Related provisions for DTR 8.4.38

LR 8.6.19R01/02/2015

4For each 8sponsor service requiring the submission of a document to the FCA or contact with the FCA, a sponsor must:8(1) at the time of submission or on first making contact with the FCA8notify the FCAof the name and contact details of a key 8contact within8 the sponsor for that matter8; and8888(2) ensure that its key8contact : 88(a) has8 sufficient knowledge about the listed company or applicant and the proposed matter8to be able to answer queries from the FCA about it; 888(b)

SUP 10C.11.19G07/03/2016

Table: examples of how the requirements for submitting statements of responsibilities work

1Example	Comments
(1) A firm applies for approval for A to perform the executive director function and the money laundering function.	There should be a single statement of responsibilities document that covers the two functions. The combined document should be included with the application for approval.
(2) Firm X applies for approval for A to perform the executive director function. Firm Y applies for approval for A to perform the money laundering function. Both firms are relevant authorised persons.	There should be separate statements of responsibilities for each firm. This is the case even if Firm X and Firm Y are in the same group.
(3) A firm applies for approval for A to perform an FCA-designated senior management function and a PRA-designated senior management function. The arrangements in SUP 10C.9 for FCA functions to be absorbed into PRA ones do not apply and so there are separate applications to the FCA and PRA.	The single statement of responsibilities document should cover both the FCA and the PRA functions.
(4) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm. This will also result in substantial changes to A’s duties as an executive director.	The firm should not use Form J to notify the changes to A’s duties as an executive director. The firm should submit a revised single statement of responsibilities document along with the application to perform the money laundering function. The single statement of responsibilities document should cover both functions. The part relating to A’s duties as an executive director should be updated.
(5) A has approval to perform the executive director function. Later, A is to be appointed to perform the PRA's chief risk officer designated senior management function for the same firm. This will also result in substantial changes to A’s duties as an executive director.	The firm should not use Form J to notify the changes to A’s duties as an executive director. The firm should submit a revised single statement of responsibilities document along with the application to perform the PRA function. The firm should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the application to the PRA. The single statement of responsibilities document should cover both the FCA and the PRA functions. The part relating to A’s duties as an executive director should be updated.
(6) A has approval to perform the money laundering function. The approval to perform the money laundering function is subject to a condition. The firm is applying to vary that condition.	The firm should include a revised statement of responsibilities with the application. The firm should not use Form J. It should submit a revised statement of responsibilities along with the application to vary the approval.
(7) A has approval to perform the executive director function and the money laundering function for the same firm. The approval to perform the money laundering function is subject to a condition. The firm is applying to vary that condition. As part of the same arrangements, there are to be substantial changes to A’s job as an executive director.	The firm should not use Form J to notify the changes to A’s duties as an executive director. The firm should submit a revised single statement of responsibilities document along with the application to vary the approval for the money laundering function. The single statement of responsibilities document should be updated and should cover both functions.
(8) A has approval to perform the executive director function and the PRA's chief risk officer designated senior management function for the same firm. The arrangements in SUP 10C.9 for FCA functions to be absorbed into PRA ones do not apply and so there are separate FCA and PRA approvals. The approval to perform the PRA's chief risk officer designated senior management function is subject to a condition. The firm is applying to vary that condition. As part of the same arrangements, there are to be substantial changes to A’s job as an executive director.	The firm should not use Form J to notify the changes to A’s duties as an executive director. The firm should submit a revised single statement of responsibilities document along with the application to vary the PRA function. The firm should not submit the revised document separately to the FCA. Instead it should include it as part of the application to the PRA. The single statement of responsibilities document should cover both the FCA and the PRA functions and should be updated.
(9) A has approval to perform the executive director function and the money laundering function for the same firm. Sometime later, A is to give up the money laundering function and take up the PRA's chief risk officer designated senior management function. This will involve major changes to A’s role as executive director.	The answer to example (5) applies. The application to the PRA to perform the PRA function should be accompanied by a single document that: (1) contains the statement of responsibilities for the new function; (2) contains the revised statement of responsibilities for the executive director function; and (3) reflects the fact that A is no longer performing the money laundering function.
(10) A firm has approval for A to perform the executive director function and the money laundering function. A then ceases to perform the money laundering function but continues to perform the executive director function.	The firm must submit: (a) Form C for the money laundering function; (b) Form J; and (c) a single updated statement of responsibilities document that covers the executive director function.
(11) A has approval to perform the executive director function and the PRA's chief risk officer designated senior management function for the same firm. Later, A gives up his role as chief risk officer.	The firm must submit: (a) Form C for the PRA function; (b) Form J; and (c) a single updated statement of responsibilities document that covers the executive director function. The firm should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the notification to the PRA.
(12) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm. The application is rejected.	The single statement of responsibilities document submitted as part of the application will no longer be correct as it reflects the proposed new approval. If the only changes to the single document in the version sent with the application are ones, clearly and exclusively tied to the new function, the firm will not need to amend the document as the changes will automatically fall away. In any other case (for instance if the application is approved conditionally), it is likely that the firm will need to update it using Form J. In any case, the FCA may contact the firm to agree a revised single statement of responsibilities document.
(13) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm. This will not result in any changes to A’s duties as an executive director. However, there have been some insignificant changes to A’s role as an executive director since the firm submitted the most recent single statement of responsibilities document. The changes are not connected to A’s appointment to perform the money laundering function.	The answer for example (4) applies. The single statement of responsibilities document should be updated to cover the changes to A’s duties as executive director, as well as covering A’s new money laundering role. It does not matter that the changes to A’s role as an executive director are not significant.
(14) A has approval to perform the executive director function. Later, A’s business unit grows in size and so the firm needs to apply for A to be approved to perform the PRA's Head of Key Business Area designated senior management function. However, A’s responsibilities do not change.	The firm should submit a revised single statement of responsibilities document along with the application to perform the PRA function. The firm should submit a single statement of responsibilities document that covers both the FCA and the PRA functions. It should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the application to the PRA.
2(15) Firm X has a branch in the United Kingdom. Firm Y is a UK authorised subsidiary 3 of firm X. Firm X is a third-country relevant authorised person and firm3 Y is a UK relevant authorised person. Both firms apply for approval for the same individual (P) to perform the executive3 director function.	There should be separate statement of responsibilities for P for each firm.
The single statement of responsibilities document means the single document described in SUP 10C.11.13D

1Example

Comments

(1) A firm applies for approval for A to perform the executive director function and the money laundering function.

There should be a single statement of responsibilities document that covers the two functions.

The combined document should be included with the application for approval.

(2) Firm X applies for approval for A to perform the executive director function. Firm Y applies for approval for A to perform the money laundering function. Both firms are relevant authorised persons.

There should be separate statements of responsibilities for each firm.

This is the case even if Firm X and Firm Y are in the same group.

(3) A firm applies for approval for A to perform an FCA-designated senior management function and a PRA-designated senior management function.

The arrangements in SUP 10C.9 for FCA functions to be absorbed into PRA ones do not apply and so there are separate applications to the FCA and PRA.

The single statement of responsibilities document should cover both the FCA and the PRA functions.

(4) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm. This will also result in substantial changes to A’s duties as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to perform the money laundering function.

The single statement of responsibilities document should cover both functions. The part relating to A’s duties as an executive director should be updated.

(5) A has approval to perform the executive director function. Later, A is to be appointed to perform the PRA's chief risk officer designated senior management function for the same firm. This will also result in substantial changes to A’s duties as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to perform the PRA function.

The firm should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the application to the PRA.

The single statement of responsibilities document should cover both the FCA and the PRA functions. The part relating to A’s duties as an executive director should be updated.

(6) A has approval to perform the money laundering function. The approval to perform the money laundering function is subject to a condition. The firm is applying to vary that condition.

The firm should include a revised statement of responsibilities with the application.

The firm should not use Form J. It should submit a revised statement of responsibilities along with the application to vary the approval.

(7) A has approval to perform the executive director function and the money laundering function for the same firm. The approval to perform the money laundering function is subject to a condition. The firm is applying to vary that condition. As part of the same arrangements, there are to be substantial changes to A’s job as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to vary the approval for the money laundering function.

The single statement of responsibilities document should be updated and should cover both functions.

(8) A has approval to perform the executive director function and the PRA's chief risk officer designated senior management function for the same firm. The arrangements in SUP 10C.9 for FCA functions to be absorbed into PRA ones do not apply and so there are separate FCA and PRA approvals.

The approval to perform the PRA's chief risk officer designated senior management function is subject to a condition. The firm is applying to vary that condition. As part of the same arrangements, there are to be substantial changes to A’s job as an executive director.

The firm should not use Form J to notify the changes to A’s duties as an executive director.

The firm should submit a revised single statement of responsibilities document along with the application to vary the PRA function.

The firm should not submit the revised document separately to the FCA. Instead it should include it as part of the application to the PRA.

The single statement of responsibilities document should cover both the FCA and the PRA functions and should be updated.

(9) A has approval to perform the executive director function and the money laundering function for the same firm.

Sometime later, A is to give up the

money laundering function and take up the PRA's chief risk officer designated senior management function. This will involve major changes to A’s role as executive director.

The answer to example (5) applies.

The application to the PRA to perform the PRA function should be accompanied by a single document that:

(1) contains the statement of responsibilities for the new function;

(2) contains the revised statement of responsibilities for the executive director function; and

(3) reflects the fact that A is no longer performing the money laundering function.

(10) A firm has approval for A to perform the executive director function and the money laundering function.

A then ceases to perform the money laundering function but continues to perform the executive director function.

The firm must submit:

(a) Form C for the money laundering function;

(b) Form J; and

(c) a single updated statement of responsibilities document that covers the executive director function.

(11) A has approval to perform the executive director function and the PRA's chief risk officer designated senior management function for the same firm. Later, A gives up his role as chief risk officer.

The firm must submit:

(a) Form C for the PRA function;

(b) Form J; and

(c) a single updated statement of responsibilities document that covers the executive director function.

The firm should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the notification to the PRA.

(12) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm.

The application is rejected.

The single statement of responsibilities document submitted as part of the application will no longer be correct as it reflects the proposed new approval.

If the only changes to the single document in the version sent with the application are ones, clearly and exclusively tied to the new function, the firm will not need to amend the document as the changes will automatically fall away.

In any other case (for instance if the application is approved conditionally), it is likely that the firm will need to update it using Form J.

In any case, the FCA may contact the firm to agree a revised single statement of responsibilities document.

(13) A has approval to perform the executive director function. Later, A is to be appointed to perform the money laundering function for the same firm.

This will not result in any changes to A’s duties as an executive director. However, there have been some insignificant changes to A’s role as an executive director since the firm submitted the most recent single statement of responsibilities document. The changes are not connected to A’s appointment to perform the money laundering function.

The answer for example (4) applies.

The single statement of responsibilities document should be updated to cover the changes to A’s duties as executive director, as well as covering A’s new money laundering role. It does not matter that the changes to A’s role as an executive director are not significant.

(14) A has approval to perform the executive director function. Later, A’s business unit grows in size and so the firm needs to apply for A to be approved to perform the PRA's Head of Key Business Area designated senior management function. However, A’s responsibilities do not change.

The firm should submit a revised single statement of responsibilities document along with the application to perform the PRA function.

The firm should submit a single statement of responsibilities document that covers both the FCA and the PRA functions.

It should not submit the revised single statement of responsibilities document separately to the FCA. Instead, it should include it as part of the application to the PRA.

2(15) Firm X has a branch in the United Kingdom. Firm Y is a UK authorised subsidiary 3 of firm X.

Firm X is a third-country relevant authorised person and firm3 Y is a UK relevant authorised person.

Both firms apply for approval for the same individual (P) to perform the executive3 director function.

There should be separate statement of responsibilities for P for each firm.

The single statement of responsibilities document means the single document described in SUP 10C.11.13D

SUP 6.3.15D30/01/2017

(1) Subject to (1A), a17firm other than a credit union wishing to make an application under SUP 6 must apply online using the forms specified on the online notification and application system21. 1417272727181814(1A) A firm wishing to make an application under SUP 6 which covers only credit-related regulated activities must submit any form, notice or application by using the form in SUP 6 Annex 5 and submitting it in the way set out in SUP 15.7.4 R to SUP 15.7.9 G (Form and method

SYSC 19A.3.4R01/07/2015

(1) Remuneration Code staff comprises:(a) an employee of an IFPRU investment firm whose professional activities have a material impact on the firm’s risk profile, including any employee who is deemed to have a material impact on the firm’s risk profile in accordance with Regulation (EU) 604/2014 of 4 March 2014 (Regulatory technical standards to identify staff who are material risk takers); or(b) subject to (2) and (3), an employee of an overseas firm in SYSC 19A1.1.1R(1)(d) (i.e.,

SYSC 19A.3.55G03/05/2017

(1) Sections 137H and 137I of the Act enables the FCA6 to make rules that render void any provision of an agreement that contravenes specified prohibitions in the Remuneration Code, and that provide for the recovery of any payment made, or other property transferred, in pursuance of such a provision. SYSC 19A.3.53A R and1SYSC 19A.3.54 R (together with SYSC 19A Annex 1) are such rules1 and render1 void provisions of an agreement that contravene the specified prohibitions on guaranteed

CASS 5.5.61R01/04/2013

On the failure of a third party with which client money is held, a firm must notify the FCA:(1) as soon as it becomes aware, of the failure of any bank, other broker or settlement agent or other entity with which it has placed, or to which it has passed, client money; and(2) as soon as reasonably practical, whether it intends to make good any shortfall that has arisen or may arise and of the amounts involved.

CASS 5.5.76R01/04/2013

A firm must notify the FCA immediately if it is unable to, or does not, perform the calculation required by CASS 5.5.63 R (1)2.

CASS 5.5.77R01/04/2013

A firm must notify the FCA immediately it becomes aware that it may not be able to make good any shortfall identified by CASS 5.5.63 R (1)2 by the close of business on the day the calculation is performed and if applicable when the reconciliation is completed2.

SUP 10A.11.4G01/04/2013

The PRA cannot give its approval for the performance of a PRA controlled function without the consent of the FCA. The firm does not need to apply to the FCA for that consent. The PRA must as soon as practicable notify the FCA of the receipt or withdrawal of an application to the PRA.

IFPRU 8.2.7R01/01/2014

A firm may only make use of the non-core large exposure group exemption where the following conditions are met: (1) the total amount of the non-trading book exposures from the firm to its non-core large exposures group does not exceed 100% of the firm'seligible capital; or (if the firm has a core UK grouppermission) the total amount of non-trading book exposures from its core UK group (including the firm) to its non-core large exposures group does not exceed 100% of the core

IFPRU 8.2.12R01/01/2014

A firm must immediately notify the FCA in writing if it becomes aware that any exposure that it has treated as exempt under IFPRU 8.2.6 R or any counterparty that it has been treating as a member of its non-core large exposures group has ceased to meet the conditions for application of the treatment in this section.

REC 4.2C.1G01/04/2013

1Section 301A(1) of chapter3 1A of Part XVIII of the Act places an obligation on a person who decides to acquire or increase control (see sections 301D and 301E of the Act) over a UK RIE3to notify the FCA5, before making the acquisition3. Furthermore, those persons are required to obtain the FCA's5 approval before acquiring control 3or increasing the level of control held.3353533

REC 4.2C.3G01/04/2013

If a proposed acquirer 3has complied with the obligation to notify, the procedure the FCA5 will follow if it approves or does not approve of that person acquiring or increasing control 3is set out in sections3 301F and 301G 3of the Act.3533

SUP 18.4.23G01/04/2013

Under the Friendly Societies Act 1992:(1) when the members of a transferor society have approved the transfer of its engagements by passing a special resolution and the transferee has approved the transfer (by passing a resolution where the transferee is a friendly society); or(2) when two or more societies have approved a proposed amalgamation by passing a special resolution;it, or they jointly, must then obtain confirmation by the appropriate authority2 of the transfer. Notice

CASS 7.19.22R01/07/2014

A firm that wishes to establish a sub-pool of client money must notify the FCA in writing not less than two months before the date on which the firm intends to receive or hold client money for that sub-pool.

CASS 7.19.24R01/07/2014

A firm must inform the FCA in writing, without delay, if it has not complied, or is unable to comply with the requirements in CASS 7.19.11 R or the requirements in CASS 7.19.18 R.

LR 8.5.1R01/04/2013

A listed company or applicant must ensure that1 the FCA is informed 1promptly of the name and contact details of any 2sponsor appointed in accordance with the listing rules (either by the listed company or applicant or by the sponsor itself)1.12

LR 8.5.2R01/04/2013

(1) A listed company or applicant must notify the FCA in writing immediately of the resignation or dismissal of any sponsor that it had appointed.(2) In the case of a dismissal, the reasons for the dismissal must be included in the notification.(3) The notification must be copied to the sponsor.

LR 1.3.3R01/04/2013

An issuer must take reasonable care to ensure that any information it notifies to a RIS or makes available through the FCA is not misleading, false or deceptive and does not omit anything likely to affect the import of the information.

REC 5.2.14G01/04/2013

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. An applicant for RAP status must provide details of the relationship between the governance arrangements in place for the UK RIE and the RAP.3
(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 or (for an RAP) auction platform,3 settlement arrangements, clearing facilitation services5 and custody services which it plans to supply. An applicant for RAP status must provide details on the relationship between the auction platform and any secondary market in emissions auction products 4 which it operates or plans to operate.3 5 4
(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. 5
(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 FCA 5. 5
(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 the results and conclusions reached. 5
(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, including (for an RAP) details of how the rules of the UK RIE will change in order to reflect RAP status.3
(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 and, where relevant, details of how information regarding specified investments will be disseminated to users of its facilities. 5
(22)	Details of arrangements for cooperating with the FCA 5 and other appropriate authorities, including draft memoranda of understanding or letters. 5
(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.

IFPRU 11.5.20R19/01/2015

An RRD group member may only give financial support using an RRD group financial support agreement if the FCA has:(1) agreed to the giving of the support with restrictions; or(2) agreed to the giving of the support without restrictions; or(3) not prohibited the support within five business days of receiving a notice of intention to give financial support.[Note: article 25(2) and (5) of RRD]

DTR 5.4.4R01/04/2013

A parent undertaking which wishes to make use of the exemption in relation to issuers subject to this chapter whose shares are admitted to trading on a regulated market must without delay, notify the following to the FCA:1(1) a list of the names of those management companies, investment firms or other entities, indicating the competent authorities that supervise them, but with no reference to the issuers concerned; and(2) a statement that, in the case of each such management company

DTR 5.4.5R26/11/2015

Where the parent undertaking intends to benefit from the exemptions only in relation to the financial instruments4 referred to in Article 13 of the TD, it must4 notify to the FCA only the list referred to in paragraph (1) of DTR 5.4.4 R.[Note: article 10(3) of the TD implementing Directive]

DTR 5.4.11R01/04/2013

A parent undertaking of a third country undertaking must comply with the notification requirements in DTR 5.4.4 R (1) and DTR 5.4.5 R and in addition: (1) must make a statement that in respect of each management company or investment firm concerned, the parent undertaking complies with the conditions of independence set down in DTR 5.4.10 R; and (2) must1 be able to demonstrate to the FCA on request that the requirements of DTR 5.4.6 R are respected.[Note: article 23 of the TD

SUP 11.5.10G01/04/2013

When an event occurs (for example, a group restructuring or a merger) as a result of which: (1) more than one firm in a group would undergo a change in control; or(2) a single firm would experience more than one change in control;then, to avoid duplication of documentation, all the firms and their controllers or proposed controllers may discharge their respective obligations to notify the appropriate regulator7 by submitting a single section 178 notice5 to the PRA7 containing

LR 5.3.1R01/04/2013

A request by an issuer for the listing of its securities to be suspended or cancelled must be in writing and must include:(1) the issuer's name;(2) details of the securities to which it relates and the RIEs on which they are traded;(3) a clear explanation of the background and reasons for the request;(4) the date on which the issuer requests the suspension or cancellation to take effect;(5) for a suspension, the time the issuer wants the suspension to take effect;(6) if relevant,

LR 5.3.7G01/04/2013

(1) If an issuer requests the FCA to suspend or cancel the listing of its securities, it may withdraw its request at any time before the suspension or cancellation takes effect. The withdrawal request should initially be made by telephone and then confirmed in writing as soon as possible, with an explanation of the reasons for the withdrawal.(2) Even if an issuer withdraws its request, the FCA may still suspend or cancel the listing of the securities if it considers it is necessary

DISP 1.10B.11D13/01/2018

If a respondent is unable to submit a report in electronic format because of a systems failure of any kind, the respondent must notify the FCA, in writing and without delay, of that systems failure.

DISP 1.10B.12R13/01/2018

(1) If a respondent does not submit a complete report by the date on which it is due, in accordance with DISP 1.10B.10D, the respondent must pay an administrative fee of £250.(2) The administrative fee in (1) does not apply if the respondent has notified the FCA of a systems failure in accordance with DISP 1.10B.11R.

SUP 10C.16.6G07/03/2016

Failing to disclose relevant information to the FCA may be a criminal offence under section 398 of the Act.

REC 2.5.1UK03/01/2018

Schedule to the Recognition Requirements Regulations, paragraphs 3 – 3H4

Paragraph 3 – Systems and controls4
(1)	The [UK RIE] must ensure that the systems and controls, including procedures and arrangements,4 used in the performance of its functions and the functions of the trading venues it operates are adequate, effective4 and appropriate for the scale and nature of its business.
(2)	Sub-paragraph (1) applies in particular to systems and controls concerning -
	(a)	the transmission of information;
	(b)	the assessment, mitigation and management of risks to the performance of the [UK RIE's relevant functions];
	(c)	the effecting and monitoring of transactions on the [UK RIE];
	(ca)	the technical operation of the [UK RIE], including contingency arrangements for disruption to its facilities;
	(d)	the operation of the arrangements mentioned in paragraph 4(2)(d); and
	(e)	(where relevant) the safeguarding and administration of assets belonging to users of the [UK RIE's] facilities.
	4(f)	the resilience of its trading systems;
	4[Note:MiFID RTS 7 contains requirements on the resilience of trading systems operated by trading venues that enable algorithmic trading]
	4(g)	the ability to have sufficient capacity to deal with peak order and message volumes;
	4[Note:MiFID RTS 7 contains requirements on the adequacy of capacity of trading systems operated by trading venues that enable algorithmic trading]
	4(h)	the ability to ensure orderly trading under conditions of severe market stress;
	4(i)	the effectiveness of business continuity arrangements to ensure the continuity of the [UK RIE’s] services if there is any failure of its trading systems including the testing of the [UK RIE’s] systems and controls;
	4(j)	the ability to reject orders that exceed predetermined volume or price thresholds or which are clearly erroneous;
	4(k)	the ability to ensure algorithmic trading systems cannot create or contribute to disorderly trading conditions on trading venues operated by the [UK RIE];
	4(l)	the ability to ensure disorderly trading conditions which arise from the use of algorithmic trading systems, including systems to limit the ratio of unexecuted orders to transactions that may be entered into the [UK RIE’s] trading system by a member or participant are capable of being managed;
	[Note:MiFID RTS 9 contains requirements on the ratio of unexecuted orders to transactions to be taken into account by a trading venue that operates electronic continuous auction order book, quote-driven or hybrid trading systems]
	4(m)	the ability to ensure the flow of orders is able to be slowed down if there is a risk of system capacity being reached;
	4(n)	the ability to limit and enforce the minimum tick size which may be executed on its trading venues; and
	4(o)	the requirement for members and participants to carry out appropriate testing of algorithms.
	4[Note:MiFID RTS 7 contains requirements on the appropriate testing of algorithms to ensure that trading systems, when they enable algorithmic trading, cannot create or contribute to disorderly trading conditions]
4(3)	For the purposes of sub-paragraph 2(c), the [UK RIE] must -
	4(a)	establish and maintain effective arrangements and procedures including the necessary resource for the regular monitoring of the compliance by members or participants with its rules; and
	4(b)	monitor orders sent including cancellations and the transactions undertaken by its members or participants under its systems in order to identify infringements of those rules, disorderly trading conditions or conduct that may indicate behavior that is prohibited under the market abuse regulation or system disruptions in relation to a financial instrument.
4(4)	For the purpose of sub-paragraph (2)(o) the [UK RIE] must provide environments to facilitate such testing.
4(5)	The [UK RIE] must be adequately equipped to manage the risks to which it is exposed, to implement appropriate arrangements and systems to identify all significant risks to its operation, and to put in place effective measures to mitigate those risks.
4Paragraph 3A – Market making arrangements
4(1)	The [UK RIE] must -
	4(a)	have written agreements with all investment firms pursuing a market making strategy on trading venues operated by it (“market making agreements”);
	4(b)	have schemes, appropriate to the nature and scale of a trading venue, to ensure that a sufficient number of investment firms enter into such agreements which require them to post firm quotes at competitive prices with the result of providing liquidity to the market on a regular and predictable basis;
	4(c)	monitor and enforce compliance with the market making agreements;
	4(d)	inform the FCA of the content of its market making agreements; and
	4(e)	provide the FCA with any information it requests which is necessary for the FCA to satisfy itself that the market making agreements comply with paragraphs (c) and (d) of this sub-paragraph and sub-paragraph 2.
4(2)	A market making agreement must specify-
	4(a)	the obligations of the investment firm in relation to the provision of liquidity;
	4(b)	where applicable, any obligations arising from the participation in a scheme mentioned in sub-paragraph (1)(b);
	4(c)	any incentives in terms of rebates or otherwise offered by the [UK RIE] to the investment firm in order for it to provide liquidity to the market on a regular and predictable basis; and
	4(d)	where applicable, any other rights accruing to the investment firm as a result of participation in the scheme referred to in sub-paragraph (1)(b).
4(3)	For the purposes of this paragraph, an investment firm pursues a market making strategy if -
	4(a)	the firm is a member or participant of one or more trading venues;
	4(b)	the firm’s strategy, when dealing on own account, involves posting firm, simultaneous two-way quotes of comparable size at competitive prices relating to one or more financial instruments on a single trading venue, across different trading venues; and
	4(c)	the result is providing liquidity on a regular and frequent basis to the overall market.
4Paragraph 3B – Halting trading
4(1)	The [UK RIE] must be able to -
	4(a)	temporarily halt or constrain trading on any trading venue operated by it if there is a significant price movement in a financial instrument on such a trading venue or a related trading venue during a short period; and
	4(b)	in exceptional cases be able to cancel, vary, or correct any transaction.
4(2)	For the purposes of sub-paragraph (1), the [UK RIE] must ensure that the parameters for halting trading are appropriately calibrated in a way which takes into account -
	4(a)	the liquidity of different asset classes and subclasses;
	4(b)	the nature of the trading venue market model; and
	4(c)	the types of users,
	4to ensure the parameters are sufficient to avoid significant disruptions to the orderliness of trading.
4(3)	The [UK RIE] must report the parameters mentioned in sub-paragraph (2) and any material changes to those parameters to the FCA in a format to be specified by the FCA.
4(4)	If a trading venue operated by the [UK RIE] is material in terms of liquidity of the trading of a financial instrument and it halts trading in an EEA State in that instrument it must have systems and procedures in place to ensure that it notifies the FCA.
4[Note:MiFID RTS 12 contains requirements for when a regulated market is material in terms of liquidity in a financial instrument for purposes of trading halt notifications]
4Paragraph 3C – Direct electronic access
4Where the [UK RIE] permits direct electronic access to a trading venue it operates, it must -
4(1)	(a)	ensure that a member of, or participant in that trading venue is only permitted to provide direct electronic access to the venue if the member or participant -
		4(i)	is an investment firm, as defined by Article 4.1.1 of the markets in financial instruments directive (definitions), authorised in accordance with the directive;
		4(ii)	is a credit institution authrised in accordance with the capital requirements directive;
		4(iii)	comes within Article 2.1(a), (e), (i), or (j) of the markets in financial instruments directive (exemptions) and has a Part 4A permission relating to investment services and activities;
		4(iv)	is a third country firm providing the direct electronic access in the course of exercising rights under Article 46.1 (general provisions) or 47.3 (equivalence decision) of the markets in financial instruments regulation;
		4(v)	is a third country firm and the provision of the direct electronic access by that firm is subject to the exclusion in Article 72 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; or
		4(vi)	is a third country firm which does not come within paragraph (iv) or (v) and is otherwise permitted to provide the direct electronic access under the Act;
	4(b)	ensure that appropriate criteria are set and applied for the suitability of persons to whom direct electronic access services may be provided;
	4(c)	ensure that a member of, or participant in, the trading venue retains responsibility for adherence to the requirements of the markets in financial instruments directive in respect of orders and trades executed using the direct electronic access service;
	4(d)	set appropriate standards regarding risk controls and thresholds on trading through direct electronic access;
	4(e)	be able to distinguish and if necessary stop orders or trading on that trading venue by a person using direct electronic access separately from -
		4(i)	other orders; or
		4(ii)	trading by the member or participant providing the direct electronic access; and
	4(f)	have arrangements in place to suspend or terminate the provision to a client of direct electronic access to that trading venue by a member of, or participant in, the trading venue in the case of non-compliance with this paragraph.
4[Note:MiFID RTS 7 contains requirements on direct electronic access permitted through a trading venue’s systems]
4Paragraph 3D – Co-location services
4(1)	The [UK RIE’s] rules on colocation services must be transparent, fair and nondiscriminatory.
4[Note:MiFID RTS 10 contains requirements to ensure co-location services are transparent, fair and non-discriminatory]
4Paragraph 3E – Fee structures
4(1)	The [UK RIE’s] fee structure, for all fees it charges including execution fees and ancillary fees and rebates it grants, must -
	4(a)	be transparent, fair and non-discriminatory;
	4[Note:MiFID RTS 10 contains requirements to ensure fee structures are transparent, fair and non-discriminatory]
	4(b)	not create incentives to place, modify or cancel orders, or execute transactions, in a way which contributes to disorderly trading conditions or market abuse; and
	4[Note:MiFID RTS 10 contains requirements concerning prohibited fee structures]
	4(c)	impose market making obligations in individual shares or suitable baskets of shares for any rebates that are granted.
4(2)	Nothing in sub-paragraph (1) prevents the [UK RIE] from -
	4(a)	adjusting its fees for cancelled orders according to the length of time for which the order was maintained;
	4(b)	calibrating its fees to each financial instrument to which they apply;
	4(c)	imposing a higher fee -
		4(i)	for placing an order which is cancelled than an order which is executed;
		4(ii)	on participants placing a high ratio of cancelled orders to executed orders; or
		4(iii)	on a person operating a high-frequency algorithmic trading technique,
		4in order to reflect the additional burden on system capacity.
4Paragraph 3F – Algorithmic trading
4(1)	The [UK RIE] must require members of and participants in trading venues operated by it to flag orders generated by algorithmic trading in order for it to be able to identify the -
	4(a)	the different algorithms used for the creation of orders; and
	4(b)	the persons initiating those orders.
4Paragraph 3G – Tick size regimes
4(1)	The [UK RIE] must adopt tick size regimes in respect of trading venues operated by it in -
	4(a)	shares, depositary receipts, exchange-traded funds, certificates and other similar financial instruments traded on each trading venue; and
	4[Note:MiFID RTS 11 contains requirements on the tick size regime for shares, depositary receipts, exchange traded funds and certificates5]
	4(b)	any financial instrument for which regulatory technical standards are adopted by the European Commission pursuant to Article 49.3 or 4 of the markets in financial instruments directive which is traded on that trading venue.
	[Note:MiFID RTS 11]
4 (2)	The tick size regime must -
	4(a)	be calibrated to reflect the liquidity profile of the financial instrument in different markets and the average bid-ask spread taking into account desirability of enabling reasonably stable prices without unduly constraining further narrowing of spreads; and
	4(b)	adapt the tick size for each financial instrument appropriately.
4(3)	The tick size regime must comply with any regulatory technical standards adopted by the European Commission pursuant to Article 49.3 or 4 of the markets in financial instruments directive.
4[Note:MiFID RTS 11]
4Paragraph 3H – Syncronisation of business clocks
4(1)	The [UK RIE] must synchronise the business clocks it uses to record the date and time of any reportable event in accordance with regulatory technical standards adopted by the European Commission pursuant to Article 50 of the markets in financial instruments directive.
4[Note:MiFID RTS 25]

Related provisions for DTR 8.4.38

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Information and supporting documentation (see REC 5.2.4 G).

Schedule to the Recognition Requirements Regulations, paragraphs 3 – 3H4