Financial Services and Markets Bill

Financial Services and Markets Bill - continued	House of Commons

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	PART XVII
	RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES
	CHAPTER I
	EXEMPTION
	General
Exemption for recognised investment exchanges and clearing houses.	260. - (1) In this Act-
	(a) "recognised investment exchange" means an investment exchange which is recognised for the purposes of this Act by a recognition order in force; and
	(b) "recognised clearing house" means a clearing house which is recognised for the purposes of this Act by a recognition order in force.
	(2) A recognised investment exchange and its recognised nominee (if any) are exempt from the general prohibition as respects any regulated activity-
	(a) which is carried on as a part of the exchange's business as an investment exchange; or
	(b) which is carried on for the purposes of, or in connection with, the provision of clearing services by the exchange or by its recognised nominee on its behalf.
	(3) A recognised clearing house and its recognised nominee (if any) are exempt from the general prohibition as respects any regulated activity which is carried on for the purposes of, or in connection with, the provision of clearing services by the clearing house or by its recognised nominee on its behalf.
	(4) In order to fall within subsection (2) or (3) a recognised nominee must be acting in accordance with the arrangements specified under section 265(3) in respect of which recognition is granted by the recognition order.
Qualification for recognition.	261. - (1) The Treasury may make regulations setting out the requirements-
	(a) which must be satisfied by an investment exchange or clearing house if it is to qualify as a body in respect of which the Authority may make a recognition order under this Part; and
	(b) which, if a recognition order is made, it must continue to satisfy if it is to remain a recognised body.
	(2) But if regulations contain provision as to the default rules of an investment exchange or clearing house, or as to proceedings taken under such rules by such a body, they require the approval of the Secretary of State.
	(3) "Default rules" means rules of an investment exchange or clearing house which provide for the taking of action in the event of a person's appearing to be unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the exchange or clearing house.
	(4) "Market contract" means-
	(a) a contract to which Part VII of the Companies Act 1989 applies as a result of section 155 of that Act or a contract to which Part V of the Companies (No. 2)(Northern Ireland) Order 1990 applies as a result of Article 80 of that Order; and
	(b) such other kind of contract as may be prescribed.
	(5) Requirements resulting from this section are referred to in this Part as "recognition requirements".
	Applications for recognition
Application by an investment exchange.	262. - (1) Any body corporate or unincorporated association may apply to the Authority for an order declaring it to be a recognised investment exchange for the purposes of this Act.
	(2) An application under subsection (1) may ask for the order to declare a person specified by the applicant to be its recognised nominee.
	(3) The application must be made in such manner as the Authority may direct and must be accompanied by-
	(a) a copy of the applicant's rules;
	(b) a copy of any guidance issued by the applicant;
	(c) the required particulars;
	(d) if the application names a person for whom recognition is sought under subsection (2), particulars of any arrangement which the applicant has made, or proposes to make, with him; and
	(e) such other information as the Authority may reasonably require for the purpose of determining the application.
	(4) The required particulars are-
	(a) particulars of any arrangements which the applicant has made, or proposes to make, for the provision of clearing services in respect of transactions effected on the exchange;
	(b) if the applicant proposes to provide clearing services in respect of transactions other than those effected on the exchange, particulars of the criteria which the applicant will apply when determining to whom it will provide those services.
Application by a clearing house.	263. - (1) Any body corporate or unincorporated association may apply to the Authority for an order declaring it to be a recognised clearing house for the purposes of this Act.
	(2) An application under subsection (1) may ask for the order to declare a person specified by the applicant to be its recognised nominee.
	(3) The application must be made in such manner as the Authority may direct and must be accompanied by-
	(a) a copy of the applicant's rules;
	(b) a copy of any guidance issued by the applicant;
	(c) the required particulars;
	(d) if the application names a person for whom recognition is sought under subsection (2), particulars of any arrangement which the applicant has made, or proposes to make, with him; and
	(e) such other information as the Authority may reasonably require for the purpose of determining the application.
	(4) The required particulars are-
	(a) if the applicant makes, or proposes to make, clearing arrangements with a recognised investment exchange, particulars of those arrangements;
	(b) if the applicant proposes to provide clearing services for persons other than recognised investment exchanges, particulars of the criteria which it will apply when determining to whom it will provide those services.
Applications: supplementary.	264. - (1) At any time after receiving an application and before determining it, the Authority may require the applicant to provide additional information.
	(2) Information which the Authority requires in connection with an application must be provided in such form, or verified in such manner, as the Authority may direct.
	(3) Different directions may be given, or requirements imposed, by the Authority with respect to different applications.
Recognition orders.	265. - (1) If it appears to the Authority that the applicant satisfies the recognition requirements applicable in its case, the Authority may make a recognition order declaring the applicant to be-
	(a) a recognised investment exchange, if the application is made under section 262;
	(b) a recognised clearing house, if it is made under section 263.
	(2) But if the application contains a request under 262(2) or 263(2) in respect of a person, the Authority may make the recognition order only if appears to it that the recognition requirements will be satisfied if that person is the recognised nominee of the applicant.
	(3) A recognition order made in accordance with subsection (2) must name the recognised nominee and specify the arrangements in respect of which recognition is granted.
	(4) The Treasury's approval of the making of a recognition order is required under section 278.
	(5) In considering an application, the Authority may have regard to any information which it considers is relevant to the application.
	(6) A recognition order must specify a date on which it is to take effect.
	(7) Section 274 has effect in relation to a decision to refuse to make a recognition order-
	(a) as it has effect in relation to a decision to revoke such an order; and
	(b) as if references to a recognised body were references to the applicant.
	(8) Subsection (7) does not apply in a case in which the Treasury have failed to give their approval under section 278.

Prepared 14 December 1999