F1PART 7ABanking companies

Annotations:
Amendments (Textual)
F1

Pt. 7A inserted (with effect in accordance with Sch. 2 para. 7-9 of the amending Act) by Finance Act 2015 (c. 11), Sch. 2 para. 1

CHAPTER 2Key definitions

“Banking company”

269BMeaning of “banking company”

1

In this Part “banking company”, in relation to an accounting period, means—

a

a company which meets conditions A to E,

b

a company which—

i

meets conditions A and B, and

ii

is a member of a partnership which meets conditions C to E, or

c

a building society.

In subsections (4) to (6) “the relevant entity” means the company or the partnership (as the case may be).

2

Condition A is that at any time during the accounting period the company—

a

is a UK resident company, or

b

is a company which carries on a trade in the United Kingdom through a permanent establishment in the United Kingdom.

3

Condition B is that the company is not an excluded entity at any time during the accounting period (see section 269BA).

4

Condition C is that, at any time during the accounting period, the relevant entity is an authorised person for the purposes of FISMA 2000 (see section 31 of that Act).

F25

Condition D is that, at any time in the accounting period—

a

the relevant entity's activities include the relevant regulated activity described in the provision mentioned in section 269BB(a), or

b

the relevant entity is an investment bank (see subsection (6A)) whose activities consist wholly or mainly of any of the relevant regulated activities described in the provisions mentioned in section 269BB(b) to (f).

6

Condition E is that the relevant entity carries on that relevant regulated activity, or those relevant regulated activities, wholly or mainly in the course of trade.

F36A

The relevant entity is an “investment bank” if—

F5a

it is an FCA investment firm that meets the conditions in subsection (6B), or

b

it is designated by the Prudential Regulation Authority under article 3 of the Financial Services and Markets Act 2000 (PRA-regulated Activities) Order 2013 (S.I. 2013/556) (dealing in investments as principal: designation by PRA).

F46B

An FCA investment firm meets the conditions in this subsection if it has a permanent minimum capital requirement of £750,000 and is not—

a

a limited activity firm,

b

a limited licence firm,

c

a local firm, or

d

a matched principal trading firm.

6C

In subsection (6B)—

  • “limited activity firm” means an investment firm that—

    1. a

      deals on own account only for the purpose of fulfilling or executing a client order or for the purpose of gaining entrance to a clearing and settlement system or a recognised exchange when acting in an agency capacity or executing a client order; or

    2. b

      meets all the following conditions—

      1. i

        it does not hold client money or securities;

      2. ii

        it undertakes only dealing on own account;

      3. iii

        it has no external customers; and

      4. iv

        its execution and settlement transactions take place under the responsibility of a clearing institution and are guaranteed by that clearing institution;

  • “limited licence firm” means an investment firm that is not authorised to provide the investment services and activities of—

    1. a

      dealing on own account; or

    2. b

      underwriting of financial instruments or placing of financial instruments on a firm commitment basis;

  • “local firm” means a firm—

    1. a

      dealing on own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets, or

    2. b

      dealing for the accounts of other members of those markets and being guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such a firm is assumed by clearing members of the same markets;

  • “matched principal trading firm” means an investment firm that executes investors’ orders for financial instruments and meets the following conditions—

    1. a

      the firm only holds financial instruments for its own account as a result of its failure to match investors’ orders precisely;

    2. b

      the total market value of all such positions is no more than 15% of the firm’s initial capital;

    3. c

      such positions are incidental and provisional in nature and strictly limited to the time required to carry out the transaction in question.

6D

In determining, for the purposes of subsection (6B), whether an FCA investment firm has a permanent minimum capital requirement of £750,000, any transitional provision in the FCA Handbook is to be disregarded.

7

See also section 269BC (which contains definitions of terms used in this section).