Legalize / United Kingdom / Public General Act

Financial Services and Markets Act 2000

Type Public General Act

Publication 2000-06-14

Last updated 2026-09-05

State In force

Department Statute Law Database

Source legislation.gov.uk

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articles Not indexed

An Act to make provision about the regulation of financial services and markets; to provide for the transfer of certain statutory functions relating to building societies, friendly societies, industrial and provident societies and certain other mutual societies; and for connected purposes.

Reform history JSON API

(a) a contract to which Part VII of the Companies Act 1989 applies as a result of section 155 of that Act or a contract to which Part V of the Companies (No. 2)(Northern Ireland) Order 1990 applies as a result of Article 80 of that Order; and

(b) such other kind of contract as may be prescribed.

(4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4F) Regulations under subsection (1) may confer power on the appropriate regulator to make rules for the purposes of the regulations or of any specified provision made by the regulations.

(5) Requirements resulting from this section are referred to in this Part as “recognition requirements”.

(6) In the case of an investment exchange, requirements resulting from this section are in addition to requirements which must be satisfied by the exchange as a result of section 290(1A) before the FCA may make a recognition order declaring the exchange to be a recognised investment exchange.

Applications for recognition

Application by an investment exchange.

287

(1) Any body corporate or unincorporated association may apply to the FCA for an order declaring it to be a recognised investment exchange for the purposes of this Act.

(2) The application must be made in such manner as the FCA may direct and must be accompanied by—

(a) a copy of the applicant’s rules;

(b) a copy of any guidance issued by the applicant;

(d) such other information as the FCA may reasonably require for the purpose of determining the application.

(3) The required particulars are—

(a) particulars of any arrangements which the applicant has made, or proposes to make, for the provision by another person of clearing services in respect of transactions effected on the exchange;

(b) if the applicant proposes to provide services falling within section 285(2)(b) in respect of transactions other than those effected on the exchange, particulars of the criteria which the applicant will apply when determining to whom it will provide those services ;

(c) a programme of operations which includes the types of business the applicant proposes to undertake and the applicant's proposed organisational structure;

(d) such particulars of the persons who effectively direct the business and operations of the exchange as the FCA may reasonably require;

(e) such particulars of the ownership of the exchange, and in particular of the identity and scale of interests of the persons who are in a position to exercise significant influence over the management of the exchange, whether directly or indirectly, as the FCA may reasonably require.

(4) Subsection (3)(c) to (e) does not apply to an application by an overseas applicant.

Application by an investment exchange: persons connected with an applicant

287A

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Application by a clearing house.

288

(A1) This section applies only in relation to an application by a clearing house.

(1) A body corporate or unincorporated association which is established in the United Kingdom may, where it intends to provide clearing services as a central counterparty, apply to the Bank of England in accordance with Article 17 of the EMIR regulation for an order granting authorisation for the purposes of that Article and declaring it to be a recognised central counterparty for the purposes of this Act.

(1A) A body corporate or unincorporated association may, where it intends to provide clearing services in the United Kingdom without doing so as a central counterparty, apply to the Bank of England for an order declaring it to be for the purposes of this Act a recognised clearing house which is not a recognised central counterparty.

(2) An application under subsection (1A) must be made in such manner as the Bank of England may direct and must be accompanied by—

(a) a copy of the applicant’s rules;

(b) a copy of any guidance issued by the applicant;

(d) such other information as the Bank may reasonably require for the purpose of determining the application.

(3) The required particulars are—

(a) if the applicant makes, or proposes to make, clearing arrangements with a recognised investment exchange, particulars of those arrangements;

(b) if the applicant proposes to provide clearing services or services falling within section 285(3)(b) for persons other than recognised investment exchanges, particulars of the criteria which it will apply when determining to whom it will provide those services.

Application by a central securities depository

288A

Where a legal person which is established in the United Kingdom intends—

(a) to operate a securities settlement system referred to in point (3) of Section A of the Annex to the CSD regulation, and

(b) to provide at least one other core service listed in Section A of that Annex,

it may apply to the Bank of England in accordance with Article 17 of the CSD regulation , and any technical standards originally made or adopted under that Article which are assimilated direct legislation and any technical standards made under that Article by the Bank on or after IP completion day, for an order granting authorisation for the purposes of Article 16 of that regulation and declaring it to be a recognised CSD for the purposes of this Act.

Applications: supplementary.

289

(1) At any time after receiving an application and before determining it, the appropriate regulator may require the applicant to provide such further information as it reasonably considers necessary to enable it to determine the application.

(2) Information which the appropriate regulator requires in connection with an application must be provided in such form, or verified in such manner, as the appropriate regulator may direct.

(3) Different directions may be given, or requirements imposed, by the appropriate regulator with respect to different applications.

(4) In relation to an application under section 288(1), this section does not apply to information which can be required under Article 17 of the EMIR regulation.

(5) In relation to an application under section 288A, this section applies only in relation to information which the Bank of England may require in connection with recognition requirements which do not derive from any of the following—

(a) the CSD Regulation;

(b) any EU regulation, originally made under the CSD regulation, which is assimilated direct legislation;

(c) any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the CSD regulation on or after IP completion day.

Recognition orders.

290

(1) If it appears to the appropriate regulator that the applicant satisfies the recognition requirements applicable in its case, the regulator may—

(a) where the application is made under section 287, make a recognition order declaring the applicant to be a recognised investment exchange;

(b) where the application is made under section 288(1) and Article 17 of the EMIR regulation allows authorisation to be granted, make a recognition order (“a central counterparty recognition order”) granting authorisation for the purposes of that Article and declaring the applicant to be a recognised central counterparty; ...

(c) where the application is made under section 288(1A), make a recognition order declaring the applicant to be a recognised clearing house which is not a recognised central counterparty ; or

(d) where the application is made under section 288A, make a recognition order (a “CSD recognition order”) granting authorisation for the purposes of Article 16 of the CSD regulation and declaring the applicant to be a recognised CSD.

(1A) In the case of an application for an order declaring the applicant to be a recognised investment exchange, the reference in subsection (1) to the recognition requirements applicable in its case includes a reference to requirements contained in any of the following—

(a) any EU regulation, originally made under the markets in financial instruments directive, which is assimilated direct legislation;

(b) any EU regulation, originally made under the markets in financial instruments regulation, which is assimilated direct legislation;

(c) any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the markets in financial instruments regulation on or after IP completion day.

(1B) In the case mentioned in subsection (1A), the application must be determined by the FCA before the end of the period of six months beginning with the date on which it receives the completed application.

(1C) Subsection (1B) does not apply in the case of an application by an overseas applicant.

(1D) A central counterparty recognition order must specify the services or activities linked to clearing which the applicant may provide or perform and the classes of financial instruments covered by the order.

(1E) A CSD recognition order must specify—

(a) the core services listed in Section A of the Annex to the CSD regulation which the applicant is authorised to provide pursuant to Article 16 or 19(1)(a) or (c) of that regulation, and

(b) any non-banking-type ancillary services listed in or permitted under Section B of that Annex which the applicant is authorised to provide, including services notified under Article 19 of the CSD regulation.

(1F) A CSD recognition order must also record the terms of any of the following authorisations granted to the CSD under the CSD regulation or notifications made by the CSD under that regulation—

(a) an authorisation under Article 19(1) of the CSD regulation to outsource a core service under Article 30 of that regulation,

(b) an authorisation under Article 19(1)(d) of the CSD regulation (settlement of cash leg of securities settlement system in the books of another settlement agent),

(d) a notification under Article 19(5) of the CSD regulation (other CSD links),

(e) an authorisation under Article 54 or 56 of the CSD regulation to provide (in accordance with Article 54(2)(a) or (b)) any banking-type ancillary service listed in or permitted under Section C of the Annex to that regulation, and

(f) an authorisation to provide investment services and activities in addition to the services explicitly listed in Sections A and B of the Annex to the CSD regulation.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) In considering an application made under section 287 or 288(1A), the appropriate regulator may have regard to any information which it considers is relevant to the application.

(4) A recognition order must specify a date on which it is to take effect.

(4A) If the Bank of England has not made a decision in relation to an application under section 288A within six months of that application being complete, the applicant may refer the matter to the Tribunal.

(4B) For the purposes of subsection (4A), an application is “complete” when the Bank of England informs the applicant that it is complete pursuant to Article 17(3) of the CSD regulation.

(5) Section 298 has effect in relation to a decision to refuse to make a recognition order in respect of an investment exchange or a clearing house which is not a central counterparty—

(a) as it has effect in relation to a decision to revoke such an order; and

(b) as if references to a recognised body were references to the applicant.

(5A) Section 298 has effect in relation to a decision to refuse an application under section 288A—

(a) as it has effect in relation to a decision to make a revocation order under section 297(1B); and

(b) as if references to a recognised body were references to the applicant.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) Where—

(a) a body corporate or unincorporated association has made an application under section 288(1), and

(b) the Bank of England has determined that application in accordance with Article 17 of the EMIR regulation,

any previous recognition order under section 290(1)(c) or 292(2)(b) shall cease to be valid.

Variation of central counterparty recognition order

290ZA

(1) On an application made to it in accordance with Article 15 of the EMIR regulation, the Bank of England may in accordance with Article 17 of that regulation vary a central counterparty recognition order by specifying an additional service or activity or class of financial instruments.

(2) Where Article 20(5) of the EMIR regulation applies, the Bank of England may vary a central counterparty recognition order by removing a service or activity or class of financial instruments from those specified in the order.

(3) The Bank of England may at any time vary a central counterparty recognition order for the purpose of correcting an error in, or omission from, the order.

Variation of CSD recognition order

290ZB

(1) Where the Bank of England—

(a) grants an authorisation in accordance with Article 19(1), 54 or 56 of the CSD regulation,

(b) receives a notification under Article 19 of that regulation, or

(c) decides to withdraw authorisation for a service, activity or financial instrument in accordance with Article 20(4) or 57(4) of that regulation,

the Bank of England must vary the CSD recognition order accordingly.

(2) Where an authorisation to provide investment services and activities in addition to the services explicitly listed in Sections A and B of the Annex to the CSD regulation is granted, varied or withdrawn, the Bank of England must vary the CSD recognition order accordingly.

(3) The Bank of England may at any time vary a CSD recognition order for the purpose of correcting an error in, or omission from, the order.

Refusal of recognition on ground of excessive regulatory provision

290A

(1) The appropriate regulator must not make a recognition order if it appears to it that an existing or proposed regulatory provision of the applicant in connection with—

(a) the applicant's business as an investment exchange, ...

(b) the provision by the applicant of clearing services, or

imposes or will impose an excessive requirement on the persons affected (directly or indirectly) by it.

(2) The reference in section 290(1) (making of recognition order) to satisfying the applicable recognition requirements shall be read accordingly.

(3) Expressions used in subsection (1) above that are defined for the purposes of section 300A (power of appropriate regulator to disallow excessive regulatory provision) have the same meaning as in that section.

(4) The provisions of section 300A(3) and (4) (determination whether regulatory provision excessive) apply for the purposes of this section as for the purposes of section 300A.

(5) Section 298 has effect in relation to a decision under this section to refuse a recognition order—

(a) as it has effect in relation to a decision to revoke such an order, and

(b) as if references to a recognised body were references to the applicant.

(6) This section does not apply to an application for recognition as an overseas investment exchange, an overseas clearing house , a recognised central counterparty or a recognised CSD.

Liability in relation to recognised body’s regulatory functions.

291

(1) A recognised body and its officers and staff are not to be liable in damages for anything done or omitted in the discharge of the recognised body’s regulatory functions unless it is shown that the act or omission was in bad faith.

(2) But subsection (1) does not prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.

(3) “Regulatory functions” means the functions of the recognised body so far as relating to, or to matters arising out of, the obligations to which the body is subject under or by virtue of this Act.

Overseas investment exchanges and overseas clearing houses.

292

(1) An application under section 287 or 288(1A) by an overseas applicant must contain the address of a place in the United Kingdom for the service on the applicant of notices or other documents required or authorised to be served on it under this Act.

(2) If it appears to the appropriate regulator that an overseas applicant satisfies the requirements of subsection (3) it may make a recognition order declaring the applicant to be—

(a) a recognised investment exchange;

(b) a recognised clearing house which is not a central counterparty.

(3) The requirements are that—

(a) investors are afforded protection equivalent to that which they would be afforded if the body concerned were required to comply with—

(i) recognition requirements, other than any such requirements which are expressed in regulations under section 286 not to apply for the purposes of this paragraph, and

(ii) requirements contained in any of the following—

(aa) any EU regulation, originally made under the markets in financial instruments directive, which is assimilated direct legislation;

(bb) any EU regulation, originally made under the markets in financial instruments regulation, which is assimilated direct legislation;

(cc) any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the markets in financial instruments regulation on or after IP completion day;

(b) there are adequate procedures for dealing with a person who is unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the investment exchange or clearing house;

(c) the applicant is able and willing to co-operate with the appropriate regulator by the sharing of information and in other ways;

(d) adequate arrangements exist for co-operation between the appropriate regulator and those responsible for the supervision of the applicant in the country or territory in which the applicant’s head office is situated.

(4) In considering whether it is satisfied as to the requirements mentioned in subsection (3)(a) and (b), the appropriate regulator is to have regard to—

(a) the relevant law and practice of the country or territory in which the applicant’s head office is situated;

(b) the rules and practices of the applicant.

(5) In relation to an overseas applicant and a body or association declared to be a recognised investment exchange or recognised clearing house by a recognition order made by virtue of subsection (2)—

(a) the reference in section 313(2) to recognition requirements is to be read as a reference to matters corresponding to the matters in respect of which provision is made in the recognition requirements;

(b) sections 296(1) and 297(2) have effect as if the requirements mentioned in section 296(1)(a) and section 297(2)(a) were those of subsection (3)(a), (b), and (c) of this section;

(c) section 297(2) has effect as if the grounds on which a recognition order may be revoked under that provision included the ground that in the opinion of the appropriate regulator arrangements of the kind mentioned in subsection (3)(d) no longer exist.

(6) Where a recognised clearing house is ... recognised as a third country central counterparty, any previous recognition order under section 290(1)(c) or 292(2)(b) shall cease to be valid.

Publication of information by recognised investment exchange

292A

(1) A recognised investment exchange must as soon as practicable after a recognition order is made in respect of it publish such particulars of the ownership of the exchange as the FCA may reasonably require.

(2) The particulars published under subsection (1) must include particulars of the identity and scale of interests of the persons who are in a position to exercise significant influence over the management of the exchange, whether directly or indirectly.

(3) If an ownership transfer takes place in relation to a recognised investment exchange, the exchange must as soon as practicable after becoming aware of the transfer publish such particulars relating to the transfer as the FCA may reasonably require.

(4) ”Ownership transfer”, in relation to an exchange, means a transfer of ownership which gives rise to a change in the persons who are in a position to exercise significant influence over the management of the exchange, whether directly or indirectly.

(5) A recognised investment exchange must publish such particulars of any decision it makes to suspend or remove a financial instrument from trading on a regulated market operated by it as the FCA may reasonably require.

(6) The FCA may determine the manner of publication under subsections (1), (3) and (5) and the timing of publication under subsection (5).

(7) This section does not apply to an overseas investment exchange.

Supervision

Notification requirements.

293

(1) The appropriate regulator may make rules requiring a recognised body to give it—

(a) notice of such events relating to the body as may be specified; and

(b) such information in respect of those events as may be specified.

(2) The rules may also require a recognised body to give the appropriate regulator, at such times or in respect of such periods as may be specified, such information relating to the body as may be specified.

(3) An obligation imposed by the rules extends only to a notice or information which the appropriate regulator may reasonably require for the exercise of its functions under this Act or for the purposes of Directive 2016/1148/EU of the European Parliament and of the Council of 6 July 2016 concerning measures for a high common level of security network and information systems across the Union as that directive had effect immediately before IP completion day.

(4) The rules may require information to be given in a specified form and to be verified in a specified manner.

(5) If a recognised body—

(a) alters or revokes any of its rules or guidance, or

(b) makes new rules or issues new guidance,

it must give written notice to the appropriate regulator without delay.

(5A) In relation to a recognised CSD, in subsection (5), “guidance” means guidance issued, or any recommendation made, in writing or other legible form and intended to have continuing effect, by the recognised CSD to—

(a) all or any class of its members, or

(b) persons using or seeking to use its services,

with respect to any of the services or activities specified in its recognition order.

(6) If a recognised investment exchange makes a change—

(a) in the arrangements it makes for the provision by another person of clearing services in respect of transactions effected on the exchange, or

(b) in the criteria which it applies when determining to whom it will provide services falling within section 285(2)(b),

it must give written notice to the FCA and the Bank of England without delay.

(7) If a recognised clearing house makes a change—

(a) in the recognised investment exchanges for whom it provides clearing services or services falling within section 285(3)(b), or

(b) in the criteria which it applies when determining to whom (other than recognised investment exchanges) it will provide clearing services or services falling within section 285(3)(b),

it must give written notice to the Bank of England and the FCA without delay.

(7A) In subsections (1) and (2), “recognised body” includes a third country CSD, in relation to any services referred to in the Annex to the CSD regulation which the third country CSD provides in the United Kingdom and a third country central counterparty.

(8) Subsections (5) to (7) do not apply to an overseas investment exchange , an overseas clearing house or a third country central counterparty.

(9) “Specified” means specified in the appropriate regulator's rules.

Information: compliance with specified requirements

293A

(1) The appropriate regulator may require a recognised body to give the appropriate regulator such information as the appropriate regulator reasonably requires in order to satisfy itself that the body is complying with any qualifying provision that is specified, or of a description specified, for the purposes of this section by the Treasury by order.

(2) The Bank of England may require a third country CSD which provides any services referred to in the Annex to the CSD regulation in the United Kingdom to give the Bank reports on those services and statistical information relating to those services, at such times or in respect of such periods as may be specified by the Bank.

(3) A requirement under subsection (2) extends only to information which the Bank may reasonably require for the exercise of its functions under the CSD regulation or , any EU regulation originally made under the CSD regulation which is assimilated direct legislation, or any subordinate legislation (within the meaning of the Interpretation Act 1978) made under the CSD regulation on or after IP completion day.

Modification or waiver of rules.

294

(1) The appropriate regulator may, on the application or with the consent of a recognised body, direct that rules made under section 293 or 295—

(a) are not to apply to the body; or

(b) are to apply to the body with such modifications as may be specified in the direction.

(2) An application must be made in such manner as the appropriate regulator may direct.

(3) Subsections (4) to (6) apply to a direction given under subsection (1).

(4) The appropriate regulator may not give a direction unless it is satisfied that—

(a) compliance by the recognised body 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

(b) the direction would not result in undue risk to persons whose interests the rules are intended to protect.

(5) A direction may be given subject to conditions.

(6) The appropriate regulator may—

(a) revoke a direction; or

(b) vary it on the application, or with the consent, of the recognised body to which it relates.

(7) In this section, “recognised body”, in relation to rules made under section 293, includes a third country CSD.

Notification: overseas investment exchanges and overseas clearing houses.

295

(1) At least once a year, every overseas investment exchange and overseas clearing house must provide the appropriate regulator with a report.

(2) The report must contain a statement as to whether any events have occurred which are likely to affect the appropriate regulator's assessment of whether it is satisfied as to the requirements set out in section 292(3).

(3) The report must also contain such information as may be specified in rules made by the appropriate regulator.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

On-site inspection of United Kingdom branches of third country CSDs

295A

(1) For the purposes of Article 25(11) of the CSD regulation, the Bank of England may, on giving reasonable notice and at any reasonable time, carry out an on-site inspection of any branch maintained by a third country CSD in the United Kingdom.

(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The Bank of England’s power under subsection (1) is enforceable, on the application of the Bank of England, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

Appropriate regulator's power to give directions.

296

(1) This section applies if it appears to the appropriate regulator that a recognised body—

(a) has failed, or is likely to fail, to satisfy the recognition requirements; or

(b) has failed to comply with any other obligation imposed on it by or under this Act.

(1A) This section also applies if it appears to the appropriate regulator that a recognised body has failed, or is likely to fail, to comply with any obligation imposed on it by or under any qualifying provision specified (or of a description specified) for the purposes of this subsection in an order made by the Treasury.

(1B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(1C) This section also applies if it appears to the Bank of England that a Tier 2 third country central counterparty has failed to comply with an obligation imposed on it by or under this Act, or by or under the EMIR regulation.

(2) The regulator concerned may direct the recognised body ... to take specified steps for the purpose of securing the body’s compliance with—

(a) the recognition requirements; or

(b) any obligation of the kind in question.

(2ZA) Where this section applies by virtue of subsection (1C), the Bank of England may direct the Tier 2 third country central counterparty to take specified steps for the purpose of securing compliance with the obligations referred to in that subsection.

(2A) In the case of a recognised body other than an overseas investment exchange or overseas clearing house, those steps may include—

(a) the granting to the regulator concerned of access to the premises of the body for the purpose of inspecting—

(i) those premises; or

(ii) any documents on the premises which appear to the regulator concerned to be relevant for the purpose mentioned in subsection (2);

(b) the suspension of the carrying on of any regulated activity by the body for the period specified in the direction.

(2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2C) In the case of a Tier 2 third country central counterparty, those steps may include—

(a) the granting to the Bank of England of access to any premises of the Tier 2 third country central counterparty for the purposes of inspecting—

(i) those premises; or

(ii) any documents on the premises which appear to the Bank of England to be relevant for the purposes mentioned in subsection (2ZA);

(b) the suspension for the period specified in the direction of the carrying on in the United Kingdom by the Tier 2 third country central counterparty of any activity in respect of which the third country central counterparty is exempt from the general prohibition.

(2D) The Bank of England may not inspect the premises or documents on the premises of a Tier 2 third country central counterparty without first informing the relevant third country competent authority, and inspections must be conducted in accordance with cooperation arrangements established under Article 25.7 of the EMIR regulation.

(2E) In subsection (2D), relevant third country competent authority means a regulatory authority of a country other than the United Kingdom which is responsible for the authorisation and supervision of central counterparties in its territory.

(3) A direction under this section (except a direction made under subsection (2ZA)) is enforceable, on the application of the regulator concerned, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(4) The fact that a rule made by a recognised body has been altered in response to a direction given by an appropriate regulator does not prevent it from being subsequently altered or revoked by the recognised body.

Additional power to direct recognised central counterparties

296A

(1) The Bank of England may direct a recognised central counterparty to take, or refrain from taking, specified action if the Bank is satisfied that it is necessary to give the direction, having regard to the public interest in—

(a) protecting and enhancing the stability of the UK financial system,

(b) maintaining public confidence in the stability of the UK financial system,

(d) maintaining and enhancing the financial resilience of the recognised central counterparty.

(2) The direction may, in particular—

(a) specify the time for compliance with the direction,

(b) require the rules of the recognised central counterparty to be amended, and

(3) The direction may not require the recognised central counterparty—

(a) to take any steps for the purpose of securing its compliance with—

(i) the recognition requirements, or

(ii) any obligation of a kind mentioned in section 296(1)(b) or (1A), or

(b) to accept a transfer of property, rights or liabilities of another recognised central counterparty.

(4) If the direction is given in reliance on section 298(7) the Bank must, within a reasonable time of giving the direction, give the recognised central counterparty a statement of its reasons—

(a) for giving the direction, and

(b) for relying on section 298(7).

(5) The direction is enforceable, on the application of the Bank, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.

(6) The Bank may revoke a direction given under this section.

Revoking recognition.

297

(1) A recognition order in respect of a recognised investment exchange or in respect of a recognised clearing house which is not a recognised central counterparty may be revoked by an order made by the appropriate regulator at the request, or with the consent, of the recognised body concerned.

(1A) A central counterparty recognition order may be revoked by an order made by the Bank of England in accordance with Article 20 of the EMIR regulation.

(1B) A CSD recognition order may be revoked by an order made by the Bank of England in accordance with Article 20 of the CSD regulation.

(2) If it appears to the appropriate regulator that a recognised body which is not a recognised central counterparty or a recognised CSD—

(a) is failing, or has failed, to satisfy the recognition requirements, or

(b) is failing, or has failed, to comply with any other obligation imposed on it by or under this Act,

it may make an order revoking the recognition order for that body even though the body does not wish the order to be made.

(2A) If it appears to the appropriate regulator that a recognised body which is not a recognised central counterparty or a recognised CSD ...—

(a) has not carried on the business of an investment exchange or (as the case may be) of a clearing house during the period of twelve months beginning with the day on which the recognition order took effect in relation to it,

(b) has not carried on the business of an investment exchange or (as the case may be) of a clearing house at any time during the period of six months ending with the relevant day, or

(c) has failed, or is likely to fail, to comply with any obligation imposed on it by any qualifying provision specified (or of a description specified) for the purposes of this subsection in an order made by the Treasury,

it may make an order revoking the recognition order for that body even though the body does not wish the order to be made.

(2B) The “relevant day”, for the purposes of paragraph (b) of subsection (2A), is the day on which the power to make an order under that subsection is exercised.

(2C) Subsection (2A) does not apply to an overseas investment exchange or overseas clearing house.

(2D) If it appears to the Bank of England that a recognised central counterparty or a recognised CSD has failed, or is likely to fail, to comply with an obligation imposed on it by or under Article 4 or 15 of the SFT regulation it may make an order revoking the recognition order for that body even though the body does not wish the order to be made.

(3) An order under this section (“a revocation order”) must specify the date on which it is to take effect.

(4) In the case of a revocation order made under subsection (2) or (2A), the specified date must not be earlier than the end of the period of three months beginning with the day on which the order is made.

(5) A revocation order may contain such transitional provisions as the appropriate regulator thinks necessary or expedient.

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directions and revocation: procedure.

298

(1) Before giving a direction under section 296 or 296A, or making a revocation order under section 297(1B), (2), (2A) or (2D), the appropriate regulator must—

(a) give written notice of its intention to do so to the recognised body concerned;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A notice under subsection (1) must—

(a) state why the appropriate regulator intends to give the direction or make the order; and

(b) draw attention to the right to make representations conferred by subsection (3).

(3) Before the end of the period for making representations—

(a) the recognised body,

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

may make representations to the appropriate regulator.

(4) The period for making representations is such period as is specified in the notice (which may, in any particular case, be extended by the appropriate regulator).

(5) In deciding whether to—

(a) give a direction, or

(b) make a revocation order,

the appropriate regulator must have regard to any representations made in accordance with subsection (3).

(6) When the appropriate regulator has decided whether to give a direction under section 296 or 296A or to make the proposed revocation order, it must—

(a) give the recognised body written notice of its decision; ... and

(aa) in the case of a direction under section 296 given to a recognised CSD ... or a revocation order under section 297(1B), give the recognised CSD ... reasons for its decision.

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6A) If the appropriate regulator—

(a) gives a direction under section 296 to a recognised body because it has failed, or is likely to fail, to comply with an obligation imposed on it by or under Article 4 or 15 of the SFT regulation;

(aa) gives any other direction under section 296 to a recognised CSD;

(ab) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ac) makes a revocation order under section 297(1B);

(b) makes a revocation order under section 297(2A)(c) because a recognised body has failed, or is likely to fail, to comply with an obligation imposed on it by or under Article 4 or 15 of the SFT regulation; or

the body concerned may refer the matter to the Tribunal.

(7) If the appropriate regulator reasonably considers it necessary to do so, it may give a direction under section 296 or 296A—

(a) without following the procedure set out in this section; or

(b) if the appropriate regulator has begun to follow that procedure, regardless of whether the period for making representations has expired.

(7A) Subsection (7) does not apply in relation to a direction given to a recognised CSD ... under section 296.

(7B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) If the appropriate regulator has, in relation to a particular matter, followed the procedure set out in subsections (1) to (5), it need not follow it again if, in relation to that matter, it decides to take action other than that specified in its notice under subsection (1).

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Complaints about recognised bodies.

299

(1) The appropriate regulator must make arrangements for the investigation of any relevant complaint about a recognised body.

(2) “Relevant complaint” means a complaint which the appropriate regulator considers is relevant to the question of whether the body concerned should remain a recognised body.

Extension of functions of Tribunal.

300

(1) If the Treasury are satisfied that the condition mentioned in subsection (2) is satisfied, they may by order confer functions on the Tribunal with respect to disciplinary proceedings—

(a) of one or more investment exchanges in relation to which a recognition order under section 290 is in force or of such investment exchanges generally, ...

(b) of one or more clearing houses in relation to which a recognition order under that section is in force or of such clearing houses generally or

(c) of one or more central securities depositories in relation to which a recognition order under that section is in force or of such central securities depositories generally.

(2) The condition is that it is desirable to exercise the power conferred under subsection (1) with a view to ensuring that—

(a) decisions taken in disciplinary proceedings with respect to which functions are to be conferred on the Tribunal are consistent with—

(i) decisions of the Tribunal in cases arising under Part VIII; and

(ii) decisions taken in other disciplinary proceedings with respect to which the Tribunal has functions as a result of an order under this section; or

(b) the disciplinary proceedings are in accordance with the Convention rights.

(3) An order under this section may modify or exclude any provision made by or under this Act with respect to proceedings before the Tribunal.

(4) “Disciplinary proceedings” means proceedings under the rules of an investment exchange , clearing house or central securities depository in relation to a contravention of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation by a person subject to the rules.

(5) “The Convention rights” has the meaning given in section 1 of the Human Rights Act 1998.

Power to disallow excessive regulatory provision

Power of appropriate regulator to disallow excessive regulatory provision

300A

(1) This section applies where a recognised body proposes to make any regulatory provision in connection with—

(a) its business as an investment exchange,

(b) the provision by it of clearing services, or

(2) If it appears to the appropriate regulator—

(a) that the proposed provision will impose a requirement on persons affected (directly or indirectly) by it, and

(b) that the requirement is excessive,

the appropriate regulator may direct that the proposed provision must not be made.

(3) A requirement is excessive if—

(a) it is not required under ... any enactment or rule of law in the United Kingdom, and

(b) either—

(i) it is not justified as pursuing a reasonable regulatory objective, or

(ii) it is disproportionate to the end to be achieved.

(4) In considering whether a requirement is excessive the appropriate regulator must have regard to all the relevant circumstances, including—

(a) the effect of existing legal and other requirements,

(b) the global character of financial services and markets and the international mobility of activity,

(d) the impact of the proposed provision on market confidence.

(5) In this section “requirement” includes any obligation or burden.

(6) Any provision made in contravention of a direction under this section is of no effect.

Duty to notify proposal to make regulatory provision

300B

(1) A recognised body that proposes to make any regulatory provision must give written notice of the proposal to the appropriate regulator without delay.

(2) The appropriate regulator may by rules under section 293 (notification requirements)—

(a) specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in subsection (1) above does not apply, or

(b) provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.

(3) The appropriate regulator may also by rules under that section—

(a) make provision as to the form and contents of the notice required, and

(b) require the body to provide such information relating to the proposal as may be specified in the rules or as the appropriate regulator may reasonably require.

Restriction on making provision before appropriate regulator decides whether to act

300C

(1) Where notice of a proposal to make regulatory provision is required to be given to the appropriate regulator under section 300B, the provision must not be made—

(a) before that notice is given, or

(b) subject to the following provisions of this section, before the end of the initial period.

(2) The initial period is—

(a) the period of 30 days beginning with the day on which the appropriate regulator receives notice of the proposal, or

(b) if any consultation period announced by the body in relation to the proposal ends after that 30-day period, the end of the consultation period.

(3) If before the end of the initial period the appropriate regulator notifies the body that it is calling in the proposal, the provisions of section 300D (consideration by appropriate regulator whether to disallow proposed provision) apply as to when the provision may be made.

(4) If—

(a) before the end of the initial period the appropriate regulator notifies the body that it is not calling in the proposal, or

(b) the initial period ends without the appropriate regulator having notified the body that it is calling in the proposal,

the body may then make the proposed provision.

(5) Any provision made in contravention of this section is of no effect.

Consideration by appropriate regulator whether to disallow proposed provision

300D

(1) This section applies where the appropriate regulator notifies a recognised body that it is calling in a proposal to make regulatory provision.

(2) The appropriate regulator must publish a notice—

(a) giving details of the proposed provision,

(b) stating that it has called in the proposal in order to consider whether to disallow it, and

(3) The appropriate regulator may extend the period for making representations.

(4) The appropriate regulator must notify the body of its decision whether to disallow the provision not later than 30 days after the end of the period for making representations, and must publish the decision and the reasons for it.

(5) The body must not make the provision unless and until—

(a) the appropriate regulator notifies it of its decision not to disallow it, or

(b) the 30-day period specified in subsection (4) ends without the appropriate regulator having notified any decision.

(6) If the appropriate regulator notifies the body of its decision to disallow the provision and that decision is questioned in legal proceedings—

(a) the body must not make the provision until those proceedings, and any proceedings on appeal, are finally determined,

(b) if the appropriate regulator's decision is quashed and the matter is remitted to it for reconsideration, the court may give directions as to the period within which the regulator concerned is to complete its reconsideration, and

(i) the appropriate regulator notifies it of its decision on reconsideration not to disallow the provision, or

(ii) the period specified by the court ends without the appropriate regulator having notified any decision.

(7) Any provision made in contravention of subsection (5) or (6) is of no effect.

Power to disallow excessive regulatory provision: supplementary

300E

(1) In sections 300A to 300D—

(a) “regulatory provision” means any rule, guidance, arrangements, policy or practice, and

(b) references to making provision shall be read accordingly as including, as the case may require, issuing guidance, entering into arrangements or adopting a policy or practice.

(2) For the purposes of those sections a variation of a proposal is treated as a new proposal.

(3) Those sections do not apply to an overseas investment exchange , overseas clearing house , recognised central counterparty or recognised CSD.

General rule-making powers

Rules relating to central counterparties and central securities depositories

300F

(1) The Bank of England may make such rules applying to FMI entities—

(a) with respect to the carrying on by them of relevant regulated activities, or

(b) with respect to the carrying on by them of an activity which is not a relevant regulated activity,

as appear to the Bank to be necessary or expedient for the purpose of advancing its Financial Stability Objective.

(2) Each of the following is an “FMI entity” for the purposes of this section—

(a) a recognised central counterparty;

(b) a recognised CSD;

(d) a third country CSD.

(3) The power to make rules under subsection (1), so far as applying to a third country central counterparty or a third country CSD, is subject to section 300G.

(4) In this section “relevant regulated activity”—

(a) in relation to a recognised central counterparty, means a regulated activity described in section 285(3A);

(b) in relation to a recognised CSD, means a regulated activity described in section 285(3D);

(d) in relation to a third country CSD, means a regulated activity described in section 285(3G).

(5) Rules under this section may include—

(a) provision applying to an FMI entity even though there is no relationship between the entity to which the rules will apply and the persons whose interests will be protected by the rules;

(b) requirements which take into account, in the case of an FMI entity which is a member of a group, any activity of another member of the group.

Section 300F: rules in relation to overseas FMI entities

300G

(1) The power to make rules under section 300F, so far as applying to an FMI entity of the kind mentioned in subsection (2)(c) or (d) of that section (an “overseas FMI entity”), is exercisable—

(a) only by the application of corresponding rules, and

(b) except in the case of systemic third country CCPs (see subsection (6)), only so far as authorised by regulations made by the Treasury.

(2) The reference in subsection (1)(a) to “corresponding rules” is—

(a) in relation to rules that would apply to a third country central counterparty, rules under section 300F that apply to a recognised central counterparty;

(b) in relation to rules that would apply to a third country CSD, rules under section 300F that apply to a recognised CSD.

(3) Rules may be applied in accordance with subsection (1)(a)—

(a) by applying all corresponding rules or only such corresponding rules as the Bank considers appropriate;

(b) with such modifications as the Bank considers appropriate for the purpose of ensuring the effectiveness of the rules in their application to the overseas FMI entities concerned (having regard in particular to the establishment of such entities in countries other than the United Kingdom).

(4) Regulations under subsection (1)(b) may authorise the making of rules generally in respect of overseas FMI entities or only in respect of overseas FMI entities which—

(a) are specified or described in the regulations, or

(b) satisfy conditions specified in the regulations.

(5) Regulations under subsection (1)(b) may—

(a) provide for the power to make rules under section 300F, so far as applying to an overseas FMI entity, to be subject to such limitations or conditions as may be specified in the regulations;

(b) make provision by reference to matters to be determined by the Bank;

(6) The restriction imposed by subsection (1)(b) does not apply in the case of systemic third country CCPs (and accordingly references to overseas FMI entities in subsections (4) and (5) do not include references to systemic third country CCPs).

(7) A “systemic third country CCP” means any third country central counterparty that the Bank has determined is systemically important, or is likely to become systemically important, to the financial stability of the United Kingdom.

(8) The Bank must publish notice of any determination made under subsection (7).

(9) A determination under subsection (7) must be made in accordance with such criteria of general application as are set out in regulations made by the Treasury for the purposes of this section.

(10) In making a determination under subsection (7) the Bank must also have regard to any statement of policy prepared and published by the Bank for the purposes of providing further specification of the criteria of general application mentioned in subsection (9).

(11) The Bank—

(a) may alter or replace a statement of policy prepared for the purposes of this section;

(b) must publish a statement as altered or replaced.

(12) Publication under this section is to be made in such manner as the Bank considers best designed to bring the publication to the attention of the public.

(13) The Treasury must consult the Bank before making regulations under subsection (9).

(14) The Treasury may by regulations provide for other provisions of this Act to apply in relation to third country central counterparties, or third country CSDs, to which rules under section 300F apply, with such modifications as may be specified in the regulations.

Rules relating to investment exchanges and data reporting service providers

300H

(1) The FCA may make such rules applying to recognised UK investment exchanges or data reporting service providers—

(a) with respect to the carrying on by them of relevant activities, or

(b) with respect to the carrying on by them of an activity which is not a relevant activity,

as appear to the FCA to be necessary or expedient for the purpose of advancing one or more of its operational objectives.

(2) In this section “relevant activity”—

(a) in relation to a recognised UK investment exchange, means a regulated activity described in section 285(2);

(b) in relation to a data reporting service provider, means providing a data reporting service.

(3) Rules under this section may include—

(a) provision applying to a recognised UK investment exchange or data reporting service provider even though there is no relationship between that person and the persons whose interests will be protected by the rules;

(b) requirements which take into account, in the case of a recognised UK investment exchange or data reporting service provider which is a member of a group, any activity of another member of the group.

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) In this section—

“data reporting service” and “data reporting service provider” have the meanings given by regulation 2 of the Data Reporting Services Regulations 2024;

“recognised UK investment exchange” means a recognised investment exchange that is not an overseas investment exchange as defined in section 313(1).

Bank of England rules

Duty of Bank of England to review rules

300I

(1) The Bank of England must keep under review generally any rules made by the Bank under this Act.

(2) Subsection (1) does not apply to rules made for the purpose of complying with a recommendation of the Financial Policy Committee of the Bank of England under section 9O of the Bank of England Act 1998 (making of recommendations within the Bank).

Statement of policy relating to review of rules

300J

(1) The Bank of England must prepare and publish a statement of policy with respect to its review of rules under section 300I.

(2) The statement must provide information about—

(a) how representations (including by a statutory panel) can be made to the Bank with respect to its review of rules under section 300I, and

(b) the arrangements to ensure that those representations are considered.

(3) In this section “statutory panel” has the meaning given by section 1RB(5).

(4) If a statement published under this section is altered or replaced, the Bank must publish the altered or replaced statement.

(5) A statement prepared under this section must be published by the Bank in the way appearing to the Bank to be best designed to bring it to the attention of the public.

Requirement to review specified rules

300K

(1) The Treasury may by direction require the Bank of England to carry out a review of specified rules made by the Bank under this Act if—

(a) the rules have been in force for at least 12 months,

(b) the Treasury consider that it is in the public interest that the rules are reviewed, and

(i) the Bank is carrying out, or plans to carry out, a review of those rules, or

(ii) if the Bank proposes to carry out a review, the proposals are appropriate for the purposes of carrying out an effective review.

(2) Subsection (1) only applies to rules falling within section 300I(1).

(3) The Treasury must consult the Bank before giving a direction under subsection (1).

(4) In exercising the power under this section, the Treasury must have regard to the desirability of minimising any adverse effect that the carrying out of the review may have on the exercise by the Bank of any of its other functions.

(5) A direction under subsection (1) may—

(a) specify the period within which a review must be carried out;

(b) determine the scope and conduct of a review;

(6) Provision made in a direction under subsection (5)(b) may include a requirement—

(a) for a review to be carried out by a person appointed by the Bank who is independent of the Bank;

(b) for any such appointment to be made only with the approval of the Treasury.

(7) As soon as practicable after giving a direction under subsection (1) the Treasury must—

(a) lay before Parliament a copy of the direction, and

(b) publish the direction in such manner as the Treasury think fit.

(8) Subsection (7) does not apply where the Treasury consider that publication of the direction would be against the public interest.

(9) A direction under subsection (1) may be varied or revoked by the giving of a further direction.

Report on certain reviews

300L

(1) This section applies where the Treasury have given a direction to the Bank of England under section 300K to carry out a review.

(2) The Bank must make a written report to the Treasury as to the opinion of the Bank in relation to the following matters—

(a) whether the rules under review advance—

(i) the Bank’s Financial Stability Objective, and

(ii) the Bank’s secondary innovation objective (see section 30D(2) of the Bank of England Act 1998);

(b) whether and to what extent the rules are functioning effectively and achieving their intended purpose;

(d) whether any rules should be revoked (with or without replacement);

(e) whether any other action should be taken and, if so, what that action should be.

(3) As soon as practicable after receiving the report the Treasury must—

(a) lay before Parliament a copy of the report, and

(b) publish the report in such manner as the Treasury think fit.

(4) When complying with subsection (3) the Treasury may withhold material from the report if the Treasury consider that publication of the material would be against the public interest.

Power of Treasury to require making of rules by regulations

300M

(1) The Treasury may by regulations require the Bank of England to exercise a power under this Act to make rules in relation to a specified activity or a specified description of person.

(2) Regulations under this section may—

(a) specify matters that the rules must cover;

(b) specify a period within which the rules must be made.

(3) But except so far as permitted by subsection (2), regulations under this section may not require rules to be made—

(a) in a specified form or with specified content, or

(b) to achieve or advance a specified outcome.

(4) If no period is specified under subsection (2)(b) the rules must be made as soon as reasonably practicable after the coming into force of the regulations.

Other matters

Supervision of certain contracts.

301

(1) The Secretary of State and the Treasury, acting jointly, may by regulations provide for—

(a) Part VII of the Companies Act 1989 (financial markets and insolvency), and

(b) Part V of the Companies (No. 2)(Northern Ireland) Order 1990,

to apply to relevant contracts as it applies to contracts connected with a recognised body.

(2) “Relevant contracts” means contracts of a prescribed description in relation to which settlement arrangements are provided by a person for the time being included in a list (“the list”) maintained by the Bank of England for the purposes of this section.

(3) Regulations may be made under this section only if the Secretary of State and the Treasury are satisfied, having regard to the extent to which the relevant contracts concerned are contracts of a kind dealt in by persons supervised by the FCA or the Bank of England, that it is appropriate for the arrangements mentioned in subsection (2) to be supervised by the Bank.

(4) The approval of the Treasury is required for—

(a) the conditions set by the Bank of England for admission to the list; and

(b) the arrangements for admission to, and removal from, the list.

(5) If the Treasury withdraw an approval given by them under subsection (4), all regulations made under this section and then in force are to be treated as suspended.

(6) But if—

(a) the Bank of England changes the conditions or arrangements (or both), and

(b) the Treasury give a fresh approval under subsection (4),

the suspension of the regulations ends on such date as the Treasury may, in giving the fresh approval, specify.

(7) The Bank of England must—

(a) publish the list as for the time being in force; and

(b) provide a certified copy of it to any person who wishes to refer to it in legal proceedings.

(8) A certified copy of the list is evidence (or in Scotland sufficient evidence) of the contents of the list.

(9) A copy of the list which purports to be certified by or on behalf of the Bank of England is to be taken to have been duly certified unless the contrary is shown.

(10) Regulations under this section may, in relation to a person included in the list—

(a) apply (with such exceptions, additions and modifications as appear to the Secretary of State and the Treasury to be necessary or expedient) such provisions of, or made under, this Act as they consider appropriate;

(b) provide for the provisions of Part VII of the Companies Act 1989 and Part V of the Companies (No. 2)(Northern Ireland) Order 1990 to apply (with such exceptions, additions or modifications as appear to the Secretary of State and the Treasury to be necessary or expedient).

CHAPTER 1A — CONTROL OVER RECOGNISED INVESTMENT EXCHANGE

Notices of acquisitions of control over recognised investment exchanges

Obligation to notify the FCA: acquisitions of control

301A

(1) A person who decides to acquire or increase control over a recognised investment exchange must give the FCA notice in writing before making the acquisition.

(2) A person who acquires or increases control over a recognised investment exchange in circumstances where notice is not required under subsection (1) must give the FCA notice in writing before the end of 14 days beginning with—

(a) the day the person acquired or increased the control; or

(b) if later, the day on which the person first became aware that the control had been acquired or increased.

(3) For the purposes of calculations relating to this section, the holding of shares or voting power by a person (“A1”) includes any shares or voting power held by another (“A2”) if A1 and A2 are acting in concert.

(4) A notice given under this section is a “section 301A notice” and a person giving notice is a “section 301A notice-giver”.

(5) Nothing in this Chapter applies to an overseas investment exchange.

Requirements for section 301A notices

301B

(1) A section 301A notice must be in such form, include such information and be accompanied by such documents as the FCA may reasonably require.

(2) The FCA must publish a list of its requirements as to the form, information and accompanying documents for a section 301A notice.

(3) The FCA may impose different requirements for different cases and may vary or waive requirements in particular cases.

Acknowledgment of receipt

301C

(1) The FCA must acknowledge receipt of a section 301A notice in writing before the end of the second working day following receipt.

(2) If the FCA receives an incomplete section 301A notice it must inform the section 301A notice-giver as soon as reasonably practicable.

Acquiring and increasing control

301D

(1) For the purposes of this Chapter, a person (“A”) acquires control over a recognised investment exchange (“B”) if any of the cases in subsection (2) begin to apply.

(2) The cases are where A holds—

(a) 20% or more of the shares in B or in a parent undertaking of B (“P”);

(b) 20% or more of the voting power in B or P; or

(c) shares or voting power in B or P as a result of which A is able to exercise significant influence over the management of B.

(3) For the purposes of this Chapter, a person (“A”) increases control over a recognised investment exchange (“B”) whenever—

(a) the percentage of shares which A holds in B or in a parent undertaking of B (“P”) increases from less than 50% to 50% or more;

(b) the percentage of voting power A holds in B or P increases from less than 50% to 50% or more; or

Disregarded holdings

301E

(1) For the purpose of section 301D, shares and voting power that a person holds in a recognised investment exchange (“B”) or in a parent undertaking of B (“P”) are disregarded in the following circumstances.

(2) Shares held only for the purposes of clearing and settling within a short settlement cycle are disregarded.

(3) Shares held by a custodian or its nominee in a custodian capacity are disregarded, provided that the custodian or nominee is only able to exercise voting power represented by the shares in accordance with instructions given in writing.

(4) Shares representing no more than 5% of the total voting power in B or P held by an investment firm are disregarded, provided that it—

(a) holds the shares in the capacity of a market maker (as defined in Article 2(1)(6) of the markets in financial instruments regulation);

(b) has a Part 4A permission to carry on a regulated activity which is any of the investment services or activities; and

(c) neither intervenes in the management of B or P nor exerts any influence on B or P to buy the shares or back the share price.

(5) Shares held by a qualifying credit institution or investment firm in its trading book are disregarded, provided that—

(a) the shares represent no more than 5% of the total voting power in B or P; and

(b) ... the voting power is not exercised nor otherwise used to intervene in the management of B or P.

(6) Shares held by a qualifying credit institution or an investment firm are disregarded, provided that—

(a) the shares are held as a result of performing the investment services and activities of—

(i) underwriting a share issue; or

(ii) placing shares on a firm commitment basis ...; and

(b) the qualifying credit institution or investment firm—

(i) does not exercise voting power represented by the shares or otherwise intervene in the management of the issuer; and

(ii) retains the holding for a period of less than one year.

(7) Where a management company (as defined in section 237(2)) and its parent undertaking both hold shares or voting power, each may disregard holdings of the other, provided that each exercises its voting power independently of the other.

(8) But subsection (7) does not apply if the management company—

(a) manages holdings for its parent undertaking or a controlled undertaking of the parent undertaking;

(b) has no discretion as to the exercise of the voting power attached to such holdings; and

(i) the parent undertaking; or

(ii) a controlled undertaking of the parent undertaking.

(9) Where an investment firm and its parent undertaking both hold shares or voting power, the parent undertaking may disregard holdings managed by the investment firm on a client by client basis and the investment firm may disregard holdings of the parent undertaking, provided that the investment firm—

(a) has permission to provide portfolio management;

(b) exercises its voting power independently from the parent undertaking; and

(c) may only exercise the voting power under instructions given in writing, or has appropriate mechanisms in place for ensuring that individual portfolio management services are conducted independently of any other services.

(9A) Shares acquired for stabilisation purposes in accordance with the market abuse regulation and Commission Delegated Regulation (EU) No. 1052/2016 of 8 March 2016 supplementing Regulation (EU) No. 596/2014 of the European Parliament and the Council with regard to the regulatory technical standards for conditions applicable to buy-back programmes and stabilisation measures are disregarded, provided that the voting power attached to those shares is not exercised or otherwise used to intervene in the management of B or P.

(10) For the purposes of this section, an undertaking is a controlled undertaking of the parent undertaking if it is controlled by the parent undertaking; and for this purpose the question of whether one undertaking controls another is to be determined in accordance with section 89J(4) and (5).

Assessment procedure

Assessment: general

301F

(1) Where the FCA receives a section 301A notice, it must—

(a) determine whether to approve the acquisition to which it relates; or

(b) propose to object to the acquisition.

(2) In making its determination the FCA must—

(a) consider the suitability of the section 301A notice-giver and the financial soundness of the acquisition in order to ensure the sound and prudent management of the recognised investment exchange in question; and

(b) have regard to the likely influence that the section 301A notice-giver will have on the recognised investment exchange.

(3) The FCA may only object to an acquisition if it is not satisfied that the approval requirement is met.

(4) The approval requirement is that the acquisition in question by the notice-giver does not pose a threat to the sound and prudent management of any financial market operated by the recognised investment exchange.

Assessment: Procedure

301G

(1) The FCA must act under section 301F within a period three months from the date the FCA receives the completed section 301A notice (“the assessment period”).

(2) The FCA must inform the section 301A notice-giver in writing of—

(a) the duration of the assessment period; and

(b) its expiry date.

(3) The FCA must, within two working days of acting under section 301F (and in any event no later than the expiry date of the assessment period)—

(a) notify the section 301A notice-giver that it has determined to approve the acquisition; or

(b) in the case of a proposed objection to an acquisition, give a warning notice.

(4) The FCA is treated as having approved the acquisition if, at the expiry of the assessment period, it has neither—

(a) given notice under subsection (3); nor

(b) informed the section 301A notice-giver that the notice is incomplete.

(5) If the FCA decides to object to an acquisition it must give the section 301A notice-giver a decision notice.

(6) Following receipt of a decision notice under this section, the section 301A notice-giver may refer the FCA's decision to the Tribunal.

Duration of approval

301H

(1) Approval of an acquisition is effective for such period as the FCA may specify in writing.

(2) Where the FCA has specified a period under subsection (1), it may extend the period.

(3) Where the FCA has not specified a period, the approval is effective for one year beginning with the date—

(a) of the notice given under section 301G(3)(a);

(b) on which the FCA is treated as having given approval under section 301G(5); or

Enforcement procedures

Objections by the FCA

301I

(1) The FCA may object to a person's control over a recognised investment exchange in any of the circumstances specified in subsection (2).

(2) The circumstances are that the FCA reasonably believes that—

(a) the person acquired or increased control without giving notice under section 301A in circumstances where notice was required; and

(b) there are grounds for objecting to control on the basis of the approval requirement in section 301F(4).

(3) If the FCA proposes to object to a person's control over a recognised investment exchange, it must give that person a warning notice.

(4) If the FCA decides to object to a person's control over a UK authorised person, it must give that person a decision notice.

(5) A person to whom the FCA gives a decision notice under this section may refer the matter to the Tribunal.

Restriction notices

301J

(1) The FCA may give notice in writing (a “restriction notice”) to a person in the following circumstances.

(2) The circumstances are that—

(a) the person has control over a recognised investment exchange by virtue of holding shares or voting power; and

(b) in relation to the shares or voting power, the FCA has given the person a warning notice or a decision notice under section 301G or 301I or a final notice which confirms a decision notice given under section 301G or 301I.

(3) In a restriction notice, the FCA may direct that shares or voting power to which the notice relates are, until further notice, subject to one or more of the following restrictions—

(a) except by court order, an agreement to transfer or a transfer of any such shares or voting power or, in the case of unissued shares, any agreement to transfer or transfer of the right to be issued with them, is void;

(b) no voting power is to be exercisable;

(c) no further shares are to be issued in pursuance of any right of the holder of any such shares or voting power or in pursuance of any offer made to their holder;

(d) except in a liquidation, no payment is to be made of any sums due from the body corporate on any such shares, whether in respect of capital or otherwise.

(4) A restriction notice takes effect—

(a) immediately; or

(b) on such date as may be specified in the notice.

(5) A restriction notice does not extinguish rights which would be enjoyable but for the notice.

(6) A copy of the restriction notice must be served on—

(a) the recognised investment exchange in question; and

(b) in the case of shares or voting power held in a parent undertaking of a recognised investment exchange, the parent undertaking.

(7) A person to whom the FCA gives a restriction notice may refer the matter to the Tribunal.

Orders for sale of shares

301K

(1) The court may, on the application of the FCA, order the sale of shares or the disposition of voting power in the following circumstances.

(2) The circumstances are that—

(a) a person has control over a recognised investment exchange by virtue of holding the shares or voting power; and

(b) the acquisition or continued holding of the shares or voting power by that person is in contravention of a final notice which confirms a decision notice given under section 301G or section 301I.

(3) Where the court orders the sale of shares or disposition of voting power it may—

(a) if a restriction notice has been given in relation to the shares or voting power, order that the restrictions cease to apply; and

(b) make any further order.

(4) Where the court makes an order under this section, it must take into account the level of holding that the person would have been entitled to acquire, or to continue to hold, without contravening the final notice.

(5) If shares are sold or voting power disposed of in pursuance of an order under this section, any proceeds, less the costs of the sale or disposition, must be paid into court for the benefit of the persons beneficially interested in them; and any such person may apply to the court for payment of a whole or part of the proceeds.

(6) The jurisdiction conferred by this section may be exercised by the High Court and the Court of Session.

Offences

Offences under this Chapter

301L

(1) A person who fails to comply with an obligation to notify the FCA under section 301A(1) or (2) is guilty of an offence.

(2) A person who gives notice to the FCA under section 301A(1) and makes the acquisition to which the notice relates before the expiry date of the assessment period is guilty of an offence unless the FCA has approved the acquisition.

(3) A person who makes an acquisition in contravention of a warning notice or a decision notice given under section 301G or a final notice which confirms a decision notice under that section is guilty of an offence.

(4) A person who makes an acquisition after the FCA's approval for the acquisition has ceased to be effective by virtue of section 301H is guilty of an offence.

(5) A person who provides information to the FCA which is false in a material particular is guilty of an offence.

(6) A person who breaches a direction contained in a restriction notice given under section 301J is guilty of an offence.

(7) A person guilty of an offence under subsection (1), (2) or (4) to (6) is liable—

(a) on summary conviction to a fine not exceeding the statutory maximum; or

(b) on conviction on indictment, to a fine.

(8) A person guilty of an offence under subsection (3) is liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum; or

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.

(9) It is a defence for a person charged with an offence under subsection (1) in relation to section 301A(2) to show that the person had, at the time of the alleged offence, no knowledge of the act or circumstances by virtue of which the duty to notify the FCA arose.

Interpretation

301M

(1) In this Chapter—

“acquisition” means the acquisition of control or of an increase in control over a recognised investment exchange;

“shares” and “voting power” have the same meaning as in section 422.

(2) For the purposes of this Chapter, a “working day” is a day other than—

(a) a Saturday or a Sunday; or

(b) a day which is a bank holiday in England and Wales under the Banking and Financial Dealings Act 1971.

Chapter II — Competition Scrutiny

Interpretation.

302

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Role of Office of Fair Trading

Initial report by OFT.

303

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Further reports by OFT.

304

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investigations by OFT.

305

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Role of Competition Commission

Consideration by Competition Commission.

306

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Role of the Treasury

Recognition orders: role of the Treasury.

307

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Directions by the Treasury.

308

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Statements by the Treasury.

309

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Procedure on exercise of certain powers by the Treasury.

310

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CHAPTER 2A — Performance of functions of recognised bodies

Relevant recognised bodies

Recognised bodies to which this Chapter applies

309A

(1) The Treasury may by regulations specify as a “relevant recognised body” for the purposes of this Chapter a type of recognised body mentioned in subsection (2).

(2) The types of recognised bodies are—

(a) recognised investment exchanges;

(b) recognised central counterparties;

(3) Before making regulations under subsection (1), the Treasury—

(a) must consult the FCA if it proposes to specify recognised investment exchanges (or recognised investment exchanges of a specified description);

(b) must consult the Bank of England if it proposes to specify recognised central counterparties or recognised CSDs (or recognised central counterparties or recognised CSDs of a specified description);

(c) in any case, must consult such persons as appear to it to be representative of interests likely to be affected by the application of this Chapter to the types, or descriptions, of bodies it proposes to specify.

(4) In this Chapter, references to “the appropriate regulator” are to be read in accordance with section 285A (accordingly, the appropriate regulator in relation to a recognised investment exchange is the FCA, and in any other case is the Bank of England).

(5) Nothing in this Chapter applies to overseas investment exchanges.

Prohibition

Part 18 prohibition orders

309B

(1) This section applies if it appears to the appropriate regulator that an individual is not a fit and proper person to perform functions in relation to an activity carried on by a relevant recognised body.

(2) The appropriate regulator may make an order (a “Part 18 prohibition order”) prohibiting the individual from performing a specified function, any function falling within a specified description or any function.

(3) A Part 18 prohibition order may relate to—

(a) a specified activity, any activity falling within a specified description or all activities (but see subsection (5));

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