Tải bản đầy đủ - 0 (trang)
Recognized Investment Exchanges ⠀刀䤀䔀猀) and Recognized Clearing Houses ⠀刀䌀䠀猀)

Recognized Investment Exchanges ⠀刀䤀䔀猀) and Recognized Clearing Houses ⠀刀䌀䠀猀)

Tải bản đầy đủ - 0trang

Directions by the FSA

Revocation of recognition

Procedure for directions and revocation

Complaints handling

Notification requirements

UK bodies

Overseas bodies

Waiver of notification requirements

Ownership and control of an RIE

Other provisions relating to financial markets and insolvency

Duty to report default proceedings


Applications by insolvent members or designated non-members

Approval of changes to default rules


Immunity under s 291 FSMA

The European framework

Regulated markets under MiFID

Regulated market definition

Scope of activities of regulated markets under MiFID

Obligations of regulated markets

Rights of regulated markets

The Settlement Finality Directive


Effect of designation

Application for designation

Approval of overseas investment exchanges and clearing houses under the

Insolvency Act 1989

Designated investment exchange status



Principal areas of impact on exchanges

Changes in scope: impact on spot secondary markets in emissions allowances

Requirements for commodity derivative exchanges and position limits

Organizational requirements

Transparency requirements

Third-country access

Impact on clearing houses







































4.01 This chapter summarizes and discusses the UK regulatory framework for recognized

investment exchanges (RIEs) and recognized clearing houses (RCHs) under the

Financial Services and Markets Act 2000 (FSMA), and considers that framework in the

light of current and forthcoming European legislation.


4.02 Exchanges and clearing houses occupy a central role in the operation of markets, and in

particular cash equity markets. In the UK, the London Stock Exchange (LSE) continues

to dominate the listing and trading of equities, and LCH.Clearnet (formed by a merger

of the London Clearing House Limited and Clearnet), which clears across a variety of

products, is Europe’s largest independent clearing house.

4.03 Exchange regulation in the UK has its background in the Financial Services Act 1986.

The Act, which came into force in April 1988, established a regulatory framework for

the regulation of so-called investment business (similar to that governing the conduct of

designated investment business under the FSMA). The Act established two tiers of

regulators, with the Securities and Investments Board (SIB), the predecessor to the

Financial Services Authority (FSA), occupying the position of top-tier regulator, and a

series of second-tier regulators, including certain self-regulating organizations,

recognized professional bodies, and the RIEs and RCHs, taking a front-line regulatory

role in relation to their functions subject to the oversight of the SIB.

4.04 The regulatory regime for RIEs and RCHs (referred to collectively in this chapter as

‘recognized bodies’) required them, as a precondition to their regulatory status (and to

the conduct of their investment business), to meet recognition requirements (laid out in

s 39 of, and Sch 4 to, the Act) designed to ensure that they regulated their markets and

clearing systems to appropriate standards. The recognized body regime was overseen

by the SIB, which had powers to revoke recognition under limited circumstances. In

addition, recognized bodies were subject to obligations to report certain events to the

SIB on an ad hoc and continuing basis.

4.05 Within the European legislative framework, the 1993 Investment Services Directive

(ISD)1 established a regulatory framework for so-called regulated markets, providing

regulated markets with the right to provide access to their services on a pan-European

basis and for member States to impose certain requirements to concentrate trading

through domestic regulated markets. The ISD was superseded by the 2004 Markets in

Financial Instruments Directive (MiFID),2 which came into force in November 2007.

4.06 MiFID significantly expanded the scope of the ISD and provides for a greater degree of

harmonization, setting out much more detailed requirements relating to the operation of

regulated markets. MiFID high-level regulatory principles for regulated markets have

been implemented by incorporating them into the existing UK framework for RIEs,

principally through amendments to the FSMA and the Recognition Requirements

Regulations 2001, as amended.3 A UK RIE is subject to more detailed organizational

requirements than an RCH, reflecting the requirements of MiFID for regulated markets.

Although these requirements are substantially similar to the pre-existing UK recognition

requirements, the Recognition Requirement Regulations were amended in 2007 to

follow the MiFID text more closely.4

Regulation under the Financial Services and Markets Act 2000

4.07 The FSMA establishes the scope of financial services regulation in the UK. A potential

exchange or clearing house operator will need to establish whether its activities fall

within the scope of regulation.5 If its proposed activities fall within the scope of

regulation, then it will have a choice as to the regulatory framework to which it

subjects itself: exemption under Pt XVIII FSMA by recognition as an RIE or RCH, or

authorization. Exemption as a recognized body requires satisfaction of certain

conditions set out in the Financial Services and Markets Act 2000 (Recognition

Requirements for Investment Exchanges and Clearing Houses) Regulations 2000,6 made

by HM Treasury under the FSMA.

Scope of regulation: the requirement for authorization/exemption

under the FSMA

4.08 In broad terms, s 19 FSMA (referred to as the ‘general prohibition’, or ‘authorization

requirement’) provides that, in order to carry on a regulated activity by way of business

in the UK, a person must be authorized or exempt. Under ss 23 and 26 FSMA,

contravention of the general prohibition constitutes a criminal offence and may render

any agreement entered into by the contravener in the course of carrying on regulated

activities unenforceable against any other party.7

4.09 Assuming that its activities will fall within the general prohibition, an operator of an

exchange or clearing house has the choice as to how it intends to become regulated—

that is, between becoming a recognized body or an authorized firm.8 The remainder of

this chapter deals with the conditions to, and consequences of, choosing to be a

recognized body.9

Exemption under Pt XVIII FSMA

Scope of exemption

4.10 Part XVIII FSMA establishes the regulatory regime for ‘recognized bodies’.

‘Recognized’, for the purpose of the FSMA, is specified as meaning, with respect to an

investment exchange or clearing house, that there is a recognition order in force for the

time being in relation to it. Section 285 sets out the scope of recognized bodies’

exemption from the general prohibition.

4.11 In respect of RIEs, s 285(2) exempts from the general prohibition any regulated activity

that is carried on by an RIE as part of the exchange’s business as an investment

exchange, or that is carried on for the purposes of, or in connection with, the provision

of clearing services by the exchange. In respect of RCHs, s 285(3) exempts any

regulated activity carried on for the purposes of, or in connection with, the provision of

clearing services by the clearing house. The FSMA does not define the terms

‘investment exchange’ or ‘clearing house’ for these purposes; accordingly, the terms

carry their ordinary meaning. The operation of an investment exchange will include

operation of a multilateral trading facility (MTF); an RIE may therefore operate an

MTF. The limits on the scope of exemption should be noted. Exemption in respect of

the general prohibition applies only to activities carried out as a part of an RIE’s

business as an investment exchange (RIEs only), or for the purposes of or in connection

with the provision of clearing services (RIEs engaging in clearing and RCHs). This

effectively prevents a recognized body from engaging in other regulated activities—so,

for example, a recognized body will be unlikely to be able to engage in asset

management or investment advice, because these would not generally be part of its

business as an investment exchange. This contrasts with the regulatory framework for

authorized firms, which are not limited in the regulated activities that they may

undertake and for which the consequences of conducting regulated activities outside the

scope of permissions are less severe. An authorized firm that conducts regulated

activities outside the scope of its Pt IV permissions is subject to regulatory sanction

under s 20 FSMA, and may be liable for breach of statutory duty to a person who

suffers loss in certain circumstances, but does not commit a criminal offence.

Transactions made outside the scope of the permissions are not open to challenge on

grounds of lack of the requisite permission.

UK and overseas bodies

4.12 The statutory framework differentiates between UK and overseas bodies. For the

purposes of the recognized body regime, an ‘overseas body’ is a body corporate or

association that does not have its head office or registered office in the UK. The

recognition requirements, application process, and continuing obligations of such

bodies differ from those applying in respect of UK bodies, reflecting the fact that the

jurisdiction of the FSA is necessarily limited in respect of overseas bodies.10

Conditions to exemption

UK bodies

4.13 Section 286 empowers the Treasury to make regulations establishing initial and

continuing recognition requirements for recognized bodies, which are to be subject to

the approval of the Secretary of State to the extent that they make provision as to the

default rules or proceedings of investment exchanges or clearing houses. The

Recognition Requirements Regulations are made under the power conferred by the


Overseas bodies

4.14 In order to be recognized, an overseas applicant need not comply with the recognition

requirements made by the Treasury under s 286. Instead, s 292(2) provides that the

FSA may make a recognition order in respect of an overseas applicant if the

requirements set out in s 292(3) are met.11

Power to refuse recognition on grounds of excessive regulatory provision

4.15 Under s 290A FSMA, the FSA is required to refuse an application for recognition of an

investment exchange or clearing house if it appears to the FSA that the applicant’s

existing or proposed regulatory provision imposes, or would impose, requirements on

persons affected by it that are excessive. The provision was inserted in 2007 in

response to a potential bid by NASDAQ to acquire the LSE, resulting from concerns

about the possible effect on the LSE’s rules of a takeover by a company based outside

the UK. The section is intended to enable the FSA to prevent recognized bodies from

making rule changes that are likely to have an impact on issuers and others that is

disproportionate to the public benefits. The power, which has never been exercised, is

intended to be a right of veto and not a broader right of approval of rule changes, to

provide assurance that the rules of recognized bodies in the UK will continue to be


Recognition requirements

4.16 The recognition requirements are set out in the Recognition Requirements Regulations

in respect of UK bodies and in s 292 in respect of overseas bodies. The FSA’s

Recognised Investment Exchanges and Recognised Clearing Houses Sourcebook (REC)

gives substantial guidance on the FSA’s interpretation of the requirements.

4.17 The Recognition Requirements Regulations set out requirements for UK bodies. Those

applying to investment exchanges are set out in Pts I and II of the Schedule, and the

requirements for clearing houses in Pts III and IV. The recognition requirements must

be satisfied by UK applicants for recognized body status before recognition is granted

and throughout the period during which recognized body status is held. Parts II and IV

deal with the obligations of UK bodies with respect to default rules relating to market


4.18 There is a substantial degree of overlap between the requirements applying to RIEs and

those applying to RCHs. The description that follows distinguishes those requirements

applying to each.

UK bodies: general requirements

4.19 This section sets out the requirements for recognition other than those in respect of

default rules, which are covered elsewhere.12 The requirements must be met by the

recognized body. However, there is scope for the requirements to be satisfied on an

outsourced basis. Regulation 6 of the Recognition Requirements Regulations, which

provides guidance on the extent of the FSA’s discretion to consider the circumstances

of the body, contemplates delegations by the body. A body may satisfy recognition

requirements by making arrangements for functions to be performed by third parties, but

any such delegation is without prejudice to the responsibility of the body to satisfy the

recognition requirements applying to it. In addition, where a body delegates functions,

there is an additional recognition requirement that the delegate be a fit and proper

person who is willing and able to perform the delegated function. The requirement for

fitness and propriety of the delegate applies to the body or applicant, not to the delegate

itself: it is for the body to satisfy the FSA that the requirement is met. Factors relating

to the delegate that the FSA may take into account when considering satisfaction of the

requirement include the resources of the delegate to perform the function, the adequacy

of its systems and controls to enable it to manage its functions and to report to the body,

the skill, integrity, and competence of its management, the understanding of the delegate

of the nature of the function that it performs on behalf of the body and its significance

for the body’s ability to satisfy the recognition requirements, and whether the delegate

undertakes to perform its functions so as to enable the body to comply with its

regulatory obligations. Factors relevant to the delegation itself include the terms of the

contract between the body and the delegate, arrangements to monitor performance of its

functions, and arrangements to manage conflicts of interest and to protect confidential


4.20 The additional requirements place a significant hurdle to outsourcings by UK

recognized bodies. In general, it is to be expected that a regulated delegate will be

acceptable to the FSA as a fit and proper person. Where a delegate is unregulated, a

UK applicant or recognized body will need to conduct extensive diligence on the

factors cited and document support for its belief that the delegate satisfies the

conditions. In addition, the terms of the outsourcing arrangement will need to take

account of the additional recognition requirement, including enabling disclosure of

information relating to the delegate to the FSA and protections to ensure satisfaction of

the other factors (such as service-level agreements, monitoring arrangements, and stepin rights or other corrective arrangements).

4.21 The recognition requirements in respect of UK bodies are as follows.

Financial resources: paras 1 (RIEs) and 16 (RCHs) of the Schedule to the

Recognition Requirements Regulations

4.22 A UK body must have financial resources sufficient for the proper performance of its

functions as a recognized body. In considering whether this requirement is satisfied, the

FSA must take into account all circumstances relating to an RIE, including the body’s

connection with any person and any activity carried on by it. With regard to RCHs, the

FSA is given discretion to take account of all of the circumstances. Unlike the

authorized persons regime, which sets out detailed requirements for the types and

amount of financial resources that must be maintained, the recognized bodies regime

expresses the financial resources requirement at a much higher level, leaving

potentially greater flexibility in structuring the body’s financial resources.

4.23 The guidance in REC provides that the FSA may have regard to operational and other

risks to which the body is exposed, and counterparty and market risks to which it is

exposed if it acts as a central counterparty (CCP) or guarantees the performance of


4.24 In looking to the amount of financial resources required, sufficiency and liquidity of the

financial resources, and their adequacy to deal with major market stress or turbulence

relative to the exposure of the body to market and counterparty risk, are likely to be

relevant. In addition to amounts necessary to deal with market and counterparty risk,

there is an expectation that a body must have sufficient liquid financial resources to

cushion it against operational and other risk. The FSA guidance13 indicates that, as a

baseline requirement for operational and other risk, it will expect excess resources

sufficient to cover liquid financial assets amounting to at least six months’ operating

costs and net capital of at least that amount, unless there are special circumstances

indicating otherwise. Although an applicant will not be bound to comply with that

guidance, the FSA will be unlikely to be minded to recognize an applicant that does not

meet the minimum capital suggested.

4.25 Unlike most investment firms, recognized bodies are not subject to consolidated

supervision (the regulation of the group of which the relevant entity forms part).

Instead, the guidance indicates that financial benefits, liabilities, risks, and exposures

arising from the UK recognized body’s connection with any person, including (but not

limited to) its connection with other group members, persons in whom it has significant

investment or who have significant investment in it, and persons with whom it has a

significant contractual relationship, will be relevant.

4.26 The guidance indicates that adequacy of financial resources will be determined by

reference to the amount and composition of the UK recognized body’s capital, liquid

financial assets, and other financial resources (such as insurance policies and

guarantees, where appropriate). This potentially gives greater latitude to recognized

bodies than investment firms in terms of capitalization, the latter being generally

restricted in terms of regulatory capital to the financial resources specified under the

Capital Requirements Directive (CRD).14

Suitability (paras 2 and 17)

4.27 A UK recognized body must be a fit and proper person to perform its functions as such.

In determining compliance with this requirement, the FSA may take into account all of

the circumstances, including the connection of the body with any person. REC 2.4.3–

2.4.5 set out certain (non-exclusive) factors that the FSA will look to in establishing

compliance with the suitability requirement. These include factors relating to the body

itself and those relating to third parties. Those relating to the body itself split broadly

into governance, ability, and procedures to comply with the recognition requirements

and other obligations under the FSMA, and integrity of key personnel.

4.28 Governance is a key theme of the guidance: in addition to the constitution and

organization of the body, there are factors relating to the size and composition of the

governing body (in broad terms, the board) of the body, the amount of member

representation, the number and responsibilities of any members with executive roles,

the number of independent members, the access of the regulatory department to the

governing body, the oversight by the governing body of the regulatory functions of the

body, the effectiveness of arrangements to control conflicts of interest, and the

independence of its regulatory department from its commercial and marketing


4.29 The rules also require a UK RIE’s controllers to comply with suitability requirements.

As such, persons in a position to exercise significant influence over the management of

a UK RIE (whether directly or indirectly) and persons who effectively direct a UK

RIE’s business and operations are required to be of sufficiently good repute and to

have sufficient experience to ensure the prudent management and operation of the RIE.

In assessing compliance with this requirement, REC 2.4.6 indicates that the FSA may

consider the repute and experience of the RIE’s key individuals.

4.30 ‘Key individuals’ is defined in the Glossary to the FSA Handbook, and includes any

member of the governing body and any person responsible under the immediate

authority of a member or committee of the governing body for the conduct of any

regulated activity or regulatory function exercised by the body (alone, or jointly with

one or more others). The factors relating to key individuals are their integrity and

competence, and any breaches by them of law, regulation, or codes of practice. Bodies

are also expected to ensure that they have arrangements for ensuring that all employees

are honest and demonstrate high standards of integrity.

4.31 In practical terms, compliance with the suitability requirement at the level of the

recognized body will be likely to entail creating, documenting, implementing, and

maintaining a variety of structures and policies for the composition and role of the

board, any sub-committees (such as remuneration, audit, risk, etc), a compliance

function, membership representation, conflicts of interest management, employment,

and training.

4.32 In terms of connections with third parties that could affect fitness and propriety, the

FSA may look to any person in the same group as the body (‘group’, for this purpose,

having the definition set out in s 421 FSMA), any part-owner of the body, any person

who has the right or is able in practice to appoint or remove members of the governing

body or other key individuals, key individuals, and any person in accordance with

whose instructions the governing body or any key individual is accustomed to act. The

factors of which the FSA indicates it may take account in respect of such persons

include their reputation and standing (including standing with any relevant UK or

overseas regulator), breaches of any law or regulation, the roles of any of the body’s

key individuals who have a position within organizations under their control or

influence (including their responsibilities in that organization, and the extent and type of

their access to its senior management or governing body), independence (or the lack of

it) from them, and the extent to which the UK recognized body’s governing body is

responsible for their day-to-day management and operations.

4.33 A UK body’s employment policy will need to ensure fitness and propriety on the part

of key individuals. The policy will need to include establishing good standing with

regulators and other relevant factors, such as past criminal proceedings, litigation, or

bankruptcy or insolvency of the individual or any business in which the individual was

a member of the governing body, and any conflict to which the individual may be

subject by virtue of his or her other roles (such as with a member firm). Ensuring

fitness and propriety on the part of owners and part-owners of a body is potentially

more problematic, because the body generally will not be in a position to make

ownership of its equity subject to conditions.

Systems and controls (paras 3 and 18)

4.34 Paragraph 3 requires a UK recognized body to ensure that the systems and controls

used in the performance of its functions are adequate and appropriate for the scale and

nature of its business. The requirement applies in particular to systems and controls


(a) the transmission of information;

(b) the assessment, management, and (in relation to a UK RIE only) mitigation of risks

to the performance of its functions;

(c) in the case of a UK RIE only, the effecting and monitoring of transactions on, and the

technical operation of, the exchange;

(d) the operation of the arrangements required to ensure timely discharge of the rights

and liabilities of the parties to transactions in respect of which the body provides

services (that is, timely settlement); and

(e) (where relevant) the safeguarding and administration of assets belonging to users of

the body’s facilities.

4.35 In assessing whether the systems and controls used by a body in the performance of its

relevant functions are adequate and appropriate for the scale and nature of its business,

the FSA may have regard to a variety of factors, including governance, management of

conflicts of interest, audit, and information technology (IT). Governance is of particular

importance. Following the trend of the FSA post-Barings to lay responsibility for

failings of firms at the door of management, the guidance indicates that the FSA will

look to the body’s arrangements for managing, controlling, and carrying out its

functions. This includes the distribution of duties and responsibilities among its key

individuals and the departments of the UK recognized body responsible for performing

its relevant functions, the staffing and resources of the departments of the UK

recognized body responsible for performing its relevant functions, the arrangements

made to enable key individuals to supervise the departments for which they are

responsible, the arrangements for appointing and supervising the performance of key

individuals (and their departments), and the arrangements by which the governing body

is able to keep the allocation of responsibilities between key individuals and their

appointment, supervision, and remuneration under review.

4.36 In assessing risk assessment and management systems and controls, the extent to which

systems and controls enable the UK recognized body to identify, measure, allocate

responsibility for, manage, control, and report on general, operational, legal, and

market risks will be relevant. Where a body assumes significant counterparty risk (for

example, by virtue of acting as a CCP), systems to monitor and manage the body’s

exposures will be critical. To this end, there will be an expectation that sufficient

prominence is given to the position of the risk management department within the body

(including its access to the governing body and relationship with the commercial or

marketing departments of the UK recognized body). In addition, the body will need to

be able to demonstrate suitable frequency of monitoring and review of exposures limits

(or other control parameters), reliability of its arrangements for monitoring and

assessing intra-day movements in exposures and risks, robustness of its arrangements

for calculating, collecting, and holding margin payments and allocation of losses, and

arrangements for stress testing.

4.37 In assessing a UK RIE’s systems and controls for effecting, operating, and/or

monitoring of transactions, and the systems and controls used by the body for the

operation of settlement arrangements, the arrangements and processes through which

transactions are effected will be relevant. In the case of an RIE, robust systems for

order receipt and matching, trade and transaction reporting, and (if relevant)

transmission to a settlement system or clearing house will be important. UK recognized

bodies engaging in clearing and settlement are also required to be able to demonstrate

accuracy of their systems in relation to clearing and settlement from the point at which

clearing and settlement instructions arising from a transaction are entered into its

system to the point at which any rights or liabilities arising from that transaction are

discharged. In addition, the arrangements made by the body for monitoring and

reviewing the operation of these systems and controls will be a relevant factor to

satisfaction of the requirement.

4.38 Where a recognized body is responsible for the custody of assets, then it will be

critical to users that it has suitable systems for the segregation and holding of their

assets, and (if appropriate) appropriate interaction with any sub-custodian.

Accordingly, in assessing a UK recognized body’s systems and controls for the

safeguarding and administration of assets belonging to users of its facilities, the FSA

may have regard to all of the arrangements and processes by which the UK recognized

body records the assets held and the identity of the owners of (and other persons with

relevant rights over) those assets, any instructions given in relation to those assets, and

their carrying out any movements in those assets (or any corporate actions or other

events in relation to those assets), and reconciles its records with those of any

custodian or sub-custodian or registrar.

4.39 Because recognized bodies are both regulators and commercial entities responsible to

their owners or shareholders, there is potential for considerable conflict of interest

between their regulatory obligations, on the one hand, and their commercial interests,

on the other. Paragraph 4(2)(ea) of the Schedule to the Recognition Requirements

Regulations expressly imposes a requirement on UK RIEs to put in place appropriate

arrangements to identify and manage the potential adverse consequences of conflicts of

interests between the RIE, its owners, its users, and the sound functioning of its

markets. REC 2.5.13G–2.5.16G set out factors to which the FSA may have regard in

assessing a UK recognized body’s systems and controls for managing conflicts of

interest. These include internal arrangements to structure itself and to allocate

responsibility for decisions, so that it can continue to take proper regulatory decisions

notwithstanding any conflicts of interest, including the size and composition of the

governing body and relevant committees, the roles and responsibilities of key

individuals (particularly where they also have responsibilities in other organizations),

the arrangements for transferring decisions or responsibilities to alternates in

individual cases, and arrangements made to ensure that individuals who may have a

permanent conflict of interest in certain circumstances are excluded from the process of

taking decisions (or receiving information) about matters in which that conflict of

interest would be relevant. A further relevant consideration is confidential information.

In practice, any applicant would need detailed procedures dealing with conflicts

management and confidentiality that are appropriate to maintain the integrity of the

regulatory function of the body.

4.40 A further relevant factor to systems and control is audit. A body’s arrangements for

internal and external audit will be an important part of its systems and controls. An

internal audit function, while not prescribed, is likely to be necessary. The size,

composition, and terms of reference of any audit committee of the governing body, the

provision, scope, staffing, resources, and access of the internal audit function to the

body’s records and other relevant information, and the position, responsibilities, and

reporting lines of the internal audit department and its relationship with other

departments will be relevant.

4.41 In assessing a UK recognized body’s systems and controls for the transmission of

information, the FSA may also have regard to the extent to which the systems and

controls ensure that information is transmitted promptly and accurately both within the

body and externally to members and other market participants. Information technology

is likely to be a major component of the systems and controls used by any UK

recognized body. Factors in assessing the adequacy of IT used by a body to perform or

support its relevant functions will include the organization, management, and resources

of the IT department, the arrangements for controlling and documenting the design,

development, implementation, and use of IT systems, and the performance, capacity,

and reliability of IT systems.

4.42 Arrangements for maintaining, recording, and enforcing technical and operational

standards and specifications for IT systems will also be relevant. Guidance in REC

2.5.19G and 2.5.20G sets out a variety of IT-related areas in relation to which a

recognized body should have systems and controls. These include procedures for the

evaluation and selection of IT systems, problem management and system change,

availability and integrity, business continuity, protection of IT systems from damage,

tampering, misuse, or unauthorized access, data integrity, monitoring, and reporting of

system performance, and audit trails.

Safeguards for investors (paras 4 and 19)

4.43 All bodies are required to ensure that their facilities are such as to ensure proper

protection to investors (paras 4(1) and 19(1) of the Schedule). In addition, RIEs are

required under para 4(1) to ensure that the business conducted by means of their

facilities is conducted in an orderly manner. Paragraph 4(1) sets out a high-level

obligation to ensure that business conducted by means of the exchange’s facilities is

conducted in an orderly manner and so as to afford proper protection to investors.

4.44 Paragraph 4(2) elaborates on this obligation by setting out a series of additional

measures to be taken by a UK RIE. These are to ensure that:

(a) access to the exchange’s facilities is subject to criteria designed to protect the

orderly functioning of the market and the interests of investors, and in particular that

transparent and non-discriminatory rules, based on objective criteria, govern access

to the facilities;

(b) it has transparent and non-discriminatory rules and procedures to provide for fair

and orderly trading and to establish objective criteria for the efficient execution of


(c) appropriate arrangements are made for relevant information to be made available

(whether by the exchange or, where appropriate, by issuers of the investments) to

persons engaged in dealing in investments on the exchange;

(d) satisfactory arrangements are made for securing the timely discharge (whether by

performance, compromise, or otherwise) of the rights and liabilities of the parties

to transactions effected on the exchange (being rights and liabilities in relation to

those transactions);

(e) satisfactory arrangements are made for recording transactions effected on the

exchange and transactions (whether or not effected on the exchange) that are cleared

or to be cleared by means of its facilities;

(f) appropriate arrangements are made to identify conflicts between the interests of the

exchange, its owners and operators, and the interests of those who use the facilities,

or the interests of the financial markets operated by it, and to manage such conflicts

to avoid adverse consequences on the financial markets operated by the exchange

and for the persons who make use of its facilities;

(g) appropriate measures are adopted to reduce the extent to which the exchange’s

facilities can be used for a purpose connected with market abuse or financial crime,

and to facilitate their detection and monitor their incidence; and

(h) where the exchange’s facilities include making provision for the safeguarding and

administration of assets belonging to users of those facilities, satisfactory

arrangements are made for that purpose.

4.45 General REC 2.6.27G gives guidance to the effect that, in assessing compliance with

para 4(1), relevance will be attached to the body’s steps to put in place appropriate:

(a) measures to prevent the use of its facilities for abusive or improper purposes;

(b) safeguards for investors against fraud or misconduct, recklessness, negligence, or

Tài liệu bạn tìm kiếm đã sẵn sàng tải về

Recognized Investment Exchanges ⠀刀䤀䔀猀) and Recognized Clearing Houses ⠀刀䌀䠀猀)

Tải bản đầy đủ ngay(0 tr)