Related provisions for SYSC 22.5.1
Schedule to the Recognition Requirements Regulations, Paragraph 9A-9H3
1(1) |
[A UK RIE] operating a multilateral trading facility or an organised trading facility3 must also operate a regulated market3. |
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(2) |
[A UK RIE] operating a multilateral trading facility or an organised trading facility3 must comply with those requirements of- |
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(a) |
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(b) |
any directly applicable EU legislation made under Chapter I;3 |
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which are applicable to a market operator3 ... operating such a facility. |
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(3) |
The requirements of this paragraph do not apply for the purposes of section 292(3)(a) of the Act (requirements for overseas investment exchanges and overseas clearing houses). |
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(4)3 |
A [UK RIE] operating a multilateral trading facility or organised trading facility must provide the FCA with a detailed description of - |
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(a) |
the functioning of the multilateral trading facility or organised trading facility; |
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(b) |
any links to another trading venue owned by the same [UK RIE] or to a systematic internaliser owned by the same exchange; and |
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(c) |
a list of the facility’s members, participants and users. |
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[Note:MiFID ITS 19 prescribes the content and format of the description of the functioning of a MTF or OTF to be provided to the FCA]3 |
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(5)3 |
Any multilateral trading facility or an organised trading facility operated by the [UK RIE] must have at least three materially active members or users who each have the opportunity to interact with all the others in respect of price formation. |
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Paragraph 9B – Specific requirements for multilateral trading facilities: execution of orders3 |
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(1)3 |
A [UK RIE] must have non-discretionary rules for the execution of orders on a multilateral trading facility operated by it. |
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(2)3 |
A [UK RIE] must not on a multilateral trading facility operated by it - |
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(a) |
execute any client orders against its proprietary capital; or |
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(b) |
engage in matched principal trading. |
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Paragraph 9C – Specific requirements for multilateral trading facilities: access to a facility3 |
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The rules of the [UK RIE] about access to, or membership of, a multilateral trading facility regulated market operated by it must permit the [UK RIE] to give access to or admit to membership to (as the case may be) only -3 |
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(a) |
an investment firm authorised under Article 5 of the markets in financial instruments directive; |
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(b) |
a credit institution authorised in accordance with the capital requirements directive; or |
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(c) |
a person who – |
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(i) |
is of sufficient good repute; |
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(ii) |
has a sufficient level of trading ability, and competence and experience; |
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(iii) |
where applicable, has adequate organisational arrangements; and |
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(iv) |
has sufficient resources for the role it is to perform, taking account of the financial arrangements the [UK RIE] has established in order to guarantee the adequate settlement transactions. |
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Paragraph 9D – Specific requirements for multilateral trading facilities: disclosure3 |
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(1)3 |
The rules of the [UK RIE] must provide that where it, without obtaining the consent of the issuer, admits to trading on a multilateral trading facility operated by it a transferable security which has been admitted to trading on a regulated market, the [UK RIE] may not require the issuer of that security to demonstrate compliance with the disclosure obligations. |
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(2)3 |
The [UK RIE] must maintain arrangements to provide sufficient publicly available information (or satisfy itself that sufficient information is publicly available) to enable users of a multilateral trading facility operated by it to form investment judgements, taking into account both the nature of the users and the types of instruments traded. |
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(3)3 |
In this paragraph, “the disclosure obligations” has the same meaning as in paragraph 9ZB. |
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Paragraph 9E – SME growth markets3 |
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(1)3 |
A [UK RIE] operating a multilateral trading facility which has registered that facility as an SME growth market in accordance with Article 33 of the markets in financial instruments directive (an “exchange-operated SME growth market”) must comply with rules made by the FCA for the purposes of this paragraph. |
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[Note:REC 2.16A.1D]4 |
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(2)3 |
An exchange-operated SME growth market must not admit to trading a financial instrument which is already admitted to trading on another SME growth market unless the issuer of the instrument has been informed of the proposed admission to trading and has not objected. |
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(3)3 |
Where an exchange-operated SME growth market exchange admits a financial instrument to trading in the circumstances of paragraph (2), that exchange-operated SME growth market may not require the issuer of the financial instrument to demonstrate compliance with - |
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(a) |
any obligation relating to corporate governance, or |
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(b) |
the disclosure obligations. |
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(4)3 |
In this paragraph, “the disclosure obligations” has the same meaning as in paragraph 9ZB. |
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Paragraph 9F – Specific requirements for organised trading facilities: execution of orders3 |
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(1)3 |
[A UK RIE] operating an organised trading facility must - |
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(a) |
execute orders on that facility on a discretionary basis in accordance with sub-paragraph (4); |
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(b) |
not execute any client orders on that facility against its proprietary capital or the proprietary capital of any entity that is part of the same group or legal person as the [UK RIE] unless in accordance with sub-paragraph (2); |
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(c) |
not operate a systematic internaliser within the same legal entity; |
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(d) |
ensure that the organised trading facility does not connect with a systematic internaliser in a way which enables orders in an organised trading facility and orders or quotes in a systematic internaliser to interact; and |
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(e) |
ensure that the organised trading facility does not connect with another organised trading facility in a way which enables orders in different organised trading facilities to interact. |
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(2)3 |
A [UK RIE] may only engage in - |
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(a) |
matched principal trading on an organised trading facility operated by it in respect of- |
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(i) |
bonds, |
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(ii) |
structured finance products, |
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(iii) |
emission allowances, |
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(iv) |
derivatives which have not been declared subject to the clearing obligation in accordance with Article 5 of the EMIR regulation, |
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where the client has consented to that; or |
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(b) |
dealing on own account on an organised trading facility operated by it, otherwise than in accordance with sub-paragraph (a), in respect of sovereign debt instruments for which there is not a liquid market. |
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(3)3 |
If the [UK RIE] engages in matched principal trading in accordance with sub-paragraph (2)(a) it must establish arrangements to ensure compliance with the definition of matched principal trading in article 4.1.38 of the markets in financial instruments directive. |
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(4)3 |
The discretion which the [UK RIE] must exercise in executing a client order may only be the discretion mentioned in sub-paragraph (5) or in sub-paragraph (6) or both. |
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(5)3 |
The first discretion is whether to place or retract an order on the organised trading facility. |
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(6)3 |
The second discretion is whether to match a specific client order with other orders available on the organised trading facility at a given time, provided the exercise of such discretion is in compliance with specific instructions received from the client and in accordance with the [UK RIE’s] obligations under Article 27 of the markets in financial instruments directive. |
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(7)3 |
Where the organised trading facility crosses client orders the [UK RIE] may decide if, when and how much of two or more orders it wants to match within the system. |
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(8)3 |
Subject to the requirements of this paragraph, with regard to a system that arranges transactions in non-equities, the [UK RIE] may facilitate negotiation between clients so as to bring together two or more comparable potentially trading interests in a transaction. |
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(9)3 |
The [UK RIE] must comply with rules made by the FCA as to how Articles 24, 25, 27 and 28 of the markets in financial instruments directive apply to its operation of an organised trading facility. |
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(10)3 |
Nothing in this paragraph prevents a [UK RIE] from engaging an investment firm to carry out market making on an independent basis on an organised trading facility operated by the [UK RIE]provided the investment firm does not have close links with the [UK RIE]. |
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(11)3 |
In this paragraph - “close links” has the meaning given in Article 4.1.1 of the markets in financial instruments directive; “investment firm” has the meaning given in Article 4.1.1 of the markets in financial instruments directive; “non-equities” means bonds, structured finance products, emissions allowances and derivatives traded on a trading venue to which Article 8(1) of the markets in financial instrument regulation applies. |
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Paragraph 9G – Specific requirements for organised trading facilities: disclosure3 |
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(1)3 |
The rules of the [UK RIE] must provide that where it, without obtaining the consent of the issuer, admits to trading on an organised trading facility operated by it a transferable security which has been admitted to trading on a regulated market, the [UK RIE] may not require the issuer of that security to demonstrate compliance with the disclosure obligations. |
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(2)3 |
The [UK RIE] must maintain arrangements to provide sufficient publicly available information (or satisfy itself that sufficient information is publicly available) to enable users of the organised trading facility operated by it to form investment judgements, taking into account both the nature of the users and the types of instruments traded. |
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(3)3 |
In this paragraph, “the disclosure obligations” has the same meaning as in paragraph 9ZB. |
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Paragraph 9H – Specific requirements for organised trading facilities: FCA request for information3 |
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(1)3 |
A [UK RIE] must, when requested to do so, provide the FCA with a detailed explanation in respect of an organised trading facility operated by it, or such a facility it proposes to operate, of - |
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(a) |
why the organised trading facility does not correspond to and cannot operate as a multilateral trading facility, a regulated market or a systematic internaliser; |
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(b) |
how discretion will exercised in executing client orders, and in particular when an order to the organized trading facility may be retracted and when and how two or more client orders will be matched within the facility; and |
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(c) |
its use of matched principal trading. |
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(2)3 |
Any information required under sub-paragraph (1) must be provided to the FCA in the manner which it considers appropriate. |
1Introduction |
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1. |
TC Appendix 4E contains a list of appropriate qualifications for the purposes of TC 2.1.10 E. |
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2. |
This Appendix sets out: |
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(1) |
the criteria which the FCA may take into account when assessing a qualification provider; and |
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(2) |
the information the FCA will expect the qualification provider to provide if it asks the FCA to add a qualification to the list of appropriate qualifications in TC Appendix 4 E. |
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Criteria for assessing a qualification provider |
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3. |
The FCA will expect the qualification provider of an appropriate qualification to have, in the FCA's opinion: |
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(1) |
assessors and qualification developers who are trained and qualified; |
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(2) |
valid, reliable and robust assessment methods; |
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(3) |
robust governance and a clear separation of function between its qualification services and any other services it performs, including effective procedures for managing any conflicts of interest; |
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(4) |
procedures for reviewing and refreshing its syllabus and question banks to ensure that they are relevant and up to date; |
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(5) |
robust and credible procedures for assessing a candidate's demonstration of the learning outcomes specified in the relevant examination standards; |
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(6) |
robust arrangements for contingency and business continuity planning in relation to its qualification services; |
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(7) |
appropriate records management procedures in relation to its qualification services; |
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(8) |
procedures for dealing with inappropriate conduct by candidates, for example, attempting to obtain or obtaining qualifications dishonestly; |
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(9) |
robust procedures for the setting of assessments and marking of results; and |
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(10) |
adequate resources in order to be financially viable. |
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Information about the qualification to be provided to the FCA |
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4. |
If a qualification provider asks the FCA to add a qualification to the list of appropriate qualifications in TC Appendix 4 E, the FCA will expect the qualification provider to: |
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(1) |
where relevant, specify the qualifications framework within which the qualification is placed; |
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(2) |
specify the activity in TC Appendix 1 to which the qualification relates; |
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(3) |
set out the recommended prior knowledge, attainment or experience for candidates; |
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(4) |
where relevant, set out the exemption policy for a candidate's prior learning or achievement; |
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(5) |
provide the relevant learning materials to the FCA together with an explanation of how those learning materials correspond to the content of the most recent examination standards. Any content of the examination standards which has been excluded from the learning materials must be justified; |
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(6) |
where applicable, explain how grading is applied; |
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(7) |
where applicable, explain the provider's rules of combination; |
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(8) |
provide details of expected learning hours or any other similar arrangements; |
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(9) |
where applicable, specify the level of the overall qualification with reference to the relevant qualification framework or, if there is no relevant qualification framework, the European Qualifications Framework and the percentage of the qualification at that level, as well as the percentages and the levels for the remainder of the qualification; |
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(10) |
provide details of any credit for prior learning included in the qualification together with an explanation of how it meets the most recent examination standards; and |
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(11) |
provide an explanation of how the qualification compares in quality and standard to other similar qualifications. |
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Information about the qualification provider to be provided to the FCA |
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5. |
When considering whether to include or retain a qualification in the list of appropriate qualifications, the FCA may consider, where relevant: |
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(1) |
whether the qualification provider has in place suitable arrangements for: |
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(a) |
meeting its statutory duties in relation to equality and diversity; and |
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(b) |
reducing barriers to learning, for example, for candidates with learning difficulties; |
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(2) |
any concerns, issues or investigations which have been raised by the qualification provider's qualifications regulator; |
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(3) |
the annual pass rates of each of the relevant qualifications; |
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(4) |
the quality of the service the qualification provider provides to candidates in relation to qualifications and its complaints procedures; |
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(5) |
how the qualification provider maintains its qualifications to ensure they remain comparable to other qualifications in the same sector; and |
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(6) |
whether the qualification provider gives candidates reasonable notice of any syllabus change, change in method of assessment or pass standards; |
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(7) |
information supporting the criteria in TC Appendix 5G paragraph 3. |