Financial Services and Markets Bill

Financial Services and Markets Bill - continued	House of Commons
PART XVII, RECOGNISED INVESTMENT EXCHANGES AND CLEARING HOUSES - continued
Applications for recognition - continued

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Liability in relation to recognised body's regulatory functions.	266. - (1) A recognised body, its recognised nominee and the officers and staff of either of them are not to be liable in damages for anything done or omitted in the discharge of the recognised body's regulatory functions unless it is shown that the act or omission was in bad faith.
	(2) But subsection (1) does not prevent an award of damages made in respect of an act or omission on the ground that the act or omission was unlawful as a result of section 6(1) of the Human Rights Act 1998.
	(3) "Regulatory functions" means the functions of the recognised body so far as relating to, or to matters arising out of, the obligations to which the body is subject under or by virtue of this Act.
Overseas investment exchanges and clearing houses.	267. - (1) An application under section 262 or 263 by an overseas applicant must contain the address of a place in the United Kingdom for the service on the applicant of notices or other documents required or authorised to be served on it under this Act.
	(2) If it appears to the Authority that an overseas applicant satisfies the requirements of subsection (3) it may make a recognition order declaring the applicant to be-
	(a) a recognised investment exchange;
	(b) a recognised clearing house.
	(3) The requirements are that-
	(a) investors are afforded protection equivalent to that which they would be afforded if the body concerned were required to comply with recognition requirements;
	(b) there are adequate procedures for dealing with a person who is unable, or likely to become unable, to meet his obligations in respect of one or more market contracts connected with the investment exchange or clearing house;
	(c) the applicant is able and willing to co-operate with the Authority by the sharing of information and in other ways;
	(d) adequate arrangements exist for co-operation between the Authority and those responsible for the supervision of the applicant in the country or territory in which the applicant's head office is situated.
	(4) In considering whether it is satisfied as to the requirements mentioned in subsection (3)(a) and (b), the Authority is to have regard to-
	(a) the relevant law and practice of the country or territory in which the applicant's head office is situated;
	(b) the rules and practices of the applicant.
	(5) In relation to an overseas applicant and a body or association declared to be a recognised investment exchange or recognised clearing house by a recognition order made by virtue of subsection (2)-
	(a) the reference in section 288(2) to recognition requirements is to be read as a reference to matters corresponding to the matters in respect of which provision is made in the recognition requirements;
	(b) sections 271(1) and 273(2) have effect as if the requirements mentioned in section 271(1)(a) and section 273(2)(a) were those of subsection (3)(a), (b), and (c) of this section;
	(c) section 273(2) has effect as if the grounds on which a recognition order may be revoked under that provision included the ground that in the opinion of the Authority arrangements of the kind mentioned in subsection (3)(d) no longer exist.
	Supervision
Notification requirements.	268. - (1) The Authority may make rules requiring a recognised body to give it-
	(a) notice of such events relating to the body or its recognised nominee (if any) as may be specified; and
	(b) such information in respect of those events as may be specified.
	(2) The rules may also require a recognised body to give the Authority, at such times or in respect of such periods as may be specified, such information relating to the body or its recognised nominee (if any) as may be specified.
	(3) An obligation imposed by the rules extends only to a notice or information which the Authority may reasonably require for the exercise of its functions under this Act.
	(4) The rules may require information to be given in a specified form and to be verified in a specified manner.
	(5) If a recognised body-
	(a) alters or revokes any of its rules or guidance, or
	(b) makes new rules or issues new guidance,
	it must give written notice to the Authority without delay.
	(6) If a recognised investment exchange makes a change-
	(a) in the arrangements it makes for the provision of clearing services in respect of transactions effected on the exchange, or
	(b) in the criteria which it applies when determining to whom it will provide clearing services,
	it must give written notice to the Authority without delay.
	(7) If a recognised clearing house makes a change-
	(a) in the recognised investment exchanges for whom it provides clearing services, or
	(b) in the criteria which it applies when determining to whom (other than recognised investment exchanges) it will provide clearing services,
	it must give written notice to the Authority without delay.
	(8) A notice under subsection (5) must include a statement as to whether the alteration, revocation or addition is likely to have any effect on competition.
	(9) Subsections (5) to (8) do not apply to an overseas investment exchange or an overseas clearing house.
	(10) "Specified" means specified in the Authority's rules.
Modification or waiver of rules.	269. - (1) The Authority may, on the application or with the consent of a recognised body, direct that rules made under section 268 or 270-
	(a) are not to apply to the body; or
	(b) are to apply to the body with such modifications as may be specified in the direction.
	(2) An application must be made in such manner as the Authority may direct.
	(3) The Authority may not give a direction unless it is satisfied that-
	(a) compliance by the recognised body with the rules, or with the rules as unmodified, would be unduly burdensome or would not achieve the purpose for which the rules were made; and
	(b) the direction would not result in undue risk to persons whose interests the rules are intended to protect.
	(4) A direction may be given subject to conditions.
	(5) The Authority may-
	(a) revoke a direction; or
	(b) vary it on the application, or with the consent, of the recognised body to which it relates.
	(6) "Direction" (except in subsection (2)) means a direction under subsection (1).
Notification: overseas investment exchanges and overseas clearing houses.	270. - (1) At least once a year, every overseas investment exchange and overseas clearing house must provide the Authority with a report.
	(2) The report must contain a statement as to whether any events have occurred which are likely-
	(a) to affect the Authority's assessment of whether it is satisfied as to the requirements set out in section 267(3); or
	(b) to have any effect on competition.
	(3) The report must also contain such information as may be specified in rules made by the Authority.
	(4) The investment exchange or clearing house must provide the Treasury and the Director with a copy of the report.
Authority's power to give directions.	271. - (1) This section applies if it appears to the Authority that a recognised body-
	(a) has failed, or is likely to fail, to satisfy the recognition requirements; or
	(b) has failed to comply with any other obligation imposed on it by or under this Act.
	(2) The Authority may direct the body or its recognised nominee (if any) to take specified steps for the purpose of securing the body's compliance with-
	(a) the recognition requirements; or
	(b) any obligation of the kind in question.
	(3) A direction under this section is enforceable, on the application of the Authority, by an injunction or, in Scotland, by an order for specific performance under section 45 of the Court of Session Act 1988.
	(4) The fact that a rule made by a recognised body has been altered in response to a direction given by the Authority does not prevent it from being subsequently altered or revoked by the recognised body.

Prepared 14 December 1999