Related provisions for BIPRU 12.4.11A

PERG 1.4.2G01/01/2022

Table: list of general guidance to be found in PERG.

Chapter:	Applicable to:	About:
PERG 2: Authorisation and regulated activities	an unauthorised person wishing to find out whether he needs to be authorised or exempt an authorised person wishing to know whether he needs to vary hisPart 4A permission	the regulatory scope of the Act the Regulated Activities Order the Exemption Order the Business Order
PERG 3A:8 Guidance on the scope of the Electronic Money Regulations 8 8 8	a person who needs to know whether a particular electronic payment product is8electronic money 8 and whether the person issuing it needs to be8 authorised or registered under the Electronic Money Regulations 8	the scope of the8Electronic Money Regulations 8
PERG 4: Regulated activities connected with mortgages	any person who needs to know whether the activities he conducts in relation to mortgages are subject to FCA regulation. This is likely to include: lenders administration service providers mortgage brokers and advisers	the scope of relevant orders (in particular, the Regulated Activities Order) as respects activities concerned with mortgages
PERG 5: Insurance distribution13 activities	any person who needs to know whether they carry on insurance distribution activities and are13,thereby, subject to FCA regulation. This is likely to include: insurance brokers insurance advisers insurance undertakings other persons involved in the sale or administration of contracts of insurance, where these activities are secondary to their main business.	the scope of relevant orders (in particular, the Regulated Activities Order) as respects activities concerned with the sale or administration of insurance
PERG 6: Identification of contracts of insurance	any person who needs to know whether a contract with which he is involved is a contract of insurance	the general principles and range of specific factors that the FCA regards as relevant in deciding whether any arrangement is a contract of insurance
PERG 7: Periodical publications, news services and broadcasts: application for certification	any person who needs to know whether he will be regulated for providing advice about investments through the medium of a periodical publication, a broadcast or a news service	the circumstances in which such persons will be carrying on the regulated activities of advising on investments or advising on regulated mortgage contracts (including where a request for a certificate may be appropriate) how theFCA will exercise its power to grant certificates
PERG 8: Financial promotion and related activities	any person who needs to know whether his communications are financial promotions or are subject to the restriction in section 21 of the Act or both whether his activities in making or helping others to make financial promotions are regulated activities. whether he is marketing an AIF.11	the scope of the restriction on financial promotion under section 21 of the Act and the main exemptions provided the circumstances in which persons who are primarily involved in making or helping others to make financial promotions may themselves be conducting regulated activities requiring authorisation or exemption the marketing of an AIF.11
PERG 9: Meaning of open-ended investment company	any person who needs to know whether a body corporate is an open-ended investment company as defined in section 236 of the Act (Open-ended investment companies) and is therefore a collective investment scheme.	the circumstances in which a body corporate will be an open-ended investment company
PERG 10: Activities related to pension schemes	Any person who needs to know whether his activities in relation to pension schemes will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.1 1	the regulated activities that arise in connection with the establishment and operation of pension schemes and any exclusions that may be relevant the circumstances in which financial promotions about pension schemes may be exempt from the restriction in section 21 of the Act 1
4PERG 11: Property investment clubs and land investment schemes	Any person who needs to know whether his activities in relation to property investment clubs and land investment schemes will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.	the regulated activities that may arise in connection with the establishment and operation of property investment clubs and land investment schemes and any exclusions that may be relevant the extent to which the financial promotion restriction in section 21 of the Act applies
2PERG 12: Running or advising on personal pension schemes	any person who needs to know whether his activities in relation to establishing, running, advising on or marketing personal pension schemes will amount to regulated activities	the regulated activities that arise in connection with establishing, running, advising on or marketing personal pension schemes and any exclusions that may be relevant
3PERG 13: Guidance on the scope of the UK provisions which implemented14 MiFID 15 9 12 12 5	Any UK person who needs to know whether MiFID applies to them15 9 14 14 9 14 5	the scope of the UK provisions which implemented14 MiFID 15 9 14 5
3PERG 14: Home reversion,7 home finance and regulated sale and rent back 7activities 7	Any person who needs to know whether his activities in relation to home reversion plans,7 home purchase plans or regulated sale and rent back agreements 7will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make. 7	the regulated activities that arise in connection with home reversion plans,7 home purchase plansand regulated sale and rent back agreements 7and any exclusions that may be relevant the circumstances in which financial promotions about home reversion plans,7home purchase plansand regulated sale and rent back agreements 7may be made without breaching the restriction in section 21 of the Act
6PERG 15: Guidance on the scope of the Payment Services Regulations 2009	Any person with an establishment in the UK who needs to know whether the Payment Services Directive, as transposed in UK legislation by the Payment Services Regulations 2009, applies to him. Q46 applies specifically to persons providing payment services from an establishment outside the EEA to persons located in the UK.	the scope of the PSD Regulations 2009.11
11PERG 16: Scope of the Alternative Investment Fund Managers Directive	any person who needs to know whether a collective investment undertaking is an AIF.	the scope of the regulated activities of managing an AIF and acting as trustee or depositary of an AIF.10
10PERG 17: Consumer credit debt counselling	Any person who needs to know whether his activities in relation to debts will amount to debt counselling.	The scope of the regulated activities relating to consumer credit debt counselling.

Chapter:

Applicable to:

About:

PERG 2:

Authorisation and regulated activities

an unauthorised person wishing to find out whether he needs to be authorised or exempt
an authorised person wishing to know whether he needs to vary hisPart 4A permission

the regulatory scope of the Act
the Regulated Activities Order
the Exemption Order
the Business Order

PERG 3A:8

Guidance on the scope of the Electronic Money Regulations 8

8 8

a person who needs to know

whether a particular electronic payment product is8electronic money 8 and whether the person issuing it needs to be8 authorised or registered under the Electronic Money Regulations 8

the scope of the8Electronic Money Regulations 8

PERG 4:

Regulated activities connected with mortgages

any person who needs to know whether the activities he conducts in relation to mortgages are subject to FCA regulation. This is likely to include:

lenders
administration service providers
mortgage brokers and advisers

the scope of relevant orders (in particular, the Regulated Activities Order) as respects activities concerned with mortgages

PERG 5:

Insurance distribution13

activities

any person who needs to know whether they carry on insurance distribution activities and are13,thereby, subject to FCA regulation. This is likely to include:

insurance brokers
insurance advisers
insurance undertakings
other persons involved in the sale or administration of contracts of insurance, where these activities are secondary to their main business.

the scope of relevant orders (in particular, the Regulated Activities Order) as respects activities concerned with the sale or administration of insurance

PERG 6:

Identification of contracts of insurance

any person who needs to know whether a contract with which he is involved is a contract of insurance

the general principles and range of specific factors that the FCA regards as relevant in deciding whether any arrangement is a contract of insurance

PERG 7:

Periodical publications, news services and broadcasts: application for certification

any person who needs to know whether he will be regulated for providing advice about investments through the medium of a periodical publication, a broadcast or a news service

the circumstances in which such persons will be carrying on the regulated activities of advising on investments or advising on regulated mortgage contracts (including where a request for a certificate may be appropriate)
how theFCA will exercise its power to grant certificates

PERG 8:

Financial promotion and related activities

any person who needs to know

whether his communications are financial promotions or are subject to the restriction in section 21 of the Act or both
whether his activities in making or helping others to make financial promotions are regulated activities.
whether he is marketing an AIF.11

the scope of the restriction on financial promotion under section 21 of the Act and the main exemptions provided
the circumstances in which persons who are primarily involved in making or helping others to make financial promotions may themselves be conducting regulated activities requiring authorisation or exemption
the marketing of an AIF.11

PERG 9:

Meaning of open-ended investment company

any person who needs to know whether a body corporate is an open-ended investment company as defined in section 236 of the Act (Open-ended investment companies) and is therefore a collective investment scheme.

the circumstances in which a body corporate will be an open-ended investment company

PERG 10:

Activities related to pension schemes

Any person who needs to know whether his activities in relation to pension schemes will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.1

1

the regulated activities that arise in connection with the establishment and operation of pension schemes and any exclusions that may be relevant
the circumstances in which financial promotions about pension schemes may be exempt from the restriction in section 21 of the Act 1

4PERG 11:

Property investment clubs and land investment schemes

Any person who needs to know whether his activities in relation to property investment clubs and land investment schemes will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.

the regulated activities that may arise in connection with the establishment and operation of property investment clubs and land investment schemes and any exclusions that may be relevant
the extent to which the financial promotion restriction in section 21 of the Act applies

2PERG 12:

Running or advising on personal pension schemes

any person who needs to know whether his activities in relation to establishing, running, advising on or marketing personal pension schemes will amount to regulated activities

the regulated activities that arise in connection with establishing, running, advising on or marketing personal pension schemes and any exclusions that may be relevant

3PERG 13:

Guidance on the scope of the UK provisions which implemented14 MiFID 15

9 12 12 5

Any UK person who needs to know whether MiFID applies to them15

9 14 14 9 14 5

the scope of the UK provisions which implemented14 MiFID 15

9 14 5

3PERG 14:

Home reversion,7 home finance and regulated sale and rent back 7activities

7

Any person who needs to know whether his activities in relation to home reversion plans,7 home purchase plans or regulated sale and rent back agreements 7will amount to regulated activities or whether the restriction in section 21 of the Act will apply to any financial promotions he may make.

7

the regulated activities that arise in connection with home reversion plans,7 home purchase plansand regulated sale and rent back agreements 7and any exclusions that may be relevant
the circumstances in which financial promotions about home reversion plans,7home purchase plansand regulated sale and rent back agreements 7may be made without breaching the restriction in section 21 of the Act

6PERG 15: Guidance on the scope of the Payment Services Regulations 2009

Any person with an establishment in the UK who needs to know whether the Payment Services Directive, as transposed in UK legislation by the Payment Services Regulations 2009, applies to him.

Q46 applies specifically to persons providing payment services from an establishment outside the EEA to persons located in the UK.

the scope of the PSD Regulations 2009.11

11PERG 16: Scope of the Alternative Investment Fund Managers Directive

any person who needs to know whether a collective investment undertaking is an AIF.

the scope of the regulated activities of managing an AIF and acting as trustee or depositary of an AIF.10

10PERG 17: Consumer credit debt counselling

Any person who needs to know whether his activities in relation to debts will amount to debt counselling.

The scope of the regulated activities relating to consumer credit debt counselling.

EG 19.14.201/01/2021

1The FCA is responsible for monitoring and enforcing compliance with the Money Laundering Regulations2 not only by authorised firms who are within the Money Laundering Regulations’ scope, but also by what the Regulations describe as “Annex I financial institutions”, and cryptoasset exchange providers and custodian wallet providers4. These are businesses which are not otherwise authorised by us but which carry out certain of the activities which were3 listed in Annex I of the Banking

CASS 12.2.2G03/01/2018

The FCA understands that in complying with condition 2(g) of the Part 30 exemption order, a firm is representing that it will not:(1) make use of the opt-out arrangements in CASS 7.10.9G2 to CASS 7.10.13G2; or(2) conduct business to which the client money rules do not apply because of the exemption for CRD credit institutions and approved banks in CASS 7.10.16R2 to CASS 7.10.24R2; or(3) enter into any TTCA under CASS 7.113;2in relation to business conducted pursuant to the Part

COLL 5.3.5R01/07/2013

(1) Cash obtained from borrowing, and borrowing which the authorised fund manager reasonably regards an eligible institution or an approved bank to be committed to provide, is not available for cover under COLL 5.3.3A R (Cover for investment in derivatives and forward transactions),3 except if (2) applies.3(2) Where, for the purposes of this section, the ICVC or the depositary4 for the account of the AUT or ACS4 on the instructions of the authorised fund manager4:44(a) borrows

MAR 5A.5.9R01/01/2021

A firm which permits direct electronic access to an OTF it operates must:(1) not permit members or participants of the OTF to provide such services unless they are:(a) MiFID investment firms3; or(b) CRD credit institutions; or(c) third country firms providing the direct electronic access in the course of exercising rights under article 46.1 of MiFIR; or(d) third country firms providing the direct electronic access in the course of exercising rights under article 47.3 of MiFIR;

DISP 2.3.1AR01/01/2021

17The Ombudsman can also consider a complaint under the Compulsory Jurisdiction if it relates to an act or omission by: (1) an investment firm authorised under the UK provisions which implemented22MiFID when providing investment services or ancillary services;(2) a CRD credit institution when providing one or more investment services;(3) an investment firm authorised under the UK provisions which implemented22MiFID or a CRD credit institution when selling structured deposits

REC 2.16A.1UK01/12/2021

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.
(2)	An exchange5 operating a multilateral trading facility or an organised trading facility3 must comply with those requirements of-
	(a)	any provisions of the law of the United Kingdom relied on by the United Kingdom before IP completion day to implement Chapter 1 of Title II of the markets in financial instruments directive—5 3
		(i)		as they have effect on 1 December 20216, in the case of rules made by the FCA under the Act; and5
		(ii)		as amended from time to time, in all other cases;5
	(b)	any EU regulation originally made under Chapter 1 of the markets in financial instruments directive which is retained direct EU legislation, or any subordinate legislation (within the meaning of the Interpretation Act 1978) made under those provisions on or after IP completion day;5 3
	which are applicable to a market operator3 5operating such a facility.
(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).
(4)3	A [UK RIE] operating a multilateral trading facility or organised trading facility must provide the FCA with a detailed description of -
	(a)	the functioning of the multilateral trading facility or organised trading facility;
	(b)	any links to another trading venue owned by the same [UK RIE] or to a systematic internaliser owned by the same exchange; and
	(c)	a list of the facility’s members, participants and users.
[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
(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.
Paragraph 9B – Specific requirements for multilateral trading facilities: execution of orders3
(1)3	A [UK RIE] must have non-discretionary rules for the execution of orders on a multilateral trading facility operated by it.
(2)3	A [UK RIE] must not on a multilateral trading facility operated by it -
	(a)	execute any client orders against its proprietary capital; or
	(b)	engage in matched principal trading.
Paragraph 9C – Specific requirements for multilateral trading facilities: access to a facility3
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
	(a)	an investment firm which has permission under Part 4A of the Act to carry on a regulated activity which is an investment service or activity5;
	(b)	a qualifying credit institution that has Part 4A permission to carry on the regulated activity of accepting deposits.5
	(c)	a person who –
		(i)	is of sufficient good repute;
		(ii)	has a sufficient level of trading ability, and competence and experience;
		(iii)	where applicable, has adequate organisational arrangements; and
		(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.
Paragraph 9D – Specific requirements for multilateral trading facilities: disclosure3
(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.
(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.
(3)3	In this paragraph, “the disclosure obligations” has the same meaning as in paragraph 9ZB.
Paragraph 9E – SME growth markets3
(1)3	A [UK RIE] operating an SME growth market5 (an “exchange-operated SME growth market”) must comply with rules made by the FCA for the purposes of this paragraph as they have effect on IP completion day5.
	[Note:REC 2.16A.1D]4
(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.
(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 -
	(a)	any obligation relating to corporate governance, or
	(b)	the disclosure obligations.
(4)3	In this paragraph, “the disclosure obligations” has the same meaning as in paragraph 9ZB.
Paragraph 9F – Specific requirements for organised trading facilities: execution of orders3
(1)3	[A UK RIE] operating an organised trading facility must -
	(a)	execute orders on that facility on a discretionary basis in accordance with sub-paragraph (4);
	(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);
	(c)	not operate a systematic internaliser within the same legal entity;
	(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
	(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.
(2)3	A [UK RIE] may only engage in -
	(a)	matched principal trading on an organised trading facility operated by it in respect of-
		(i)	bonds,
		(ii)	structured finance products,
		(iii)	emission allowances,
		(iv)	derivatives which have not been declared subject to the clearing obligation in accordance with Article 5 of the EMIR regulation,
		where the client has consented to that; or
	(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.
(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 trading5.
(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.
(5)3	The first discretion is whether to place or retract an order on the organised trading facility.
(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—5
	(a)			section 11.2A of the Conduct of Business sourcebook;5
	(b)			Articles 64 to 66 of Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive;5
	(c)			[deleted]6 5
	(d)			[deleted]6 5
(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.
(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.
(9)3	The [UK RIE] must comply with rules made by the FCA as they have effect on 1 December 20216 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. 5
(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].
(11)3	In this paragraph - “close links” has the meaning given in Article 2(1)(21) of the markets in financial instruments regulation;5 “investment firm” has the meaning given in Article 2(1A) of the markets in financial instruments regulation;5 “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.
Paragraph 9G – Specific requirements for organised trading facilities: disclosure3
(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.
(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.
(3)3	In this paragraph, “the disclosure obligations” has the same meaning as in paragraph 9ZB.
Paragraph 9H – Specific requirements for organised trading facilities: FCA request for information3
(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 -
	(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;
	(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
	(c)	its use of matched principal trading.
(2)3	Any information required under sub-paragraph (1) must be provided to the FCA in the manner which it considers appropriate.

PRIN 3.1.1R30/04/2021

PRIN applies to every firm, except that it does not apply to a firm in relation to its carrying on of auction regulation bidding.2015

SYSC 19D.1.6G01/01/2021

(1) The aim of the dual-regulated firms Remuneration Code is to ensure that firms have risk-focused remuneration policies, which are consistent with and promote effective risk management and do not expose them to excessive risk. It expands upon the general organisational requirements in SYSC 4.(2) The dual-regulated firms Remuneration Code implements the main provisions of the CRD which relate to remuneration. In applying the rules in the dual-regulated firms Remuneration Code,

PERG 2.5.8G01/01/2021

7When PERG 2.5.7G applies, the product is only treated as falling within the definition of the specified investment concerned if (in relation to that product):(1) one of the following persons:(a) a MiFID investment firm; or(b) a third country investment firm; or(c) a CRD credit institution; or(d) a credit institution that would qualify to be a CRD credit institution if its registered or head office were in the United Kingdom10;provides or performs investment services and/or activities

EG 19.12.201/01/2021

2The FCA's powers to vary a firm’s Part 4A permission or to impose requirements under sections 55J and 55L of the Act were3 extended under these Regulations. The FCA is able to use these powers where it is desirable to do so for the purpose of: supervision in accordance with the Financial Groups Directive Regulations3;acting in accordance with specified provisions of the Capital Requirements Regulations 20133; andacting in accordance with specified provisions that implemented

SYSC 18.6.4G01/01/2022

In addition to obligations under the MiFID regime2, similar whistleblowing obligations apply to miscellaneous persons subject to regulation by the FCA under the following non-exhaustive list of 2legislation:4(1) article 32(3) of the Market Abuse Regulation, as implemented in section 131AA of the Act;(2) [deleted]52(3) the UK provisions which implemented2 article 99d(5) of the UCITS Directive (see SYSC 4.1.1ER in respect of UKUCITS management companies, and COLL 6.6B.30R in respect

PERG 2.7.6BG17/12/2021

36The RAO and the UK auctioning regulations together generate three broad categories of person in relation to bidding for emission allowances on an auction platform:(1) The first category consists of a MiFID investment firm (other than a collective portfolio management investment firm) or a third country investment firm (other than one which would be a collective portfolio management investment firm if its head office were in the United Kingdom)38.(1A) The first category also

SYSC 10.1.1R01/01/2021

32(1) 5This section applies to a firm which provides services to its clients in the course of carrying on regulated activities or ancillary activities or providing ancillary services (but only where the ancillary services constitute MiFID business).(2) 5This section also applies to a UK UCITS management company13.[Note: The provisions in SYSC 10.1 also implement articles 27 and 28 of the IDD,12 articles 74(1) and 88 of CRD and as applied under the discretion in the third paragraph

REC 2.5.1UK31/03/2022

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.
7[Note: SYSC 15A contains requirements relating to the operational resilience of UK RIEs]
(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 the United Kingdom6 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)	an investment firm which has permission under Part 4A of the Act to carry on a regulated activity which is any of the investment services or activities;6
		4(ii)	a qualifying credit institution that has Part 4A permission to carry on the regulated activity of accepting deposits;6
		4(iii)	is a person who falls within regulation 30(1A) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 and has permission under Part 4A of the Act to carry on a regulated activity which is any of the investment services or activities;6
		4(iv)	is a third country firm providing the direct electronic access in the course of exercising rights under Article 46.1 (general provisions) 6of 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 any provisions of the law of the United Kingdom relied on by the United Kingdom before IP completion day to implement6 the markets in financial instruments directive in respect of orders and trades executed using the direct electronic access service, as those provisions have effect on IP completion day, in the case of rules made by the FCA under the Act, and as amended from time to time, in all other cases6;
	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)	Subject to paragraph 1A, the8 [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 technical standards are adopted by FCA under paragraphs 24 and 25 of Part 2 of Schedule 3 to6 the markets in financial instruments regulation8 which is traded on that trading venue.
	[Note:MiFID RTS 11]
8(1A)	The application of tick sizes shall not prevent the [UK RIE] from matching orders that are large in scale (as determined in accordance with Article 4 of the markets in financial instruments regulation) at the mid-point within the current bid and offer prices.
	[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 Commission Delegated Regulation (EU) 2017/588 of 14 July 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards on the tick size regime for shares, depositary receipts and exchange-traded funds6.
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 Commission Delegated Regulation (EU) 2017/574 of 7 June 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the level of accuracy of business clocks6.
4[Note:MiFID RTS 25]

SUP 15.3.11R01/01/2022

(1) A firm must notify the FCA11 of:3535(a) a significant breach of a rule (which includes a Principle, a Statement of Principle or a COCONrule)20; or2020(aa) a significant breach of any requirement imposed by the CCA or by regulations or an order made under the CCA (except if the breach is an offence, in which case (c) applies), but any notification under (aa) is required to be made only to the FCA; or 14(b) a breach of any requirement imposed by the Act or by regulations

Related provisions for BIPRU 12.4.11A

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Schedule to the Recognition Requirements Regulations, Paragraph 9A-9H3

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