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PART IX |
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RULES AND GUIDANCE |
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CHAPTER I |
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RULE-MAKING POWERS |
| General rule-making power. |
110. - (1) The Authority may make such rules applying to authorised persons with respect to the carrying on by them of regulated activities as appear to it to be necessary or expedient for the purpose of protecting the interests of persons-
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(a) who use, have used, or are or may be contemplating using, any of the services provided by authorised persons in carrying on regulated activities; or |
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(b) who have rights or interests which- |
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(i) are derived from, or are otherwise attributable to, or
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(ii) may be adversely affected by,
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the use of any such services by other persons. |
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(2) Rules made under this section are referred to in this Act as the Authority's general rules.
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(3) The Authority's power to make general rules is not limited by any other power which it has to make regulating provisions.
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(4) The Authority's general rules may make provision applying to authorised persons even though there is no relationship between the authorised persons to whom the rules will apply and the persons whose interests will be protected by the rules.
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(5) General rules requiring authorised persons to have or maintain financial resources may contain requirements which take into account, in the case of an authorised person who is a member of a group, any activity of another member of the group.
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(6) General rules may not-
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(a) make provision prohibiting an EEA firm from carrying on, or holding itself out as carrying on, any activity which it has permission conferred by Part II of Schedule 3 to carry on in the United Kingdom; |
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(b) make provision, as respects an EEA firm, about any matter responsibility for which is, under any of the single market directives, reserved to the firm's home state regulator. |
| Non-regulated activity rules. |
111. - (1) The Authority may make such rules applying to authorised persons with respect to the carrying on by them of non-regulated activities as appear to it to be necessary or expedient to ensure that the carrying on of such an activity by an authorised person is unlikely to have an adverse effect on his carrying on of a regulated activity and, as a result, on users of services provided by him in carrying on that regulated activity.
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(2) Rules made under this section are referred to in this Act as the Authority's non-regulated activity rules.
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(3) Non-regulated activity rules requiring authorised persons to have or maintain financial resources may contain requirements which take into account, in the case of an authorised person who is a member of a group, any activity of another member of the group.
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(4) Non-regulated activity rules may not-
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(a) make provision prohibiting an EEA firm from carrying on, or holding itself out as carrying on, any activity which it has permission conferred by Part II of Schedule 3 to carry on in the United Kingdom; |
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(b) make provision, as respects an EEA firm, about any matter responsibility for which is, under any of the single market directives, reserved to the firm's home state regulator. |
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(5) "Non-regulated activity" means any activity which is not a regulated activity.
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| Miscellaneous ancillary matters. |
112. - (1) Rules requiring an authorised person to have or maintain financial resources may contain provision-
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(a) as to the nature of those resources; |
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(b) requiring him to maintain resources at the appropriate level. |
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(2) "The appropriate level" is-
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(a) such level as may from time to time be notified to the authorised person by the Authority; or |
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(b) such level as may otherwise be determined in accordance with the rules. |
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(3) Rules relating to the handling of money held by an authorised person in specified circumstances ("clients' money") may-
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(a) make provision which results in that clients' money being held on trust in accordance with the rules; |
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(b) treat two or more accounts as a single account for specified purposes (which may include the distribution of money held in the accounts); |
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(c) authorise the retention by the authorised person of interest accruing on the clients' money; and |
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(d) make provision as to the distribution of such interest which is not to be retained by him. |
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(4) An institution with which an account is kept in pursuance of rules relating to the handling of clients' money does not incur any liability as constructive trustee if money is wrongfully paid from the account, unless the institution permits the payment-
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(a) with knowledge that it is wrongful; or |
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(b) having deliberately failed to make enquiries in circumstances in which a reasonable and honest person would have done so. |
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(5) In the application of subsection (3) to Scotland, the reference to money being held on trust is to be read as a reference to its being held as agent for the person who is entitled to call for it to be paid over to him or to be paid on his direction or to have it otherwise credited to him.
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(6) Rules may-
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(a) confer rights on persons to rescind agreements with, or withdraw offers to, authorised persons within a specified period; and |
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(b) make provision, in respect of authorised persons and persons exercising those rights, for the restitution of property and the making or recovery of payments where those rights are exercised. |
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(7) "Rules" means general rules or non-regulated activity rules.
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(8) "Specified" means specified in the rules.
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| Insurance business: regulations supplementing Authority's rules. |
113. - (1) The Treasury may make regulations for the purpose of preventing a person who is not an authorised person but who-
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(a) is a parent undertaking of an authorised person who has permission to deal in contracts of insurance, and |
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(b) falls within a prescribed class, |
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from doing anything to lessen the effectiveness of asset identification rules.
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(2) "Asset identification rules" means rules made by the Authority which require an authorised person who has permission to deal in contracts of insurance to identify assets which belong to him and which are maintained in respect of a particular aspect of his business.
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(3) The regulations may, in particular, include provision-
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(a) prohibiting the payment of dividends; |
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(b) prohibiting the creation of mortgages or charges (or in Scotland securities over property); |
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(c) making mortgages or charges (or in Scotland securities over property) created in contravention of the regulations void. |
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(4) The Treasury may by regulations provide that, in prescribed circumstances, mortgages or charges (or in Scotland securities over property) created in contravention of asset identification rules are void.
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(5) A person who contravenes regulations under subsection (1) is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.
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| Endorsement of codes etc. issued by other bodies. |
114. - (1) The Authority may make rules ("endorsing rules")-
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(a) endorsing the City Code on Takeovers and Mergers issued by the Panel on Takeovers and Mergers; |
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(b) endorsing the Rules Governing Substantial Acquisitions of Shares issued by the Panel. |
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(2) Endorsement may be-
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(a) as respects all authorised persons; or |
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(b) only as respects a specified kind of authorised person. |
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(3) At any time when endorsing rules are in force and if asked to do so by the Panel, the Authority may exercise its powers under Part IV, XII, XIII or XXIII as if the endorsed provisions were rules applying to the persons in respect of whom they are endorsed.
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(4) If endorsed provisions are altered, subsection (3) applies to them as altered, but only if before the alteration the Authority has notified the Panel (and has not withdrawn its notification) that it is satisfied with the Panel's consultation procedures.
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(5) "Consultation procedures" means procedures designed to provide an opportunity for persons likely to be affected by alterations to those provisions to make representations about proposed alterations to any of those provisions.
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(6) The Authority may at any time revoke endorsing rules.
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(7) If the Authority proposes to make endorsing rules, it must publish notice of its proposal in the way appearing to the Authority to be most suitable for bringing it to the attention of the public.
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(8) The notice must be accompanied by-
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(a) a cost benefit analysis; and |
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(b) a statement that representations about the Authority's proposals may be made to the Authority within a specified time. |
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(9) Before making the proposed endorsing rules, the Authority must have regard to any representations made to it in accordance with subsection (8)(b).
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(10) "Cost benefit analysis", in relation to any proposal to make endorsing rules, means an estimate of the costs together with an analysis of the benefits that will arise if the rules are made.
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(11) The Authority may charge a reasonable fee for providing a person with a copy of a proposal published under subsection (7).
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(12) Subsections (7), (8)(b), (9) and (11) apply to a proposal to give notification of the kind mentioned in subsection (4) as they apply to a proposal to make endorsing rules.
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(13) This section applies in relation to particular provisions of the code or rules mentioned in subsection (1) as it applies to the code or the rules.
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Price stabilising and certain other rules |
| Price stabilising rules. |
115. - (1) The Authority may make rules ("price stabilising rules") as to-
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(a) the circumstances and manner in which, |
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(b) the conditions subject to which, and |
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(c) the time when or the period during which, |
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action may be taken for the purpose of stabilising the price of investments of specified kinds.
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(2) Price stabilising rules-
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(a) are to be made so as to apply only to authorised persons; |
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(b) may make different provision in relation to different kinds of investment. |
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(3) The Authority may make rules which, for the purposes of section 341(4)(b), treat a person who acts or engages in conduct-
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(a) for the purpose of stabilising the price of investments, and |
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(b) in conformity with such provisions corresponding to price stabilising rules and made by a body or authority outside the United Kingdom as may be specified in the rules under this subsection, |
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as acting, or engaging in that conduct, for that purpose and in conformity with price stabilising rules.
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(4) The Treasury may by order impose limitations on the power to make rules under this section.
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(5) Such an order may, in particular-
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(a) specify the kinds of investment in relation to which price stabilising rules may make provision; |
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(b) specify the kinds of investment in relation to which rules made under subsection (3) may make provision; |
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(c) provide for price stabilising rules to make provision for action to be taken for the purpose of stabilising the price of investments only in such circumstances as the order may specify; |
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(d) provide for price stabilising rules to make provision for action to be taken for that purpose only at such times or during such periods as the order may specify. |
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(6) If provisions specified in rules made under subsection (3) are altered, the rules continue to apply to those provisions as altered, but only if before the alteration the Authority has notified the body or authority concerned (and has not withdrawn its notification) that it is satisfied with its consultation procedures.
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(7) "Consultation procedures" has the same meaning as in section 114.
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