuss various aspects of the application and may invite the applicant to attend one or more meetings for that purpose. When requested to do so, the FCA5 will explain the nature of the information which it has asked an applicant to supply in connection with its application.

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Where the FCA5 considers that it is unlikely to make a recognition order it will discuss its concerns with the applicant as early as possible with a view to enabling the applicant to make changes to its rules or guidance, or other parts of the application (see REC 5.2.7 G). If the FCA5 decides that it will not make a recognition order, it will follow the procedure set out in section 298 of the Act (Directions and revocation: procedure) 6and described in more detail in REC 4.8.