Related provisions for SUP 16.13.8
Table: Examples of how the other local responsibility function applies
Example |
Comments |
(1) ‘A’ is allocated local responsibility for one of a branch’s main business lines. A is also appointed to perform a PRA-designated senior management function for the same branch. |
A only needs approval to perform the PRA-designated senior management function. |
(2) ‘A’ is outside the branch’s management structure and A’s responsibilities for the branch are limited to setting overall strategy for the branch. A does not have responsibility for implementing that strategy. |
A is not performing the other local responsibility function. The reason for this is explained in SYSC 4.8.27G. SUP 10C.8.1R(2) is irrelevant to this example. |
(3) A small branch undertakes two business lines (wholesale lending and corporate investments). ‘A’ is head of wholesale lending and is also an executive director of the branch. ‘B’ is head of corporate investments and does not sit on the branch management committee but reports to it on corporate investments. The branch allocates local responsibility for these functions to A and B. Neither A nor B performs any other PRA or FCA-designated senior management functions. |
A only needs approval to perform the executive director function3. B needs approval to perform the other local responsibility function. |
(4) A branch does not have a Head of Internal Audit. ‘P’ is allocated local responsibility for internal audit in relation to that branch. |
P needs approval to perform the other local responsibility function. However, if P has already been approved to perform another PRA or FCA designated senior management function, then P will not be performing the other local responsibility function. |
(5) ‘A’ is appointed to perform the executive3director function. The same branch also allocates local responsibility for some branch functions to A. |
A only needs approval to perform the executive3director function. |
(6) ‘A’ is approved to perform the other local responsibility function. Later, A is appointed to perform the executive3director function for the same firm. |
A requires approval for the other local responsibility function when A is first appointed. When A is later approved to perform the executive3director function, A stops performing the other local responsibility function. The firm should use Form E to apply for approval for A to perform the executive3director function. |
(7) ‘A’ is appointed to perform: (a) the compliance oversight function for one firm (Firm X) in a group (which may or may not be a relevant authorised person); and (b) a function coming within the scope of the other local responsibility function for another firm (which is a third-country relevant authorised person) in the same group (Firm Y). |
A needs approval to perform the compliance oversight function for Firm X and the other local responsibility function for Firm Y. |
(8) ‘A’ is appointed to take on some functions that come within the other local responsibility function. Later, A is appointed as chief risk officer. |
On A’s first appointment, A will need to be approved to perform the other local responsibility function. On being approved as chief risk officer, A stops performing the other local responsibility function as being chief risk officer is a PRA designated senior management function. |
(9) ‘A’ is appointed as an executive director. A then resigns and takes up a job with the same firm coming within the other overall responsibility function. |
On A’s first appointment, A will need to be approved to perform the executive3director function. A will need to get approval to perform the other overall responsibility function before A gives up being a director. |
Note: Local responsibility is explained in SYSC 4.8.10R (Third-country relevant authorised persons: Allocation of responsibilities) |
1Paragraph 7BA – Position management |
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(1) |
A [UK RIE] operating a trading venue which trades commodity derivatives must apply position management controls on that venue, which must at least enable the [UK RIE] to - |
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(a) |
monitor the open interest positions of persons; |
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(b) |
access information, including all relevant documentation, from persons about- |
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(i) |
the size and purpose of a position or exposure entered into; |
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(ii) |
any beneficial or underlying owners; |
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(iii) |
any concert arrangements; and |
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(iv) |
any related assets or liabilities in the underlying market; |
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(c) |
require a person to terminate or reduce a position on a temporary or permanent basis as the specific case may require and to unilaterally take appropriate action to ensure the termination or reduction if the person does not comply; and |
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(d) |
where appropriate, require a person to provide liquidity back into the market at an agreed price and volume on a temporary basis with the express intent of mitigating the effects of a large or dominant position. |
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(2) |
The position management controls must take account of the nature and composition of market participants and of the use they make of the contracts submitted to trading and must- |
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(a) |
be transparent; |
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(b) |
be non-discriminatory; and |
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(c) |
specify how they apply to persons. |
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(3) |
A [UK RIE] must inform the FCA of the details of the position management controls in relation to each trading venue it operates. |
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Paragraph 7BB – Position reporting |
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(1) |
This paragraph applies to a [UK RIE] operating a trading venue which trades commodity derivatives, emission allowances, or emission allowance derivatives. |
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(2) |
The [UK RIE] must - |
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(a) |
where it meets the minimum threshold, as specified in a delegated act adopted by the European Commission pursuant to Article 58.6 of the markets in financial instruments directive, make public a weekly report with the aggregate positions held by the different categories of persons for the different commodity derivatives, emission allowances, or emission allowance derivatives traded on the trading venue specifying - |
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(i) |
the number of long and short positions by such categories; |
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(ii) |
changes of those positions since the previous report; |
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(iii) |
the percentage of the total open interest represented by each category; and |
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(iv) |
the number of persons holding a position in each category; and |
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(b) |
provide the FCA with a complete breakdown of the positions held by all persons, including the members and participants and their clients, on the trading venue on a daily basis, or more frequently if that is required by the FCA. |
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(3) |
For the weekly report mentioned in sub-paragraph (2)(a) the [UK RIE] must - |
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(a) |
categorise persons in accordance with the classifications required under sub-paragraph (4); and |
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(b) |
differentiate between positions identified as- |
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(i) |
positions which in an objectively measurable way reduce risks directly relating to commercial activities; or |
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(ii) |
other positions. |
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(4) |
The [UK RIE] must classify persons holding positions in commodity derivatives, emission allowances, or emission allowance derivatives according to the nature of their main business, taking account of any applicable authorisation or registration, as - |
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(a) |
an investment firm or credit institution; |
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(b) |
an investment fund, either as an undertaking for collective investments in transferrable securities as defined in the UCITS Directive, or an alternative investment fund or alternative investment fund manager as defined in the alternative investment fund managers directive; |
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(c) |
another financial institution, including an insurance undertaking and reinsurance undertaking as defined in the Solvency 2 Directive and an institution for occupational retirement provision as defined in Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement; |
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(d) |
a commercial undertaking; or |
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(e) |
in the case of emission allowances, or emission allowance derivatives, an operator with compliance obligations under Directive 2003/87/EC of the European Parliament and the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community. |
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(5) |
The [UK RIE] must communicate the weekly report mentioned in sub-paragraph (2)(a) to the FCA and ESMA. |