Financial Services and Markets Act 2023

Derivatives trading obligation U.K.

Prospective

17 After Article 28 insert—

“Article 28a U.K. Suspension or modification of Article 28

1. The FCA may direct that the trading obligation imposed by Article 28(1) and (2) (the “DTO”) is suspended or modified in accordance with the direction if it considers that the suspension or modification—

(a) is necessary for the purpose of preventing or mitigating disruption to financial markets, and

(b) advances one or more of the FCA’s operational objectives referred to in section 1B(3) of FSMA.

2. A direction under this Article may provide for the DTO to be suspended or modified—

(a) in the case of all persons to whom the DTO applies or only to such persons or descriptions of persons as are specified in the direction;

(b) in the case of all derivatives to which the DTO applies or only to such derivatives, or classes of derivatives, as are specified in the direction;

(c) by reference to the venues on which derivative transactions are concluded under the DTO;

(d) subject to conditions.

3. In giving a direction under this Article the FCA must have regard to its competitiveness and growth objective in section 1EB of FSMA.

4. Before giving a direction under this Article the FCA must consult—

(a) the Bank of England, and

(b) the PRA, if the PRA has an interest in the proposed direction.

The PRA has an interest in a proposed direction if the direction—

(a) might affect the PRA’s discharge of its functions conferred by or under FSMA or any other enactment, or

(b) would apply to a PRA-authorised person or to a person connected with a PRA-authorised person (and for this purpose “PRA authorised person” has the same meaning as in FSMA and “connected” is to be read in accordance with section 165(11) of FSMA).

5. A direction under this Article may be given only with the consent of the Treasury.

The Treasury must notify the FCA in writing whether or not consent is given before the end of four weeks beginning with the day on which the proposed direction is submitted to the Treasury for consent (and if the notice is not given before the end of that period the Treasury are deemed to have consented).

6. Where the FCA gives a direction under this Article it must also prepare a statement setting out—

(a) an explanation of the purpose of the direction, including (where relevant) the ways in which the direction will further the purpose mentioned in paragraph 1(a) and advance one or more of the objectives mentioned in paragraph 1(b), and

(b) such guidance in connection with the direction that the FCA considers appropriate.

7. The FCA must publish a direction given under this Article together with the statement mentioned in paragraph 6.

8. The Treasury must lay before Parliament a copy of a direction given under this Article and the statement mentioned in paragraph 6.

9. If a direction under this Article has effect for a period lasting longer than 6 months, the FCA must publish, as soon as reasonably practicable after the end of each applicable 6 month period, a statement with an explanation as to why the conditions in paragraph 1(a) and (b) continue to be met.

The reference to each “applicable 6 month period” is to—

(a) the period of 6 months beginning with the day on which the direction is given, and

(b) each subsequent 6 month period during which the direction continues in effect.

10. Publication under paragraph 7 or 9 is to be in whatever way appears to the FCA to be best calculated to bring the publication to the attention of the public.

11. A direction under this Article may be varied or revoked by the giving of a further direction under this Article.

12. For the purposes of this Article—

(a) the variation of a direction by virtue of paragraph 11 is not to be treated as the giving of a new direction for the purposes of paragraph 9;

(b) paragraphs 6(b) and 9 do not apply to the revocation of a direction by virtue of paragraph 11.

13. The functions of the FCA under this Article are not “relevant functions” for the purposes of section 84 of the Financial Services Act 2012 (arrangements for the investigation of complaints relating to exercise of relevant functions of regulators).”

Commencement Information

I1 Sch. 2 para. 17 not in force at Royal Assent, see s. 86(3)