Legalize / United Kingdom / Statutory-Instrument

The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017

Type Statutory-Instrument

Publication 2017-06-21

Last updated 2025-10-23

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

PDF Download

articles Not indexed

Reform history JSON API

(3) A person who contravenes sub-paragraph (1) or (2) is guilty of an offence.

(4) A person guilty of an offence under this paragraph is liable—

(a) on summary conviction—

(i) in England and Wales, to a fine;

(ii) in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum; or

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

Restriction on penalties

17

(1) A person who is convicted of an offence under these Regulations or under the Act as applied by these Regulations is not subsequently liable to a penalty under paragraph 11 in respect of the same acts or omissions that constituted the offence.

(2) A person who is liable to a penalty under paragraph 11 is not subsequently liable for an offence under these Regulations in respect of the same acts or omissions that constituted the contravention of a requirement imposed by or under these Regulations for the purposes of that penalty.

PART 4 — Application of the Act for the purposes of the Regulations

Application of Part 9 of the Act (hearings and appeals)

18

(1) Part 9 of the Act (hearings and appeals) applies with respect to proceedings pursuant to references to the Tribunal under these Regulations and under the Act as applied by these Regulations (“relevant proceedings”) as it applies with respect to proceedings pursuant to references to the Tribunal under that Act, with the following modifications.

(2) Section 133 of the Act (proceedings before the Tribunal: general provision) applies as if—

(a) in subsection (1)—

(i) “(whether made under this or any other Act)” were omitted;

(ii) paragraphs (b) and (c) were omitted;

(b) in subsection (2), “, (b) or (c)” were omitted;

(c) in subsection (5) the reference to section 393(11) were a reference to section 393(11) as applied by these Regulations;

(d) for subsection (7A) there were substituted—

(7A) A reference is a “disciplinary reference” for the purposes of this section if it is in respect of either of the following decisions— (a) a decision to publish a statement under paragraph 10 of Schedule 1 to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017; (b) a decision to impose a penalty under paragraph 11 of Schedule 1 to those Regulations.

(3) Section 133A of the Act (proceedings before Tribunal: decision and supervisory notices, etc.) applies as if for subsection (1) there were substituted—

(1) In determining in accordance with section 133(5) (as applied by the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017) a reference made as a result of a decision notice given by the FCA or the PRA, the Tribunal may not direct the FCA or the PRA (as the case may be) to take action which it would not, under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017, have had power to take when giving the notice.

(4) Section 133B of the Act (offences) applies as if subsection (1)(b) and (c) were omitted.

Application of Part 11 of the Act (information gathering and investigations)

19

(1) Part 11 of the Act (information gathering and investigations) applies with respect to the discharge by the regulators of their functions under these Regulations and with respect to Article 28 of the markets in financial instruments regulation as it applies with respect to the discharge by the regulators of their functions under the Act, with the following modifications.

(2) In this paragraph, “regulator” means the FCA or the PRA.

(3) Part 11 of the Act applies as if—

(a) each reference to the Act included a reference to these Regulations and Article 28 of the markets in financial instruments regulation;

(b) each reference to a section or Part of, or Schedule to, the Act were a reference to that section, Part or Schedule as applied by these Regulations;

(c) each reference to an authorised person were a reference to a person in respect of whom a requirement is imposed by or under these Regulations or to a non-authorised counterparty in respect of whom a requirement is imposed by Article 28 of the markets in financial instruments regulation.

(4) Sections 165A (PRA's power to require information: financial stability), 165B (safeguards etc. in relation to exercise of power under section 165A) and 165C (orders under section 165A(2)(d)) of the Act do not apply.

(5) Section 166A of the Act (appointment of skilled person to collect and update information) applies as if—

(a) for subsection (1) there were substituted—

(1) This section applies if either regulator considers that a person has contravened a requirement imposed by or under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 to collect, and keep up to date, information of a description specified in those Regulations.

(b) subsection (10) were omitted.

(6) Section 167 of the Act (appointment of persons to carry out general investigations) applies as if—

(a) for subsection (1) there were substituted—

(1) If it appears to an investigating authority that there is good reason for doing so, the investigating authority may appoint one or more competent persons to conduct an investigation on its behalf into— (a) the nature, conduct or state of the business of a person in respect of whom a requirement is imposed by or under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (“a person subject to the 2017 Regulations”) or a non-authorised counterparty in respect of whom a requirement is imposed by Article 28 of the markets in financial instruments regulation (“a non-authorised counterparty”); (b) a particular aspect of that business; or (c) the ownership or control of a person subject to the 2017 Regulations or a non-authorised counterparty.

(b) for subsection (4) there were substituted—

(4) The power conferred by this section may be exercised in relation to a person who was formerly a person subject to the 2017 Regulations or a non-authorised counterparty but only in relation to— (a) business carried on when the person was a person subject to the 2017 Regulations or a non-authorised counterparty; or (b) the ownership or control of a person who was formerly a person subject to the 2017 Regulations or a non-authorised counterparty at any time when the person was a person subject to the 2017 Regulations or a non-authorised counterparty.

(b) in relation to any other person subject to the 2017 Regulations, the FCA or the PRA; (c) in relation to a non-authorised counterparty, the FCA.

(d) subsection (6) were omitted.

(7) Section 168 of the Act (appointment of persons to carry out investigations in particular cases) applies as if—

(a) for subsection (1) there were substituted—

(1) Subsection (3) applies if it appears to an investigating authority that there are circumstances suggesting that— (a) a person may have contravened a requirement imposed by or under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 or by Article 28 of the markets in financial instruments regulation; (b) a member of the management body of a person referred to in paragraph (a) or another member of the senior management of such a person may be responsible for the contravention of a requirement imposed by or under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 or by Article 28 of the markets in financial instruments regulation; or (c) a person may be guilty of an offence under those Regulations or under this Act as applied by those Regulations.

(b) subsections (2), (4) and (5) were omitted;

(6) “Investigating authority” means the FCA or the PRA.

(8) Section 169 of the Act (investigations etc. in support of overseas regulator) applies as if—

(a) subsection (2A) were omitted;

(b) for subsection (13) there were substituted—

(13) “Overseas regulator” means an authority in a country or territory outside the United Kingdom which has functions corresponding to those of the FCA or the PRA under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 or with respect to Article 28 of the markets in financial instruments regulation.

(9) Section 169A of the Act (support of overseas regulator with respect to financial stability) does not apply.

(10) Section 170 of the Act (investigations: general) applies as if—

(a) in subsection (1) “or (5)” were omitted;

(b) for subsection (3) there were substituted—

(3) Subsections (2) and (9) do not apply if the investigator is appointed as a result of section 168(1) and the investigating authority believes that the notice required by subsection (2) or (9) would be likely to result in the investigation being frustrated.

(11) Section 172 of the Act (additional power of persons appointed as a result of section 168(1) or (4)) applies as if in the heading and in subsection (4) “or (4)” were omitted.

(12) Section 173 of the Act (powers of persons appointed as a result of section 168(2)) applies as if—

(a) in the heading for “as a result of section 168(2)” there were substituted “ in relation to a recognised investment exchange ”;

(b) in subsection (5) for “subsection (3) of section 168 (as a result of subsection (2) of that section)” there were substituted “ section 167 in relation to a recognised investment exchange ”.

(13) Section 174 of the Act (admissibility of statements made to investigators) applies as if—

(a) in subsection (2) “or in proceedings in relation to action to be taken against that person under section 123 to which this section applies” were omitted;

(b) in subsection (3)(a) for “398” substitute “ paragraph 16 of Schedule 1 to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 ”;

(d) in subsection (4) the words from “or (5),” to the end were omitted.

(14) Section 175 of the Act (information and documents: supplemental provisions) applies as if in subsection (8) “or (5)” were omitted.

(15) Section 176 of the Act (entry of premises under warrant) applies as if—

(a) in subsection (1) “the Secretary of State,” were omitted;

(b) in subsection (3)(a) for “an authorised person or an appointed representative” there were substituted “ a person in respect of whom a requirement is imposed by or under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 or a non-authorised counterparty in respect of whom a requirement is imposed by Article 28 of the markets in financial instruments regulation ”;

(d) in subsection (11)(a) “87C, 87J,” and “,165A, 169A” were omitted.

Restrictions on disclosure of information

20

Sections 348 (restrictions on disclosure of confidential information by FCA, PRA etc.), 349 (exceptions from section 348) and 352 (offences) of the Act apply with respect to information received under these Regulations as they apply with respect to information received under the Act as if—

(a) each reference to the Act included a reference to these Regulations;

(b) each reference to a section or Part of the Act were a reference to that section or Part as applied by these Regulations;

(c) in section 348(2), for “In this Part” there were substituted “ In sections 348, 349 and 352 as applied by the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 ”;

(d) in section 352—

(i) in subsection (1) “or 350(5)” were omitted;

(ii) subsection (4) were omitted;

(iii) in subsection (5) “or (4)” were omitted;

(iv) in subsection (6)(a) “or that it had been disclosed in accordance with section 350” were omitted.

Application of Part 25 of the Act (injunctions and restitution)

21

(1) Part 25 of the Act (injunctions and restitution) applies for the purposes of these Regulations, Article 28 of the markets in financial instruments regulation, and the Act as applied by these Regulations, with the following modifications.

(2) Part 25 of the Act applies as if—

(a) each reference to the Act included a reference to these Regulations and to Article 28 of the markets in financial instruments regulation;

(b) each reference to a section of the Act were a reference to that section as applied by these Regulations;

(d) each reference to a relevant requirement were a reference to a requirement which is imposed by or under these Regulations, Article 28 of the markets in financial instruments regulation or the Act as applied by these Regulations.

(3) Section 380 of the Act (injunctions) applies as if—

(a) subsections (6) and (7) were omitted;

(b) in subsection (8) paragraphs (b) and (c) were omitted;

(4) Section 381 of the Act (injunctions in cases of market abuse) does not apply.

(5) Section 382 of the Act (restitution orders) applies as if—

(a) subsections (9) and (10) were omitted;

(b) in subsection (11) paragraphs (b) and (c) were omitted;

(6) Section 383 of the Act (restitution orders in cases of market abuse) does not apply.

(7) Section 384 of the Act (power of FCA or PRA to require restitution) applies as if—

(a) subsections (2) and (3) and references to those subsections were omitted;

(b) subsection (7) were omitted;

(d) subsection (10) were omitted.

Application of Part 26 of the Act (notices)

22

(1) Part 26 of the Act (notices) applies with respect to the giving of notices under regulations 28(4) (FCA power to intervene), 36(4) (FCA power to impose requirements) and 40(3) and (6) (removal of persons from management boards: procedure), paragraphs 12 and 13 of this Schedule and the Act as applied by these Regulations as it applies with respect to the giving of notices under the Act, with the following modifications.

(2) Part 26 of the Act applies as if—

(a) each reference to the Act included a reference to these Regulations;

(b) each reference to a section of the Act were a reference to that section as applied by these Regulations;

(3) In this paragraph, “regulator” means the FCA or the PRA.

(4) Section 387 of the Act (warning notices) applies as if subsections (1A) and (3A) were omitted.

(5) Section 388 of the Act (decision notices) applies as if subsections (1A) and (2) were omitted.

(6) Section 391 of the Act (publication) applies as if—

(a) in subsection (1) the reference to a warning notice falling within subsection (1ZB) were to a warning notice given under paragraph 12;

(b) in subsection (1ZA) the reference to a warning notice not falling within subsection (1ZB) were to a warning notice given under the Act as applied by these Regulations;

(d) in subsection (4A) the reference to sections 391A, 391B and 391C were omitted;

(e) subsections (5A), (8A), (8B) and (8C) were omitted;

(f) for subsection (11) there were substituted—

(11) Section 425A (meaning of “consumers”) applies for the purposes of this section as if subsection (2)(c) were omitted.

(7) Sections 391A (publication: special provisions relating to the capital requirements directive), 391B (publication: special provisions relating to the transparency obligations directive) and 391C (publication: special provisions relating to the UCITS directive) of the Act do not apply.

(8) Section 392 of the Act (application of sections 393 and 394) applies as if for paragraphs (a) and (b) there were substituted—

(a) a warning notice given in accordance with paragraph 12 of Schedule 1 to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 or section 385 as applied by those Regulations; (b) a decision notice given in accordance with paragraph 13 of Schedule 1 to those Regulations or section 386 as applied by those Regulations.

(9) Section 395 of the Act (the FCA's and PRA's procedures) applies as if—

(a) in subsection (1) paragraph (b)(ii) were omitted;

(b) in subsection (9) “other than a warning notice or decision notice relating to a decision of the PRA that is required by a decision of the FCA of the kind mentioned in subsection (1)(b)(ii)” were omitted;

(d) for subsection (13) there were substituted—

(13) “Supervisory notice” means a notice given in accordance with regulation 28(4) (FCA power to intervene), 36(4) (FCA power to impose requirements) or 40(3) or (6) (removal of persons from management boards: procedure) of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017.

Application of Part 27 of the Act (offences)

23

(1) Part 27 of the Act (offences) applies with respect to offences under these Regulations and the Act as applied by these Regulations as it applies with respect to offences under the Act, with the following modifications.

(2) Part 27 of the Act applies as if—

(a) each reference to the Act included a reference to these Regulations;

(b) each reference to a section of the Act were a reference to that section as applied by these Regulations;

(3) Sections 398 (misleading the FCA or PRA: residual cases) and 399 (misleading the CMA) of the Act do not apply.

(4) Section 400 of the Act (offences by bodies corporate) applies as if subsection (6A) were omitted.

(5) Section 401 of the Act (proceedings for offences) applies as if—

(a) subsection (1)(c) were omitted;

(b) in subsection (3A)—

(i) paragraphs (a), (f), (g) and (h) were omitted;

(ii) in paragraph (i) for “section 398(1)” there were substituted “ paragraph 16(1) of Schedule 1 to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 ”;

(6) Section 402 of the Act (power of FCA to institute proceedings for certain other offences) does not apply.

(7) Section 403(7) of the Act (jurisdiction and procedure in respect of offences) applies as if the words from “or an offence” to the end were omitted.

Application of section 413 of the Act (protected items)

24

Section 413 of the Act (protected items) applies for the purposes of these Regulations as it applies for the purposes of the Act.

FCA: penalties, fees and exemption from liability in damages

25

(1) Paragraphs 19 to 23 (penalties and fees) and 25 (exemption from liability in damages) of Schedule 1ZA to the Act apply with respect to the discharge by the FCA of its functions under these Regulations and with respect to Article 28 of the markets in financial instruments regulation as they apply with respect to the discharge by it of its functions under the Act, with the following modifications.

(2) Those paragraphs apply as if—

(a) each reference to penalties imposed under the Act included a reference to penalties imposed under these Regulations;

(b) each reference to a section or Part of the Act included a reference to that section or Part as applied by these Regulations;

(c) each reference to the functions of the FCA included a reference to its functions under these Regulations and with respect to Article 28 of the markets in financial instruments regulation.

(3) Paragraph 20 applies as if references to the FCA's enforcement powers included—

(a) its powers under these Regulations and under Part 25 of the Act as applied by these Regulations;

(b) its powers in relation to the investigation of offences under these Regulations or under the Act as applied by these Regulations;

(c) its powers in England and Wales or Northern Ireland in relation to the prosecution of offences under these Regulations or under the Act as applied by these Regulations.

(4) Paragraph 21 applies as if regulated persons included persons on whom requirements are imposed under these Regulations and non-authorised counterparties on whom requirements are imposed by Article 28 of the markets in financial instruments regulation.

(5) Paragraph 23 applies as if references to qualifying functions included references to the functions of the FCA under these Regulations, with respect to Article 28 of the markets in financial instruments regulation and under the Act as applied by these Regulations.

PRA: penalties, fees and exemption from liability in damages

26

(1) Paragraphs 27 to 31 (penalties and fees) and 33 (exemption from liability in damages) of Schedule 1ZB to the Act apply with respect to the discharge by the PRA of its functions under these Regulations as they apply with respect to the discharge by it of its functions under the Act, with the following modifications.

(2) Those paragraphs apply as if—

(a) each reference to penalties imposed under the Act or under FSMA 2000 included a reference to penalties imposed under these Regulations;

(b) each reference to a section or Part of the Act included a reference to that section or Part as applied by these Regulations;

(3) Paragraph 28 applies as if references to the PRA's enforcement powers included—

(a) its powers under Part 5 of these Regulations and under Part 25 of the Act as applied by these Regulations;

(b) its powers in relation to the investigation of offences under these Regulations or under the Act as applied by these Regulations;

(c) its powers in England and Wales or Northern Ireland in relation to the prosecution of offences under those Regulations or under the Act as applied by those Regulations.

(4) Paragraph 31 applies as if references to qualifying functions included references to the functions of the PRA under Part 5 of these Regulations and under the Act as applied by these Regulations.

PART 5 — Application of secondary legislation for the purposes of the Regulations

Service of notices

27

The Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001 (“Notice Regulations”) apply with respect to any notice or document to be given by the FCA or PRA under regulation 12(3)(b) (FCA power to intervene in relation to third country firms registered with ESMA), 28(4) (FCA power to intervene), 36(4) (FCA power to impose requirements) or 40(3) or (6) (removal of persons from management boards: procedure), paragraph 12 or 13 of this Schedule or the Act as applied by these Regulations, as if—

(a) that notice or document were “a relevant document” under the Notice Regulations;

(b) each reference to the Act included a reference to these Regulations and to the Act as applied by these Regulations;

Disclosure of confidential information

28

The Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 apply for the purposes of section 349 of the Act (exceptions from section 348) as applied by paragraph 20.

Communications by auditors

29

The Financial Services and Markets Act 2000 (Communications by Auditors) Regulations 2001 apply for the purposes of sections 342 (information given by auditor or actuary to a regulator), 343 (information given by auditor or actuary to a regulator: person with close links) and 344 (duty of auditor or actuary resigning etc. to give notice) of the Act as if—

(a) in regulation 1(2) (citation, commencement and interpretation) “relevant requirement” included a requirement which is imposed by or under these Regulations or by Article 28 of the markets in financial instruments regulation;

(b) in regulation 2(2)(a)(ii) (circumstances in which an auditor is to communicate) the reference to functions included a reference to the FCA's and PRA's functions under these Regulations and under the Act as applied by these Regulations.

SCHEDULE 2 — Amendments to the Financial Services and Markets Act 2000

1

The Act is amended as follows.

Amendments to Part 3 (authorisation and exemption)

2

(1) Section 39 (exemption of appointed representatives) is amended as follows.

(2) In subsection (1ZA) after “(1A)” insert “ , (1AA) ”.

(3) In the opening words of subsection (1A)(a) for “or a credit institution” substitute “ , a credit institution, or a person mentioned in Article 3.1 (optional exemptions) of the markets in financial instruments directive ”.

(4) After subsection (1A) insert—

(1AA) This subsection applies to a person— (a) if the person's principal is an investment firm or a credit institution, and (b) so far as the business for which the person's principal has accepted responsibility is selling, or advising clients on, structured deposits as defined by Article 4.1.43 (definitions) of the markets in financial instruments directive, unless the person is entered on the applicable register.

(5) In subsection (1B) —

(a) in the opening words at the beginning insert “ In subsections (1A) and (1AA) ”;

(b) in paragraph (a)—

(i) omit the words from “which” to “appoint tied agents”;

(ii) for “Article 23” substitute “ Article 29 ”; and

(iii) at the end insert “ and ”; and

(6) In subsection (7)(a) for “4.1.25” substitute “ 4.1.29 ”.

(7) In subsection (8) , in the definition of “competent authority” for “4.1.22” substitute “ 4.1.26 ”.

3

(1) Section 39A (certain tied agents operating outside the United Kingdom) is amended as follows.

(2) In subsection (6)—

(a) for paragraph (c) substitute—

(c) enters into a relevant contract with an agent who is not entered on— (i) the record maintained by the FCA by virtue of section 347(1)(ha), or (ii) the register of tied agents of another EEA State maintained pursuant to Article 29 of the markets in financial instruments directive,

; and

(b) in paragraph (d) after “record” insert “ or register, ”.

(3) In subsection (8)(a) for “Article 4.1.25” substitute “ Article 4.1.29 ”.

(4) In subsection (9) in the definition of “competent authority” for “Article 4.1.22” substitute “ Article 4.1.26 ”.

Amendments to Part 4A (permission to carry on regulated activities)

4

After section 55K(1)(d) (investment firms: particular conditions that enable cancellation) insert—

; (e) that the firm has seriously or systematically infringed the markets in financial instruments regulation.

5

(1) Section 55R (persons connected with an applicant) is amended as follows.

(2) In subsection (2)—

(a) in paragraph (a) after “intermediaries))” insert “or “ an EEA market operator ”; and

(b) in the closing words after “the firm's” insert “ or the market operator's”.

(3) After subsection (3) insert—

(3A) A person (“P”) is connected with an EEA market operator if— (a) P is an investment firm and is a subsidiary undertaking of the market operator, or (b) P is an investment firm and is a subsidiary undertaking of a parent undertaking of the market operator. (3B) In subsection (2)— - “EEA market operator” has the meaning given in section 312D (interpretation of Chapter 3A); and - “home state regulator”, in relation to an EEA market operator, has the meaning given in section 312D.

(4) After subsection (6) insert—

(7) Subsection (8) applies where— (a) an investment firm (“C”) makes an application for permission under section 55A to carry on a regulated activity which is any of the investment services and activities; (b) the requirement for C to obtain permission under section 55A to carry on that activity derives from Chapter 1 of Title II of the markets in financial instruments directive; and (c) C is controlled by a person who also controls— (i) an EEA credit institution, (ii) an EEA investment firm, or (iii) an EEA insurance undertaking. (8) Before granting C's application for permission, the regulator concerned must— (a) in a case falling within subsection (7)(c)(i) consult the competent authorities of the other EEA State responsible for the authorisation or supervision of the credit institution; (b) in case falling within subsection (7)(c)(ii) consult the competent authority of the other EEA State responsible for the authorisation of the investment firm; (c) in a case falling within subsection (7)(c)(iii), consult the competent authorities of the other EEA State responsible for the authorisation or supervision of the insurance undertaking. (9) In subsections (7)— - “controls” has the same meaning as in Article 4.1.35(b)(definitions) of the markets in financial instruments directive; - “EEA credit institution” means a credit institution, as defined by Article 4.1.27 of the markets in financial instruments directive, authorised in another EEA State pursuant to Title III of the capital requirements directive; - “EEA insurance undertaking” means an insurance undertaking, as defined by Article 13.1 of the Solvency 2 Directive, authorised in another EEA State; - “EEA investment firm” means an investment firm, as defined by Article 4.1.1 of the markets in financial instruments directive, authorised in another EEA State pursuant to Chapter 1 of Title II of that directive.

Amendments to Part 6 (official listing)

6

In section 86(7) (exempt offers to the public) for subsection (d) substitute—

(d) a person whom— (i) any relevant firm was authorised to continue to treat as a professional client immediately before 3 January 2018by virtue of Article 71.6 (transitional provisions) of Directive 2004/39/EC on markets in financial instruments ; and (ii) the firm may continue to treat as a professional client from 3 January 2018 by virtue of Section II.2 of Annex II to the markets in financial instruments directive.

7

(1) Section 102A (meaning of “securities” etc) is amended as follows.

(2) In subsection (3) for the words “Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments” substitute “ the markets in financial instruments directive ”.

(3) In subsection (4) for “4.1.17” substitute “ 4.1.15 ”.

8

In section 103(1) (interpretation of Part 6) in the definition of “regulated market” for the words “Article 4.1(14) of Directive 2004/” to the end substitute “ Article 4.1.21 of the markets in financial instruments directive ”.

Amendments to Part 8 (provisions relating to market abuse)

9

(1) Section 122G (publication of information and corrective statements by issuers) is amended as follows.

(2) In the opening words of subsection (1) after “issuer” insert “ or emission allowance market participant ”.

(3) For subsection (7) substitute—

(7) In this section— - “emission allowance market participant” has the same meaning as in Article 3.1.19 (definitions) of the market abuse regulation; and - “specified” means specified by the FCA.

10

(1) Section 122I (power to suspend trading in financial instruments) is amended as follows.

(2) After subsection (2) insert—

(2A) But subsection (2) does not apply if the financial instrument is an emission allowance.

(3) In the opening words of subsection (4) after “instrument” insert “ other than an emission allowance ”.

(4) After subsection (4) insert—

(4A) A suspension of trading in a financial instrument that is an emission allowance takes effect— (a) immediately, if the FCA states that is the case; or (b) on such later date as the FCA specify.

11

After section 122I insert—

(122IA) (1) The FCA may suspend the auctioning of a relevant auctioned product at an auction conducted by a recognised auction platform where it considers it necessary for the purpose of the exercise by it of functions under the market abuse regulation or a supplementary EU regulation. (2) If the FCA does so the recognised auction platform may refer the matter to the Tribunal. (3) A suspension by the FCA takes place— (a) immediately, if the FCA specify this is the case, or (b) on such later date as the FCA specify. (4) The FCA may— (a) cancel a suspension under subsection (1), and (b) impose such conditions for the cancellation to take effect as it considers appropriate. (5) The provisions relating to the suspension and removal of financial instruments from trading set out in— (a) section 313B(2) to (4) (suspension or removal of financial instruments from trading: procedure), and (b) sections 313BA (procedure following consideration of representations) to 313BC (decisions on applications for revocation by institutions), apply, with the modifications set out in subsection (6), to a suspension of the auctioning of a relevant auctioned product at an auction conducted by a recognised auction platform. (6) The modifications referred to in subsection (5) are— (a) references to a requirement imposed on an institution under section 313A are to be read as references to the suspension of the auctioning of the relevant auctioned product; (b) references to an institution are to be read as references to the recognised auction platform; (c) in section 313B, the omission of— (i) subsection (2)(a)(ii); (ii) in subsection (3A)(d), the words “or the issuer of the financial instrument in question” and “or the issuer”; (iii) in subsection (3A)(f), the words “or the issuer of the financial instrument in question; (d) the omission of section 313BA(5)(b) and (8); (e) the omission of section 313BB(6)(b); and (f) the omission of section 313BC(3)(b) and (6)(b). (7) In this section “relevant auctioned product” means an auctioned product (as defined by Article 4 (auctioned products) of the emission allowance auctioning regulation) which is an emission allowance or based on an emission allowance.

12

In section 123(1)(c)(i) (power to impose penalties or issue censure) after “122I, ” insert “ 122IA, ”.

13

(1) Section 123A (power to prohibit individuals from managing or dealing) is amended as follows.

(2) In subsection (1)(c) after “122I” insert “ , 122IA ”.

(3) In subsection (2)—

(a) in the opening words for “either or both” substitute “ one or more ”; and

(b) after paragraph (b) insert—

(c) a temporary prohibition on the individual making a bid, on his or her own account or the account of a third party, directly or indirectly, at an auction conducted by a recognised auction platform.

(4) After subsection (7) insert—

(8) For the meaning of “recognised auction platform” in this Part, see section 131AB.

14

In section 123B(1)(c) (suspending permission to carry on regulated activities etc) after “122I” insert “ , 122IA ”.

15

In section 124(10) (statement of policy) in paragraph (c)(i) of the definition of “relevant person” after “122I,” insert “ 122IA, ”.

16

(1) Section 129 (power of the court to impose administrative sanctions in cases of market abuse) is amended as follows.

(2) In subsection (7), in the definition of “temporary prohibition”—

(a) at the end of paragraph (a) omit “or”;

(b) after paragraph (b) insert—

; or (c) making a bid, on his or her own account or the account of a third party, directly or indirectly, at an auction conducted by a recognised auction platform.

(3) After subsection (7) insert—

(8) For the meaning of “recognised auction platform” in this Part, see section 131AB.

17

In section 131AB (interpretation)—

(a) in the definition of “financial instrument” for “4.1(17)” substitute “ 4.1.15 ”; and

(b) at the appropriate places insert—

“emission allowance” has the meaning given in Article 3.1.19 (definitions) of the market abuse regulation;

“recognised auction platform” has the meaning given in regulation 1(3) of the Recognised Auction Platform Regulations 2011 (S.I. 2011/2699);

Amendments to Part 9A (rules and guidance)

18

In section 137R(5)(b) (financial promotion rules)—

(a) in sub-paragraph (i) for “paragraphs 1 to 8 of Article 19” substitute “ Articles 24 (general principles and information to clients) and 25 (assessment of suitability and appropriateness and reporting to clients) ”; and

(b) for sub-paragraph (ii) substitute—

(ii) any delegated act adopted under Article 24.13 or 25.8 of that directive,

Amendments to Part 12 (control over authorised persons)

19

In section 184(4)(a) (disregarded holdings) for “4.1(8)” substitute “ 4.1.7 ”.

Amendments to Part 13 (incoming firms: intervention by FCA or PRA)

20

(1) Section 194A (contravention by relevant EEA firm with UK branch of requirement under markets in financial instruments directive: appropriate regulator primarily responsible for securing compliance) is amended as follows.

(2) In subsection (1)(b) for “62.2” substitute “ 86.2 ”.

(3) In subsection (3)—

(a) at the end of paragraph (a) omit “or”;

(b) after paragraph (a) insert—

(aa) by or under any provision of the markets in financial instruments regulation; or

; and

(i) for “Community” substitute “ EU ”; and

(ii) after “directive” insert “ or the markets in financial instruments regulation ”.

21

(1) Section 195A (contravention by relevant EEA firm etc of directive requirements: home state regulator primarily responsible for securing compliance) is amended as follows.

(2) In subsection (1)(a) for “62.1 or 62.3” substitute “ 86.1 or 86.3 ”.

(3) In subsection (2), insert—

(a) at the end of paragraph (a) omit “or”;

(b) after paragraph (a) insert—

(aa) by or under any provision of the markets in financial instruments regulation; or

; and

(i) for “Community” substitute “ EU ”; and

(ii) after “directive” insert “ or the markets in financial instruments regulation ”.

Amendments to Part 14 (disciplinary measures)

22

In section 206A(1B) (suspending permission to carry on regulated activities etc) after “122I,” insert “ 122IA, ”.

Amendments to Part 15 (the financial services compensation scheme)

23

(1) Section 213 (the compensation scheme) is amended as follows.

(2) In subsection (1) —

(a) at the end of paragraph (a) omit “or”;

(b) after paragraph (a) insert—

(aa) relevant exchanges are unable, or likely to be unable, to satisfy claims made against them in connection with a regulated activity relating to a trading facility carried on by the exchange, or

; and

(3) In subsection (3)—

(a) for paragraphs (a) and (b) substitute—

(a) to assess and pay compensation, in accordance with the scheme, to claimants in respect of claims made in connection with— (i) a regulated activity carried on (whether or not with permission) by relevant persons; and (ii) a regulated activity relating to a trading facility carried on (whether or not in accordance with any requirements relating to that activity resulting from section 286) by relevant exchanges; and (b) to have power to impose levies for the purpose of meeting its expenses (including in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks)— (i) on authorised persons, or any class of authorised person; (ii) on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or (iii) on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges.

(4) For subsection (4) substitute—

(4) The compensation scheme may provide for the scheme manager to have power to impose levies— (a) on authorised persons, or any class of authorised person; (b) on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or (c) on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges, for the purpose of recovering the cost (whenever incurred) of establishing the scheme.

(5) For subsection (5) substitute—

(5) In making any provision of the scheme by virtue of subsection (3)(b), the regulators must take account of the desirability of ensuring that the amount of the levies imposed on a particular — (a) class of authorised person; (b) class of recognised investment exchange carrying on a regulated activity relating to a trading facility; or (c) class of authorised person and of recognised investment exchanges carrying on a regulated activity relating to a trading facility; reflects, so far as is practicable, the amount of claims made, or likely to be made in respect of that class of person, exchange, or persons and exchanges.

(6) After subsection (11) insert—

(12) In this Part (except in sections 220 and 224) “relevant exchange” means a body corporate or unincorporated association which was a recognised investment exchange carrying on a regulated activity relating to a trading facility at the time the act or omission giving rise to the claim against it, or against a successor falling within subsection (1)(b), took place. (13) In this Part “regulated activity relating to a trading facility” means— (a) the regulated activity of operating a multilateral trading facility; or (b) the regulated activity of operating an organised trading facility.

24

In section 214(1) (general)—

(a) in paragraph (a)—

(i) after “person” insert “ or relevant exchange ”; and

(ii) after “him” insert “ or it ”;

(b) in paragraph (aa) after “person” insert “ or relevant exchange ”.

25

(1) Section 215 (rights of the scheme in insolvency) is amended as follows.

(2) In subsection (3) for the words from “a company” to the end substitute—

(a) a company or partnership which is a relevant person; or (b) a body corporate or unincorporated association which is a relevant exchange; the scheme manager has the same rights as are conferred on the regulators by section 362.

(3) In subsection (4) after “relevant person” insert “ or relevant exchange ”.

26

(1) Section 218A (regulators power to require information) is amended as follows.

(2) In subsection (1) after “authorised persons” insert “ or recognised investment exchanges carrying on a regulated activity relating to a trading facility ”.

(3) In subsection (3) after paragraph (a) insert—

(aa) to recognised investment exchanges mentioned in subsection (1) generally or only to specified exchanges or classes of exchange;

27

(1) Section 220 (scheme manager's power to inspect information held by liquidator etc.) is amended as follows.

(2) In subsection (1) after “relevant person” insert “ or insolvent relevant exchange ”.

(3) In subsection (3)—

(a) in paragraph (a) after “relevant person” insert “ or insolvent relevant exchange ”; and

(b) in paragraph (b) after “relevant person” insert “ or insolvent relevant exchange ”.

(4) In subsection (5)—

(a) after “ “relevant person”” insert “ and “relevant exchange” ”; and

(b) for “has” substitute “ have ”.

28

(1) Section 224 (scheme manager's power to inspect documents held by Official Receiver etc) is amended as follows.

(2) In subsection (1) in the opening words after “relevant person” insert “ or relevant exchange ”.

(3) After subsection (4) insert—

(4A) In this section “relevant exchange” means a body corporate or unincorporated association carrying on a regulated activity relating to a trading facility at the time the act or omission which may give rise to the liability mentioned in subsection (1)(a) took place.

Amendments to Part 18 (recognised investment exchanges and clearing houses)

29

Omit section 286(4A) to (4E) (qualification for recognition).

30

After section 287 (application by an investment exchange) insert—

(287A) (1) Subsection (2) applies where— (a) a body corporate or unincorporated association (“A”) makes an application under section 287 for an order declaring it to be a recognised investment exchange; and (b) A is— (i) connected with an EEA credit institution or EEA insurance undertaking; or (ii) controlled by a person who also controls an EEA credit institution or EEA insurance undertaking. (2) Before making a recognition order declaring A to be a recognised investment exchange under section 290, the FCA must consult the competent authority responsible for the supervision of the EEA credit institution or EEA insurance undertaking. (3) A is connected with an EEA credit institution or EEA insurance undertaking if— (a) A is a subsidiary undertaking of the EEA credit institution or EEA insurance undertaking; or (b) A is a subsidiary undertaking of a parent undertaking of the EEA credit institution or EEA insurance undertaking. (4) In this section— - “control” has the same meaning as in Article 4.1.35(b) (definitions) of the markets in financial instruments directive; - “EEA credit institution” means a credit institution (as defined by Article 4.1.27 of the markets in financial instruments directive) authorised in another EEA State under the capital requirements directive; - “EEA insurance undertaking” means an insurance undertaking (as defined by Article 13.1 of the Solvency 2 Directive) authorised in another EEA State.

31

In section 290(1A) (recognition orders)—

(a) for “Community” substitute “ EU ”; and

(b) at the end insert “ or the markets in financial instruments regulation ”.

32

In section 292(3) (overseas investment exchanges and overseas clearing houses), for paragraph (a) substitute—

(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 directly applicable EU regulation made under the markets in financial instruments directive or the markets in financial instruments regulation;

33

In section 301E(4)(a) (disregarded holdings) for “4.1(8)” substitute “ 4.1.7 ”.

34

(1) Section 312A (exercise of passport rights by EEA market operator) is amended as follows.

(2) In subsection (1) for “regulated market or specified multilateral trading facility” substitute “ trading venue ”.

(3) In subsection (2) for “market or facility” substitute “ venue ”.

35

(1) Section 312B (removal of passport rights from EEA market operator) is amended as follows.

(2) In subsection (1) for “regulated market or multilateral trading facility” substitute “ trading venue ”.

(3) In subsection (2) —

(a) at the end of paragraph (b) omit “or”;

(b) for paragraph (c) substitute—

(c) by the markets in financial instruments regulation; or (d) by any directly applicable EU regulation made under that directive or that regulation

36

(1) Section 312C (exercise of passport rights by recognised investment exchange) is amended as follows.

(2) In subsection (1) for “regulated market or multilateral trading facility” substitute “ trading venue ”.

(3) In subsection (5) —

(a) in paragraph (a)—

(i) for “31.6” substitute “ 34.7 ”; and

(ii) after “multilateral trading facility”, insert “ or an organised trading facility ”; and

(b) in paragraph (b) for “42.6” substitute “ 53.6 ”.

(4) In subsection (7) for “4.1.22” substitute “ 4.1.26 ”.

37

In section 312D (interpretation of Chapter 3A of Part 18)—

(a) in the definition of “the applicable provision”—

(i) in paragraph (a) for “Article 31.5” substitute “ or an organised trading facility, Article 34.6 ”; and

(ii) in paragraph (b) for “42.6” substitute “ 53.6 ”;

(b) in the definition of “EEA market operator” for “4.1.13” substitute “ 4.1.18 ”; and

38

In section 313(1) (interpretation of Part 18)—

(a) in the definition of “multilateral trading facility” for “4.1.15” substitute “ 4.1.22 ”;

(b) after the definition of “multilateral trading facility” insert—

“organised trading facility” has the meaning given in Article 4.1.23 of the markets in financial instruments directive;

(d) after the definition of “revocation order” insert—

“trading venue” means a multilateral trading facility, a regulated market or an organised trading facility.

Amendments to Part 18A (suspension and removal of financial instruments from trading)

39

In section 313A(3) (FCA's power to require suspension or removal of financial instruments from trading) for the words “regulated market” to the end substitute “ trading venue ”.

40

Omit section 313C (notification in relation to suspension or removal of a financial instrument from trading).

41

After section 313C insert—

(313CA) (1) The FCA must take the steps in subsection (2) to (4) if it imposes a requirement on an institution under section 313A to— (a) suspend or remove a financial instrument from trading; or (b) suspend or remove a derivative which relates, or is referenced, to the financial instrument from trading to support the objectives of a suspension or removal mentioned in paragraph (a). (2) The FCA must require any trading venue or systematic internaliser which falls under its jurisdiction and trades the same instrument or derivative to suspend or remove the instrument or derivative from trading if a suspension or removal mentioned in subsection (1) was due to— (a) suspected market abuse; (b) a take-over bid; or (c) the non-disclosure of inside information about the issuer or the instrument. (3) But the FCA is not obliged to impose a requirement under subsection (2) if it could cause significant damage to the interests of investors or the orderly functioning of the market. (4) The FCA must— (a) inform ESMA and the competent authorities of every other EEA State of— (i) a decision to impose a requirement under section 313A; (ii) a decision to revoke a requirement imposed under section 313A; (iii) a decision to impose, not to impose, or to revoke a requirement under subsection (2); and (b) publish a decision mentioned in paragraph (a)(i) to (iii) in such a manner as it considers appropriate unless the decision has already been published under section 313B(2)(b) or 313BE(5). (313CB) (1) The FCA must take the steps in subsections (2), (4), and (5) if a person specified in subsection (6) operating a trading venue in the United Kingdom informs the FCA it has made a decision— (a) to suspend or remove a financial instrument from trading on the trading venue because the instrument no longer complies with the venue's rules, or (b) to suspend or remove a derivative which relates, or is referenced, to the financial instrument from trading on the trading venue to support the objectives of a suspension or removal mentioned in paragraph (a). (2) The FCA must require any other trading venue or any systematic internaliser which falls under its jurisdiction and trades the same instrument or derivative to suspend or remove the instrument or derivative from trading if a suspension or removal mentioned in subsection (1) was due to— (a) suspected market abuse; (b) a take-over bid; or (c) the non-disclosure of inside information about the issuer or the instrument. (3) But the FCA is not obliged to impose a requirement under subsection (2) if it could cause significant damage to the interests of investors or the orderly functioning of the market. (4) The FCA must revoke a requirement imposed under subsection (2) if the person mentioned in subsection (1) informs the FCA it has lifted the suspension mentioned in that subsection. (5) The FCA must— (a) inform ESMA and the competent authorities of every other EEA State of any decision to impose, not to impose, or to revoke a requirement under subsection (2), (b) provide ESMA and those competent authorities with an explanation if the decision is not to impose a requirement under subsection (2) because subsection (3) applies, and (c) publish any decision mentioned in paragraph (a) in such a manner as it considers appropriate. (6) The specified persons for the purposes of subsection (6) are— (a) a recognised investment exchange, (b) an investment firm with a Part 4A permission to carry on a regulated activity which is any of the investment services and activities, (c) a credit institution authorised under the capital requirements directive. (313CC) (1) The FCA must take the steps in subsections (2) and (3) if the FCA is informed that a competent authority of another EEA State has made a decision to— (a) suspend or remove a financial instrument from trading on a trading venue or systematic internaliser in that State for the purposes of— (i) Article 32.2 (suspension and removal of financial instruments from trading on an MTF or OTF) of the markets in financial instruments directive; (ii) Article 52.2 (suspension and removal of financial instruments from trading on a regulated market) of the directive, or (iii) Article 69.2(m) or (n) (supervisory powers) of the directive, or (b) suspend or remove a derivative which relates, or is referenced, to the financial instrument from trading on a trading venue or systematic internaliser in that State for those purposes. (2) The FCA must require any trading venue or systematic internaliser which falls under its jurisdiction and trades the same instrument or derivative to suspend or remove the instrument or derivative from trading if the suspension or removal was due to— (a) suspected market abuse; (b) a take-over bid; or (c) the non-disclosure of inside information about the issuer or the instrument. (2A) But the FCA is not obliged to impose a requirement under subsection (2) if it could cause significant damage to the interests of investors or the orderly functioning of the market. (3) The FCA must revoke a requirement imposed under subsection (2) if the competent authority of the other EEA State informs the FCA it has lifted the suspension or removal mentioned in subsection (1). (4) For the purposes of subsection (1) the FCA is informed of a decision mentioned in subsection (1)(a) or (b) when the competent authority that made the decision, the competent authority of any other EEA State, or ESMA informs the FCA of the decision for the purposes of Article 32.2 or 52.2 of the markets in financial instrument directive.

42

(1) Section 313D (interpretation of Part 18A) is amended as follows.

(2) The existing text becomes subsection (1).

(3) In subsection (1)—

(a) in the definition of “financial instrument” for “4.1.17” substitute “ 4.1.15 ”;

(b) omit the definition of “multilateral trading facility”;

(d) in the appropriate places, insert—

“competent authority” has the meaning given in Article 4.1.26 (definitions) of the markets in financial instruments directive;

“derivative” means a derivative referred to in points (4) to (10) of Section C of Annex 1 to the markets in financial instruments directive;

“non-disclosure of inside information” means a failure to disclose inside information, as defined by Article 7 (inside information) of the market abuse regulation, in contravention of Article 17 (public disclosure of inside information) of that Regulation;

“market abuse” means a contravention of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or 15 (prohibition of market manipulation) of the market abuse regulation;

“systematic internaliser” has the meaning given in Article 4.1.20 of the markets in financial instruments directive;

; and

“trading venue” has the meaning given in Article 4.1.24 of the markets in financial instruments directive.

(4) After subsection (1) insert—

(2) In this Part a trading venue or systematic internaliser falls under the FCA's jurisdiction if— (a) the United Kingdom is the home Member State (as defined by Article 4.1.55 of the markets in financial instruments directive) of— (i) in the case of a trading venue which is a regulated market (as defined by Article 4.1.21 of the directive), the regulated market; (ii) in the case of a trading venue which is a multilateral trading facility (as defined by Article 4.1.22 of the directive), the person operating the facility; (iii) in the case of a trading venue which is an organised trading facility (as defined by Article 4.1.23 of the directive), the person operating the facility; or (iv) in the case of a systematic internaliser, the systematic internaliser; or (b) in the case of a systematic internaliser does not fall within the FCA's jurisdiction by virtue of paragraph (a)— (i) it has established a branch (as defined by Article 4.1.30 of the directive) in the United Kingdom; and (ii) the FCA considers that it is necessary to impose a requirement on the systematic internaliser under section 313CA(2), 313CB(2), or 313CC(2) for the purposes of Article 32.2 or 52.2 ... of the markets in financial instruments directive.

Amendments to Part 20 (provision of financial services by members of the professions)

43

(1) Section 327 (exemption from general prohibition) is amended as follows.

(2) In subsection (1)—

(a) at the end of paragraph (a) omit “and”;

(b) after paragraph (a) insert—

(aa) where the activity is the provision of a service listed in Section A of Annex 1 of the markets in financial instruments directive relating to a financial instrument, the condition set out in subsection (7A) is also satisfied; and

(3) After subsection (7) insert—

(7A) The condition mentioned in subsection (1)(aa) is that— (a) the service is provided in an incidental manner in the course of a professional activity for the purposes of the markets in financial instruments directive; and (b) the professional activity concerned is the provision of professional services. (7B) In subsection (7A) a service is provided in an incidental manner in the course of a professional activity for the purposes of the markets in financial instruments directive if the applicable conditions are satisfied. (7C) The applicable conditions for the purposes of subsection (7B) are those set out in Article 4(a) to (c) of Commission 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 .

Amendments to Part 23 (public record, disclosure of information and co-operation)

44

(1) Section 347 (the record of authorised persons etc) is amended as follows.

(2) In subsection (1)(a) for the “and” after paragraph (hb) insert—

(hc) appointed representative to whom subsection (2C) applies; and

(3) In subsection (2A) —

(a) in paragraph (a) after “subsection (1A)” insert “ or (1AA) ”; and

(b) in paragraph (c) for “23.3” substitute “ 29.3 ”.

(4) After subsection (2B) insert—

(2C) This subsection applies to an appointed representative of an authorised person who has a Part 4A permission by virtue of regulation 4 or 7 of the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/XXXX).

(5) After subsection (3) insert—

(3A) But if a person ceases to be a person to whom one of the paragraphs of subsection (1) applies as a result of— (a) a cancellation of that person's Part 4A permission under section 55J(6) because one or more of the conditions in 55K(1)(b) to (d) was met; or (b) a cancellation of that person's Part 4A permission to carry on regulated activities as an exempt investment firm under section 55J(1) to (3) because— (i) the person has contravened a requirement imposed on that person by or under the Act for the purposes of Article 3.2(a) of the markets in financial instruments directive; and (ii) one or more of the conditions mentioned in Article 8(b) to (d) of the directive was met; the power conferred by subsection (3) is not exercisable for a period of five years from the date on which the person ceased to be a person to whom subsection (1) applied. (3B) Where the power conferred by subsection (3) is not exercisable in respect of an entry in the record as a result of subsection (3A) the FCA must— (a) make a note in the record that it considers the person to whom the entry relates has ceased to be person to whom one of the paragraphs of subsection (1) applies as a result of a cancellation of that person's Part 4A permission for a reason mentioned in subsection (3A)(a) or (b); and (b) state why it considers that is the case.

(6) At the end of subsection (4)(b) insert “ in any case where it has not already done so under subsection (3B) ”.

(7) In subsection (8A) at the appropriate place insert—

“exempt investment firm” means an authorised person who— (a) is an investment firm; and (b) has a Part 4A permission; but to whom Title II of the markets in financial instruments directive does not apply by virtue of Article 3 of the directive..

Amendments to Part 26 (notices)

45

In section 391 (publication) —

(a) in subsection (4A) for “and 391C” substitute “ , 391C and 391D ”; and

(b) in subsection (7B) —

(i) at the end of paragraph (c) omit “or”;

(ii) in paragraph (d) after “by” insert “ or under ”; and

(iii) at the end of paragraph (d) insert—

; or (e) by or under the markets in financial instruments regulation and any directly applicable EU regulation made under it.

46

After section 391C (publication: special provisions relating to the UCITs directive), insert—

(391D) (1) This section applies where a supervisory notice, decision notice or final notice relates to the imposition of a sanction or measure to which Article 71 of the markets in financial instruments directive applies. (2) Where a regulator publishes information under section 391(4) or (5) about a matter to which a supervisory notice or decision notice relates and the person to whom the notice is given refers the matter to the Tribunal, the regulator must, without undue delay, publish on its official website information about the status of the appeal and its outcome. (3) Subject to subsections (4), (5), and (8) where a regulator gives a final notice, it must, without undue delay, publish on its official website information on the type and nature of the breach and the identity of the person on whom the sanction or measure is imposed. (4) Subject to subsection (7) and (8), information about a matter to which a final notice relates must be published in accordance with subsection (5) where— (a) a regulator considers it to be disproportionate to publish the identity of a legal person on whom the sanction or measure is imposed following an assessment by the regulator of the proportionality of publishing the person's identity; (b) a regulator considers it to be disproportionate to publish the personal data of an individual on whom the sanction or measure is imposed following an assessment by the regulator of the proportionality of publishing the personal data; or (c) the publication of information under subsection (3) would jeopardise the stability of the financial markets or an ongoing investigation. (5) Where subsection (4) applies, a regulator must— (a) defer the publication of the information about a matter to which a final notice relates until such time as subsection (4) ceases to apply; or (b) publish the information on an anonymous basis if publication on that basis would ensure the effective protection of any anonymised personal data in the information. (6) Where subsection (5)(b) applies, the regulator may make such arrangements as to the publication of information (including as to the timing of publication) as are necessary to preserve the anonymity of the person on whom the sanction or measure is imposed. (7) The regulator may make arrangements for the postponed publication of any personal data that is anonymised in information it publishes under subsection (5)(b) if— (a) publication of the data is postponed for a reasonable period of time; and (b) the regulator considers that subsection (5)(b) will no longer apply in respect of that data at the time of the postponed publication. (8) Information about a matter to which a final notice relates must not be published if publication in accordance with subsection (5) is considered by the regulator insufficient to ensure— (a) that the stability of the financial markets would not be put in jeopardy; or (b) that the publication of the information would be proportionate with regard to sanctions or measures which are considered by the regulator to be of a minor nature. (9) Where a regulator publishes information in accordance with subsections (2) to (7), the regulator must— (a) ensure the information remains on its official website for at least five years, unless the information is personal data and the Data Protection Act 1998 requires the information to be retained for a different period; and (b) promptly report the information to ESMA.

47

After section 395(13)(bbza) (the FCA's and PRA's procedures) insert—

(bbzb) section 122IA;

Amendments to Part 27 (offences)

48

In section 398(1A) (Misleading FCA or PRA: residual cases)—

(a) after paragraph (b) insert—

(ba) the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701);

(b) at the end of paragraph (e) omit “or”; and

(ea) any directly applicable EU regulation made under the markets in financial instruments directive; (eb) the markets in financial instruments regulation and any directly applicable EU regulation made under it; or

Amendments to Part 28 (miscellaneous)

49

Omit sections 405 (directions) to 408 (EFTA firms).

50

Omit sections 412A (approval and monitoring of trade-matching and reporting systems) and 412B (procedure for approval, suspension and withdrawal).

Amendments to Part 29 (interpretation)

51

(1) Section 417(1) is amended as follows.

(2) For the definition of “investment services and activities” substitute—

“investment services and activities” has the meaning given by Article 4.1.2 (definitions) of the markets in financial instruments directive, read with Articles 5 to 8 of the Commission Delegated Regulation (EU) 2017/565 on Directive 2014/65/EU of the European Parliament and of the Council as regarding organisational requirements and operational conditions for investment firms and defined terms for the purposes of that Directive;

(3) Insert the following definition in the appropriate places—

“markets in financial instruments regulation” means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2004 on markets in financial instruments;

52

In section 422A(4)(a) (disregarded holdings) for “4.1(8)” substitute “ 4.1.7 ”.

53

In section 424A(5)(b) (investment firm) for “4.1.20” substitute “ 4.1.55 ”.

Amendments to Schedule 3 (EEA passport rights)

54

(1) Schedule 3 (EEA passport rights) is amended as follows.

(2) For paragraph 4C substitute—

(4C) “The markets in financial instruments directive” means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments.

(3) In paragraph 11A for “4.1.25” substitute “ 4.1.29 ”.

(4) In paragraph 12(3) after “5(a)”, insert “ or (b) ”.

(5) In paragraph 14(1)(ba) for “31.5” substitute “ 34.6 ”.

(6) In paragraph 20(4BA) for “31.6” substitute “ 34.7 ”.

(7) In paragraph 20A —

(a) after “investment firm” in both places, insert “ or UK credit institution ”; and

(b) after sub-paragraph (2) insert—

(3) In this paragraph “UK credit institution” means a UK firm— (a) which is a credit institution; and (b) whose EEA right derives from the markets in financial instruments directive.

Amendments to Schedule 10A (liability of issuers)

55

In paragraph 8(1) of Schedule 10A (liability of issuers in connection with published information)—

(a) in paragraph (a)—

(i) for “4.1.18” substitute “ 4.1.44 ”; and

(ii) for “4.1.19” substitute “4.1.17; and

(b) in paragraph (b)—

(i) for “4.1.14” substitute “ 4.1.21 ”; and

(ii) for “4.1.15” substitute “ 4.1.22 ”.

SCHEDULE 3 — Amendments to secondary legislation made under the Financial Services and Markets Act 2000

The Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges and Clearing Houses) Regulations 2001

1

(1) The Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges and Clearing Houses) Regulations 2001 are amended as follows.

(2) In regulation 3(1) (interpretation)—

(a) in the definition of “branch” for “Article 4.1.26” substitute “ Article 4.1.30 ”;

(b) omit the definition of “the Commission Regulation”;

(d) in the definition of “multilateral trading facility” for “Article 4.1.15” substitute “ Article 4.1.22 ”;

(e) in the definition of “regulated market” for “Article 4.1.14” substitute “ Article 4.1.21 ”;

(f) in the definition of “transferable securities” for “Article 4.1.18” substitute “ Article 4.1.44 ”;

(g) at the appropriate places insert—

“algorithmic trading” has the meaning given in Article 4.1.39 of the markets in financial instruments directive;

“certificates” has the meaning given in Article 2.1.27 of the markets in financial instruments regulation;

“commodity derivatives” has the meaning given in Article 4.1.50 of the markets in financial instruments directive;

“depositary receipts” has the meaning given in Article 4.1.45 of the markets in financial instruments directive;

“derivative” means a financial instrument defined in Article 4.1.44(c) of the markets in financial instruments directive and listed in Section C(4) to (10) of Annex 1 to that directive;

“direct electronic access” has the meaning given in Article 4.1.41 of the markets in financial instruments directive;

“emission allowances” has the same meaning as in the markets in financial instruments directive;

“exchange-traded fund” has the meaning given in Article 4.1.46 of the markets in financial instruments directive;

“group” has the meaning given in Article 4.1.34 of the markets in financial instruments directive;

“high-frequency algorithmic trading technique” has the meaning given in Article 4.1.40 of the markets in financial instruments directive;

“liquid market” has the meaning given in Article 4.1.25 of the markets in financial instruments directive;

“management body” in relation to an exchange means— (a) the board of directors, or if there is no such board, the equivalent body responsible for the management of the exchange; and (b) any other person who effectively directs the business of the exchange;

“matched principal trading” has the meaning given in Article 4.1.38 of the markets in financial instruments directive;

“multilateral system” has the meaning given as in Article 4.1.19 of the markets in financial instruments directive;

“senior management” has the meaning given by Article 4.1.37 of the markets in financial instruments directive;

“SME growth market” has the meaning given by Article 4.1.12 of the markets in financial instruments directive;

“sovereign debt” has the meaning given by Article 4.1.61 of the markets in financial instruments directive;

“structured finance products” has the meaning given in Article 4.1.48 of the markets in financial instruments directive;

“systematic internaliser” has the meaning given in Article 4.1.20 of the markets in financial instruments directive;

“third country firm” has the meaning given in Article 4.1.57 of the markets in financial instruments directive;

(3) After regulation 10 (revocation of recognition) insert—

(11) The FCA may make rules for the purposes of these Regulations.

(4) For paragraph 2(3) of the Schedule (suitability) substitute—

(3) The members of the management body must be of sufficiently good repute and possess sufficient knowledge, skills and experience to perform their duties.

(5) After paragraph 2 of the Schedule insert—

(2A) (1) The composition of the management body of an exchange must reflect an adequately broad range of experience. (2) The management body must possess adequate collective knowledge, skills and experience in order to understand the exchange's activities and main risks. (3) Members of the management body must— (a) commit sufficient time to perform their functions on the management body; (b) act with honesty, integrity and independence of mind; and (c) effectively— (i) assess and challenge, where necessary, the decisions of the senior management; and (ii) oversee and monitor decision-making. (4) The management body must— (a) define and oversee the implementation of governance arrangements that ensure the effective and prudent management of the exchange in a manner which promotes the integrity of the market, which at least must include— (i) the segregation of duties in the organisation; and (ii) the prevention of conflicts of interest; (b) monitor and periodically assess the effectiveness of the exchange's governance arrangements; and (c) take appropriate steps to address any deficiencies found as a result of the monitoring under paragraph (b). (5) An exchange must— (a) devote adequate human and financial resources to the induction and training of members of the management body; (b) ensure that the management body has access to the information and documents it requires to oversee and monitor management decision-making; and (c) notify the FCA of the identity of all the members of its management body. (6) An exchange and, if it has a nomination committee, its nomination committee must engage a broad set of qualities and competences when recruiting persons to the management body, and for that purpose have a policy promoting diversity on the management body. (7) The number of directorships a member of the management body can hold at the same time must take into account individual circumstances and the nature, scale and complexity of the exchange's activities. (2B) (1) If an exchange is significant the following requirements apply to the management body— (a) members of the management body must not at the same time hold positions exceeding more than one of the following combinations— (i) one executive directorship with two non-executive directorships (or where so authorised by the FCA under regulation 44(1), three non-executive directorships); or (ii) four non-executive directorships (or where so authorised by the FCA under regulation 44(1), five non-executive directorships); and (b) the management body must have a nomination committee unless it is prevented by law from selecting and appointing its own members. (2) For the purposes of sub-paragraph (1)(a)— (a) any directorship in which the person represents the United Kingdom is not counted; (b) executive or non-executive directorships— (i) held within the same group, or (ii) held within the same undertaking where the exchange holds a qualifying holding within the meaning of Article 4.1.31 of the markets in financial instruments directive, shall be counted as a single directorship; and (c) any directorship in an organisation which does not pursue predominantly commercial objectives is not counted. (3) The nomination committee referred to in sub-paragraph (1)(b) must— (a) be composed of members of the management body who do not perform an executive function in the exchange; (b) identify and recommend to the exchange persons to fill management body vacancies; (c) at least annually assess the structure, size, composition and performance of the management body and make recommendations to the management body; (d) at least annually assess the knowledge, skills and experience of individual members of the management body and of the management body collectively, and report to the management body accordingly; (e) periodically review the policy of the management body for the selection and appointment of senior management and make recommendations to the management body; and (f) be able to use any forms of resource it deems appropriate, including external advice. (4) In performing its functions under sub-paragraph (3) the nomination committee must take account of the need to ensure that the management body's decision-making is not dominated by— (a) any one individual; or (b) a small group of individuals, in a manner that is detrimental to the interests of the exchange as a whole. (5) In performing its function under sub-paragraph (3)(b) the nomination committee must— (a) evaluate the balance of knowledge, skills, diversity and experience of the management body; (b) prepare a description of the roles, capabilities and expected time commitment for any particular appointment; (c) decide on a target for the representation of the underrepresented gender in the management body and prepare a policy on how to meet that target; (d) engage a broad set of qualities and competences, and for that purpose have a policy promoting diversity on the management body. (6) In sub-paragraph (1), “significant” in relation to an exchange means significant in terms of the size and internal organisation of the exchange and the nature, scope and complexity of the exchange's activities.

(6) In paragraph 3 of the Schedule (systems and controls)—

(a) for sub-paragraph (1) substitute—

(1) The exchange must ensure that the systems and controls, including procedures and arrangements, used in the performance of its functions and the functions of the trading venues it operates are adequate, effective and appropriate for the scale and nature of its business.

(b) at the end of sub-paragraph (2)(d) omit “and”;

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.