Related provisions for SUP App 3.6.1
1 - 20 of 249 items.
In the FSA's view the requirements relating to risk management policy and risk measurement set out in this section are the regulatory responsibility of the management company'sHome State regulator but to the extent that they constitute fund application rules, are also the responsibility of the UCITS'Home State regulator. As such, these responsibilities may overlap between the competent authorities of the Home and Host States. EEA UCITS management companies providing collective
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must use a risk management process enabling it to monitor and measure at any time the risk of the scheme's positions and their contribution to the overall risk profile of the scheme.(2) An authorised fund manager (excluding the EEA UCITS management company of a UCITS scheme) or a UK UCITS management company of an EEA UCITS scheme must regularly notify the following details
(1) The risk management process in COLL 6.12.3 R should take account of the investment objectives and policy of the scheme as stated in the most recent prospectus.(2) The depositary of a UCITS scheme should take reasonable care to review the appropriateness of the risk management process in line with its duties under COLL 6.6.4 R (General duties of the depositary) and COLL 6.6.14 R (Duties of the depositary and authorised fund manager: investment and borrowing powers), as appropriate.
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must establish, implement and maintain an adequate and documented risk management policy for identifying the risks to which that scheme is or might be exposed.(2) The risk management policy must comprise such procedures as are necessary to enable the authorised fund manager or UK UCITS management company to assess the exposure of each UCITS it manages to market risk, liquidity
UK UCITS management companies operating EEA UCITS schemes are advised that to the extent that the matters referred to in COLL 6.12.5 R (3)(a) are viewed by the UCITSHome State regulator as falling under its responsibility, they will be expected to comply with the UCITS Home State measures implementing articles 40 and 41 of the UCITS implementing Directive.
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must assess, monitor and periodically review:(a) the adequacy and effectiveness of the risk management policy and of the arrangements, processes and techniques referred to in COLL 6.12.5 R;(b) the level of compliance by the authorised fund manager or the UK UCITS management company with the risk management policy and with those arrangements, processes and techniques referred
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must adopt adequate and effective arrangements, processes and techniques in order to:(a) measure and manage at any time the risks to which that UCITS is or might be exposed; and(b) ensure compliance with limits concerning global exposure and counterparty risk, in accordance with COLL 5.2.11B R (Counterparty risk and issuer concentration) and COLL 5.3 (Derivative exposure).(2)
UK UCITS management companies operating EEA UCITS schemes are advised that to the extent that the matters referred to in COLL 6.12.9R (1)(b) are viewed by the UCITSHome State regulator as falling under its responsibility, they will be expected to comply with the UCITS Home State measures implementing articles 41 and 43 of the UCITS implementing Directive.
(1) An authorised fund manager or a UKUCITS management company of an EEA UCITS scheme must employ an appropriate liquidity risk management process in order to ensure that each UCITS it manages is able to comply at any time with COLL 6.2.16 R (Sale and redemption) or the equivalent UCITS Home State measures implementing article 84(1) of the UCITS Directive.(2) Where appropriate, the authorised fund manager or UKUCITS management company must conduct stress tests to enable it to
An authorised fund manager or a UKUCITS management company of an EEA UCITS scheme must ensure that, for each UCITS it manages, the liquidity profile of the investments of the scheme is appropriate to the redemption policy laid down in the instrument constituting the scheme or the prospectus.[Note: article 40(4) of the UCITS implementing Directive]
When the competent authorities of a third country which apply supervisory and regulatory arrangements at least equivalent to those applied in the EEA assign a risk weight which is lower than that indicated in BIPRU 3.4.1 R to BIPRU 3.4.3 R to exposures to their central government and central bank denominated and funded in the domestic currency, a firm may risk weight such exposures in the same manner.[Note: BCD Annex VI Part 1 point 5]
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
When competent authorities of a third country jurisdiction which apply supervisory and regulatory arrangements at least equivalent to those applied in the EEA treat exposures to regional governments and local authorities as exposures to their central government, a firm may risk weightexposures to such regional governments and local authorities in the same manner.[Note: BCD Annex VI Part 1 point 11]
Where a competent authority of another EEA State implements points 14 or 15 of Part 1 of Annex VI of the Banking Consolidation Directive by exercising the discretion to treat exposures to public sector entities as exposures to institutions or as exposures to the central government of the EEA State concerned, a firm may risk weightexposures to the relevant public sector entities in the same manner.[Note: BCD Annex VI Part 1 point 16]
When competent authorities of a third country jurisdiction, which apply supervisory and regulatory arrangements at least equivalent to those applied in the EEA, treat exposures to public sector entities as exposures to institutions, a firm may risk weightexposures to the relevant public sector entities in the same manner.[Note: BCD Annex VI Part 1 point 17]
(1) Where a competent authority of another EEA State implements point 37 of Part 1 of Annex VI of the Banking Consolidation Directive by exercising the discretion to allow the treatment in that point, a firm may assign to the relevant national currency exposures the risk weight permitted by that CRD implementation measure.(2) When the competent authority of a third country which applies supervisory and regulatory arrangements at least equivalent to those applied in the EEA assigns
Where an exposure to an institution is in the form of minimum reserves required by the European Central Bank or by the central bank of an EEA State to be held by the firm, a firm may assign the risk weight that would be assigned to exposures to the central bank of the EEA State in question provided:(1) the reserves are held in accordance with Regulation (EC) No. 1745/2003 of the European Central Bank of 12 September 2003 or a subsequent replacement regulation or in accordance
If a CRD implementation measure of another EEA State exercises the discretion in point 49 of Part 1 of Annex VI of the Banking Consolidation Directive to dispense with the condition corresponding to BIPRU 3.4.60 R (3) (The risk of the borrower should not materially depend upon the performance of the underlying property or project) , a firm may apply a risk weight of 35% to such exposures fully and completely secured by mortgages on residential property situated in that EEA State.[Note:
The property must be valued by an independent valuer at or less than the market value. In those EEA States that have laid down rigorous criteria for the assessment of the mortgage lending value in statutory or regulatory provisions the property may instead be valued by an independent valuer at or less than the mortgage lending value.[Note: BCD Annex VIII Part 3 point 62]
A firm may only treat an exposure as fully and completely secured by residential property situated in another EEA State for the purposes of BIPRU 3.4.56 R or BIPRU 3.4.58 R if it would be treated as fully and completely secured by the relevant CRD implementation measures in that EEA State implementing points 45 and 47 of Part 1 of Annex VI of the Banking Consolidation Directive.
If a CRD implementation measure in another EEA State implements the discretion in point 51 of Part 1 of Annex VI of the Banking Consolidation Directive, a firm may apply the same treatment as that CRD implementation measure to exposures falling within the scope of that CRD implementation measure which are fully and completely secured by mortgages on offices or other commercial premises situated in that EEA State.[Note: BCD Annex VI Part 1 points 51 and 57]
If a CRD implementation measure in another EEA State implements the discretion in point 53 of Part 1 of Annex VI of the Banking Consolidation Directive, a firm may apply the same treatment as that CRD implementation measure to exposures related to property leasing transactions concerning offices or other commercial premises situated in that EEA State and governed by statutory provisions whereby the lessor retains full ownership of the rented assets until the tenant exercises his
(1) If a CRD implementation measure in another EEA State implements the discretion in point 58 of Part 1 of Annex VI of the Banking Consolidation Directive to dispense with the condition in point 54(b) for exposures fully and completely secured by mortgages on commercial property situated in that EEA State, a firm may apply the same treatment as that CRD implementation measure to exposures fully and completely secured by mortgages on commercial property situated in that EEA State
(1) Covered bonds means covered bonds as defined in paragraph (1) of the definition in the glossary (Definition based on Article 22(4) of the UCITS Directive) and collateralised by any of the following eligible assets:(a) exposures to or guaranteed by central governments, central bank, public sector entities, regional governments and local authorities in the EEA;(b) (i) exposures to or guaranteed by non-EEA central governments, non-EEAcentral banks, multilateral development banks,
Where BIPRU 3.4.116 R does not apply, a firm may determine the risk weight for a CIU as set out in BIPRU 3.4.123 R to BIPRU 3.4.125 R, if the following eligibility criteria are met:(1) one of the following conditions is satisfied:(a) the CIU is managed by a company which is subject to supervision in an EEA State; or(b) the following conditions are satisfied:(i) the CIU is managed by a company which is subject to supervision that is equivalent to that laid down in EU5 law; and5(ii)
For the purposes of regulated mortgage activities, sections 418(2), (4), (5), (5A) and (6) are relevant, as follows:(1) Section 418(2) refers to a case where a UK-based person carries on a regulated activity in another EEA State in the exercise of rights under a Single Market Directive. The only Single Market Directive which is relevant to mortgages is the Banking Consolidation Directive.(2) Section 418(4) refers to the case where a UK-based person carries on a regulated activity
Simplified summary of the territorial scope of the regulated mortgage activities, to be read in conjunction with the rest of this section.
This table belongs to PERG 4.11.8 G
Individual borrower resident and located: |
|||
in the UK |
outside the UK |
||
Service provider carrying on regulated activity from establishment: |
in the UK |
Yes |
Yes |
outside the UK |
Yes |
No |
|
Yes = authorisation or exemption required No = authorisation or exemption not required |
|||
When a person is arranging (bringing about) regulated mortgage contracts or making arrangements with a view to regulated mortgage contracts from overseas, the question of whether he will be carrying on regulated activities in the United Kingdom will depend on the relevant circumstances. In the FSA's view, factors to consider include:(1) the territorial limitation in the definition of regulated mortgage contract so that regulation only applies if the land is in the United Kingdom;(2)
In the FSA's view, in circumstances other than those excluded by article 72(5D) of the Regulated Activities Order, an overseas lender is likely to carry on the regulated activity of entering into regulated mortgage contracts in the United Kingdom. This is because of:(1) the territorial limitation in the definition of regulated mortgage contract so that regulation applies only if the land is in the United Kingdom;(2) the general principle and practice that contracts relating to
In the FSA's view, in circumstances other than those excluded by article 72(5E) of the Regulated Activities Order, an overseas administrator is likely to carry on the regulated activity of administering a regulated mortgage contract in the United Kingdom. This is because:(1) the territorial limitation in the definition of regulated mortgage contract means that regulation applies only if the land is in the United Kingdom;(2) when administrators notify borrowers resident in the
The E-Commerce Directive removes restrictions on the cross-border provision of services by electronic means, introducing a country of origin approach to regulation. This requires EEA States to impose their requirements on the outward provision of such services and to lift them from inward providers. The E-Commerce Directive contains only a few exceptions, termed derogations, from this principle. The E-Commerce Directive defines an e-commerce service (termed an information society
The FSA will be responsible for implementing the Distance Marketing Directive for those firms and activities it regulates. The FSA and the Treasury agree that the Distance Marketing Directive is intended to operate on a country of origin basis, except where a firm is marketing into the UK from an establishment in an EEA State which has not implemented the Directive.
Guidance on what constitutes a branch is given in SUP App 36. Note that if a UK MiFID investment firm is seeking to use a tied agent established in another EEA State, the rules in SUP 13 will apply as if that firm were seeking to establish a branch in that EEA State unless the firm has already established a branch in that EEA State (paragraph 20A of Schedule 3 to the Act).846
A UK firm other than a UK pure reinsurer9cannot establish a branch in another EEA State for the first time under an EEA right unless the conditions in paragraphs 19(2), (4) and (5) of Part III of Schedule 3 to the Act are satisfied. It is an offence for a UK firm which is not an authorised person to contravene this prohibition (paragraph 21 of Part III of Schedule 3 to the Act). These conditions are that:(1) the UKfirm has given the FSA, in accordance with the FSArules (see SUP
4If the UK firm is passporting under the Insurance Mediation Directive and the EEA State in which the UK firm is seeking to establish a branch has not notified the European Commission of its wish to be informed of the intention of persons to establish a branch in its territory in accordance with article 6(2) of that directive, SUP 13.3.2 G (2) and SUP 13.3.2 G (3) do not apply. Accordingly, the UK firm may establish the branch to which its notice of intention8 relates as soon
4An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may establish a branch in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention8 in SUP 13.3.2 G (1) should be given to the FSA by the firm on behalf of the appointed representative.58
8A tied agent appointed by a MiFID investment firm to carry on investment services and activities (and ancillary services where relevant) does not have its own passporting right to establish a branch in another EEA State. However, a MiFID investment firm remains free to appoint a tied agent to do business in another EEA State and where it does so, the tied agent will benefit from its passport.9
(1) 8If the UK firm'sEEA right derives from the Banking Consolidation Directive or10MiFID8,10 the FSA will give the Host State regulator a consent notice within three months unless it has reason to doubt the adequacy of a UK firm's resources or its administrative structure.8 The Host State regulator then has a further two months to notify the applicable provisions (if any) and prepare for the supervision, as appropriate, of the UK firm, or in the case of a MiFID investment firm,
10A UK firm seeking to provide collective portfolio management services from a branch in another EEA State, is advised that it will need to refer to the rules of the competent authority of the UCITS Home State implementing article 20 of the UCITS Directive which will require it to submit to that competent authority information relating to its depositary agreement and certain delegation arrangements.
Where a UK firm is exercising an EEA right, other than under the Insurance Mediation Directive (see SUP 13.6.9A G) or the Reinsurance Directive (see SUP 13.6.9B R)8, and has established a branch in another EEA State, any changes to the details of the branch are governed by the EEA Passport Rights Regulations. References to regulations in this section are to the EEA Passport Rights Regulations. A UK firm which is not an authorised person should note that, under regulation 18,
If a UK firm has exercised an EEA right, under the Banking Consolidation Directive or the UCITS Directive, and established a branch in another EEA State, regulation 11(1) states that the UK firm must not make a change in the requisite details of the branch (see SUP 13 Annex 1), unless it has satisfied the requirements of regulation 11(2), or, where the change arises from circumstances beyond the UK firm's control, regulation 11(3) (see SUP 13.6.10 G).47
7If a UK firm has exercised an EEA right to establish a branch under MiFID, it must not make a change in the requisite details of the branch (see SUP 13 Annex 1), use, for the first time, a tied agent established in the EEA State in which the branch is established, or cease to use a tied agent established in the EEA State in which the branch is established, unless it has satisfied the requirements of regulation 11A(2) (see SUP 13.6.5B G).
When the FSA receives a notice from a UK firm other than a MiFID investment firm7(see SUP 13.6.5 G (1) and SUP 13.6.7 G (1)) or a pure reinsurer (see SUP 13.6.9B R) 8it is required by regulations 11(4) and 13(4) to either refuse, or consent to the change within a period of one month7 from the day on which it received the notice.7
Under the Treaty, the freedom to provide services within the EC may be exercised in three broad ways:(1) where the provider of a service moves temporarily to another EEA State in order to provide the service;(2) where the service is provided without either the provider or the recipient moving (in this situation the provision, and receipt, of the service may take place by post, telephone or fax, through computer terminals or by other means of remote control);(3) where the recipient
In the opinion of the European Commission (and in the wording of the Single Market Directives) "only activities carried on within the territory of another Member State should be the subject of prior notification" (Commission interpretative communication: Freedom to provide services and the interests of the general good in the Second Banking Directive (97/C 209/04)). In determining, for the purposes of notification, whether a service is to be provided 'within' another EEA State,
An insurance undertaking that effects contracts of insurance covering risks or commitments situated in another EEA State should comply with the notification procedures for the provision of services within that EEA State. The location of risks and commitments is found by reference to the rules set out in paragraph 6 of schedule 12 to the Act, which derive from article 1 of the Consolidated Life Directive and article 2 of the Second Non-Life Directive. It may be appropriate for
The FSA is of the opinion that UK firms that are credit institutions and MiFID investment firms2 should apply the 'characteristic performance' test (as referred to in SUP App 3.6.7 G) when considering whether prior notification is required for services business. Firms should note that other EEA States may take a different view. Some EEA States may apply a solicitation test. This is a test as to whether it is the consumer or the provider that initiates the business relationshi
Where, however, a credit institution or MiFID investment firm:22(1) intends to send a member of staff or a temporarily authorised intermediary to the territory of another EEA State on a temporary basis to provide financial services; or(2) provides advice, of the type that requires notification under either MiFID or the Banking Consolidation Directive2, to customers in another EEA State;2 the firm should make a prior notification under the freedom to provide services.
The key distinction in relation to temporary activities is whether a firm should make its notification under the freedom of establishment in a Host State, or whether it should notify under the freedom to provide services into a Host State. It would be inappropriate to discuss such a complex issue in guidance of this nature. It is recommended that, where a firm is unclear on the distinction, it should seek appropriate advice. In either case, where a firm is carrying on activities
The FSA considers that, in order to comply with Principle 3:Management and control (see PRIN 2.1.1 R), a firm should have appropriate procedures to monitor the nature of the services provided to its customers. Where a UK firm has non-resident customers but has not notified the EEA State in which the customers are resident that it wishes to exercise its freedom to provide services, the FSA would expect the firm's systems to include appropriate controls. Such controls would include
(1) 2The FSA is of the opinion that where a UK firm becomes a member of:(a) a regulated market that has its registered office or, if it has no registered office, its head office, in another EEA State; or(b) an MTF operated by a MiFID investment firm or a market operator in another EEA State,2the same principles as in the 'characteristic performance' test should apply. Under this test, the fact that a UK firm has a screen displaying the regulated market's or the MTF's prices in
(1) 1This section applies to:(a) an authorised fund manager of a UCITS scheme; and(b) a UK UCITS management company providing collective portfolio management services for an EEA UCITS scheme from a branch in another EEA State or under the freedom to provide cross border services.(2) This section does not apply to an EEA UCITS management company providing collective portfolio management services for a UCITS scheme under the freedom to provide cross border services.
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must ensure, for each portfolio transaction relating to a scheme it manages, that a record of information which is sufficient to reconstruct the details of the order and the executed transaction is produced without delay.(2) The record referred to in (1) must include:(a) the name or other designation of the scheme and of the person acting on behalf of the scheme;(b) the details
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must take all reasonable steps to ensure that every subscription and redemption order it receives relating to units in any such scheme it manages are centralised and recorded immediately after receipt of that order.(2) The record referred to in (1) must include information on the following:(a) the relevant scheme;(b) the person giving or transmitting the order;(c) the person
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must ensure the retention of the records referred to in COLL 6.13.2 R and COLL 6.13.3 R for a period of at least five years or, in exceptional circumstances and where directed by the FSA, for a longer period, determined by the nature of the instrument or portfolio transaction, where it is necessary to enable the FSA to exercise its supervisory functions under the UCITS Directive.(2)
An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must make appropriate arrangements for suitable electronic systems so as to permit a timely and proper recording of each portfolio transaction or subscription or redemption order, in order to be able to comply with COLL 6.13.2 R (Recording of portfolio transactions) and COLL 6.13.3 R (Recording of subscription and redemption orders).[Note: article 7(1) of the UCITS implementing
An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must ensure a high level of security during the electronic data processing referred to in COLL 6.13.5 R as well as the integrity and confidentiality of the recorded information, as appropriate.[Note: article 7(2) of the UCITS implementing Directive]
A UK firm, other than a UK pure reinsurer,9 cannot start providing cross border services into another EEA State under an EEA right unless it satisfies the conditions in paragraphs 20(1) of Part III of Schedule 3 to the Act and, if it derives its EEA right from the Insurance Directives, paragraph 20(4B) of Part III of Schedule 3 to the Act. It is an offence for a UK firm which is not an authorised person to breach this prohibition (paragraph 21 of Part III of Schedule 3 to the
4An appointed representative appointed by a firm to carry on insurance mediation activity on its behalf may provide cross border services in another EEA State under the Insurance Mediation Directive. In this case, the notice of intention8 in SUP 13.4.2 G (1) should be given to the FSA by the firm on behalf of the appointed representative5.8
4An exempt professional firm which is included in the record of unauthorised persons carrying on insurance mediation activity maintained by the FSA under article 93 of the Regulated Activities Order may provide cross border services in another EEA State under the Insurance Mediation Directive (see PROF 7.2).
8A tied agent appointed by a MiFID investment firm to carry on investment services and activities (and ancillary services where relevant) does not have its own passporting right to provide cross border services in another EEA State. However, a MiFID investment firm remains free to appoint a tied agent to do business in another EEA State and where it does so, the tied agent will benefit from its passport.
8A MiFID investment firm that wishes to obtain a passport for the activity of operating an MTF should follow the procedures described in this chapter. A UK market operator that operates a recognised investment exchange, a recognised auction platform (pursuant to the RAP regulations, the definition of regulated market in the Act is read for these purposes as including a recognised auction platform)11 or an MTF and wishes to provide cross border services into another EEA State should
8(1) If8 the UK firm'sEEA right derives from MiFID8, the Banking Consolidation Directive or the UCITS Directive, paragraph 20(3) of Part III of Schedule 3 to the Act requires the FSA to send a copy of the notice of intention8 to the Host State Regulator within one month8 of receipt.8A UK firm passporting under the Banking Consolidation Directive10 may start providing cross border services as soon as it satisfies the relevant conditions (see SUP 13.4.2 G).88888810(2) (a) If8 the
10A UK firm seeking to provide collective portfolio management services in another EEA State under the freedom to provide cross border services, is advised that it will need to refer to the rules of the competent authority of the UCITS Home State implementing article 20 of the UCITS Directive which will require it to submit to that competent authority information relating to its depositary agreement and certain delegation arrangements.
(1) 1This section applies to:(a) an authorised fund manager of a UCITS scheme, a depositary, an ICVC and any other director of an ICVC which is a UCITS scheme; and(b) subject to (2), a UKUCITS management company providing collective portfolio management services for an EEA UCITS scheme under the freedom to provide cross border services.(2) COLL 6.6A.6 R (Strategies for the exercise of voting rights) also applies to a UKUCITS management company providing collective portfolio management
An authorised fund manager of a UCITS schemes or a UK UCITS management company of an EEA UCITS scheme must:(1) ensure that the unitholders of any such scheme it manages are treated fairly;(2) refrain from placing the interests of any group of unitholders above the interests of any other group of unitholders;(3) apply appropriate policies and procedures for preventing malpractices that might reasonably be expected to affect the stability and integrity of the market;(4) (a) ensure
An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must:(1) ensure a high level of diligence in the selection and ongoing monitoring of scheme property, in the best interests of the scheme and the integrity of the market;(2) ensure it has adequate knowledge and understanding of the assets in which any scheme it manages is invested;(3) establish written policies and procedures on due diligence and implement effective arrangements
The authorised fund manager of a UCITS scheme or the UK UCITS management company of an EEA UCITS scheme must comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of its investors and the integrity of the market.[Note: article 14(1)(e) of the UCITS Directive]
(1) An authorised fund manager of a UCITS scheme or a UK UCITS management company of an EEA UCITS scheme must develop adequate and effective strategies for determining when and how voting rights attached to ownership of scheme property, or the instruments held by an EEA UCITS scheme, are to be exercised, to the exclusive benefit of the scheme concerned.(2) The strategy referred to in (1) must determine measures and procedures for:(a) monitoring relevant corporate events;(b) ensuring
An EEA firm3(other than an EEA pure reinsurer or an EEA firm that received authorisation under article 18 of the auction regulation)31should note that the requirement under the Single Market Directives to give a notice of intention to provide cross border services applies whether or not:(1) it has established a branch in the United Kingdom; or(2) those cross border services are regulated activities.
(1) Before an EEA firm (other than an EEA pure reinsurer1 or an EEA firm that has received authorisation under article 18 of the auction regulation)3 exercises an EEA right to provide cross border services into the United Kingdom, the Act requires it to satisfy the service conditions, as set out in paragraph 14 of Part II of Schedule 3 to the Act. (2) For the purposes of paragraph 14(1)(b) of Part II of Schedule 3 to the Act, the information to be contained in the regulator's
(1) Unless the EEA firm3(other than an EEA pure reinsurer or an EEA firm that received authorisation under article 18 of the auction regulation)331is passporting under the Insurance Mediation Directive, if the FSA receives a regulator's notice or, where no notice is required (in the case of an EEA firm passporting under the Banking Consolidation Directive), is informed of the EEA firm's intention to provide cross border services into the United Kingdom, the FSA will, under paragraphs
An EEA firm (other than an EEA UCITS management company)2 that has satisfied the service conditions in paragraph 14 of Part II of Schedule 3 to the Act is entitled to start providing cross border services into the United Kingdom. In the case of an EEA UCITS management company, FSA approval must first be obtained, as explained in SUP 13A.5.3 G (see also SUP 13A.3.1C G).2 However, an EEA firm that wishes to start providing cross border services but has not yet received notification
This chapter applies to a UK firm, that is, a person whose head office is in the United Kingdom and which is entitled to carry on an activity in another EEA State subject to the conditions of a Single Market Directive. Such an entitlement is referred to in the Act as an EEA right and its exercise is referred to in the Handbook as passporting.1
This chapter also applies to a UK firm which wishes to establish a branch in, or provide cross border services into, Gibraltar. The Financial Services and Markets Act 2000 (Gibraltar) Order 2001 provides that a UK firm is to be treated as having an entitlement corresponding to its EEA right, to establish a branch in, or provide cross border services into, Gibraltar under any of the Single Market Directives. So, references in this chapter to an EEA State or an EEA right include
This chapter does not apply to:(1) a firm established in an EEA State other than the United Kingdom; passporting by such a firm in or into the United Kingdom is a matter for its Home State regulator although guidance is given in 4SUP 13A4 (Qualifying for authorisation under the Act);(2) other overseas firms (that is, overseas firms established outside the EEA); such firms are not entitled to passport into another EEA State and, where relevant, may need to obtain authorisation
9Other than the notification requirements in SUP 13.5.1AA R and SUP 13.5.2-A R and the related guidance in SUP 13.5.1B G, SUP 13.5.2A G and SUP 13.5.7 G, this chapter does not apply to a UK firm in relation to its exercise of an EEA right under the auction regulation to provide services or establish a branch in another EEA state. This is because a UK firm is not subject to the requirements in Schedule 3 to the Act in respect of its exercise of that EEA right.
This chapter gives guidance on Schedule 3 to the Act for a UK firm which wishes to exercise its EEA right and establish a branch in, or provide cross border services into, another EEA State. That is, when a UK firm wishes to establish its first branch in, or provide cross border services for the first time into, a particular EEA State.
The chapter also explains how a UK firm which has already established a branch in, or is providing cross border services into, another EEA State, may change the details of its branch or of the cross border services it is providing: for example, where a UK firm wishes to establish additional branches in an EEA State in which it has already established a branch where this would result in a change to the details provided previously. Such changes are governed by the EEA Passport Rights
In giving its views, communications made by the European Commission have the status of guidance and are not binding on the national courts of EEA States. This is because it is the European Court of Justice that has ultimate responsibility for interpreting the Treaty and secondary legislation. Accordingly, the communications "do not prejudge the interpretation that the Court of Justice ...,4 which is responsible in the final instance for interpreting the Treaty and secondary legislation,
The E-Commerce Directive covers services provided at a distance by means of electronic equipment for the processing (including digital compression) and storage of data. The services would normally be provided in return for remuneration and must be provided at the individual request of a recipient (see recital 17 of the E-Commerce Directive). The Directive implements the country of origin approach to regulation. This approach makes firms subject to the conduct of business requirements
The E-Commerce Directive does not affect the responsibilities of Home State under the Single Market Directives. This includes the obligation of a Home State regulator to notify the Host State regulator of a firm's intention to establish a branch in, or provide cross border services into, the other EEA State.
There are, however, general derogations from the internal market provisions under article 3(3) of the E-Commerce Directive. The derogations include consumer contracts, the permissibility of unsolicited e-mail and certain insurance services (both life and non-life). Where these derogations apply, the EEA States in which the recipients of the service are based may continue to be able to impose their own requirements.
1The Single Market Directives require credit institutions, insurance undertakings (other than reinsurance undertakings)5, MiFID investment firms3, UCITS management companies and insurance intermediaries to make a notification to the Home State before establishing a branch or providing cross border services.SUP 13.5 (Notices of intention) sets out the notification requirements for a firm seeking to establish a branch or provide cross border services. As firms will note, the decision
1Blanket notification is the practice of the Home State regulator notifying all Host State regulators in respect of all activities regardless of any genuine intention to carry on the activity. This practice is discouraged by the FSA. However, a firm may be carrying on activities in the United Kingdom or elsewhere in a way that necessarily gives rise to a real possibility of the provision of services in other EEA States. In such cases, the firm should consider with its advisers
A firm which is included within comparable disclosures provided on a consolidated basis by a parent undertaking whose head office is not in an EEA State may apply for a waiver from the relevant disclosure requirements in BIPRU 11.2.2 R - BIPRU 11.2.5 R. The FSA's approach to granting waivers is set out in the Supervision manual (see SUP 8).[Note: BCD Article 72(3)]
A firm applying for a waiver from one or more of the disclosure requirements in BIPRU 11.2.2 R - BIPRU 11.2.5 R will need to:(1) satisfy the FSA that it is included within comparable disclosures provided on a consolidated basis by a parent undertaking whose head office is not in an EEA State; and(2) notify the FSA of the location where the comparable disclosures are provided.
Where a UK firm is exercising an EEA right under the UCITS Directive, MiFID or the5Insurance Directives and is providing cross border services into another EEA State, any changes to the details of the services are governed by the EEA Passport Rights Regulations. References to regulations in this section are to the EEA Passport Rights Regulations. A UK firm which is not an authorised person should note that contravention of the prohibition imposed by regulation 12(1), 12A(1)5 or
If a UK firm is passporting under the UCITS Directive, regulation 12(1) states that the UK firm must not make a change in its programme of operations, or the activities to be carried on under its EEA right, unless the relevant requirements in regulation 12(2) have been complied with. These requirements are:5(1) the UK firm has given a notice to the FSA and to the Host State regulator stating the details of the proposed change; or(2) if the change arises as a result of circumstances
5If a UK firm is providing cross border services in a particular EEA State in exercise of an EEA right deriving from MiFID, the UK firm must comply with the requirements of regulation 12A(2) before it makes a change to its programme of operations, including:(1) changing the activities to be carried on in exercise that EEA right;(2) using, for the first time, any tied agent to provide services in the territory of that EEA State; or(3) ceasing to use any tied agent to provide services
A UK firm wishing to provide cross border services into a particular EEA State for the first time under an EEA right other than under the auction regulation7 must submit a notice in the form set out in:535(1) SUP 13 Annex 2 R5if the UK firm is passporting under 3MiFID;5 or53(1A) SUP 13 Annex 3 R if the UK firm is passporting under the Insurance Directives; or5(2) SUP 13 Annex 4 R5if the UK firm is passporting under the Banking Consolidation Directive; or55(3) SUP 13 Annex 5 R5if
(1) 7A UK firm wishing to provide a service into a particular EEA State for the first time under the auction regulation must inform the FSA of the information in (2) by email to emissionstrading@fsa.gov.uk prior to its provision of that service or whenever possible thereafter.(2) The information required by (1) is:(a) name of the firm and the FSAfirm reference number;(b) EEA state in which the service is or will be provided; and(c) the proposed commencement date of the service
4SUP 13.5.2 R does not apply to UK pure reinsurers or a UK firm exercising an EEA right under the auction regulation7 as they have automatic passport rights on the basis of their Home State authorisation under Reinsurance Directive or the auction regulation. However, the information required by SUP 13.5.2-A R assists the FSA's supervision of a UK firm's provision of a service in another EEA state under the auction regulation.7
A notice of intention3 (other than one to establish a branch or provide services in another EEA state under the auction regulation)7 may include activities within the scope of the relevant Single Market Directive which are not regulated activities (paragraphs 19(3) and 20(2) of Part III of Schedule 3 to the Act), although in the case of a MiFID investment firm a notice of intention may only include ancillary services which are to be carried on with one or more investment services
A UK UCITS management company that operates an EEA UCITS scheme must in relation to that activity comply with the rules which relate to:(1) the organisation of the management company, including delegation arrangements;(2) risk-management procedures;(3) prudential rules and supervision;(4) operating conditions; and(5) reporting requirements.[Note: article 19(1) of the UCITS Directive]
A UK UCITS management company that operates an EEA UCITS scheme must decide and be responsible for adopting and implementing all the arrangements and organisational decisions that are necessary to ensure compliance with rules drawn up by the EEA State in which that scheme is established, in implementation of its obligations under articles 19(3) and 19(4) of the UCITS Directive.[Note: article 19(6) of the UCITS Directive]
(1) Each EEA State, including the United Kingdom, is required to implement article 14 of the UCITS Directive by drawing up rules of conduct which management companies authorised in that State must observe at all times, except as explained in (3).(2) UK UCITS management companies operating an EEA UCITS scheme under the freedom to provide cross border services (otherwise than by establishing a branch in that State) are advised that, as provided for elsewhere in the Handbook, they
(1) A UK UCITS management company which applies to operate an EEA UCITS scheme in another EEA State is advised that it must comply with the requirements of the Host State regulator regarding provision to them of the following documents:(a) the written agreement it has entered into with the depositary of the EEA UCITS scheme, as referred to in articles 23 and 33 of the UCITS Directive; and(b) information on delegation arrangements (if any), regarding functions of investment management
This section applies to an EEA UCITS management company that provides collective portfolio management services in the United Kingdom by acting as the manager of an AUT or the ACD of an ICVC which is a UCITS scheme, either by establishing a branch or under the freedom to provide cross border services.
(1) An EEA UCITS management company may be the manager of an AUT or the ACD of an ICVC, that is a UCITS scheme (see SUP 13A (Qualifying for authorisation under the Act)).(2) An EEA UCITS management company that acts as the manager of an AUT, or the ACD of an ICVC, that is a UCITS scheme may conduct its business from a branch in the United Kingdom or under the freedom to provide cross border services (without establishing a branch in the United Kingdom).(3) The Glossary definition
(1) An EEA UCITS management company which applies to manage a UCITS scheme under paragraph 15A(1) of Schedule 3 to the Act must provide the FSA with the following documents:(a) the written agreement that has been entered into with the depositary of the scheme, as referred to in COLL 6.6.4 R (6) (General duties of the depositary);(b) information on any delegation arrangements it has made regarding the functions of investment management and administration, as referred to in Annex
An EEA UCITS management company that manages a UCITS scheme must comply with the rules of the Handbook which relate to the constitution and functioning of the UCITS scheme (the fund application rules), as follows:(1) the setting up and authorisation of the UCITS scheme (COLL 1 (Introduction), COLL 2 (Authorised fund applications), COLL 3 (Constitution), COLL 6.5 (Appointment and replacement of the authorised fund manager and the depositary), COLL 6.6 (Powers and duties of the
(1) An EEA UCITS management company that manages a UCITS scheme must establish appropriate procedures and arrangements to make information available at the request of the public or the FSA.(2) The EEA UCITS management company must ensure that the procedures and arrangements it establishes in accordance with (1), enable the FSA to obtain any information it requests directly from the management company.[Note: article 15 second paragraph and article 21(2) third paragraph, of the
An EEA UCITS management company that operates a UCITS scheme is advised that in particular it needs to comply with:(1) COLL 6.6.3 R (Functions of the authorised fund manager) requiring it to fulfil the obligations placed on it by the instrument constituting the scheme and the prospectus of that scheme;(2) Dispute resolution: Complaints sourcebook (DISP - see DISP 1 Annex 2 G for a summary of the relevant requirements that apply, which include the complaints handling rules (under
(1) In addition to the requirements of this section, an EEA UCITS management company that provides collective portfolio management services from a branch in the United Kingdom must comply with the following rules that implement the requirements of article 14(1) of the UCITS Directive:(a) COLL 6.6A.2 R (Duties of AFMs of UCITS schemes and EEA UCITS schemes to act in the best interests of the scheme and its Unitholders);(b) COLL 6.6A.4 R (Due diligence requirements of AFMs of UCITS
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.
If an offer is
made, or admission to trading is
sought, in more than one EEA State including
the United Kingdom and the United Kingdom is the Home
State, the prospectus must
be drawn up in English and must also be made available either in a language
accepted by the competent authorities of each Host
State or in a language customary in the sphere of international
finance, at the choice of the issuer, offeror or person requesting
admission (as the case may be). [Note: article
19.3
(1) If an offer is
made, or admission to trading is
sought, in one or more EEA States excluding
the United Kingdom and the United Kingdom is the Home
State, the prospectus must
be drawn up in a language accepted by the competent authorities of those EEA States or in a language customary in
the sphere of international finance, at the choice of the issuer, offeror or person requesting
admission (as the case may be). [ Note: article
19.2 PD ](2) For the purpose of the scrutiny
by
If admission
to trading of non-equity transferable
securities whose denomination per unit amounts to at least 100,0003 euros (or an equivalent amount)
is sought in the United Kingdom or
in one or more other EEA States,
the prospectus must be drawn
up in either a language accepted by the competent authorities of the Home State and Host
States or in a language customary in the sphere of international
finance, at the choice of the issuer, offeror or person requesting
admission (as
If:(1) an offer is
made in the United Kingdom;(2) a prospectus relating
to the transferable securities has
been approved by the competent authority of another EEA
State and the prospectus contains
a summary; and(3) the prospectus is drawn up in a language other than English
that is customary in the sphere of international finance;222the offeror must
ensure that the summary is
translated into English. [ Note: article
19.2 PD ]
Table Territorial issues relating to overseas insurance intermediaries carrying on insurance mediation activities in or into the United Kingdom
Needs Part IVpermission |
Schedule 3 EEA passport rights available |
Overseas persons exclusion available |
|
Registered EEA-based intermediary with UK branch (registered office or head office in another EEA State) |
No |
Yes |
No |
Registered EEA-based intermediary with no UK branch providing cross-border services |
No |
Yes |
Potentially available [see Note] |
Third country intermediary operating from branch in the UK |
Yes |
No |
No |
Third country intermediary providing services in (or into) the UK |
Yes unless overseas persons exclusion applies |
No |
Potentially available |
This does not, however, affect the firm'sauthorisation under Schedule 3 to the Act (see PERG 5.12.9 G to PERG 5.12.10 G (Passporting)). |
|||
3For EEA-based intermediaries this table assumes that the insurance mediation activities are within the scope of the Insurance Mediation Directive. |
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Section 418 of the Act extends the meaning that 'carry on regulated activity in the United Kingdom' would normally have by setting out additional cases in which a person who would not otherwise be regarded as carrying on the activity in the United Kingdom is to be regarded as doing so. Each of the following cases thus amounts to carrying on a regulated activity in the United Kingdom:(1) where a UK-based person carries on a regulated activity in another EEA State in the exercise
The effect of the IMD is that any EEA-based insurance intermediaries doing business within the Directive’s scope4 must first be registered in their home EEA State before carrying on insurance mediation in that EEA State or other EEA States. For these purposes, an EEA-based insurance intermediary is either:(1) a legal person with its registered office or head office in an EEA State other than the United Kingdom; or(2) a natural person resident in an EEA State other than the United
The E-Commerce Directive removes restrictions on the cross-border provision of services by electronic means, introducing a country of origin approach to regulation. This requires EEA States to impose certain requirements on the outward provision of such services and to lift them from inward providers. The E-Commerce Directive defines an e-commerce service (termed an information society service) as any service, normally provided for remuneration, at a distance, by electronic means,
The E-Commerce Directive does not remove the IMD requirement for persons taking up or pursuing insurance mediation for remuneration to be registered in their Home State. Nor does it remove the requirement for EEA-based intermediaries to acquire passporting rights in order to establish branches in the United Kingdom (see PERG 5.12.7 G (Where is insurance mediation carried on?) in relation to electronic commerce activity carried on from an establishment in the United Kingdom) or
Put shortly, the E-Commerce Directive relates to services provided into the United Kingdom from other EEA States and from the United Kingdom into other Member States. In broad terms, such cross-border insurance mediation services provided by an EEA firm into the United Kingdom (via electronic commerce activity or distance means) will generally be subject to IMD registration in, and conduct of business regulation of, the intermediary's EEA State of origin. By contrast, insurance