Related provisions for PR 1.1.3

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SUP 12.5.5RRP
A firm must ensure that its written contract with each of its appointed representatives:4(1) complies with the requirements prescribed in regulation 3 of the Appointed Representatives Regulations (see SUP 12.5.2 G);4(2) requires the appointed representative to comply, and to ensure that any persons who provide services to the appointed representative under a contract of services or a contract for service comply, with the relevant requirements in or under the Act (including the
SUP 12.5.6GRP
(1) If the appointed representative is appointed to give advice on investments to private customers concerning packaged products, the firm should also satisfy itself that:(a) the contract requires compliance with the rules in COB 5.1 (Advising of packaged products)3; and(b) if the firm is a provider firm, the contract prevents the appointed representative from giving advice on investments to a private customer concerning the purchase of a packaged product which is not issued by
SUP 16.1.4GRP
(1) This chapter contains requirements to report to the FSA on a regular basis. These requirements include reports relating to a firm's financial condition, and to its compliance with other rules and requirements which apply to the firm. Where the relevant requirements are set out in another section of the Handbook, this chapter contains cross references. An example of this is financial reporting for insurers and friendly societies.(2) Where such requirements already apply to
REC 5.2.14GRP

Information and supporting documentation (see REC 5.2.4 G).

(1)

Details of the applicant's constitution, structure and ownership, including its memorandum and articles of association (or similar or analogous documents ) and any agreements between the applicant, its owners or other persons relating to its constitution or governance.

(2)

Details of all business to be conducted by the applicant, whether or not a regulated activity.

(3)

Details of the facilities which the applicant plans to operate, including details of the trading platform, settlement arrangements, clearing services and custody services which it plans to supply.

(4)

Copies of the last three annual reports and accounts and, for the current financial year, quarterly management accounts.

(5)

Details of its business plan for the first three years of operation as a UK recognised body.

(6)

A full organisation chart and a list of the posts to be held by key individuals (with details of the duties and responsibilities) and the names of the persons proposed for these appointments when these names are available.

(7)

Details of its auditors, bankers, solicitors and any persons providing corporate finance advice or similar services (such as reporting accountants) to the applicant.

(8)

Details of any relevant functions to be outsourced or delegated, with copies of relevant agreements.

(9)

Details of information technology systems and of arrangements for their supply, management, maintenance and upgrading, and security.

(10)

Details of all plans to minimise disruption to operation of its facilities in the event of the failure of its information technology systems.

(11)

Details of internal systems for financial control, arrangements for risk management and insurance arrangements to cover operational and other risks.

(12)

Details of its arrangements for managing any counterparty risks, including details of margining systems, guarantee funds and insurance arrangements.

(13)

Details of internal arrangements to safeguard confidential or privileged information and for handling conflicts of interest.

(14)

Details of arrangements for complying with the notification rules and other requirements to supply information to the FSA.

(15)

Details of the arrangements to be made for monitoring and enforcing compliance with its rules and with its clearing, settlement and default arrangements.

(16)

A summary of the legal due diligence carried out in relation to ascertaining the enforceability of its rules (including default rules)and arrangements for margin against any of its members based outside the United Kingdom, and the results and conclusions reached.

(17)

Details of the procedures to be followed for declaring a member in default, and for taking action after that event to close out positions, protect the interests of other members and enforce its default rules.

(18)

Details of membership selection criteria, rules and procedures.

(19)

Details of arrangements for recording transactions effected by, or cleared through, its facilities.

(20)

Details of arrangements for detecting financial crime and market abuse , including arrangements for complying with money laundering law.

(21)

Details of criteria, rules and arrangements for selecting specified investments to be admitted to trading on (or cleared by) an RIE, or to be cleared by an RCH and, where relevant, details of how information regarding specified investments will be disseminated to users of its facilities.

(22)

Details of arrangements for cooperating with the FSA and other appropriate authorities, including draft memoranda of understanding or letters.

(23)

Details of the procedures and arrangements for making and amending rules, including arrangements for consulting on rule changes.

(24)

Details of disciplinary and appeal procedures, and of the arrangements for investigating complaints.

PERG 1.3.1GRP
This guidance is issued under section 157 of the Act (Guidance). It represents the FSA's views and does not bind the courts. For example, it would not bind the courts in an action for damages brought by a private person for breach of a rule (see section 150 of the Act (Actions for damages)), or in relation to the enforceability of a contract where there has been a breach of sections 19 (The general prohibition) or 21 (Restrictions on financial promotion) of the Act (see sections
SUP 12.3.1GRP
In determining whether a firm has complied with any provision in or under the Act such as any Principle or other rule, anything that an appointed representative has done or omitted to do as respects the business for which the firm has accepted responsibility will be treated as having been done or omitted to be done by the firm (section 39(4) of the Act ).
PERG 9.1.3GRP
This guidance is issued under section 157of the Act (Guidance). It is designed to throw light on particular aspects of regulatory requirements, not to be an exhaustive description of a person's obligations. If a person acts in line with the guidance in the circumstances it contemplates, the FSA will proceed on the footing that the person has complied with aspects of the requirement to which the guidance relates. Rights conferred on third parties cannot be affected by guidance
REC 2.17.2UKRP

Schedule to the Recognition Requirements Regulations, Part II

Paragraph 10 (Default rules in respect of market contracts)

(1)

The [UK RIE] must havedefault ruleswhich, in the event of amemberof the [UK RIE] being or appearing to be unable to meet his obligations in respect of one or moremarket contracts, enable action to be taken in respect of unsettledmarket contractsto which he is party.

(2)

The [default rules] may authorise the taking of the same or similar action in relation to amemberwho appears to be likely to become unable to meet his obligations in respect of one or moremarket contracts.

(3)

The [default rules] must enable action to be taken in respect of all unsettledmarket contracts, other than those entered into by [anRCH] for the purposes of or in connection with the provision of clearing services for the [UK RIE].

Paragraph 11 (Content of rules)

(1)

This paragraph applies as regards contracts falling within section 155(2)(a) of the Companies Act [1989].

(2)

The [default rules] must provide -

(a)

for all rights and liabilities between those party as principal to unsettledmarket contractsto which the defaulter is party as principal to be discharged and for there to be paid by one party to the other such sum of money (if any) as may be determined in accordance with the [default rules];

(b)

for the sums so payable in respect of different contracts between the same parties to be aggregated or set off so as to produce a net sum; and

(c)

for the certification by or on behalf of the [UK RIE] of the net sum payable or, as the case may be, of the fact that no sum is payable.

(3)

The reference in sub-paragraph (2) to rights and liabilities between those party as principal to unsettledmarket contractsdoes not include rights and liabilities -

(a)

in respect of margin; or

(b)

arising out of a failure to perform amarket contract.

(4)

The [default rules] may make the same or similar provision, in relation to [designated non-members] designated in accordance with the procedures mentioned in sub-paragraph (5), as in relation tomembersof the [UK RIE].

(5)

If such provision is made as is mentioned in sub-paragraph (4), the [UK RIE] must have adequate procedures -

(a)

for designating thepersons, or descriptions of person, in respect of whom action may be taken;

(b)

for keeping under review the question whichpersonsor descriptions of person should be or remain so designated; and

(c)

for withdrawing such designation.

(6)

The procedures must be designed to secure that -

(a)

apersonis not, or does not remain, designated if failure by him to meet his obligations in respect of one or moremarket contractswould be unlikely adversely to affect the operation of the market; and

(b)

a description of persons is not, or does not remain, designated if failure by apersonof that description to meet his obligations in respect of one or moremarket contractswould be unlikely adversely to affect the operation of the market.

(7)

The [UK RIE] must have adequate arrangements -

(a)

for bringing a designation or withdrawal of designation to the attention of thepersonor description of persons concerned; and

(b)

where a description ofpersonsis designated, or the designation of a description of persons is withdrawn, for ascertaining whichpersonsfall within that description.

Paragraph 12 (Content of rules)

(1)

This paragraph applies as regards contracts falling within section 155(2)(b) of the Companies Act [1989].

(2)

The [default rules] must provide -

(a)

for all rights and liabilities of the defaulter under or in respect of unsettledmarket contractsto be discharged and for there to be paid by or to the defaulter such sum of money (if any) as may be determined in accordance with the [default rules];

(b)

for the sums so payable by or to the defaulter in respect of different contracts to be aggregated or set off so as to produce a net sum;

(c)

for that sum -

(i)

if payable by the defaulter to the [UK RIE], to be set off against any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property) so as to produce a further net sum;

(ii)

if payable by the [UK RIE] to the defaulter, to be aggregated with any property provided by or on behalf of the defaulter as cover for margin (or the proceeds of realisation of such property); and

(d)

for the certification by or on behalf of the [UK RIE] of the sum finally payable or, as the case may be, of the fact that no sum is payable.

(3)

The reference in sub-paragraph (2) to the rights and liabilities of a defaulter under or in respect of an unsettledmarket contractincludes (without prejudice to the generality of that provision) rights and liabilities arising in consequence of action taken under provisions of the [default rules] authorising -

(a)

the effecting by the [UK RIE] of corresponding contracts in relation to unsettledmarket contractsto which the defaulter is party;

(b)

the transfer of the defaulter's position under an unsettledmarket contractto anothermemberof the [UK RIE];

(c)

the exercise by theUK RIEof anyoptiongranted by an unsettledmarket contract.

(4)

A "corresponding contract" means a contract on the same terms (except as to price or premium) as themarket contractbut under which thepersonwho is the buyer under themarket contractagrees to sell and thepersonwho is the seller under themarket contractagrees to buy.

(5)

Sub-paragraph (4) applies with any necessary modifications in relation to amarket contractwhich is not an agreement to sell.

(6)

The reference in sub-paragraph (2) to the rights and liabilities of a defaulter under or in respect of an unsettledmarket contractdoes not include, where he acts as agent, rights or liabilities of his arising out of the relationship of principal and agent.

Paragraph 13 (Notification to other parties affected)

The [UK RIE] must have adequate arrangements for ensuring that -

(a)

in the case of unsettledmarket contractswith a defaulter acting as principal, parties to the contract are notified as soon as reasonably practicable of the default and of any decision taken under the [default rules] in relation to contracts to which they are a party; and

(b)

in the case of unsettledmarket contractswith a defaulter acting as agent, parties to the contract and the defaulter's principals are notified as soon as reasonably practicable of the default and of the identity of the other parties to the contract.

Paragraph 14 (Cooperation with other authorities)

The [UK RIE] must be able and willing to cooperate, by the sharing of information and otherwise, with the Secretary of State, anyrelevant office-holderand any other authority or body having responsibility for any matter arising out of, or connected with, the default of amemberof the [UK RIE] or any [designated non-member].

Paragraph 15 (Margin)

(1)

Where the [UK RIE] provides clearing services, the [default rules] of the [UK RIE] must provide that in the event of a default, margin provided by the defaulter for his own account is not to be applied to meet a shortfall on aclientaccount.

(2)

This paragraph is without prejudice to the requirements of anyrulesrelating to clients' money made by the [FSA] under sections 138 and 139 of theAct.1