Related provisions for SUP 18.3.5
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(1) 1The purpose of this chapter is to implement articles 57 and 58 of MiFID by setting out the necessary directions, rules and guidance.(2)
In particular, this chapter sets out the FCA’s requirements in respect of:
(a) articles 57(1) and 57(6) of MiFID, which require competent authorities or central competent authorities to establish limits, on the basis of a methodology determined by ESMA, on the size of a net position which a person can hold, together with those held on the
(1) The scope of this chapter is as follows:
In respect of position limit requirements in MAR 10.2, a commodity derivative position limit established by the FCA in accordance with MAR 10.2.2D(1) applies regardless of the location of the person at the time of entering into the position and the location of execution.
[Note: article 57(14)(a) of MiFID](2) In respect of position management controls requirements:(a) the requirements contained or referred to in MAR 10.3 apply to persons
(1) Business plan failure in the context of reverse stress testing should be understood as the point at which the market loses confidence in a firm and this results in the firm no longer being able to carry out its business activities. Examples of this would be the point at which all or a substantial portion of the firm's counterparties are unwilling to continue transacting with it or seek to terminate their contracts, or the point at which the firm's existing shareholders are
(1) The FSAappropriate regulator may request a firm to submit the design and results of its reverse stress tests and any subsequent updates as part of its ARROW risk assessment. (2) In the light of the results of a firm's reverse stress tests, the FSAappropriate regulator may require the firm to implement specific measures to prevent or mitigate the risk of business failure where that risk is not sufficiently mitigated by the measures adopted by the firm in accordance with SYSC
2If a firm requires employees who are not subject to a qualification 7 requirement in TC7 to pass a relevant examination from the list of appropriate qualifications 8maintained by the FCA8, the appropriate regulator will take that into account when assessing whether the firm has ensured that the employee satisfies the knowledge component of the competent employees rule.78878778
3For
the purpose of this Statement of Principle,
regulators in addition to the FCA and
the PRA are those which have
recognised jurisdiction in relation to regulated
activities and a power to call for information from the approved person in connection with their 1accountable function or (in the case of
an individual performing an accountable higher management function)1 in connection with the business for which they are1 responsible.
This may include an exchange or an oversea
1Where the approved person is, or is one of the approved persons who is, responsible within the firm for reporting matters to the regulator concerned (as defined in APER 4.4.4G), failing promptly to inform the regulator concerned of information of which they are aware and which it would be reasonable to assume would be of material significance to the regulator concerned, whether in response to questions or otherwise, falls within APER 4.4.3G.
This chapter gives guidance to UK firms. In most cases UK firms will be authorised persons under the Act. However, under the CRD2, a subsidiary of a firm which is a credit institution6 meets the criteria set out in that Directive also has an EEA right. Such an unauthorised subsidiary is known as a financial institution. References in this chapter to a UK firm include a financial institution. The chapter does not provide guidance for Solvency II firms. Solvency II firms should
Under section 138A(4) of the Act, the appropriate regulator10 may not give a waiver unless it is satisfied that:1010(1) compliance by the firm with the rules, or with the rules as unmodified, would be unduly burdensome, or would not achieve the purpose for which the rules were made; and(2) the waiver would not adversely affect the advancement of, in the case of the PRA, any of its objectives and, in the case of the FCA, any of its operational objectives.1010
(1) The authorised fund manager may, with the prior agreement of the depositary, and must without delay, if the depositary so requires, temporarily1 suspend the issue, cancellation, sale and redemption of units in an authorised fund (referred to in this chapter as "dealings in units"), where due to exceptional circumstances it is in the interest of all the unitholders in the authorised fund. Where an authorised fund is a regulated money market fund, the authorised fund manager
2Where:(1) an authorised fund manager of a UCITS scheme which is a master UCITS or a qualifying master scheme3temporarily suspends the issue, cancellation, sale and redemption of its units, whether at its own initiative or at the request of the FCA; or(2) an operator of an EEA UCITS scheme which is a master UCITS or a qualifying master scheme3temporarily suspends the issue, cancellation, sale or redemption of its units, whether at its own initiative or at the request of its Home
5A UK UCITS management company must ensure that the procedures it establishes under DISP 1.3.1 R for the reasonable and prompt handling of complaints require that:(1) there are no restrictions on Unitholders exercising their rights in the event that the UCITS is authorised in an EEA State other than the United Kingdom; and(2) Unitholders are allowed to file complaints in any of the official languages of the Home State of the UCITS scheme or EEA UCITS scheme or of any EEA State
416These procedures should, taking into account the nature, scale and complexity of the respondent's business, ensure that lessons learned as a result of determinations by the Ombudsman are effectively applied in future complaint handling, for example by:(1) relaying a determination by the Ombudsman to the individuals in the respondent who handled the complaint and using it in their training and development;(2) analysing any patterns in determinations by the Ombudsman concerning
6Under sections 313CC (2) and (3) of the Act, if the FCA receives notice that a competent authority of another EEA State has suspended or removed a financial instrument from trading on a trading venue or systematic internaliser pursuant to articles 32.2, 52.2 or 69.2 of MiFID, the FCA must require any trading venue or systematic internaliser falling under its jurisdiction as defined in section 313D of the Act, and which trades the same instrument, to suspend or remove the instrument
2The FCA may apply to the court for an injunction if it appears that a person, whether authorised or not, is reasonably likely to breach a relevant requirement12, or engage in market abuse. It can also apply for an injunction if a person has breached one of those requirements or has engaged in market abuse and is likely to continue doing so. 12 Under section 380(6)(a) and (7)(a), a 'relevant requirement' in relation to an application by the appropriate regulator means a requirement:
2The FCA may consider taking disciplinary1 action using a range of powers1 as well as seeking restitution, if a person has breached a relevant requirement13 of the Act or any directly applicable Community regulation or decision under MiFID or the UCITS Directive or the auction regulation1, or has engaged in1market abuse. 13 Under section 204A(2), a 'relevant requirement' in relation to an application by the appropriate regulator means a requirement: which is imposed by or under
This chapter does not apply to:(1) an EEA firm that wishes to carry on in the United Kingdom activities which are outside the scope of its EEA right and the scope of a permission granted under Schedule 4 to the Act; in this case the EEA firm requires a "top-up permission" under Part 4A16 of the Act (see the appropriate UK regulator's website www.fca.org.uk/firms/authorisation/apply-authorisation for the FCA and www.bankofengland.co.uk/pra/Pages/authorisations/newfirm/default.aspx
(1) EEA firms should note that this chapter only addresses the procedures which the appropriate UK regulator16 will follow under the Act.So, an EEA firm should consider this guidance in conjunction with the requirements with which it will have to comply in its Home State. 166(2) The guidance in this chapter represents the appropriate UK regulator's16 interpretation of the Single Market Directives, the auction regulation,7 the Act and the secondary legislation made under the Act.
Under the EEA Passport Rights Regulations, references in section 60 of the Act (applications for approval for persons to perform controlled functions) to "the authorised person concerned" include:33(1) an EEA MiFID investment firm whose Home State regulator has given a consent notice under paragraph 13 of Schedule 3 to the Act (see SUP 13A.4.1G (1) and SUP 13A.4.2 G) or a regulator's notice under paragraph 14 of that Schedule (see SUP 13A.5.3G (1)), and which will be the authorised
A firm is required under GENPRU 2.1.52 R (Calculation of the market risk capital requirement) to calculate its market risk capital requirement using the rules in BIPRU 7. However, the appropriate regulator may at the firm's request modify GENPRU 2.1.52 R to allow the firm to calculate all or part of the PRR for the positions covered by that model by using a CAD 1 model (for options risk aggregation and/or interest rate pre-processing) or a VaR model (value at risk model) instead.
The purpose of BIPRU 7.9 is to provide guidance on the appropriate regulator's policy for granting CAD 1 model waivers under section 138A of the Act (Modification or waiver of rules). The policy recognises that CAD 1 models may vary across firms but, as a minimum, the appropriate regulator will need to be satisfied:(1) about the quality of the internal controls and risk management relating to the model (see BIPRU 7.9.19G - BIPRU 7.9.23G for further details);(2) about the quality
No changes should be made to a CAD 1 model unless the change is not material. Material changes to a CAD 1 model will require a renewed waiver to be issued. Materiality is measured from the time that the waiver is granted or, if the waiver has been varied in accordance with section 138A of the Act, any later time that may be specified in the waiver for these purposes. If a firm is considering making material changes to its CAD 1 model, then it should notify the appropriate regulator
1This chapter applies to every firm and with respect to every regulated activity, except that:(1) for an incoming ECA provider, this chapter does not apply when the firm is acting as such;(2) for an incoming EEA firm which has permission only for cross-border services and which does not carry on regulated activities in the United Kingdom, this chapter does not apply;(3) for an incoming firm not falling under (1) or (2), this chapter does not apply to the extent that the firm is
3GEN 4.5 (Statements about authorisation and regulation by the appropriate regulator9) applies in relation to activities carried on from an establishment maintained by the firm (or by its appointed representative) in the United Kingdom, provided that, in the case of the MiFID business of an EEAMiFID investment firm or the activities of an EEA UCITS management company,4 it only applies to business conducted within the territory of the United Kingdom. 9
(1) 7A UK firm wishing to provide a service into a particular EEA State for the first time under the auction regulation must inform the appropriate UK regulator18 of the information in (2) by email to emissionstrading@fca.org.uk18 prior to its provision of that service or whenever possible thereafter.1818(2) The information required by (1) is:(a) name of the firm and the firm reference number;18(b) EEA state in which the service is or will be provided; and(c) the proposed commencement
35(1) If the information technology systems fail and online submission is unavailable for 24 hours or more, the appropriate UK regulator18 will endeavour to publish a notice on its website confirming that online submission is unavailable and that the alternative methods of submission set out in SUP 13.5.3 R (3) and SUP 15.7.4 R to SUP 15.7.9 G (Form and method of notification) should be used.51818(2) Where SUP 13.5.3 R (3) applies to a firm, GEN 1.3.2 R (Emergency) does not a
(1) In assessing whether a penalty would cause an individual serious financial hardship, the FCA3 will consider the individual’s ability to pay the penalty over a reasonable period (normally no greater than three years). The FCA's3 starting point is that an individual will suffer serious financial hardship only if during that period his net annual income will fall below £14,000 and his capital will fall below £16,000 as a result of payment of the penalty. Unless the FCA3 believes
(1) The FCA3 will consider reducing the amount of a penalty if a firm will suffer serious financial hardship as a result of having to pay the entire penalty. In deciding whether it is appropriate to reduce the penalty, the FCA3 will take into consideration the firm’s financial circumstances, including whether the penalty would render the firm insolvent or threaten the firm’s solvency. The FCA3 will also take into account its statutory objectives3, for example in situations where
(1) The FCA will not automatically suspend, cancel or restore the listing of securities at the request of an overseas exchange or overseas authority (for example, if listing of a listed3issuer'ssecurities are suspended, cancelled or restored on its home exchange).(2) The FCA will not normally suspend the listing of securities where there is a trading halt for the security on its home exchange.(3) If a listedissuer3 requests a suspension, cancellation or restoration of the listing
1A firm must: (1) report to the FCA any:(a) significant breaches of the firm’s rules;
(b) disorderly trading conditions;
(c) conduct that may involve market abuse; and
(d) system disruptions in relation to a financial instrument;
(2) supply the information required under this rule without delay to the FCA and any other authority competent for the investigation and prosecution of market abuse; and
(3) provide full assistance to the FCA, and any other authority competent for the