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Confer power on the Financial Services Authority to disallow excessive |
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regulatory provision by recognised investment exchanges and clearing |
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houses; and for connected purposes. |
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Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and |
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consent of the Lords Spiritual and Temporal, and Commons, in this present |
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Parliament assembled, and by the authority of the same, as follows:— |
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1 | Power of FSA to disallow excessive regulatory provision |
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In Part 18 of the Financial Services and Markets Act 2000 (c. 8) (recognised |
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investment exchanges and clearing houses), after section 300 insert— |
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“Power to disallow excessive regulatory provision |
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300A | Power of Authority to disallow excessive regulatory provision |
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(1) | This section applies where a recognised body proposes to make any |
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regulatory provision in connection with its business as an investment |
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exchange or the provision by it of clearing services. |
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(2) | If it appears to the Authority— |
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(a) | that the proposed provision will impose a requirement on |
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persons affected (directly or indirectly) by it, and |
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(b) | that the requirement is excessive, |
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| the Authority may direct that the proposed provision must not be |
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(3) | A requirement is excessive if— |
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(a) | it is not required under Community law or any enactment or |
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rule of law in the United Kingdom, and |
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(i) | it is not justified as pursuing a reasonable regulatory |
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(ii) | it is disproportionate to the end to be achieved. |
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(4) | In considering whether a requirement is excessive the Authority must |
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have regard to all the relevant circumstances, including— |
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(a) | the effect of existing legal and other requirements, |
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(b) | the global character of financial services and markets and the |
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international mobility of activity, |
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(c) | the desirability of facilitating innovation, and |
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(d) | the impact of the proposed provision on market confidence. |
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(5) | In this section “requirement” includes any obligation or burden. |
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(6) | Any provision made in contravention of a direction under this section |
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2 | Procedural and other supplementary provisions |
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In Part 18 of the Financial Services and Markets Act 2000 (c. 8) (recognised |
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investment exchanges and clearing houses), after the section inserted by |
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“300B | Duty to notify proposal to make regulatory provision |
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(1) | A recognised body that proposes to make any regulatory provision |
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must give written notice of the proposal to the Authority without delay. |
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(2) | The Authority may by rules under section 293 (notification |
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(a) | specify descriptions of regulatory provision in relation to |
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which, or circumstances in which, the duty in subsection (1) |
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(b) | provide that the duty applies only to specified descriptions of |
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regulatory provision or in specified circumstances. |
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(3) | The Authority may also by rules under that section— |
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(a) | make provision as to the form and contents of the notice |
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(b) | require the body to provide such information relating to the |
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proposal as may be specified in the rules or as the Authority |
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300C | Restriction on making provision before Authority decides whether to |
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(1) | Where notice of a proposal to make regulatory provision is required to |
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be given to the Authority under section 300B, the provision must not be |
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(a) | before that notice is given, or |
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(b) | subject to the following provisions of this section, before the end |
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(2) | The initial period is— |
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(a) | the period of 30 days beginning with the day on which the |
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Authority receives notice of the proposal, or |
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(b) | if any consultation period announced by the body in relation to |
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the proposal ends after that 30-day period, the end of the |
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(3) | If before the end of the initial period the Authority notifies the body |
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that it is calling in the proposal, the provisions of section 300D |
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(consideration by Authority whether to disallow proposed provision) |
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apply as to when the provision may be made. |
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(a) | before the end of the initial period the Authority notifies the |
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body that it is not calling in the proposal, or |
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(b) | the initial period ends without the Authority having notified |
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the body that it is calling in the proposal, |
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| the body may then make the proposed provision. |
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(5) | Any provision made in contravention of this section is of no effect. |
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300D | Consideration by Authority whether to disallow proposed provision |
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(1) | This section applies where the Authority notifies a recognised body |
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that it is calling in a proposal to make regulatory provision. |
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(2) | The Authority must publish a notice— |
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(a) | giving details of the proposed provision, |
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(b) | stating that it has called in the proposal in order to consider |
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whether to disallow it, and |
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(c) | specifying a period during which representations with respect |
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to that question may be made to it. |
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(3) | The Authority may extend the period for making representations. |
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(4) | The Authority must notify the body of its decision whether to disallow |
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the provision not later than 30 days after the end of the period for |
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making representations, and must publish the decision and the reasons |
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(5) | The body must not make the provision unless and until— |
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(a) | the Authority notifies it of its decision not to disallow it, or |
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(b) | the 30-day period specified in subsection (4) ends without the |
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Authority having notified any decision. |
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(6) | If the Authority notifies the body of its decision to disallow the |
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provision and that decision is questioned in legal proceedings— |
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(a) | the body must not make the provision until those proceedings, |
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and any proceedings on appeal, are finally determined, |
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(b) | if the Authority’s decision is quashed and the matter is remitted |
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to it for reconsideration, the court may give directions as to the |
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period within which the Authority is to complete its |
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(c) | the body must not make the provision until— |
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(i) | the Authority notifies it of its decision on |
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reconsideration not to disallow the provision, or |
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(ii) | the period specified by the court ends without the |
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Authority having notified any decision. |
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(7) | Any provision made in contravention of subsection (5) or (6) is of no |
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300E | Power to disallow execessive regulatory provision: supplementary |
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(1) | In sections 300A to 300D— |
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(a) | “regulatory provision” means any rule, guidance, |
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arrangements, policy or practice, and |
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(b) | references to making provision shall be read accordingly as |
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including, as the case may require, issuing guidance, entering |
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into arrangements or adopting a policy or practice. |
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(2) | For the purposes of those sections a variation of a proposal is treated as |
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(3) | Those sections do not apply to an overseas investment exchange or |
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overseas clearing house.”. |
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3 | Interim power to give directions about notification |
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(1) | The Authority may, on the application or with the consent of a recognised |
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body, direct that the obligation under section 300B(1) of the Financial Services |
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and Markets Act 2000 (c. 8) (duty to notify Authority of proposal to make |
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regulatory provision) does not apply— |
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(a) | to specified provision proposed to be made by that body, or |
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(b) | to any provision proposed to be made by that body that is of a specified |
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description or is made in specified circumstances. |
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(2) | An application must be made in such manner as the Authority may require. |
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(3) | The Authority may give a direction if it thinks it appropriate to do so. |
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(4) | A direction may be given subject to conditions. |
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(5) | The effect of a direction is that the provisions of sections 300B to 300D of that |
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Act (provisions requiring notification and restricting the making of regulatory |
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provision of which notification is required) do not apply or, as the case may be, |
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cease to apply to regulatory provision to which the direction relates. |
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(a) | revoke a direction, or |
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(b) | vary it on the application or with the consent of the recognised body to |
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(7) | Expressions used in this section that are defined for the purposes of sections |
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300A to 300E of that Act have the same meaning as in those sections. |
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(8) | This section shall cease to have effect twelve months after the passing of this |
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4 | Consequential amendment of grounds for refusing recognition |
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In Part 18 of the Financial Services and Markets Act 2000 (recognised |
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investment exchanges and clearing houses), after section 290 (recognition |
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“290A | Refusal of recognition on ground of excessive regulatory provision |
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(1) | The Authority must not make a recognition order if it appears to the |
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Authority that an existing or proposed regulatory provision of the |
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applicant in connection with— |
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(a) | the applicant’s business as an investment exchange, or |
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(b) | the provision by the applicant of clearing services, |
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| imposes or will impose an excessive requirement on the persons |
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affected (directly or indirectly) by it. |
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(2) | The reference in section 290(1) (making of recognition order) to |
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satisfying the applicable recognition requirements shall be read |
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(3) | Expressions used in subsection (1) above that are defined for the |
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purposes of section 300A (power of Authority to disallow excessive |
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regulatory provision) have the same meaning as in that section. |
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(4) | The provisions of section 300A(3) and (4) (determination whether |
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regulatory provision excessive) apply for the purposes of this section as |
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for the purposes of section 300A. |
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(5) | Section 298 has effect in relation to a decision under this section to |
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refuse a recognition order— |
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(a) | as it has effect in relation to a decision to revoke such an order, |
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(b) | as if references to a recognised body were references to the |
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(6) | This section does not apply to an application for recognition as an |
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overseas investment exchange or overseas clearing house.”. |
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5 | Short title and commencement |
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(1) | The short title of this Act is the Investment Exchanges and Clearing Houses Act |
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(2) | This Act comes into force on the day after that on which it is passed. |
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(3) | Sections 300A to 300E of the Financial Services and Markets Act 2000 (c. 8) (as |
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(a) | do not apply to regulatory provision made before that day, and |
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(b) | apply to regulatory provision proposed on or after that day, whenever |
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| Expressions used in this subsection that are defined for the purposes of those |
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sections have the same meaning as in those sections. |
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