Related provisions for INSPRU 1.5.4
41 - 60 of 376 items.
When a firm receives
a client entitlement on behalf
of a client, it must pay any
part of it which is client money:(1) for client entitlements received in the United Kingdom, into a client
bank account in accordance with CASS 5.5.5 R;
or(2) for client entitlements received outside the United Kingdom, into any bank account operated
by the firm, provided that such client money is:(a) paid
to, or in accordance with, the instructions of the client concerned;
or(b) paid
into a client
A firm may
hold client money with a bank
that is not an approved bank if
all the following conditions are met:(1) the client money relates to one or more insurance
transactions which are subject to the law or market practice of a jurisdiction
outside the United Kingdom;(2) because
of the applicable law or market practice of that overseas jurisdiction, it
is not possible to hold the client money in
a client bank account with an approved bank;(3) the firm holds the money with
such
A firm owes
a duty of care to a client when
it decides where to place client money.
The review required by CASS 5.5.43 R is intended to ensure that the risks inherent
in placing client money with
a bank are minimised or appropriately diversified by requiring a firm to consider carefully the bank or banks
with which it chooses to place client money.
For example, a firm which is
likely only to hold relatively modest amounts of client
money will be likely to be able to satisfy this
In the case of a client
bank account in the United
Kingdom, if the bank does not provide the acknowledgement referred
to in CASS 5.5.49 R within 20 business days after
the firm dispatched the notice,
the firm must withdraw all money standing to the credit of the account
and deposit it in a client bank account with
another bank as soon as possible.
A firm must
not hold, for a consumer5, client money in
a client bank account outside
the United Kingdom, unless
the firm has previously disclosed
to the consumer5 (whether in its terms of business, client
agreement11 or otherwise in writing):5511(1) that
his money may be deposited in
a client bank account outside
the United Kingdom but that
the client may notify the firm that he does not wish his money to be held in a particular jurisdiction;(2) that
in such circumstances, the
A firm must
not undertake any transaction for a consumer5 that involves client money being
passed to another broker or settlement agent located
in a jurisdiction outside the United Kingdom,
unless the firm has previously
disclosed to the consumer5 (whether in its terms of business, client agreement 4or otherwise in writing):554(1) that
his client money may be passed
to a person outside the United Kingdom but the client may
notify the firm that he does
not wish his money to be
If a client has
notified a firm before entering
into a transaction that he does not wish his money to
be passed to another broker or settlement
agent located in a particular jurisdiction, the firm must either:(1) hold
the client money in a client bank account in the United
Kingdom or a jurisdiction to which the money has
not objected and pay its own money to
the firm's own account with
the broker, agent or counterparty; or(2) return
the money to, or to the order
of, the clien
The client
money resource, for the purposes of CASS
5.5.63 R (1)(a),2 is:(1) the
aggregate of the balances on the firm's client money
bank accounts, as at the close of business on the previous business day and, if held in accordance with CASS
5.4, designated investments (valued
on a prudent and consistent basis) together with client
money held by a third party in accordance with CASS 5.5.34 R;
and(2) (but
only if the firm is comparing
the client money resource with
its client's
The exemption applies whether or not the financial promotion is made from the United Kingdom. However, there is the exception that, if it is an unsolicited real time financial promotion, it must be made from a place outside the United Kingdom and be for the purposes of a business carried on entirely outside the United Kingdom. To give effect to the principle of country of origin regulation of information society services as required by the E-Commerce Directive, article 12(7) of
Articles 12(3) and (4) of the Financial Promotion Order (subject to article 12(5) – see PERG 8.12.8 G) have the effect that, where a financial promotion is directed from a place outside the United Kingdom, it will be conclusive proof that it is not directed at persons in the United Kingdom even if it is received by a person in the United Kingdom, if:(1) the financial promotion is not referred to in or directly accessible from another communication (for example, an advertisement
There is no definition in the Financial Promotion Order of what ‘proper systems and procedures’ are, and the matter will ultimately be for the courts to determine. This is unsurprising as systems and procedures may take many different forms depending upon the precise circumstances in which financial promotions are made. But it is clear that persons seeking conclusive proof that the exemption applies must consciously make arrangements to prevent their dealing with certain recipients
Where a financial promotion is directed from within the United Kingdom, articles 12(3) and (4) also state (subject to article 12(5) – see PERG 8.12.8 G) that there can be conclusive proof that the financial promotion is directed only at persons outside the United Kingdom. This will be the case if, in addition to the conditions referred to in PERG 8.12.5G (1) and PERG 8.12.5G (2), the financial promotion is accompanied by an indication that:(1) it is directed only at persons outside
In any case, some but not all of the conditions referred to in PERG 8.12.5G (1) to PERG 8.12.5G (2) and PERG 8.12.7G (1) to PERG 8.12.7G (2) (or the additional condition that the communication is included in a website, newspaper or periodical publication which is principally accessed in or intended for a non-UK market or in a radio or television broadcast or teletext service transmitted principally for reception overseas) may be met. In these cases, those conditions being satisfied
The purpose of these 1exemptions1 is to ensure that, subject to certain conditions, the restriction in section 21 of the Act does not apply to those who merely transport the financial promotions of other persons. Obvious examples here are postal and Internet service providers, courier companies and telecommunications companies. PERG 8.6.5 G explains that such persons may not be regarded as communicating a financial promotion simply because they have distributed it. Article 18
Article 20B gives effect to the provisions of the E- Commerce Directive by exemptingelectronic commerce communications made from an establishment in an EEA State other than the United Kingdom to an ECA recipient in the United Kingdom2. However, article 20B does not apply to the following communications:2(1) an advertisement by the operator of a UCITS of units in that scheme; or(2) an invitation or inducement to enter into a contract of insurance where:(a) it is made by an undertaking
The FSA will include a regional government or local authority in the list in BIPRU 3 Annex 2 R where there is no difference in risk between exposures to that body and exposures to the central government of the United Kingdom because of the specific revenue-raising powers of the regional government or local authority, and the existence of specific institutional arrangements the effect of which is to reduce the risk of default.[Note: BCD Annex VI Part 1 point 9]
A firm must treat an exposure to a regional government or local authority of an EEA State other than the United Kingdom as an exposure to the central government in whose jurisdiction that regional government or local authority is established if that regional government or local authority is included on the list of regional governments and local authorities drawn up by the competent authority in that EEA State under a CRD implementation measure with respect to point 9 of Part 1
In exceptional circumstances a firm may treat an exposure to a public sector entity established in the United Kingdom as an exposure to the central government of the United Kingdom if there is no difference in risk between exposures to that body and exposures to the central government of the United Kingdom because of the existence of an appropriate guarantee by the central government.[Note: BCD Annex VI Part 1 point 15]
A firm may assign to an exposure to an institution formed under the law of the United Kingdom of a residual maturity of 3 months or less denominated and funded in pounds sterling a risk weight that is one category less favourable than the preferential risk weight, as described in BIPRU 3.4.5 R (Exposures in the national currency of the borrower), assigned to exposures to the central government of the United Kingdom.[Note: BCD Annex VI Part 1 point 37]
(1) 4This paragraph provides guidance on BIPRU 3.4.56A R.(2) For the purposes of BIPRU 3.4.56A R (2), a firm may use the FTSE UK gilt 10-year yield index which the Council of Mortgage Lenders makes available to its members.(3) If a firm offers a variable interest rate on a lifetime mortgage, it should calculate an average interest rate in a way which is consistent with the calculation of the discount rate.(4) To determine the projected number of years to maturity of the exposure,
A firm may not treat an exposure as fully and completely secured by residential property located in the United Kingdom for the purpose of BIPRU 3.4.56 R or BIPRU 3.4.58 R unless the amount of the exposure or of the secured part of the exposure referred to in BIPRU 3.4.56 R or BIPRU 3.4.58 R, as the case may be, is 80% or less of the value of the residential property on which it is secured.
(1) The application of BIPRU 3.4.81 R may be illustrated by an example. If a firm has a mortgage exposure of £100,000 secured on residential property in the United Kingdom that satisfies the criteria listed in BIPRU 3.4.56 R to BIPRU 3.4.80 R and the value of that property is £100,000, then £80,000 of that exposure may be treated as fully and completely secured and risk weighted at 35%. The remaining £20,000 may be risk weighted at 75% provided the exposure meets the criteria
Schedule to the Recognition Requirements Regulations, Paragraph 4(1)
2The [UK RIE] must ensure that business conducted by means of itsfacilitiesis conducted in an orderly manner and so as to afford proper protection to investors. |
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(aa)
2Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that - |
|
it has transparent and non-discretionary rules and procedures - |
|
(i) |
to provide for fair and orderly trading, and |
(ii) |
to establish objective criteria for the efficient execution of orders; |
Schedule to the Recognition Requirements Regulations, Paragraph 7E
2The rules of the [UK RIE] must provide that the [UK RIE] must not exercise its power to suspend or remove from trading on a regulated market operated by it any financial instrument which no longer complies with its rules, where such step would be likely to cause significant damage to the interests of investors or the orderly functioning of the financial markets. |
2In determining whether:(1) business conducted by means of a UK RIE'sfacilities is conducted so; or (2) a UK RCH'sfacilities are such;as to afford proper protection to investors, the FSA may, in addition to the matters dealt with in REC 2.7 to REC 2.12, have regard to all the arrangements made by the UK recognised body concerning the operation of its facilities.
2The FSA may also have regard to the extent to which the UK recognised body's rules, procedures and the arrangements for monitoring and overseeing the use of its facilities:(1) include appropriate measures to prevent the use of its facilities for abusive or improper purposes;(2) provide appropriate safeguards for investors against fraud or misconduct, recklessness, negligence or incompetence by users of its facilities;(3) provide appropriate information to enable users of its
2In determining whether a UK RIE is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the FSA may have regard to the extent to which the UK RIE's rules and procedures:(1) are consistent with the Code of Market Conduct (see MAR 1);(2) prohibit abusive trading practices or the deliberate reporting or publication of false information about trades; and(3) prohibit or prevent:(a) trades
2In determining whether a UK RIE is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the FSA may have regard to whether the UK RIE's arrangements and practices: (1) enable members and clients for whom they act to obtain the best price available at the time for their size and type of trade;(2) ensure:(a) sufficient pre-trade transparency in the UK RIE's markets taking account of the
1Under section 312C of the Act, if a UK RIE wishes to make arrangements in an EEA State other than the UK to facilitate access to or use of a regulated market or multilateral trading facility operated by it, it must give the FSAwritten notice of its intention to do so. The notice must:(1) describe the arrangements; and(2) identify the EEA State in which the UK RIE intends to make them.
The FSA expects to have an open, cooperative and constructive relationship with UK recognised bodies to enable it to have a broad picture of the UK recognised body's activities and its ability to meet the recognition requirements. This broad picture is intended to complement the information which the FSA will obtain under section 293 of the Act (Notification requirements) or under notification rules made under that section (see REC 3). The FSA will usually arrange meetings between
UK recognised bodies are likely to develop and adapt their businesses in response to customer demand and new market opportunities. Where such developments involve changes to the way the UK recognised body operates, they are likely to involve changes to the way it satisfies the recognition requirements, the MiFID implementing requirements (in the case of a UK RIE) 1and other obligations in or under the Act.
The FSA expects a UK recognised body to take its own steps to assure itself that it will continue to satisfy the recognition requirements, the MiFID implementing requirements (in the case of a UK RIE)1 and other obligations in or under the Act when considering any changes to its business or operations.
However, the FSA also expects that UK recognised bodies will keep it informed of all significant developments and of progress with itsplans and operational initiatives, and will provide it with appropriate assurance that the recognition requirements and the MiFID implementing requirements (in the case of a UK RIE)1 will continue to be satisfied.
This chapter gives guidance to UK firms. In most cases UK firms will be authorised persons under the Act. However, under the Banking Consolidation Directive, a subsidiary of a firm which is a credit institution which meets the criteria set out in that Directive also has an EEA right. Such an unauthorised subsidiary is known as a financial institution. References in this chapter to a UK firm include a financial institution.
A UK firm should be aware that the guidance is the FSA's interpretation of the Single Market Directives, the Act and the legislation made under the Act. The guidance is not exhaustive and is not a substitute for firms consulting the legislation or taking their own legal advice in the United Kingdom and in the relevant EEA States.
In some circumstances, a UK firm that is carrying on business which is outside the scope of the Single Market Directives has a right under the Treaty to carry on that business. For example, for1 an insurer carrying on both direct insurance and reinsurance business, the authorisationof reinsurance business 1is not covered by the Insurance Directives . The firm1may, however, have rights under the Treaty in respect of its reinsurance1 business. Such UK firms may wish to consult with
Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(d)
2Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that - |
satisfactory arrangements which comply with paragraph 7D are made for securing the timely discharge (whether by performance, compromise or otherwise) of the rights and liabilities of the parties to transactions effected on the [UK RIE] (being rights and liabilities in relation to those transactions); |
Schedule to the Recognition Requirements Regulations, Paragraph 7D
2(1) |
The rules of the [UK RIE] must permit a user or member of a regulated market operated by it to use whatever settlement facility he chooses for a transaction. |
|
(2) |
Sub-paragraph (1) only applies where - |
|
(a) |
such links and arrangements exist between the chosen settlement facility and any other settlement facility as are necessary to ensure the efficient and economic settlement of the transaction; and |
|
(b) |
the [UK RIE] is satisfied that the smooth and orderly functioning of the financial markets will be maintained. |
|
In determining whether there are satisfactory arrangements for securing the timely discharge of the rights and liabilities of the parties to transactions, the FSA may have regard to the UK recognised body's:(1) rules and practices relating to clearing and settlement;(2) arrangements for matching trades and ensuring that the parties are in agreement about trade details;(3) arrangements for making deliveries and payments and, where relevant, for collecting margin and holding collateral,
(1) This sourcebook, except for COLL 9 (Recognised schemes), applies to:(a) investment companies with variable capital (ICVCs);(b) ACDs, other directors and depositaries of ICVCs; and(c) managers and trustees of authorised unit trust schemes (AUTs).(2) COLL 9 applies to operators of schemes that are recognised schemes and to those seeking to secure recognised status for such schemes.
(1) Under the Gibraltar Order4 made under section 409 of the Act, a Gibraltar firm is treated as an EEA firm under Schedule 3 to the Act if it is:(a) authorised in Gibraltar under the Insurance Directives; or(b) authorised in Gibraltar under the Banking Consolidation Directive;44(c) authorised in Gibraltar under the Insurance Mediation Directive; or4(d) authorised in Gibraltar under the Investment Services Directive .4(1A) 4Similarly, an EEA firm which:(a) has satisfied the Gibraltar
This chapter does not, however, give guidance on the procedures for the establishment of a branch in, or the providing of cross border services into, the United Kingdom for the first time. So, an incoming EEA firm that wishes to change or supplement the nature of its operations in the United Kingdom from the providing of cross border services to the establishment of a branch (or vice versa) should refer to 3SUP 13A3 (Qualifying for authorisation under the Act).
In addition, the chapter does not give guidance on the procedures for making an application for top-up permission, to carry on regulated activities in the United Kingdom which are outside the scope of the Single Market Directives and for which the firm cannot exercise Treaty rights. Incoming EEA firms seeking a top-up permission should refer to 3SUP 13A3.
A firm that is a member of a UK consolidation group must comply, to the extent and in the manner prescribed in BIPRU 8.5, with the obligations laid down in GENPRU 1.2 (Adequacy of financial resources), the main BIPRU firm Pillar 1 rules (but not the base capital resources requirement) and BIPRU 10 (Concentration risk requirements) on the basis of the consolidated financial position of:(1) where either Test 1A or Test 1B in BIPRU 8 Annex 1 (Decision tree identifying a UK consolidation
A firm'sUK consolidation group means a1 group that is identified as a UK consolidation group in accordance with the decision tree in BIPRU 8 Annex 1 R (Decision tree identifying a UK consolidation group); the members of that group are:111(1) 1where either Test 1A or Test 1B in BIPRU 8 Annex 1 R apply, the members of the consolidation group made up of the sub-group of the parent institution in a Member State identified in BIPRU 8 Annex 1 R together with any other person who is
BIPRU 8 Annex 1 (Decision tree identifying a UK consolidation group) shows that Articles 125 and 126 of the Banking Consolidation Directive are important in deciding whether the FSA is obliged to supervise a group or part of a group and hence whether that group or part of a group is a UK consolidation group. BIPRU 8 Annex 4 (Text of Articles 125 and 126 of the Banking Consolidation Directive) sets out these articles together with an explanation of how those articles should be
A number of controls apply under the Act to the promotion of shares or securities that are issued by any body corporate. These controls differ according to whether the person making the promotion is an unauthorised person (see PERG 9.10.2 G) or an authorised person (see PERG 9.10.3 G to PERG 9.10.6 G). In addition, where a body corporate is not an open-ended investment company:(1) the requirements of Prospectus Rules relating to the publication of an approved prospectus may1 apply
The controls under the Act that apply to promotions of shares or securities by unauthorised persons are in section 21 of the Act (Restrictions on financial promotion). These controls apply where an unauthorised person makes a financial promotion in, or from, the United Kingdom that relates to the shares in or securities of any body corporate. The same controls apply regardless of whether the shares or securities being promoted are issued by a body corporate that is an open-ended
Promotions made by authorised persons in the United Kingdom are generally subject to the controls inCOBS 4 (Communicating with clients, including financial promotions).3 However, in the case of shares in, or securities of, a body corporate which is an open-ended investment company, additional controls are imposed by Chapter II of Part XVII of the Act (Restrictions on promotion of collective investment schemes) (see PERG 8.20). Section 238 of the Act (Restrictions on promotion)
The restrictions mentioned in PERG 9.10.3 G are subject to a number of exemptions. For example, the controls in sections 238 and 240 do not apply to financial promotions about certain kinds of collective investment scheme. These are:(1) open-ended investment companies formed in Great Britain and authorised by the FSA under the Open-ended Investment Companies Regulations 2001;(2) authorised unit trust schemes; and(3) collective investment schemes that are recognised schemes (see
A person carrying on the regulated activity of establishing, operating or winding up a collective investment scheme that is constituted by an open-ended investment company will need permission for those activities. In line with section 237(2) of the Act (Other definitions), the operator of a collective investment scheme that is an open-ended investment company is the company itself. But where the open-ended investment company is incorporated outside the United Kingdom, it will
(1) 1This chapter applies to an EEA firm that wishes to exercise an entitlement to establish a branch in, or provide cross border services into, the United Kingdom under a Single Market Directive. (The Act refers to such an entitlement as an EEA right and its exercise is referred to in the Handbook as "passporting".) (See SUP App 3 (Guidance on passporting issues) for further guidance on passporting.)(2) This chapter also applies to:(a) a Treaty firm that wishes to exercise rights
This chapter does not apply to:(1) an EEA firm that wishes to carry on in the United Kingdom activities which are outside the scope of its EEA right and the scope of a permission granted under Schedule 4 to the Act; in this case the EEA firm requires a "top-up permission" under Part IV of the Act (see the FSA website "How do I get authorised":http://www.fsa.gov.uk/Pages/Doing/how/index.shtml3); or 3(2) an EEA firm that carries on any insurance activity:(a) by the provision of
(1) Under the Gibraltar Order2 made under section 409 of the Act, a Gibraltar firm is treated as an EEA firm under Schedule 3 to the Act if it is:22(a) authorised in Gibraltar under the Insurance Directives; or(aA) authorised in Gibraltar under the Reinsurance Directive; or6(b) authorised in Gibraltar under the Banking Consolidation Directive; or22(c) authorised in Gibraltar under the Insurance Mediation Directive; or2(d) authorised in Gibraltar under the MiFID4.24(1A) Similarly,
(1) This chapter explains how an EEA firm and a Treaty firm can qualify for authorisation under Schedules 3 and 4 to the Act and how a UCITS qualifier is authorised under Schedule 5 to the Act. (2) This chapter also provides guidance on Schedule 3 to the Act for an incoming EEA firm that wishes to establish a branch in the United Kingdom instead of, or in addition to, providing cross border services into the United Kingdom or vice versa.
(1) EEA firms should note that this chapter only addresses the procedures which the FSA will follow under the Act.So, an EEA firm should consider this guidance in conjunction with the requirements with which it will have to comply in its Home State. 6(2) The guidance in this chapter represents the FSA's interpretation of the Single Market Directives, the Act and the secondary legislation made under the Act. The guidance is not exhaustive and should not be seen as a substitute
The senior personnel of a common platform firm or of the UK branch of a non-EEA bank1must be of sufficiently good repute and sufficiently experienced as to ensure the sound and prudent management of the firm.[Note: article 9(1) of MiFID and article 11(1) second paragraph of the Banking Consolidation Directive ]
At least two independent minds should be applied to both the formulation and implementation of the policies of a common platform firm and the UK branch of a non-EEA bank1. Where such1 a firm1 nominates just two individuals to direct its business, the FSA will not regard them as both effectively directing the business where one of them makes some, albeit significant, decisions relating to only a few aspects of the business. Each should play a part in the decision-making process
Where there are more than two individuals directing the business of a common platform firm or the UK branch of a non-EEA bank,1 the FSA does not regard it as necessary for all of these individuals to be involved in all decisions relating to the determination of strategy and general direction. However, at least two individuals should be involved in all such decisions. Both individuals' judgement should be engaged so that major errors leading to difficulties for the firm are less
If a common platform firm, (other than a credit institution) or the UK branch of a non-EEA bank1, is:1(1) a natural person; or(2) a legal person managed by a single natural person; it must have alternative arrangements in place which ensure sound and prudent management of the firm.[Note: article 9(4) second paragraph of MiFID]
Schedule to the Recognition Requirements Regulations, Paragraph 6
2(1) The [UK RIE] must be able and willing to promote and maintain high standards of integrity and fair dealing in the carrying on of regulated activities by persons in the course of using the facilities provided by the [UK RIE]. |
(2) The [UK RIE] must be able and willing to cooperate by the sharing of information or otherwise, with the [FSA],with any other authority, body or person having responsibility in the United Kingdom for the supervision or regulation of any regulated activity or other financial service, or with an overseas regulator within the meaning of section 195 of the Act. |
In determining whether a UK recognised body is able and willing to promote and maintain high standards of integrity and fair dealing in the carrying on of regulated activities, the FSA may have regard to the extent to which the UK recognised body seeks to promote and encourage, through its rules, practices and procedures, conduct in regulated activities which is consistent with the Code of Market Conduct (see MAR 1) and with any other codes of conduct, rules or principles relating
In assessing the ability of a UK recognised body to cooperate with the FSA and other appropriate bodies, the FSA may have regard to the extent to which the constitution and rules of the UK recognised body and its agreements with its members enable it to obtain information from members and to disclose otherwise confidential information to the FSA and other appropriate bodies.
In assessing the willingness of a UK recognised body to cooperate with the FSA and other appropriate bodies, the FSA may have regard to:(1) the extent to which the UK recognised body is willing to provide information about it and its activities to assist the FSA in the exercise of its functions;(2) the extent to which the UK recognised body is open with the FSA or other appropriate bodies in regulatory matters;(3) how diligently the UK recognised body investigates or pursues enquiries
An applicant for recognised
body status needs to demonstrate to the FSA that it is able to meet the recognition requirements and in the case
of a UK RIE, the MiFID implementing requirements1before a recognition
order can be made. Once it has been recognised, a recognised body has to comply with the recognition requirements and in the case of a UK
RIE, the MiFID implementing
requirements1at all times. (Guidance on
the recognition requirements applicable to UK
recognised bodies
In addition, under section 290A
of the Act (Refusal of recognition
on ground of excessive regulatory provision), the FSA must refuse to make a recognition
order in relation to a body applying for recognition as a UK RIE or UK RCH if it appears to the FSA 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 services imposes, or will impose, an excessive
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 (if not contained in the information listed in REC 5.2.3A G)1. |
(2) |
Details of all business to be conducted by the applicant, whether or not a regulated activity (if not contained in the information listed in REC 5.2.3A G)1. |
(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 (if not contained in the information listed in REC 5.2.3A G)1. |
(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 (if not contained in the information listed in REC 5.2.3A G)1. |
(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. |
Schedule to the Recognition Requirements Regulations, paragraph 7
2(1) The [UK RIE] must ensure that appropriate procedures are adopted for it to make rules, for keeping its rules under review and for amending them. |
(2) The procedures must include procedures for consulting users of the [UK RIE's ] facilitiesin appropriate cases. |
(3) The [UK RIE ] must consult users of itsfacilities on any arrangements it proposes to make for dealing with penalty income in accordance with paragraph 8(3) ... (or on any changes it proposes to make to those arrangements). |
In determining whether a UK recognised body has appropriate procedures for it to make rules, for keeping its rules under review and for amending them, the FSA may have regard to:(1) the arrangements made for taking decisions about making and amending rules in the UK recognised body, including the level at which the decisions are taken and any provision for the delegation of decisions by the governing body;(2) the arrangements made for determining whether or not it is appropriate
(1) In determining whether a UK recognised body's procedures include procedures for consulting users of its facilities in appropriate cases, the FSA may have regard to whether those procedures include provision for consulting users of those facilities before changes are made to any rules relating to its regulatory functions. (2) In the FSA's view, a UK recognised body's procedures may not need to contain provision for consulting users of its facilities before making minor changes
(1) In determining whether a UK recognised body's procedures for consulting members and other users of its facilities are appropriate, the FSA may have regard to the range of persons to be consulted by the UK recognised body under those procedures. (2) In the FSA's view, consultation with a smaller range of persons may be appropriate where limited, technical changes to a UK recognised body's rules are proposed.(3) In the FSA's view, a UK recognised body's procedures may include
In determining whether a UK recognised body's procedures for consulting members and other users of its facilities are appropriate, the FSA may have regard to the extent to which the procedures include:(1) informal discussions at an early stage with users of its facilities or appropriate representative bodies; (2) publication to users of its facilities of a formal consultation paper which includes clearly expressed reasons for the proposed changes and an appropriately detailed
Schedule to the Recognition Requirements Regulations, Paragraph 2
2(1) The [UK RIE] must be a fit and properpersonto perform the [ relevant functions ] of a [ UK RIE ]. |
(2) In considering whether this requirement is satisfied, the [FSA] may (without prejudice to the generality of regulation 6(1)) take into account all the circumstances, including the [UK RIE's] connection with any person. |
2(3) The persons who effectively direct the business and operations of the [UK RIE] must be of sufficiently good repute and sufficiently experienced to ensure the sound and prudent management and operation of the financial markets operated by it. |
2(4) The persons who are in a position to exercise significant influence over the management of the [UK RIE], whether directly or indirectly must be suitable. |
In determining whether a UK recognised body is a fit and proper person, the FSA may have regard to any relevant factor including, but not limited to:(1) the commitment shown by the UK recognised body'sgoverning body to satisfying the recognition requirements and to complying with other obligations in or under the Act;(2) its arrangements, policies and resources for fulfilling its obligations under the Act in relation to its activities as a UK recognised body;(3) the extent to
In determining whether a UK recognised body is a fit and proper person, the FSA may have regard to its connections with:(1) any undertaking in the same group;(2) any owner or part-owner of the UK recognised body;(3) any person who has the right to appoint or remove members of the governing body or other key individuals;(4) any person who is able in practice to appoint or remove members of the governing body or other key individuals;(5) any person in accordance with whose instructions
In assessing whether its connection with any person could affect whether a UK recognised body is a fit and proper person, the FSA may have regard to:(1) the reputation and standing of that other person, including his standing with any relevant UK or overseas regulator;(2) breaches of any law or regulation by that other person; (3) the roles of any of the UK recognised body's key individuals who have a position within organisations under the control or influence of that other person,
2In assessing whether the persons who effectively direct the business and operations of the UK RIE are of sufficiently good repute and sufficiently experienced to ensure the sound and prudent management and operation of the financial markets operated by 3it, the FSA may have regard to the repute and experience of the UK RIE'skey individuals.
Schedule to the Recognition Requirements Regulations, Paragraph 8
2(1) |
The [UK RIE] must have - |
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(a) |
effective arrangements (which include the monitoring of transactions effected on the [UK RIE]) for monitoring and enforcing compliance with its rules, including rules in relation to the provision of clearing services in respect of transactions other than transactions effected on the [UK RIE]); |
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(b) |
effective arrangements for monitoring and enforcing compliance with the arrangements made by it as mentioned in paragraph 4(2)(d); and |
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(c) |
effective arrangements for monitoring transactions effected on the [UK RIE] in order to identify disorderly trading conditions. |
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(2) |
Arrangements made pursuant to sub-paragraph (1) must include procedures for - |
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(a) |
investigating complaints made to the [UK RIE] about the conduct ofpersonsin the course of using the [UK RIE's ] facilities; and |
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(b) |
the fair, independent and impartial resolution of appeals against decisions of the [UK RIE]. |
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(3) |
Where arrangements made pursuant to sub-paragraph (1) include provision for requiring the payment of financial penalties, they must include arrangements for ensuring that any amount so paid is applied only in one or more of the following ways - |
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(a) |
towards meeting expenses incurred by the [UK RIE] in the course of the investigation of the breach in respect of which the penalty is paid, or in the course of any appeal against the decision of the [UK RIE] in relation to that breach; |
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(b) |
for the benefit of users of the [UK RIE's ] facilities; |
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(c) |
for charitable purposes. |
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In determining whether a UK recognised body has effective arrangements for monitoring and enforcing compliance with its rules (and, in the case of a UK RIE, its settlement arrangements), the FSA may have regard to:(1) the UK recognised body's ability to:(a) monitor and oversee the use of its facilities;(b) assess its members' compliance with its rules (and settlement arrangements, where appropriate);(c) assess the significance of any non-compliance;(d) take appropriate disciplinary
In assessing whether the procedures made by a UK recognised body to investigate complaints about the users of its facilities are satisfactory, the FSA may have regard to: (1) whether these procedures include arrangements which enable the UK recognised body to:(a) acknowledge complaints promptly;(b) consider and investigate these complaints objectively, promptly and thoroughly; (c) provide a timely reply to the complainant; and(d) keep adequate records of complaints and investigations;(2)
In assessing whether the arrangements include procedures for the fair, independent and impartial resolution of appeals against decisions of a UK recognised body, the FSA may have regard to at least the following factors: (1) the appeal procedures of the UK recognised body, including the composition and roles of any appeal committees or tribunals, and their relationship to the governing body; (2) the arrangements made to ensure prompt hearings of appeals from decisions made by
In assessing whether a UK recognised body's arrangements include appropriate provision for ensuring the application of any financial penalties in ways described in the recognition requirement, the FSA may have regard to: (1) the UK recognised body's policy regarding the application of financial penalties; (2) the arrangements made for applying that policy in individual cases; but the FSA does not consider that it is necessary for UK recognised bodies to follow any specific policy
(1) A firm must at all times maintain liquidity resources which are adequate, both as to amount and quality, to ensure that there is no significant risk that its liabilities cannot be met as they fall due.(2) For the purpose of (1):(a) a firm may not include liquidity resources that can be made available by other members of its group;(b) an incoming EEA firm or a third country BIPRU firm may not, in relation to its UK branch, include liquidity resources other than those which
The conditions to which BIPRU 12.2.1R (2)(b) refers are that the firm's liquidity resources are:(1) under the day-to-day control of the UK branch's senior management;(2) held in an account with one or more custodians in the sole name of the UK branch;(3) unencumbered; and(4) for the purpose of the overall liquidity adequacy rule only, attributed to the balance sheet of the UK branch.
The overall liquidity adequacy rule is expressed to apply to each firm on a solo basis. Each firm must be able to satisfy that rule relying solely on its own liquidity resources. Where the firm is an incoming EEA firm or a third country BIPRU firm, compliance with the overall liquidity adequacy rule with respect to the UK branch must be achieved relying solely on liquidity resources that satisfy the conditions in BIPRU 12.2.3R.
The starting point, therefore, is that each firm, or where relevant its UK branch, must be self-sufficient in terms of its own liquidity adequacy. The FSA does, however, recognise that there are circumstances in which it may be appropriate for a firm or branch to rely on liquidity support provided by other entities in its group or from elsewhere within the firm. A firm wishing to rely on support of this kind, whether for itself or for its UK branch, may only do so with the consent