PART 2Amendment of EU Regulations

CHAPTER 1Amendment of Regulation (EU) 2016/1011

DefinitionsI15

1

Article 3 (definitions) is amended as follows.

2

Paragraph 1 is amended as follows.

3

In point (10) (definition of ‘supervised contributor’), for “Union” substitute “ United Kingdom ”.

4

In point (16) (definition of ‘financial instrument’)—

a

for “listed in Section C of Annex I to Directive 2014/65/EU” substitute “ specified in Part 1 of Schedule 2 to the Regulated Activities Order ”;

b

for the words from “trading venue”, where first occurring, to the end substitute “ UK trading venue has been made, or which is traded on a UK trading venue or via a systematic internaliser as defined in Article 2(1)(12) of the Markets in Financial Instruments Regulation; ”.

5

In point (17) (definition of ‘supervised entity’)—

a

for points (a) and (b) substitute—

a

a CRR firm as defined in Article 4(1)(2A) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012, which is a credit institution referred to in point (a)(i) of that definition;

b

a UK investment firm, which means an investment firm as defined in Article 2(1A) of the Markets in Financial Instruments Regulation which has its head office in the United Kingdom;

b

in point (c), for the words from “point (1)” to the end substitute “ section 417(1) of FSMA ”M1 ;

c

in point (d), for the words from “point (4)” to the end substitute “ section 417(1) of FSMA ”M2 ;

d

in point (e)—

i

for “UCITS as defined in Article 1(2) of Directive 2009/65/EC” substitute “ UK UCITS as defined in section 237(3) of FSMA ”M3 ;

ii

for the words from “UCITS management company” to the end substitute “ management company as defined in section 237(2) of FSMA ”M4 ;

e

in point (f), for the words from “point (b)” to the end substitute “ regulation 4 of the Alternative Investment Fund Managers Regulations 2013 ”M5 ;

f

after point (g) insert—

ga

an occupational pension scheme as defined in section 1(1) of the Pension Schemes Act 1993;

g

in point (h), for the words from “purposes of” to the end substitute—

purposes of:

i

a credit agreement which, immediately before F1IP completion day, satisfied the definition of a credit agreement in Article 3(17)(h) of the EU Benchmarks Regulation; or

ii

a credit agreement as defined in point (c) of Article 3 of Directive 2008/48/EC read in accordance with the modifications made to that Directive by points (18A) and (18B);

h

for point (i) substitute—

i

a non-credit institution, which means a mortgage creditor (as defined in s.423A of FSMA) that is not a credit institution (as defined in Article 4(1)(1) of Regulation (EU) No 575/2013), for the purposes of a mortgage agreement (as defined in section 423A of FSMA;

i

in point (j), for “point (18) of Article 4(1) of Directive 2014/65/EU” substitute “ Article 2(1)(10) of the Markets in Financial Instruments Regulation ”.

6

For point (18) (definition of ‘financial contract’) substitute—

18

‘financial contract’ means:

a

a credit agreement which, immediately before F2IP completion day, satisfied the definition of a credit agreement in Article 3(17)(h) of the EU Benchmarks Regulation;

aa

a credit agreement as defined in point (c) of Article 3 of Directive 2008/48/EC read in accordance with the modifications made to that Directive by points (18A) and (18B);

b

a mortgage agreement as defined in section 423A of FSMA;

7

After point (18) insert—

18A

 For the purposes of points (17)(h)(ii) and (18)(aa), Article 2 of Directive 2008/48/EC is to be read as if:

a

in paragraph 1—

i

for “Directive” there were substituted “ Article ”;

ii

after “credit agreements” there were inserted “ where the act of entering into the credit agreement or exercising the lender's rights and duties under the credit agreement is carried on in the United Kingdom ”.

b

in paragraph 2:

i

in the opening words, for “Directive” there were substituted “ Article ”;

ii

for points (a) and (b) there were substituted—

a

an agreement to which section 423A(2) of the Financial Services and Markets Act 2000 applies;

iii

in point (h)—

aa

for the words from “investment firms” to “financial instruments” there were substituted “ a UK investment firm (as defined in Article 3(1)(17)(b) of Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014) ”;

bb

for “as defined in Article 4 of Directive 2006/48/EC” there were substituted “ (as defined in Article 4(1)(1) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012) ”;

cc

for “listed in Section C of Annex 1 to Directive 2014/65/EU” there were substituted “ specified in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ”;

c

in paragraph 2a, for “Directive” there were substituted “ Article ”;

d

paragraphs 3 to 6 were omitted.

18B

For the purposes of points (17)(h)(ii) and (18)(aa), Article 3(a) of Directive 2008/48/EC is to be read as if for “transactions covered by this Directive” there were substituted “ respect of a credit agreement to which Article 2 applies ”.

8

For point (19) (definition of ‘investment fund’) substitute—

19

‘investment fund’ means:

a

an AIF as defined in regulation 3 of the Alternative Investment Fund Managers Regulations 2013 M8;

b

a UK UCITS as defined in section 237(3) of FSMA;

9

In point (23) (definition of ‘commodity benchmark’), for the words from “is a commodity” to the end substitute—

is:

a

a commodity, which means any goods of a fungible nature that are capable of being delivered, including metals and their ores and alloys, agricultural products, and energy such as electricity;

b

not an emission allowance referred to in paragraph 11 of Part 1 of Schedule 2 to the Regulated Activities Order;

F59A

In point (23a), for “EU”, in both places, substitute “ UK ”.

9B

In point (23b), for “EU”, in both places, substitute “ UK ”.

10

In point (24), in point (a) of the definition of “regulated-data benchmark”—

a

for point (i) substitute—

i

a UK trading venue, but only with reference to transaction data concerning financial instruments;

ia

a trading venue (as defined in Article 2(1)(16) of the Markets in Financial Instruments Regulation) in a third country if:

aa

the Treasury have made regulations determining that the legal and supervisory framework of the third country is equivalent in accordance with paragraph 4 of Article 28 of the Markets in Financial Instruments Regulation, or

bb

a decision has been adopted by the European Commission before F3IP completion day determining that the legal and supervisory framework of the third country is equivalent in accordance with paragraph 4 of Article 28 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 M9 as it had effect in the European Union immediately before F3IP completion day,

but only with reference to transaction data concerning financial instruments;

ib

a regulated market (as defined in Article 2(1)(13) of the Markets in Financial Instruments Regulation) that is considered to be equivalent in accordance with:

aa

regulations made by the Treasury under Article 2a of Regulation (EU) No 648/2012, or

bb

an implementing act adopted by the European Commission before F3IP completion day under Article 2a of Regulation (EU) No 648/2012 as it had effect in the European Union immediately before F3IP completion dayM10,

but only with reference to transaction data concerning financial instruments;

b

in point (ii)—

i

for “point (52) of Article 4(1) of Directive 2014/65/EU” substitute “ Article 2(1)(34) of the Markets in Financial Instruments Regulation ”;

ii

for “point (53) of Article 4(1) of Directive 2014/65/EU” substitute “ Article 2(1)(35) of the Markets in Financial Instruments Regulation ”;

iii

before “trading venue” insert “ UK ”;

c

in point (iii)—

i

for “point (54) of Article 4(1) of Directive 2014/65/EU” substitute “ Article 2(1)(36) of the Markets in Financial Instruments Regulation ”;

ii

before “trading venue” insert “ UK ”;

d

in point (iv), for the words from “as referred to” to the end substitute “ operating in an electricity market in the United Kingdom; ”;

e

in point (v), for the words from “as referred to” to the end substitute “ operating in a gas market in the United Kingdom; ”;

F6f

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

g

in point (vii), for “(vi)” substitute “ (v) ”.

11

For point (25) (definition of ‘critical benchmark’) substitute—

25

‘critical benchmark’ means a benchmark listed in:

a

Commission Implementing Regulation (EU) 2016/1368 of 11 August 2016 establishing a list of critical benchmarks used in financial markets pursuant to Regulation (EU) 2016/1011 of the European Parliament and of the Council; or

b

regulations made by the Treasury under paragraph 5 or 6 of Article A20 or paragraph 5 of Article 20;

12

In point (27) (non-significant benchmark), for the words from “does not” to the end substitute “ is not a critical benchmark or a significant benchmark ”.

13

At the end insert—

30

  ‘EU Benchmarks Regulation’ means Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 M11 as it had effect in the European Union before F4IP completion day;

31

‘FCA register’ means the register of administrators and benchmarks established and maintained by the FCA in accordance with Article 36(1);

32

‘FSMA’ means the Financial Services and Markets Act 2000;

33

‘Markets in Financial Instruments Regulation’ means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012;

34

‘Regulated Activities Order’ means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;

35

‘third country’ means a country outside the United Kingdom;

36

‘UK trading venue’ has the meaning given in Article 2(1)(16A) of the Markets in Financial Instruments Regulation.

14

In paragraph 2—

i

in the first subparagraph, for the words from “Commission” to “in order to” substitute “ Treasury may by regulations ”;

ii

in the second subparagraph, for “Commission” substitute “ Treasury ”.

15

In paragraph 3—

a

in the first subparagraph—

i

for the words from “Commission” to “review” substitute “ Treasury may by regulations specify ”;

ii

for “Union” substitute “ United Kingdom ”;

iii

omit the second sentence;

b

in the second subparagraph, for “Commission” substitute “ Treasury ”.