Related provisions for DTR 6.2.9
Table: Examples5 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 function5 and the money laundering reporting function5. |
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 function5. Firm Y applies for approval for A to perform the money laundering reporting function. Both firms are SMCR firms5. |
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 function5. Later, A is to be appointed to perform the money laundering reporting function5 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 reporting function5. 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 function5. 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 reporting function5. The approval to perform the money laundering reporting function5 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 function5 and the money laundering reporting function5 for the same firm. The approval to perform the money laundering reporting function5 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 reporting function5. The single statement of responsibilities document should be updated and should cover both functions. |
(8) A has approval to perform the executive director function5 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 function5 and the money laundering reporting function5 for the same firm. Sometime later, A is to give up the money laundering reporting function5 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 function5; and (3) reflects the fact that A is no longer performing the money laundering reporting function5. |
(10) A firm has approval for A to perform the executive director function5 and the money laundering reporting function5. A then ceases to perform the money laundering reporting function5 but continues to perform the executive director function.5 |
The firm must submit: (a) Form C for the money laundering reporting function5; (b) Form J; and (c) a single updated statement of responsibilities document that covers the executive director function and reflects the fact that A is no longer performing the money laundering reporting function5. |
(11) A has approval to perform the executive director function5 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 function5. 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 function5. Later, A is to be appointed to perform the money laundering reporting function5 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 ones5 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 money laundering reporting function5. Later, A is to be appointed as an executive director5 for the same firm. This will not result in any significant5 changes to A’s duties in the money laundering reporting function5. However, there have been some insignificant changes to A’s role in the money laundering reporting function5 since the firm submitted the most recent single statement of responsibilities document. The changes are not connected to A’s appointment as executive director5. |
The answer for example (4) applies. The single statement of responsibilities document should be updated to cover the changes to A’s duties in the money laundering role as well as covering A’s appointment to perform the executive director function. It does not matter that the changes to A’s money laundering role5 are not significant. |
(14) A has approval to perform the executive director function5. 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 subsidiary3 of firm X. Firm X is an overseas SMCR firm that is not an EEA SMCR firm5 and firm3 Y is a UK SMCR firm5. Both firms apply for approval for the same individual (P) to perform the executive director function5. 3 |
There should be separate statement of responsibilities for P for each firm. |
Note:5 The single statement of responsibilities document means the single document described in SUP 10C.11.13D.5 |
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. |