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Prospective
18For Article 31 substitute—
1.The FCA may by rules provide for one or more relevant obligations not to apply—
(a)in relation to activities or transactions of a specified description carried out as part of a risk reduction service, or
(b)to persons of a specified description in the provision of such services.
2.The power to make rules under paragraph 1 is exercisable only if the FCA considers that the rules are necessary or expedient for the purpose of advancing one or more of its operational objectives referred to in section 1B(3) of FSMA.
3.The risk reduction services to which the rules relate may only be post-trade services that do not give rise to any transactions that contribute to the price discovery process.
4.The rules—
(a)may describe the risk reduction services to which they relate in whatever way the FCA considers appropriate (subject to paragraph 3);
(b)may provide for whatever conditions or exceptions the FCA considers appropriate.
5.Before making rules under paragraph 1 the FCA must consult the Bank of England.
6.In this Article—
“relevant obligation” means—
the best execution obligation in section 11.2A of the Conduct of Business sourcebook;
the obligation in rule 5AA.1.1 in the Market Conduct sourcebook;
the trading obligation imposed by Article 28 of this Regulation;
“risk reduction service” means a service provided to two or more counterparties to derivatives transactions for the purpose of reducing non-market risks in derivatives portfolios (including, for example, portfolio compression);
“specified” means specified in the rules.”
Commencement Information
I1Sch. 2 para. 18 not in force at Royal Assent, see s. 86(3)
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