UKLR 18.2 Requirements for listing

An applicant for the admission of securitised derivatives must:

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 FCA; 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 paragraph (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;

2. (2)

   an index;

3. (3)

   an interest rate; or

4. (4)

   a basket of any of the above.

The FCA may modify or dispense with the requirement in UKLR 18.2.2R for other derivative products.

To be listed, a retail securitised derivative must:

1. (1)

   satisfy the requirements set out in UKLR 18.2.2R; 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 holder’s failure to deliver the exercise notice, the amount and method of calculation of this amount to be determined by the issuer.