5.—(1) Arrangements do not amount to a collective investment scheme if they are arrangements under which the rights or interests of participants are, except as provided in sub-paragraph (2), represented by investments of one, and only one, of the following descriptions:
(a)investments of the kind specified by article 77 of the Regulated Activities Order (instruments creating or ackowledging indebtedness) which are—
(i)issued by a single body corporate other than an open-ended investment company; or
(ii)issued by a single issuer who is not a body corporate and which are guaranteed by the government of the United Kingdom, the Scottish Administration, the Executive Committee of the Northern Ireland Assembly, the National Assembly for Wales or the government of any country or territory outside the United Kingdom;
and which are not convertible into or exchangeable for investments of any other description;
(b) investments falling within sub-paragraph (a)(i) or (ii) (“the former investments”) which are convertible into or exchangeable for investments of the kind specified by article 76 of the Regulated Activities Order (“the latter investments”) provided that the latter investments are issued by the same person who issued the former investments or are issued by a single other issuer;
(c) investments of the kind specified by article 78 of the Regulated Activities Order (government and public securities) which are issued by a single issuer; or
(d) investments of the kind specified by article 79 of the Regulated Activities Order (instruments giving entitlement to investments) which are issued otherwise than by an open-ended investment company and which confer rights in respect of investments, issued by the same issuer, of the kind specified by article 76 of that Order or within any of paragraphs (a) to (c).
(2) Arrangements which would otherwise not amount to a collective investment scheme by virtue of the provisions of sub-paragraph (1) are not to be regarded as amounting to such a scheme by reason only that one or more of the participants (“the counterparty”) is a person—
(a)whose ordinary business involves him in carrying on activities of the kind specified by any of articles 14 (dealing in investments as principal), 21 (dealing in investments as agent), 25 (arranging deals in investments), [F125D (operating a multilateral trading facility),] 37 (managing investments), 40 (safeguarding and administering investments), 45 (sending dematerialised instructions), 51 (establishing etc. a collective investment scheme), 52 (establishing etc. a stakeholder pension scheme) and 53 (advising on investments) or, so far as relevant to any of those articles, article 64 of the Regulated Activities Order (agreeing to carry on specified kinds of activities), or would do so apart from any exclusion from any of those articles made by that Order; and
(b)whose rights or interests in the arrangements are or include rights or interests under a swap arrangement.
(3) In sub-paragraph (2), “swap arrangement” means an arrangement the purpose of which is to facilitate the making of payments to participants whether in a particular amount or currency or at a particular time or rate of interest or all or any combination of those things, being an arrangement under which the counterparty—
(a)is entitled to receive amounts, whether representing principal or interest, payable in respect of any property subject to the arrangements or sums determined by reference to such amounts; and
(b)makes payments, whether or not of the same amount or in the same currency as the amounts or sums referred to in paragraph (a), which are calculated in accordance with an agreed formula by reference to those amounts or sums.
Textual Amendments
F1Words in Sch. para. 5(2)(a) inserted (1.4.2007 for specified purposes, 1.11.2007 in so far as not already in force) by The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment No. 3) Order 2006 (S.I. 2006/3384), arts. 1(2), 36(2)
Commencement Information
I1Sch. para. 5 in force 1.12.2001 see reg. 1 and S.I. 2001/3538, art. 2