The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007

PART 1 U.K. GENERAL

Citation and commencement U.K.

1.—(1) These Regulations may be cited as the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007.

(2) These Regulations come into force on 1st April 2007 for the purposes of—

(a) enabling the Authority to receive a notice under subsection (1)(b) of section 312A of the Act (inserted by these Regulations) in preparation for the making of arrangements as mentioned in that section by an EEA market operator on or after 1st November 2007;

(b) enabling a recognised investment exchange to give notice under subsection (2) of section 312C of the Act (inserted by these Regulations), and enabling the Authority to send a copy of the notice to the host state regulator as required by subsection (3) of that section;

(c) enabling applications to be made for approval under section 412A of the Act (inserted by these Regulations);

(d) enabling the Authority to give a direction as to the manner in which an application under section 412A is to be made and as to the content of the application and information to accompany it, and enabling the Authority to require the applicant to provide further information in accordance with section 412A(3);

(e) enabling the Authority, on receipt on or after that date of a consent notice under paragraph 13(1)(a) of Schedule 3 M1 in relation to a EEA firm exercising an EEA right deriving from the markets in financial instruments directive, to prepare for the firm's supervision in accordance with paragraph 13(2)(a) of that Schedule;

(f) enabling the Authority, on receipt of a regulator's notice under paragraph 14 of Schedule 3 M2 or a notice referred to in paragraph 14(1)(ba) of that Schedule (inserted by these Regulations) in relation to a EEA firm exercising an EEA right deriving from the markets in financial instruments directive, to prepare for the firm's supervision in accordance with paragraph 14(2)(a) of that Schedule;

(g) enabling—

(i) a UK firm to give a notice of intention under paragraph 19 of Schedule 3 M3 (as amended by these Regulations) in exercise of an EEA right deriving from the markets in financial instruments directive,

(ii) the Authority to give a consent notice referred to in paragraph 19(4) of that Schedule to the host state regulator or a notice referred to in paragraph 19(8), (11) or (12) of that Schedule in relation to the exercise of that EEA right, and

(iii) the firm to make a reference to the Tribunal in accordance with paragraph 19(12)(b) of that Schedule in relation to the exercise of that EEA right;

(h) enabling—

(i) a UK firm to give a notice of intention under paragraph 20 of Schedule 3 M4 (as amended by these Regulations) in exercise of an EEA right deriving from the markets in financial instruments directive,

(ii) the Authority to send a copy of such a notice to the host state regulator under paragraph 20(3) of that Schedule and notify the UK firm under paragraph 20(4) of that Schedule that it has done so,

and for all other purposes on 1st November 2007.

(3) For the purposes of paragraph (2)(e) to (h)—

“EEA right” has the meaning given in paragraph 7 of Schedule 3; an “EEA right deriving from the markets in financial instruments directive” means an EEA right to carry on an activity—

(a)

which is an investment service or activity listed in Section A of Annex I to the markets in financial instruments directive;

(b)

which is an ancillary service listed in Section B of Annex I to the markets in financial instruments directive; or

(c)

in relation to an investment which is a financial instrument listed in Section C of Annex I to the markets in financial instruments directive;

“Schedule 3” means Schedule 3 to the Act.

(4) Nothing in paragraph (2)(e) to (h) gives an EEA firm or a UK firm an EEA right to carry on, before 1st November 2007, an activity—

(a) which is an ancillary service listed in Section B of Annex I to the markets in financial instruments directive but which is not a non-core service listed in Section C of the Annex to the investment services directive;

(b) in relation to an investment which is a financial instrument listed in Section C of Annex I to the markets in financial instruments directive but which is not an instrument listed in Section B of the Annex to the investment services directive; or

(c) referred to in paragraph 5 of Section A of Annex I to the markets in financial instruments directive unless the firm has an EEA right to carry on one or more core services listed in Section A of the Annex to the investment services directive.

Marginal Citations

M1 Paragraph 13(1) was amended by S.I. 2003/1473 and 2066.

M2 Relevant amendments to paragraph 14 were made by S.I. 2003/1473 and 2066.

M3 Relevant amendments to paragraph 19 were made by S.I. 2003/1473 and 2066.

M4 Relevant amendments to paragraph 20 were made by S.I. 2001/ 1376 and 2003/ 2066.

Interpretation U.K.

2.  In these Regulations—

“the Act” means the Financial Services and Markets Act 2000 M5 ;

“authorised person” has the meaning given in section 31(2) of the Act;

“the Authority” means the Financial Services Authority;

“investment services directive” means Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field M6 ;

“markets in financial instruments directive” means Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments M7 ;

“Part IV permission” has the meaning given in section 40(4) of the Act;

[F1 “regulated activity” has the meaning given in section 22 of the Act;]

“Schedule 3” means Schedule 3 to the Act;

Textual Amendments

F1 Words in reg. 2 inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 2(1)

Marginal Citations

M5 2000 c. 8.

M6 OJ No L 141, 11.6.1993, p. 27.

M7 OJ No L 145, 30.4.2004, p.1.

Amendments of primary and secondary legislation U.K.

3.—(1) Schedule 1, which contains amendments of Part 13 of the Act (incoming firms: intervention by authority), has effect.

(2) Schedule 2, which contains amendments of Part 18 of the Act (recognised investment exchanges and clearing houses), has effect.

(3) Schedule 3, which inserts Part 18A of the Act, has effect.

(4) Schedule 4, which contains amendments of Schedule 3 to the Act (EEA passport rights), has effect.

(5) Schedule 5, which contains other amendments of the Act, has effect.

(6) Schedule 6, which contains consequential amendments of other enactments, has effect.

PART 2 U.K. PART IV PERMISSION: INVESTMENT FIRMS

[F2 General restriction on giving Part IV permission] U.K.

4.—(1) The Authority must not give a Part IV permission to an applicant who is an investment firm unless it is satisfied that the applicant complies with—

(a) the provisions contained in or made under the Act implementing Chapter I of Title II of the markets in financial instruments directive; and

(b) any directly applicable Community regulation made under that Chapter.

(2) Paragraph (1) also applies if an authorised person becomes an investment firm by virtue of a variation of his Part IV permission.

(3) “Investment firm” has the meaning given in section 424A of the Act M8 .

Textual Amendments

F2 Reg. 4 heading inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 2(2)(a)

Marginal Citations

M8 Section 424A was inserted by S.I. 2006/2975.

[F3 Applications to be an exempt investment firm U.K.

4A.— (1) A person may apply in accordance with section 40 of the Act for a Part IV permission to carry on regulated activities as an exempt investment firm.

(2) An authorised person may become entitled to carry on regulated activities as an exempt investment firm only by applying for a variation of his Part IV permission in accordance with section 44 of the Act.

(3) For the purposes of this regulation, and regulations 4B and 4C, “exempt investment firm” means an authorised person who—

(a) is an investment firm within the meaning given in Article 4.1.1 of the markets in financial instruments directive, and

(b) has a Part IV permission,

but to whom Title II of the markets in financial instruments directive does not apply.

(4) A person may only apply for a Part IV permission as mentioned in paragraph (1), and an authorised person may only apply for a variation of his Part IV permission as mentioned in paragraph (2), if the person or authorised person has his relevant office in the United Kingdom.

(5) In paragraph (4) “relevant office” means—

(a) in relation to a body corporate, its registered office or, if it has no registered office, its head office, and

(b) in relation to a person or authorised person other than a body corporate, the person’s head office.

Textual Amendments

F3 Regs. 4A-4C inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 2(2)(b)

Limitation on exempt investment firms U.K.

4B.   An exempt investment firm has no entitlement—

(a) to establish a branch by making use of the procedures in paragraph 19 of Schedule 3, or

(b) to provide any service by making use of the procedures in paragraph 20 of Schedule 3,

in a case where the entitlement of the firm to do so would, but for this regulation, derive from the markets in financial instruments directive.

Textual Amendments

F3 Regs. 4A-4C inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 2(2)(b)

Requirements to be applied to exempt investment firms U.K.

4C.— (1) If the Authority—

(a) gives to a person who has applied as mentioned in regulation 4A(1) a Part IV permission to carry on regulated activities as an exempt investment firm, or

(b) varies the Part IV permission of an authorised person who has applied as mentioned in regulation 4A(2) for a variation to permit him to carry on regulated activities as an exempt investment firm,

the requirements specified in paragraph (3) (“the specified requirements”) shall be treated as being included in the permission by the Authority under section 43 of the Act.

(2) Notwithstanding paragraph (1)—

(a) the inclusion of the specified requirements in the Part IV permission does not—

(i) amount, for the purpose of section 52(6) of the Act, to a proposal to exercise the power of the Authority under section 43(1) of the Act,

(ii) amount, for the purpose of section 52(9) of the Act, to a decision to exercise the power of the Authority under section 43(1) of the Act, or

(iii) entitle the person to refer a matter under section 55(1) of the Act;

(b) the specified requirements shall not expire until the person ceases to be an exempt investment firm and, accordingly, section 43(5) shall not be treated as requiring the Authority to specify a period at the end of which they expire; and

(c) no application under section 44 of the Act to vary the permission by cancelling or varying any of the specified requirements may be made by the person unless he informs the Authority when making the application that he wishes to cease to be an exempt investment firm.

(3) The requirements are that the person—

(a) does not hold clients’ funds or securities and does not, for that reason, at any time, place himself in debt with his clients;

(b) does not provide any investment service other than—

(i) the reception and transmission of orders in transferable securities and units in collective investment undertakings, and

(ii) the provision of investment advice in relation to the financial instruments mentioned in paragraph (i);

(c) in the course of providing the investment services mentioned in sub-paragraph (b), transmits orders only to—

(i) investment firms authorised in accordance with the markets in financial instruments directive,

(ii) credit institutions authorised in accordance with the banking consolidation directive,

(iii) branches of investment firms or of credit institutions which are authorised in a third country and which are subject to and comply with prudential rules considered by the Authority to be at least as stringent as those laid down in the markets in financial instruments directive, the banking consolidation directive or Directive 2006/49/EC of the European Parliament and of the Council of 14 June 2006 on the capital adequacy of investment firms and credit institutions,

(iv) collective investment undertakings authorised under the law of a Member State to market units to the public and to the managers of such undertakings,

(v) investment companies with fixed capital, as defined in Article 15(4) of Second Council Directive 77/91/EEC of 13 December 1976 on the coordination of safeguards required of public companies in respect of their formation and the maintenance and alteration of their capital, the securities of which are listed or dealt in on a regulated market in a Member State.

(4) In paragraph (3)—

(a) terms and expressions defined in Article 4 of the markets in financial instruments directive and used in the paragraph have the meanings given in that Article;

(b) “the banking consolidation directive” means Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions;

(c) other terms and expressions used both in the paragraph and in Article 3 of or Annex 1 to the markets in financial instruments directive have the same meanings in the paragraph as in that Article or Annex; and

(d) “Member State”, in sub-paragraph (c)(iv), includes an EEA State that is not a Member State.]

Textual Amendments

F3 Regs. 4A-4C inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 2(2)(b)

PART 3 U.K. TRANSITIONAL AND SAVING PROVISIONS

Transitional and saving provisions: market operators U.K.

5.—(1) Section 312A(2) of the Act applies to arrangements made on or before 31st October 2007, in the United Kingdom, by an EEA market operator to facilitate access to, or use of, a regulated market or multilateral trading facility operated by it as it applies to arrangements under section 312A(1).

(2) Section 312C(2) and (4) of the Act does not apply in relation to arrangements made by a recognised investment exchange on or before 31st October 2007 in the territory of another EEA State to facilitate access to, or use of, a regulated market or multilateral trading facility operated by it by persons established in that State.

Transitional and saving provisions: EEA firms U.K.

6.—(1) Where the Authority has received a consent notice of the sort referred to in paragraph 13(1)(a) of Schedule 3 from the home state regulator of an EEA investment firm on or before 31st October 2007, paragraph 13 of Schedule 3 applies as if it had not been amended by paragraph 8 of Schedule 4 to these Regulations.

(2) In this regulation, “EEA investment firm” means an EEA firm falling within paragraph 5(a) of Schedule 3 (before its amendment by these Regulations).

[F4 Transitional provisions: EEA investment firms exercising passport rights under the investment services directive U.K.

6A.— (1) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations, or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations,

that notice is on 1st November 2007 to be treated as having been given in relation to the investment service or activity specified in the second column of table 1 opposite that investment service.

(2) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations, or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations,

that notice is on 1st November 2007 to be treated as having been given in relation to the ancillary service specified in the second column of table 2 opposite that non-core service.

(3) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive (investment advice concerning one or more of the instruments listed in Section B), or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive,

that notice is on 1st November 2007 to be treated as having been given in relation to the investment service specified in paragraph 5 of Section A of Annex I to the markets in financial instruments directive (investment advice).

(4) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations, or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations,

that notice is on 1st November 2007 to be treated as having been given in relation to the financial instrument specified in the second column of table 3 opposite that instrument.

(5) If this regulation conflicts with any law of an EEA investment firm’s home state, the law of the firm’s home state shall prevail.

(6) In this regulation—

“EEA investment firm” means an EEA firm falling within paragraph 5(a) of Schedule 3 (before its amendment by these Regulations);

“EEA right” has the meaning given in paragraph 7 of Schedule 3;

“home state” in relation to an EEA investment firm means the EEA State which is the firm’s home Member State for the purposes of the markets in financial instruments directive.]

Textual Amendments

F4 Reg. 6A inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment No. 2) Regulations 2007 (S.I. 2007/2160), regs. 1(2)(c), 2(2)

Transitional provisions: UK investment firms exercising passport rights under the investment services directive U.K.

7.—(1) Where—

(a) a UK investment firm on or before 31st October 2007 has given—

(i) notice of intention under paragraph 19(2) or 20(1) of Schedule 3 in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations, or

(ii) notice of change under regulation 11(3) or 12(2)(a) of the EEA Passport Rights Regulations in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations, or

(b) the Authority on or before 31st October 2007 has given—

(i) a consent notice under paragraph 19(4) of Schedule 3 or a notice referred to in paragraph 20(3) of Schedule 3 in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations, or

(ii) a notice referred to in regulation 11(5) of the EEA Passport Rights Regulations in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations,

it is on 1st November 2007 to be treated as having given that notice in relation to the investment service or activity specified in the second column of table 1 opposite that investment service.

(2) Where—

(a) a UK investment firm on or before 31st October 2007 has given—

(i) notice of intention under paragraph 19(2) or 20(1) of Schedule 3 in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations, or

(ii) notice of change under regulation 11(3) or 12(2)(a) of the EEA Passport Rights Regulations in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations, or

(b) the Authority on or before 31st October 2007 has given—

(i) a consent notice under paragraph 19(4) of Schedule 3 or a notice referred to in paragraph 20(3) of Schedule 3 in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations, or

(ii) a notice referred to in regulation 11(5) of the EEA Passport Rights Regulations in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations,

it is on 1st November 2007 to be treated as having given that notice in relation to the ancillary service specified in the second column of table 2 opposite that non-core service.

(3) Where—

(a) a UK investment firm on or before 31st October 2007 has given—

(i) notice of intention under paragraph 19(2) or 20(1) of Schedule 3 in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive (investment advice concerning one or more of the instruments listed in Section B), or

(ii) notice of change under regulation 11(3) or 12(2)(a) of the EEA Passport Rights Regulations in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive, or

(b) the Authority on or before 31st October 2007 has given—

(i) a consent notice under paragraph 19(4) of Schedule 3 or a notice referred to in paragraph 20(3) of Schedule 3 in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive, or

(ii) a notice referred to in regulation 11(5) of the EEA Passport Rights Regulations in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive,

it is on 1st November 2007 to be treated as having given that notice in relation to the investment service specified in paragraph 5 of Section A of Annex I to the markets in financial instruments directive (investment advice) F5 ....

(4) Where—

(a) a UK investment firm on or before 31st October 2007 has given—

(i) notice of intention under 19(2) or 20(1) of Schedule 3 in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations, or

(ii) notice of change under regulation 11(3) or 12(2)(a) of the EEA Passport Rights Regulations in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations, or

(b) the Authority on or before 31st October 2007 has given—

(i) a consent notice under paragraph 19(4) of Schedule 3 or a notice referred to in paragraph 20(3) of Schedule 3 in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations, or

(ii) a notice referred to in regulation 11(5) of the EEA Passport Rights Regulations in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations,

it is on 1st November 2007 to be treated as having given that notice in relation to the financial instrument specified in the second column of table 3 opposite that instrument.

(5) Nothing in this regulation gives a UK investment firm the right to carry on a regulated activity (or an activity which, if it were regarded as carried on in the United Kingdom, would be a regulated activity) which it would require Part IV permission to carry on but for which it does not have Part IV permission.

Textual Amendments

F5 Words in reg. 7(3) omitted (1.11.2007) by virtue of The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment No. 2) Regulations 2007 (S.I. 2007/2160), regs. 1(2)(c), 2(3)

[F6 Transitional provision: investment research and financial analysis U.K.

7A.— (1) This regulation applies where a UK investment firm on or before 15th August 2007 has given—

(a) notice of intention under paragraph 19(2) or 20(1) of Schedule 3, or

(b) notice of change under regulation 11(3) or 12(2)(a) of the EEA Passport Rights Regulations,

in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive (investment advice concerning one or more of the instruments listed in Section B).

(2) The Authority may during the period starting on 1st September 2007 and ending on 31st October 2007 give notice to the UK investment firm’s host state regulator (within the meaning of paragraph 11 of Schedule 3) that from 1st November 2007 the firm will offer the ancillary service specified in paragraph 5 of Section B of Annex I to the markets in financial instruments directive (investment research and financial analysis).

(3) Regulation 11 or 12 of the EEA Passport Rights Regulations does not apply where the Authority has given a notice in accordance with paragraph (2).

(4) Where the UK investment firm concerned gave written notice to the Authority on or before 31st August 2007 to that effect, this regulation shall not apply to him.]

Textual Amendments

F6 Reg. 7A inserted (15.8.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment No. 2) Regulations 2007 (S.I. 2007/2160), regs. 1(2)(a), 2(4)

Additional saving provision: UK investment firms U.K.

8.  Where the Authority has given a consent notice under paragraph 19(4) of Schedule 3 in relation to a UK investment firm on or before 31st October 2007, paragraph 19(6) of that Schedule applies as if it had not been amended by paragraph 10(c) of Schedule 4 to these Regulations, and paragraph 19(7B) (inserted by paragraph 10(d) of Schedule 4 to these Regulations) does not apply.

Transitional provision: appointed representatives and tied agents U.K.

9.—(1) A person—

(a) to whom section 39(1A) or 39A(1) of the Act (both inserted by these Regulations) applies,

(b) whose name appeared in the record maintained by the Authority under section 347(1)(i) of the Act immediately before 1st November 2007,

is deemed, with effect from 1st November 2007, to be included in the record maintained by the Authority under section 347(1)(ha) of the Act (inserted by paragraph 12 of Schedule 5 to these Regulations).

(2) Paragraph (1) does not prevent the Authority from removing an entry from the record in accordance with section 347(3).

[F7 Transitional provision: exempt investment firms U.K.

9A.— (1) Except where paragraph (3) applies, an authorised person who immediately before 1st November 2007—

(a) is an investment firm within the meaning given in Article 4.1.1 of the markets in financial instruments directive,

(b) has his relevant office in the United Kingdom, and

(c) fulfils all the requirements set out in regulation 4C(3),

becomes an exempt investment firm with effect from that day as if he had applied as mentioned in regulation 4A(2) for a variation of his Part IV permission to permit him to carry on regulated activities as an exempt investment firm and the Authority had so varied the permission on that day.

(2) In paragraph (1) “relevant office” has the meaning given in regulation 4A(5).

(3) This paragraph applies—

(a) to an authorised person having a Part IV permission that, immediately before 1st November 2007—

(i) includes no requirement having the effect of prohibiting the person from holding clients’ funds, or

(ii) permits the person, in connection with the carrying on of regulated activities comprising any investment services and activities (excluding activities to which, by virtue of Article 2, the markets in financial instruments directive does not apply), to carry on the activity consisting of both the safeguarding of assets belonging to another and the administration of those assets; and

(b) to an authorised person who, before 1st November 2007, gives the Authority notice, in such form as the Authority may direct, that he does not wish to become an exempt investment firm.

(4) In paragraph (3)—

(a) “clients’ funds”, in sub-paragraph (a)(i), has the same meaning as in Article 3 of the markets in financial instruments directive, and

(b) sub-paragraph (a)(ii) is to be construed in accordance with section 22 of the Act, any relevant order made under that section and Schedule 2 to the Act.

(5) The variation of a person’s Part IV permission effected by paragraph (1) does not amount to the grant of an application for variation of a Part IV permission for the purpose of section 52(4) of the Act or to the determination of an application under Part IV for the purpose of section 55(1) of the Act.]

Textual Amendments

F7 Reg. 9A 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 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 3

[F8 Transitional provision: operators of alternative trading systems U.K.

9B.— (1) Any person who immediately before 1st November 2007—

(a) had a Part IV permission to carry on an activity of the kind specified by article 14, 21 or 25 of the principal Order in relation to an investment of a particular kind; and

(b) operated an alternative trading system (within the meaning of the Alternative Trading Systems Instrument 2003 (2003/45) made by the Authority under the Act on 19th June 2003),

is, subject to regulation 9C, from 1st November 2007 to be treated as having a Part IV permission to carry on the kind of activity specified by article 25D of the principal Order (inserted by the 2006 Order) in relation to an investment of the same kind which is a financial instrument.

(2) Where the person concerned gave written notice to the Authority on or before 1st October 2007 to that effect, paragraph (1) shall not apply to him.

Textual Amendments

F8 Regs. 9B-9D 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 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 4

Transitional provision for investment firms and credit institutions in relation to options, futures and contracts for differences U.K.

9C.— (1) Any person who immediately before 1st November 2007—

(a) was an investment firm or a credit institution (in each case within the meaning of the principal Order as amended by the 2006 Order); and

(b) had a Part IV permission to carry on an activity of the kind specified by article 14, 21, 25, 37 or 53 of the principal Order in relation to an investment specified in the first column in the table in Schedule 8,

is from 1st November 2007 also to be treated as having a Part IV permission to carry on that kind of activity in relation to an investment specified in the second column of the table opposite that investment (in so far as he does not already have such permission).

(2) Where the person concerned gave written notice to the Authority on or before 1st October 2007 to that effect, paragraph (1) shall not apply to him.

Textual Amendments

F8 Regs. 9B-9D 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 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 4

Transitional provision for management companies in relation to options, futures and contracts for differences U.K.

9D.— (1) Any person who immediately before 1st November 2007—

(a) was a management company (within the meaning of the principal Order as amended by the 2006 Order);

(b) was providing, in accordance with Article 5.3 of Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities, the investment service specified in paragraph 4 or 5 of Section A, or the ancillary service specified in paragraph 1 of Section B, of Annex I to the markets in financial instruments directive; and

(c) had a Part IV permission to carry on an activity of the kind specified by article 14, 21, 25, 37, 40 or 53 of the principal Order in relation to an investment specified in the first column in the table in Schedule 8,

is from 1st November 2007 also to be treated as having a Part IV permission to carry on that kind of activity in relation to an investment specified in the second column of the table opposite that investment (in so far as he does not already have such permission).]

(2) Where the person concerned gave written notice to the Authority on or before 1st October 2007 to that effect, paragraph (1) shall not apply to him.

Textual Amendments

F8 Regs. 9B-9D 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 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 4

[F9 Transitional provision in relation to client classification U.K.

9E.— (1) Any person who immediately before 1st November 2007 had a Part IV permission containing a limitation or requirement—

(a) in relation to the carrying on of any regulated activity except an activity mentioned in paragraph (2); and

(b) described by reference to a category of clients specified in the first column in the table in Schedule 9,

is from 1st November 2007 to be treated as having a Part IV permission to carry on that regulated activity subject to the same limitation or requirement described by reference to the category of clients specified in the second column of that table opposite.

(2) The activities are—

(a) an insurance mediation activity (within the meaning of paragraph 2(5) of Schedule 6 to the Act) carried on in relation to a contract of insurance (within the meaning of article 3(1) of the principal Order) which is not a life policy (within the meaning of the Glossary (Conduct of Business and Other Sourcebooks) Instrument 2007 (2007/32) made by the Authority under the Act on 24th May 2007); and

(b) activities of the kind specified in any of the following provisions of the principal Order—

(i) article 25A (arranging regulated mortgage contracts),

(ii) article 25B (arranging regulated home reversion plans),

(iii) article 25C (arranging regulated home purchase plans),

(iv) article 53A (advising on regulated mortgage contracts),

(v) article 53B (advising on regulated home reversion plans),

(vi) article 53C (advising on regulated home purchase plans),

(vii) article 61 (entering into and administering regulated mortgage contracts),

(viii) article 63B (entering into and administering regulated home reversion plans), and

(ix) article 63F (entering into and administering regulated home purchase plans).

(3) Where the person concerned gave written notice to the Authority on or before 1st October 2007 to that effect, paragraph (1) shall not apply to him.]

Textual Amendments

F9 Reg. 9E inserted (15.8.2007 for specified purposes, 1.11.2007 for remaining purposes) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment No. 2) Regulations 2007 (S.I. 2007/2160), regs. 1(2)(b)(c), 2(5)

Interpretation of Part 3 U.K.

10.  In this Part—

[F10 “the principal Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;]

[F10 “the 2006 Order” means the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment No. 3) Order 2006;]

“ancillary service” has the meaning given in Article 4.1.3 of the markets in financial instruments directive;

“EEA Passport Rights Regulations” means the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001 M9 ;

“EEA State” has the meaning given in paragraph 8 of Schedule 3;

“EEA market operator” has the meaning given in section 312D of the Act (inserted by these Regulations);

“financial instrument” has the meaning given in Article 4.1.17 of the markets in financial instruments directive;

“home state regulator” the meaning given in paragraph 9 of Schedule 3;

“instrument” (except in the expression “financial instrument”) means any of the instruments listed in Section B of the Annex to the investment services directive;

“investment service” (except in the expression “investment services and activities”) has the meaning given in Article 1.1 of the investment services directive;

“investment services and activities” has the meaning given in Article 4.1.2 of the markets in financial instruments directive;

“multilateral trading facility” has the meaning given in Article 4.1.15 of the markets in financial instruments directive;

“non-core service” means any of the services listed in Section C of the Annex to the investment services directive;

“recognised investment exchange” has the meaning given in section 285 of the Act;

F11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“regulated market” has the meaning given in Article 4.1.14 of the markets in financial instruments directive;

F11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“UK investment firm” means a UK firm (within the meaning of paragraph 10 of Schedule 3 M10 )—

(a)

which is an investment firm (within the meaning of the investment services directive); and

(b)

whose EEA right derives from that directive.

Textual Amendments

F10 Words in reg. 10 inserted (1.11.2007) by The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 5

F11 Words in reg. 10 omitted (1.11.2007) by virtue of The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment) Regulations 2007 (S.I. 2007/763), regs. 1(2), 2(3)

Marginal Citations

M9 S.I. 2001/2511.

M10 Paragraph 10 was amended by S.I. 2003/1473.

Kevin Brennan

Claire Ward

Two of the Lords Commissioners of Her Majesty's Treasury