Financial Services and Markets Act 2023

(1) The Treasury may by regulations designate a country or territory in relation to securitisations of descriptions specified in the regulations. (2) The power in paragraph 1 is exercisable only if the Treasury are satisfied that the law and practice which applies in the country or territory, in relation to securitisations of the descriptions specified, has equivalent effect (taken as a whole) to applicable UK law. (3) “Applicable UK law” means: (a) this Regulation, as it applies to STS securitisations, and (b) the Securitisation Regulations 2018 (S.I. 2018/2188), as those regulations apply to STS securitisations. (4) In making regulations under paragraph 1, the Treasury must have regard, in addition to any other matters they consider relevant, to whether the FCA (and, where relevant, the PRA) have established effective cooperation arrangements with the competent authorities of the country or territory. (5) When considering whether to make, vary or revoke regulations under paragraph 1, the Treasury may, by making a request in writing to the FCA, require the FCA to prepare a report on the law and practice of a country or territory outside the United Kingdom, or particular aspects of such law and practice, in relation to securitisations of descriptions specified in the request. (6) If the Treasury request a report under paragraph 5, the FCA must: (a) consult the PRA when preparing the report, and (b) provide the Treasury with the report within such reasonable period as may be specified in the request (or such other period as may be agreed with the Treasury). (7) Regulations under paragraph 1 may— (a) specify matters that a person carrying out a due-diligence assessment required by Article 5(3) must consider with regard to an STS equivalent non-UK securitisation; (b) in relation to a matter specified, specify the extent to which the person may rely on the matter. (8) Regulations under this Article are to be made by statutory instrument. (9) Such regulations may— (a) contain incidental, supplemental, consequential and transitional provision; and (b) make different provision for different purposes. (>10.) Regulations under this Article are subject to annulment in pursuance of a resolution of either House of Parliament.

Minor and consequential amendments

34

The EU Securitisation Regulation 2017 is amended in accordance with paragraphs 35 to 37.

35

In Article 4 (requirements for securitisation special purpose entities)—

• (a) in the words before point (a), for “third country” substitute “country or territory outside the United Kingdom”;

• (b) in point (a), for “third country” substitute “country or territory”;

• (c) in point (b), for “third country”, in both places, substitute “country or territory”.

36

• (1) Article 5 (due-diligence requirements for institutional investors) is amended as follows.

• (2) In paragraph 1, for “third country”, in each place, substitute “country or territory outside the United Kingdom”.

• (3) In paragraph 3, after point (d) insert—

(da) with regard to an STS equivalent non-UK securitisation, such matters as may be specified in regulations under Article 28A (and may rely on such matters to such extent as may be specified).

37

• (1) Article 46 (Treasury review) is amended as follows.

• (2) In paragraph 1, omit the second subparagraph.

• (3) In paragraph 2—

• (a) in point (a), omit “in the Union”;

• (b) omit point (e).

38

In 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, in Article 242 (definitions), in point (10) (meaning of “simple, transparent and standardised securitisation” or “STS securitisation”)—

• (a) the words from “a securitisation” to the end become paragraph (a);

• (b) at the end of that paragraph, insert

; or (b) an STS equivalent non-UK securitisation as defined in point (A9) of Article 2 of Regulation (EU) 2017/2402;

.

39

In Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), in Article 1 (definitions), in point 18b (meaning of “STS securitisation”)—

• (a) the words from “a securitisation” to the end become paragraph (a);

• (b) at the end of that paragraph, insert

; or (b) an STS equivalent non-UK securitisation within the meaning of Article 2(A9) of Regulation (EU) 2017/2402;

.

40

In Article 11(1) of Regulation (EU) 2017/1131 of the European Parliament and of the Council of 14 June 2017 on money market funds (eligible securitisations and ABCPs), after paragraph (c) insert—

(d) an STS equivalent non-UK securitisation as defined in point (A9) of Article 2 of Regulation (EU) 2017/2402.

41

The Securitisation Regulations 2018 (S.I. 2018/1288) are amended in accordance with paragraphs 42 and 43.

42

In regulation 2 (interpretation), in the definition of “SRUP”, in paragraph (c), for “third country” substitute “country or territory outside the United Kingdom”.

43

In regulation 4 (designation of competent authorities), in paragraph (1)(b), for “third country” substitute “country or territory outside the United Kingdom”.

PART 4 — Amendments to the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017

Introductory

44

The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701) is amended in accordance with this Part of this Schedule.

Position limits for commodity derivatives

45

In Part 3 (position limits and position management controls in commodity derivatives), before regulation 16 insert—

(15A) (1) The FCA may by rules require relevant persons to establish and apply— (a) position limits in respect of specified commodity derivatives, or commodity derivatives of a specified class, that are traded on a trading venue, and (b) position management controls in relation to the trading of commodity derivatives. (2) The power to make rules under paragraph (1) is exercisable only if the FCA considers that the rules are necessary or expedient for the purpose of advancing one or more of its operational objectives referred to in section 1B(3) of the Act. (3) In making rules under paragraph (1) the FCA must have regard to its competitiveness and growth objective in section 1EB of the Act. (4) Rules under paragraph (1) may provide for matters that relevant persons must have regard to when establishing position limits, or position management controls, under requirements imposed by the rules. (5) Rules under paragraph (1) may provide for exemptions from the requirements imposed by the rules to such extent, and in such cases, as the rules may specify. (6) The reference in paragraph (1)(b) to position management controls includes (for example) arrangements under which— (a) the open interest positions of persons can be monitored; (b) information and documentation can be obtained from persons about the size of positions entered into; (c) requirements can be imposed on persons to terminate or reduce positions or to provide liquidity. (7) The following provisions of Part 9A of the Act (rules and guidance) apply in relation to rules made by the FCA under this regulation as they apply in relation to rules made by the FCA under that Part of the Act, subject to the modification in paragraph (8)— (a) section 137T (general supplementary powers); (b) Chapter 2 (modification, waiver, contravention and procedural provisions), with the exception of sections 138D (actions for damages) and 138EA (matters to consider when making rules); (c) section 141A (power to make consequential amendments of references to rules etc). (8) Section 137T applies as if the reference to authorised persons were a reference to relevant persons to whom rules under this regulation apply. (9) A requirement imposed by rules under this regulation is, for the purposes of section 296 of the Act (regulator’s power to give directions), to be treated as an obligation imposed under the Act. (10) In this Part “relevant persons” means market operators and investment firms operating a trading venue.

46

• (1) Regulation 16 (FCA duty to establish position limits) is amended as follows.

• (2) In the title, for “duty” substitute “power”.

• (3) In paragraph (1)—

• (a) for “must” substitute “may”;

• (b) for the words from “traded” to the end substitute “to which requirements imposed by rules under regulation 15A apply”.

• (4) After that paragraph insert—

(1A) The power to give a direction under paragraph (1) is exercisable only if the FCA considers that it is necessary to give the direction for the purpose of advancing one or more of its operational objectives referred to in section 1B(3) of the Act. (1B) Position limits established by virtue of regulation 15A do not apply to the extent that position limits established by virtue of this regulation apply instead.

• (5) Omit paragraphs (2), (3) and (5).

47

• (1) Regulation 27 (FCA power to require information) is amended as follows.

• (2) In paragraph (1), in both of sub-paragraphs (a) and (b) omit “or over the counter contract”.

• (3) In paragraph (2) omit “or over the counter contract”.

• (4)

(3) For the purposes of this regulation a commodity derivative is a “relevant” commodity derivative if— (a) requirements imposed by rules under regulation 15A apply to the commodity derivative (or to commodity derivatives of that class), or (b) it is a commodity derivative (or falls within a class of commodity derivatives) to which the FCA is considering making such requirements apply.

48

• (1) Regulation 28 (FCA power to intervene) is amended as follows.

• (2) In paragraph (1), in the words before sub-paragraph (a), for the words from “the exercise” to “regulation” substitute “advancing one or more of its operational objectives referred to in section 1B(3) of the Act”.

• (3) In paragraph (2) after “established” insert “in accordance with rules made under regulation 15A or”.

• (4) In paragraph (3) omit “or an economically equivalent over the counter contract”.

49

In regulation 29 (interpretation of Part 3), in paragraph (2)—

• (a) before the definition of “position” insert—

• “market operator” has the same meaning as in the markets in financial instruments regulation;

;

• (b) after the definition of “position limit” insert—

• “relevant person” has the meaning given by regulation 15A(10)

.

Consequential revocations relating to this Part

50

The following provisions are revoked—

• (a) paragraph 7BA of the Schedule to the Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges, Clearing Houses and Central Securities Depositories) Regulations 2001 (S.I. 2001/995);

• (b) in the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017—

• (i) regulation 17;

• (ii) regulation 18;

• (iii) regulation 19;

• (iv) regulation 25;

• (v) regulation 29(1);

• (c) in Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments—

• (i) in Article 26(3), the last sentence;

• (ii) in Schedule 3, paragraphs 31 and 32;

• (d) Commission Delegated Regulation (EU) 2017/591 of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the application of position limits to commodity derivatives.

PART 5 — Amendments to the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018

51

• (1) Regulation 19B of the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184) is amended as follows.

• (2) In paragraph (2) for “one year” substitute “3 years and 6 months”.

• (3) After paragraph (3) insert—

(4) The period determined by the Bank of England in a particular case under paragraph (2) (whenever determined) may be varied by the making of a subsequent determination. (5) Paragraph (6) applies where— (a) a central counterparty (A) was taken to be recognised pursuant to Article 25 of the EMIR regulation in accordance with regulation 19A(3), and (b) A ceased to be taken to be so recognised by virtue of the relevant period in the case of A having expired before the commencement day. (6) The Bank of England— (a) may determine that the relevant period in the case of A is (in spite of its expiry) to be treated, as from the making of the determination, as not having expired, and (b) may accordingly exercise its power under this regulation to vary the relevant period on or after the commencement day. (7) In paragraphs (5) and (6) “the commencement day” means the day on which Part 5 of Schedule 2 to the Financial Services and Markets Act 2023 comes into force. (8) Paragraphs (5) to (7) expire at the end of 31 December 2025 (but without affecting any variation of a relevant period made under this regulation by virtue of paragraph (6)(b) before that time).

PART 6 — Amendments relating to critical third parties

52

The Electronic Money Regulations 2011 (S.I. 2011/99) are amended in accordance with paragraphs 53 to 62.

53

In regulation 48 (monitoring and enforcement), after paragraph (1)(a) insert—

(aa) electronic money institutions on whom requirements are imposed by or under section 312R of the 2000 Act are complying with them;

.

54

In regulation 49 (reporting requirements), after paragraph (1) insert—

(1A) An electronic money institution must give the Authority such information in respect of its compliance with requirements imposed by or under section 312R of the 2000 Act as the Authority may direct.

55

In regulation 50 (public censure), after “Regulations” insert “or, in the case of an electronic money institution, section 312R of the 2000 Act”.

56

In regulation 51 (financial penalties)—

• (a) omit “or” at the end of paragraph (1)(a), and

• (b) after that paragraph insert—

(aa) an electronic money institution who has contravened a requirement imposed on it by or under section 312R of the 2000 Act; or

.

57

In regulation 52 (suspending authorisation etc), in paragraph (1) after “Regulations” insert “or by or under section 312R of the 2000 Act”.

58

In regulation 54 (injunctions)—

• (a) omit “or” at the end of paragraph (1)(a);

• (b) after paragraph (1)(b) insert—

(c) that there is a reasonable likelihood that an electronic money institution will contravene a requirement imposed on it by or under section 312R of the 2000 Act; or (d) that an electronic money institution has contravened such a requirement and that there is a reasonable likelihood that the contravention will continue or be repeated,

;

• (c) in paragraph (2)(a) after “Regulations” insert “or an electronic money institution has contravened a requirement imposed on it by or under section 312R of the 2000 Act”;

• (d) in the words after paragraph (2)(b), after “that person” insert “or institution”;

• (e) omit “or” at the end of paragraph (3)(a);

• (f) after that paragraph insert—

(aa) in the case of an electronic money institution, contravened a requirement imposed on it by or under section 312R of the 2000 Act; or

;

• (g) in paragraph (3)(b) for “such a requirement” substitute “a requirement described in sub-paragraph (a) or (aa)”.

59

In regulation 55 (power to require restitution), in paragraph (1) after “requirement,” insert “or, where the electronic money issuer is an electronic money institution, has contravened a requirement imposed on it by or under section 312R of the 2000 Act, or been knowingly concerned in the contravention of such a requirement,”.

60

In regulation 57 (restitution orders), in paragraph (1) after “requirement,” insert “or, where the electronic money issuer is an electronic money institution, has contravened a requirement imposed on it by or under section 312R of the 2000 Act, or been knowingly concerned in the contravention of such a requirement,”.

61

In regulation 58 (complaints), in paragraph (1)—

• (a) the words from “a requirement” to the end become sub-paragraph (a), and

• (b) after that sub-paragraph insert

, or (b) a requirement imposed by or under section 312R of the 2000 Act has been breached by an electronic money institution.

62

In Schedule 3 (application and modification of legislation)—

• (a) in paragraph 1(b), in the inserted text substituting section 66A of the 2000 Act—

• (i) in subsection (1), the words from “a contravention” to the end become sub-paragraph (a),

• (ii) after that paragraph insert

, or (b) a contravention of a requirement imposed by or under section 312R of the 2000 Act by an electronic money institution.

, and

• (iii) for subsection (2) substitute—

(2) “Relevant person” means— (a) in relation to subsection (1)(a), any person responsible for the management of the electronic money issuer or, where relevant, any person responsible for the management of electronic money issuance by the electronic money issuer, or (b) in relation to subsection (1)(b), any person responsible for the management of the electronic money institution or, where relevant, any person responsible for the management of electronic money issuance by the electronic money institution.

;

• (b) in paragraph 3(d)(i), in the inserted subsection (1)(ab), after “2011” insert “or section 312R”.

63

The Payment Services Regulations 2017 (S.I. 2017/752) are amended in accordance with paragraphs 64 to 72.

64

In regulation 108 (monitoring and enforcement), after paragraph (1)(a) insert—

(aa) authorised payment institutions, small payment institutions or registered account information services providers on whom requirements are imposed by or under section 312R of the 2000 Act are complying with them;

.

65

In regulation 109 (reporting requirements), after paragraph (1) insert—

(1A) An authorised payment institution, small payment institution, or registered account information services provider must give the FCA such information as the FCA may direct in respect of its compliance with requirements imposed by or under section 312R of the 2000 Act.

66

In regulation 110 (public censure), after “Regulations” insert “or, in the case of an authorised payment institution, small payment institution, or registered account information services provider, section 312R of the 2000 Act”.

67

In regulation 111 (financial penalties)—

• (a) omit “or” at the end of paragraph (1)(a), and

• (b) after that paragraph insert—

(aa) an authorised payment institution, small payment institution, or registered account information services provider who has contravened a requirement imposed on it by or under section 312R of the 2000 Act; or

.

68

In regulation 113 (injunctions)—

• (a) omit “or” at the end of paragraph (1)(a);

• (b) after paragraph (1)(b) insert—

(c) that there is a reasonable likelihood that an authorised payment institution, small payment institution, or registered account information services provider will contravene a requirement imposed on it by or under section 312R of the 2000 Act; or (d) that an authorised payment institution, small payment institution, or registered account information services provider has contravened such a requirement and that there is a reasonable likelihood that the contravention will continue or be repeated,

;

• (c) in paragraph (2)(a) after “Regulations” insert “or an authorised payment institution, small payment institution, or registered account information services provider has contravened a requirement imposed on it by or under section 312R of the 2000 Act”;

• (d) in the words after paragraph (2)(b), after “that person” insert “or institution or provider”;

• (e) omit “or” at the end of paragraph (3)(a);

• (f) after that paragraph insert—

(aa) in the case of an authorised payment institution, small payment institution, or registered account information services provider contravened a requirement imposed on it by or under section 312R of the 2000 Act; or

;

• (g) in paragraph (3)(b) for “such a requirement” substitute “a requirement described in sub-paragraph (a) or (aa)”.

69

In regulation 114 (power to require restitution), in paragraph (1) after “requirement,” insert “or, where the payment service provider is an authorised payment institution, small payment institution, or registered account information services provider, has contravened a requirement imposed on it by or under section 312R of the 2000 Act, or been knowingly concerned in the contravention of such a requirement,”.

70

In regulation 116 (restitution orders), in paragraph (1) after “requirement,” insert “or, where the payment service provider is an authorised payment institution, small payment institution, or registered account information services provider, has contravened a requirement imposed on it by or under section 312R of the 2000 Act, or been knowingly concerned in the contravention of such a requirement,”.

71

In regulation 117 (complaints), in paragraph (1)—

• (a) the words from “a requirement” to the end become sub-paragraph (a), and

• (b) after that sub-paragraph insert

or (b) a requirement imposed by or under section 312R of the 2000 Act has been breached by an authorised payment institution, small payment institution, or registered account information services provider.

72

In Schedule 6 (application and modification of legislation)—

• (a) in paragraph 1, in the inserted text substituting section 66A of the 2000 Act—

• (i) in subsection (1), the words from “a contravention” to the end become sub-paragraph (a), and

• (ii) after that paragraph insert

or (b) a contravention of a requirement imposed by or under section 312R of the 2000 Act by an authorised payment institution, small payment institution, or registered account information services provider.

;

• (iii) for subsection (2) substitute—

(2) “Relevant person” means— (a) in relation to subsection (1)(a), any person responsible for the management of the payment service provider or, where relevant, any person responsible for the management of the payment service provider’s payment services activities, or (b) in relation to subsection (1)(b), any person responsible for the management of the authorised payment institution, small payment institution, or registered account information services provider or, where relevant, any person responsible for the management of the authorised payment institution’s, small payment institution’s, or registered account information services provider’s payment services activities.

;

• (b) in paragraph 4(e), in the inserted subsection (1)(c), after “2017” insert “or section 312R”.

SCHEDULE 3

SCHEDULE 4

Participation

1

• (1) Eligibility for participation in the FMI sandbox arrangements for FMI entities and persons other than FMI entities.

• (2) The requirements mentioned in sub-paragraph (1) may be framed by reference to—

• (a) the description of persons who carry on activities;

• (b) the description of activities carried on by persons;

• (c) the relationship of persons with FMI entities.

• (3) Application or other procedures for participating in the FMI sandbox arrangements.

• (4) Information to be supplied by persons wishing to participate in the FMI sandbox arrangements for the purposes of assessing eligibility.

• (5) Information to be supplied by persons participating in the FMI sandbox arrangements for the purposes of notifying other persons of their participation.

Technology

2

The particular kinds of technology that may be used under the FMI sandbox arrangements for the purposes of assessing their efficiency or effectiveness.

Practices

3

• (1) The particular kinds of practices that may be adopted under the FMI sandbox arrangements for the purposes of assessing their efficiency or effectiveness.

• (2) The practices referred to in sub-paragraph (1) include practices adopted in the issuance, trading or settlement of financial instruments in a way not otherwise possible or practicable as a result of requirements imposed by relevant enactments.

Financial instruments

4

• (1) Descriptions of financial instrument (“the FMI sandbox instruments”) that may be traded under the FMI sandbox arrangements.

• (2) The forms that the FMI sandbox instruments may take for the purposes of trading as part of the FMI sandbox arrangements.

• (3) Limitations or prohibitions on the trading of the FMI sandbox instruments, or of other instruments that are converted from, or are otherwise linked to, the FMI sandbox instruments.

• (4) Limitations (whether by reference to number, value or another metric) on the amount of FMI sandbox instruments permitted for trading under the FMI sandbox arrangements.

• (5) References in this paragraph to the trading of FMI sandbox instruments include references to their settlement.

Settlement of payments

5

• (1) How payments are to be settled in respect of transactions taking place under the FMI sandbox arrangements.

• (2) Provision under sub-paragraph (1) includes provision as to cash settlement or whatever other forms of settlement the provision may specify.

Requirements

6

• (1) Requirements applicable—

• (a) to persons participating in the FMI sandbox arrangements, and

• (b) to other persons in connection with such arrangements.

• (2) Provision under this paragraph includes provision conferring powers on the appropriate regulator to make rules or technical standards applicable for the purposes of the FMI sandbox arrangements.

Cooperation

7

Duties of the appropriate regulators to cooperate with each other for the purposes of implementing and operating the FMI sandbox arrangements.

Transparency and reporting

8

• (1) Publication of specified details of the FMI sandbox arrangements by the Treasury or the appropriate regulator (or both).

• (2) Duties of appropriate regulators to provide the Treasury with information about the operation of the FMI sandbox arrangements.

• (3) Requirements imposed by virtue of this paragraph are in addition to the requirement imposed by section 14.

Enforcement

9

• (1) How requirements imposed by or under the FMI sandbox arrangements are to be enforced.

• (2) Provision under sub-paragraph (1) may be made by—

• (a) conferring powers on the appropriate regulator;

• (b) applying provisions of FSMA 2000 in relation to enforcement;

• (c) imposing other means of enforcement set out in the arrangements.

• (3) The powers mentioned in sub-paragraph (2)(a) include powers to—

• (a) suspend or terminate a person’s participation in the FMI sandbox arrangements;

• (b) impose civil penalties.

SCHEDULE 5

1

FSMA 2000 is amended as follows.

2

In section 1H (further interpretative provisions for sections 1B to 1G), in subsection (2)(c) after “invitations” insert “or inducements”.

3

In section 25 (contravention of section 21), in subsection (2)(a) after “section 21” insert “in accordance with subsection (2A) of that section”.

4

In section 55A (application for permission), after subsection (5) insert—

(6) References in this section to permission under this Part do not include references to permission under section 55NA.

5

• (1) Section 55O (imposition of requirements on acquisition of control) is amended as follows.

• (2) In subsection (1)(b), after “power” insert “or (as the case may be) the power under section 55NA(5)(b)”.

• (3) In subsection (2)(a) for “or 55M” substitute “, 55M or 55NA”.

• (4) In subsection (3), after “PRA-authorised person” insert “and the case does not relate to a requirement that is imposed (or that could be imposed) under section 55NA”.

6

In section 55R (persons connected with an applicant), in subsection (1) after paragraph (b) insert—

(ba) an application for permission under section 55NA, (bb) whether to vary or cancel permission under section 55NA,

.

7

In section 55U (applications under Part 4A), after subsection (3) insert—

(3A) An application for permission under section 55NA, or for the variation of permission under that section, must contain a statement of the desired permission or variation.

8

In section 55V (determination of applications), in subsection (5)—

• (a) omit “or” at the end of paragraph (c);

• (b) after paragraph (d) insert

, or (e) for permission under section 55NA or for the variation or cancellation of permission granted under that section,

.

9

• (1) Section 55X (determination of applications: warning notices and decision notices) is amended as follows.

• (2) In subsection (1)—

• (a) omit “or” at the end of paragraph (d);

• (b) after paragraph (e) insert—

(f) to give permission under section 55NA but to exercise its power under subsection (4)(b) of that section, or (g) to vary permission under section 55NA on the application of an authorised person but to exercise its power under subsection (4)(b) of that section,

.

• (3) In subsection (4)—

• (a) omit “or” at the end of paragraph (e);

• (b) after that paragraph insert—

(ea) to give permission under section 55NA but to exercise its power under subsection (4)(b) of that section, (eb) to vary permission under section 55NA on the application of an authorised person but to exercise its power under subsection (4)(b) of that section, or

.

10

• (1) Section 55Y (exercise of own-initiative power: procedure) is amended as follows.

• (2) After subsection (1) insert—

(1A) This section also applies to an exercise of the FCA’s power under subsection (5)(b) of section 55NA to vary of its own initiative a permission given under that section to an authorised person (“A”). (1B) References in this section to a regulator’s own initiative variation power are to be taken as including the power mentioned in subsection (1A).

• (3) For subsection (4) substitute—

(4) If either regulator— (a) proposes to vary a Part 4A permission or to impose or vary a requirement, (b) varies a Part 4A permission, or imposes or varies a requirement, with immediate effect, (c) proposes to vary a permission under section 55NA, or (d) varies permission under section 55NA with immediate effect, it must give A written notice.

11

• (1) Section 55Z (cancellation of Part 4A permission: procedure) is amended as follows.

• (2) In the heading, after “permission” insert “or permission under section 55NA”.

• (3) In subsection (1) after “permission” insert “or permission under section 55NA”.

• (4) In subsection (2) after “permission” insert “or permission under section 55NA”.

12

In section 55Z3 (right to refer matters to the Tribunal), after subsection (2) insert—

(2A) An authorised person who is aggrieved by the exercise by the FCA of its power under section 55NA(5)(b) may refer the matter to the Tribunal.

SCHEDULE 6

PART 1 — Amendments to the Banking Act 2009

1

The Banking Act 2009 is amended as follows.

2

In the heading to Part 5 (payment systems), after “systems” insert “and service providers”.

3

In section 181 (overview), after “services” insert “, including”.

4

• (1) Section 182 (interpretation of payment system) is amended as follows.

• (2) In the heading, for ““payment system”” substitute “key terms”.

• (3) In subsection (1), after “money” insert “or digital settlement assets”.

• (4) After subsection (4) insert—

(4A) In subsection (1) “digital settlement asset” means a digital representation of value or rights, whether or not cryptographically secured, that— (a) can be used for the settlement of payment obligations, (b) can be transferred, stored or traded electronically, and (c) uses technology supporting the recording or storage of data (which may include distributed ledger technology). (4B) In this section, “digital settlement asset” includes a right to, or an interest in, a digital settlement asset.

• (5) After subsection (5) insert—

(5A) In this Part, a “DSA service provider” is a person who provides one or more services in relation to a payment system that includes arrangements using digital settlement assets where— (a) the person creates or issues the digital settlement assets involved in the payment system, (b) the person provides services to safeguard, or to safeguard and administer, digital settlement assets including their private cryptographic keys (or means of access), (c) the person is directly involved in any of the activities mentioned in paragraphs (a) or (b), (d) the person is a digital settlement asset exchange provider, (e) the person sets rules, standards, or conditions of access or participation in relation to the payment system, or (f) the person provides any service that facilitates, or supports, a transfer of money or digital settlement assets to be made using the payment system, including any infrastructure provider in relation to the system. (5B) In this Part “digital settlement asset exchange provider” means a person who provides one or more of the following services, including as creator or issuer of any of the digital settlement assets, by— (a) exchanging, or arranging the exchange of— (i) digital settlement assets for money, (ii) money for digital settlement assets, (iii) digital settlement assets and money for digital settlement assets, or (iv) digital settlement assets and money for money, (b) exchanging, or arranging the exchange of, one digital settlement asset for another, or (c) operating an automated process to carry out any of the activities mentioned in paragraphs (a) and (b). (5C) The Treasury may by regulations amend— (a) the definition of “digital settlement asset” in subsection (4A); (b) the definition of “DSA service provider” in subsection (5A); (c) the definition in section 206AA of a person who provides services connected with a recognised payment system that uses digital settlement assets.

5

• (1) Section 183 (interpretation of other expressions) is amended as follows.

• (2) In the opening words of paragraph (k) after “system” insert “or to a DSA service provider”.

• (3) In sub-paragraph (i) of paragraph (k), after “constituting” insert “, or connected with,”.

6

In the cross-heading before section 184 (recognition order), after “systems” insert “and service providers”.

7

In the heading to section 184 , after “order” insert “: payment system”.

8

In section 184, in subsection (4), after “constituting” insert “or connected with”.

9

After section 184 insert—

(184A) (1) The Treasury may by order (“recognition order”) specify a DSA service provider as a recognised DSA service provider for the purposes of this Part. (2) A recognition order under this section must specify in as much detail as is reasonably practicable the services provided. (3) The Treasury may not specify a DSA service provider operated solely by the Bank of England.

10

In the heading to section 185 (recognition criteria) after “criteria” insert “: payment system”.

11

After section 185 insert—

(185A) (1) The Treasury may make a recognition order in respect of a DSA service provider only if satisfied that any deficiencies in the services provided by the service provider, or any disruption to the provision of those services, would be likely— (a) to threaten the stability of, or confidence in, the UK financial system, or (b) to have serious consequences for business or other interests throughout the United Kingdom. (2) In considering whether to specify a DSA service provider the Treasury must have regard to— (a) the value of the services in relation to payment systems that the DSA service provider presently provides or is likely to provide in the future, (b) the nature of the services in relation to payment systems that the DSA service provider provides, (c) whether those services or their equivalent could be provided by others, and (d) the relationship between the DSA service provider and— (i) operators of payment systems that use digital settlement assets, and (ii) other DSA service providers.

12

• (1) Section 186 (procedure) is amended as follows.

• (2) In the opening words of subsection (1) after “system” insert “or a DSA service provider”.

• (3) After subsection (1)(a) insert—

(aa) in the case of a recognition order in respect of a DSA service provider, consult the FCA,

.

• (4) In subsection (1)(b), after “system” insert “or the DSA service provider (as appropriate)”.

• (5) In subsection (2)(a), for “the operator of which” substitute “or a DSA service provider, where the operator of the system or the provider”.

• (6) In subsection (2)(b), after “operator” insert “or provider”.

• (7) In subsection (3), after “system” insert “or a DSA service provider”.

13

• (1) Section 186A (amendment of recognition order) is amended as follows.

• (2) After subsection (2)(a) insert—

(aa) in the case of a recognition order in respect of a DSA service provider, consult the FCA,

.

• (3) In subsection (2)(b), after “system” insert “or the recognised DSA service provider (as appropriate)”.

• (4) In subsection (3)(a), for “the operator of which” substitute “or a DSA service provider, where the operator of the system or the provider”.

• (5) In subsection (3)(b), after “operator” insert “or provider”.

• (6) In subsection (4)—

• (a) after first “system” insert “or by a recognised DSA service provider”,

• (b) after second “system” insert “or provider,”.

14

• (1) Section 187 (de-recognition) is amended as follows.

• (2) In subsection (2)—

• (a) the words after “satisfied” become paragraph (a),

• (b) after that paragraph insert

, or (b) that the criteria in section 185A are met in respect of the recognised DSA service provider.

• (3) After subsection (3)(a) insert—

(aa) in the case of a recognition order in respect of a DSA service provider, consult the FCA,

.

• (4) In subsection (3)(b), after “system” insert “or the recognised DSA service provider (as appropriate)”.

• (5) In subsection (4)(a), for “the operator of which” substitute “or a DSA service provider, where the operator of the system or the provider”.

• (6) In subsection (4)(b), after “operator” insert “or provider”.

• (7) In subsection (5), after “system” insert “, or by a recognised DSA service provider”.

15

• (1) Section 188 (principles) is amended as follows.

• (2) In subsection (1)—

• (a) the words after “publish” to the second “systems” become paragraph (a);

• (b) after that paragraph insert

, (b) principles to which recognised DSA service providers are to have regard in the provision of services to payment systems (whether or not recognised),

;

• (c) the words after “and” become paragraph (c);

• (d) at end insert “or to such DSA service providers”.

16

In section 189 (codes of practice)—

• (a) the words after “about” to the first “systems” become paragraph (a);

• (b) after that paragraph, insert

, (b) the provision of services by DSA service providers in relation to payment systems (whether or not recognised), or

;

• (c) omit “and”;

• (d) the words after “and” become paragraph (c);

• (e) at end insert “or to such DSA service providers”.

17

In section 190 (system rules), in subsection (1)(a)—

• (a) after “constituting” insert “, or connected with,”;

• (b) at end insert “, or a DSA service provider”.

18

After section 190 insert—

(190A) (1) The Bank of England may require a recognised DSA service provider— (a) to establish rules for the operation of services provided by the recognised DSA service provider; (b) to establish rules for the operation of services provided by a service provider to the recognised DSA service provider; (c) to change the rules in a specified way or so as to achieve a specified purpose; (d) to notify the Bank of any proposed change to the rules; (e) not to change the rules without the approval of the Bank. (2) A requirement under subsection (1)(d) or (e) may be general or specific.

19

• (1) Section 191 (directions) is amended as follows.

• (2) In subsection (1)—

• (a) the words after the first “to” to the first “system” become paragraph (a);

• (b) after that paragraph insert

, (b) to a recognised DSA service provider,

;

• (c) the words after “or” become paragraph (c);

• (d) at the end of that paragraph insert “or to such DSA service providers”.

• (3) In subsection (2)—

• (a) in paragraph (a), omit “to the system”;

• (b) in paragraph (b), omit “to the system”.

• (4) In subsection (3)—

• (a) after “operator” insert “, DSA service provider”;

• (b) after “operator’s” insert “, DSA service provider’s”.

• (5) In subsection (4)(b), after “operator” insert “, DSA service provider”.

20

After section 192 (role of FCA and PRA), insert—

(192A) (1) Where the first, second and third conditions are met, the Bank of England may give a direction under this section to the FCA. (2) The first condition is that the FCA is proposing to exercise any of its powers in relation to— (a) a recognised payment system that includes arrangements using digital settlement assets, or (b) a recognised DSA service provider. (3) The second condition is that the Bank of England is of the opinion that the exercise of the power in the manner proposed may— (a) threaten the stability of the UK financial system, (b) have serious consequences for business or other interests in the United Kingdom (including for the payment system or provider in relation to which the powers are proposed to be exercised), or (c) have an adverse effect on the Bank’s ability to act in its capacity as a monetary authority. (4) The third condition is that the Bank of England is of the opinion that the giving of the direction is necessary in order to avoid an outcome mentioned in subsection (3). (5) A direction under this section is a direction requiring the FCA not to exercise the power or not to exercise it in a specified manner. (6) The direction may be expressed to have effect during a specified period or until revoked. (7) The FCA is not required to comply with a direction under this section if or to the extent that in the opinion of the FCA compliance would be incompatible with any international obligation of the United Kingdom.

21

• (1) Section 193 (inspection) is amended as follows.

• (2) In subsection (1)—

• (a) after first “system” insert “, a recognised DSA service provider”;

• (b) after second “system” insert “or such a DSA service provider”.

• (3) In the opening words of subsection (2)—

• (a) after first “system” insert “, or a recognised DSA service provider”;

• (b) after second “system” insert “or such a DSA service provider”.

22

• (1) Section 194 (inspection: warrant) is amended as follows.

• (2) In subsection (1)(a)—

• (a) at end of sub-paragraph (i), omit “or” and insert—

(ia) a recognised DSA service provider, or

;

• (b) in sub-paragraph (ii), after “system” insert “or a recognised DSA service provider”.

• (3) In subsection (2)(a), after “system” insert “, the DSA service provider”.

• (4) In subsection (3), after “system” insert “, the DSA service provider”.

23

• (1) Section 195 (independent report) is amended as follows.

• (2) In subsection (1)(a), omit “or”.

• (3) After subsection (1)(b), insert—

(c) a recognised DSA service provider to appoint an expert to report on the provision of services to payment systems (whether or not recognised), or (d) a service provider in relation to a recognised DSA service provider to appoint an expert to report on the provision of services to the DSA service provider.

• (4) In subsection (2)(a), after “operator” insert “, recognised DSA service provider”.

• (5) In subsection (2)(b), after “operator” insert “, recognised DSA service provider”.

24

In section 196 (compliance failure)—

• (a) after first “system” insert “, a recognised DSA service provider”;

• (b) after second “system” insert “or such a DSA service provider”.

25

In section 197 (publication), in subsection (1)—

• (a) after first “system” insert “, a recognised DSA service provider”;

• (b) after second “system” insert “or such a DSA service provider”.

26

In section 198 (penalty), in subsection (1)—

• (a) after first “system” insert “, a recognised DSA service provider”;

• (b) after second “system” insert “or such a DSA service provider”.

27

• (1) Section 199 (closure) is amended as follows.

• (2) In subsection (2)—

• (a) after “concerned” insert “, the DSA service provider concerned”;

• (b) after second “system” insert “, providing services,”;

• (c) after third “system” insert “or recognised DSA service provider”.

• (3) In subsection (3)(a)—

• (a) after first “system” insert “, or DSA service provider”;

• (b) after second “system” insert “, or a recognised DSA service provider”.

• (4) In subsection (3A)—

• (a) after “system” insert “, or of each recognised DSA service provider,”;

• (b) after “206A(2)(b)” insert “or 206A(2A)(b) (as the case may be).”

• (5) In subsection (4), after “operator” insert “, DSA service provider,”.

28

• (1) Section 200 (management disqualification) is amended as follows.

• (2) In subsection (1), after “system” insert “or from being a DSA service provider”.

• (3) In subsection (2)—

• (a) after first “system” insert “, or a recognised DSA service provider,”;

• (b) after second “system” insert “or such a DSA service provider”.

• (4) In subsection (2A)—

• (a) after “system” insert “, or of each recognised DSA service provider,”;

• (b) after “206A(2)(b)” insert “or 206A(2A)(b) (as the case may be).”

29

• (1) Section 201 (warning) is amended as follows.

• (2) In subsection (1)—

• (a) after first “system” insert “, on a DSA service provider,”;

• (b) after second “system” insert “or such a DSA service provider”;

• (c) in paragraph (a), after “operator” insert “, DSA service provider”;

• (d) in paragraph (b), after “operator” insert “, DSA service provider”;

• (e) in paragraph (d), after “operator” insert “, DSA service provider”.

• (3) In subsection (1A)—

• (a) after first “system” insert “or recognised DSA service provider”;

• (b) in paragraph (a), after “system” insert “, or DSA service provider”;

• (c) in paragraph (b), after “operator” insert “, or DSA service provider”;

• (d) in paragraph (d), after “operator” insert “or DSA service provider”.

30

In section 202 (appeal), in subsection (2)—

• (a) after first “system” insert “or recognised DSA service provider”;

• (b) after second “system” insert “or DSA service provider (as the case may be)”.

31

• (1) Section 202A (injunctions) is amended as follows.

• (2) In subsection (2)—

• (a) in paragraph (a)—

• (i) after first “system” insert “, a recognised DSA service provider,”;

• (ii) after second “system” insert “or such a DSA service provider”;

• (b) in the words following paragraph (b), after “operator” insert “, DSA service provider”.

• (3) In subsection (3)—

• (a) in paragraph (a)—

• (i) after first “system” insert “, a recognised DSA service provider,”;

• (ii) after second “system” insert “or such a DSA service provider”;

• (b) in the words following paragraph (b), after “operator” insert “, DSA service provider,”.

32

In section 203 (fees), in subsection (1)—

• (a) after first “systems” insert “, recognised DSA service providers,”;

• (b) after second “systems” insert “or such DSA service providers”.

33

After section 203B (annual report) insert—

(203C) (1) The Bank of England must prepare a statement of the general policy it proposes to follow in relation to its oversight under this Part of — (a) recognised payment systems that include arrangements using digital settlement assets, (b) DSA service providers, and (c) service providers as described in sections 206A and 206AA. (2) Before issuing a statement of policy under this section, the Bank must consult the FCA. (3) The Bank must — (a) publish the statement on its website, (b) send a copy to the Treasury, and (c) review the statement from time to time and revise it if necessary (and paragraphs (a) and (b) apply to a revision). (4) Nothing in this section is to be regarded as preventing the Bank of England from exercising any of its powers under this Part where it considers it necessary to do so by reason of urgency, before it has prepared a statement under this section.

34

• (1) Section 204 (information) is amended as follows.

• (2) In subsection (1)(a), after “206A(2)(b)” insert “or 206A(2A)(b)”.

• (3) In subsection (1A)—

• (a) after first “system” insert “, a recognised DSA service provider,”;

• (b) after second “system” insert “or such a DSA service provider”.

• (4) In subsection (2)—

• (a) after first “system” insert “, a recognised DSA service provider,”;

• (b) after second “system” insert “or such a DSA service provider”.

35

• (1) Section 205 (pretending to be recognised) is amended as follows.

• (2) In the opening words of subsection (1) after “system” insert “or DSA service provider”.

• (3) In subsection (1)(a), after “system” insert “or provider”.

• (4) In subsection (1)(b), after “system” insert “or provider”.

• (5) In subsection (1A), after “system” insert “or recognised DSA service provider”.

36

• (1) Section 206 (saving for informal oversight) is amended as follows.

• (2) In subsection (1)—

• (a) after first “systems” insert “, DSA service providers”;

• (b) after second “systems” insert “or DSA service providers”.

• (3) In subsection (2)—

• (a) after first “systems” insert “, DSA service providers”;

• (b) after second “systems” insert “or DSA service providers”.

37

• (1) Section 206A (services forming part of recognised payment systems) is amended as follows.

• (2) For the heading substitute “Service providers”.

• (3) In subsection (1)—

• (a) omit the words “persons who are”;

• (b) the words after “providers” become paragraph (a);

• (c) after that paragraph insert

, or (b) in relation to a recognised DSA service provider.

• (4) After subsection (2) insert—

(2A) A person is a service provider in relation to a recognised DSA service provider if— (a) the person provides services to the recognised DSA service provider, and (b) the person is specified as a person within paragraph (a) by the Treasury in the recognition order made in respect of the DSA service provider. (2B) A payment system that includes arrangements using digital settlement assets is a service provider in relation to a recognised DSA service provider if— (a) the system provides services to the recognised DSA service provider, and (b) the system is specified as a system within paragraph (a) by the Treasury in the recognition order made in respect of the DSA service provider.

• (5) After subsection (3) insert—

(3A) In relation to a recognised payment system that includes arrangements using digital settlement assets, subsection (2)(a) includes a person providing services connected with the system. See section 206AA.

• (6) In the opening words of subsection (4), after “(2)(b)” insert “or (2A)(b) or systems under subsection (2B)(b)”.

• (7) In subsection (4)(b) after “system” insert “or DSA service provider”.

• (8) In subsection (5) after “(2)(b)” insert “, (2A)(b) or (2B)(b)”.

38

After section 206A insert—

(206AA) For the purposes of section 206A(3A), a person provides services connected with the system where— (a) the person creates or issues the digital settlement assets involved in the payment system, (b) the person provides services to safeguard, or to safeguard and administer, digital settlement assets including their private cryptographic keys (or means of access), (c) the person is directly involved in any of the activities mentioned in paragraphs (a) or (b), (d) the person is a digital settlement asset exchange provider, (e) the person sets rules, standards, or conditions of access or participation in relation to the payment system, or (f) the person provides any service that facilitates, or supports, a transfer of money or digital settlement assets to be made using the payment system, including any infrastructure provider in relation to the system.

39

In section 259 (statutory instruments), in the Table in subsection (3), in Part 5, at the appropriate place insert—

182(5C)	Meaning of “digital settlement asset” and “DSA service provider”	Draft affirmative resolution

PART 2 — Amendments to the Financial Services (Banking Reform) Act 2013

40

The Financial Services (Banking Reform) Act 2013 is amended as follows.

41

• (1) Section 41 (meaning of payment system) is amended as follows.

• (2) After subsection (2) insert—

(2A) In this Part— - “funds” includes digital settlement assets (except in section 41(2)(e)); - “digital settlement asset” means a digital representation of value or rights, whether or not cryptographically secured, that— can be used for the settlement of payment obligations, can be transferred, stored or traded electronically, and uses technology supporting the recording or storage of data (which may include distributed ledger technology). (2B) In this section, “digital settlement asset” includes a right to, or interest in, a digital settlement asset. (2C) The Treasury may by regulations amend the definition of “digital settlement asset” in subsection (2A).

42

• (1) Section 42 (participants in payment systems) is amended as follows.

• (2) In subsection (2)(c), for “subsection (5)” substitute “subsections (5) and (5A)”.

• (3) After subsection (5) insert—

(5A) “Payment service provider” in relation to a payment system that includes arrangements using digital settlement assets means— (a) a person responsible for managing the issuance and redemption of digital settlement assets; (b) a person whose business or occupation is to safeguard, or to safeguard and administer digital settlement assets, including their private cryptographic keys (or means of access); (c) a digital settlement asset exchange provider; (d) a person who— (i) sets rules, standards, or conditions of access or participation in relation to the system, or (ii) provides any service that facilitates, or supports, a transfer of money or digital settlement assets to be made using the system, including any infrastructure provider in relation to the system.

43

In section 98 (duty of regulators to ensure co-ordinated exercise of functions), for paragraph (c) of subsection (5) substitute—

(c) in relation to the FCA— (i) the functions conferred on it by or under FSMA 2000 (see section 1A(6) of that Act); (ii) the functions conferred on it by or under Part 3 of the Payment Card Interchange Fee Regulations 2015 (S.I. 2015/1911); (iii) the functions conferred on it by or under the Electronic Money Regulations 2011 (S.I. 2011/99); (iv) its functions in regulating— (a) credit institutions where authorised under Part 4A of FSMA 2000, or (b) authorised payment institutions under the Payment Services Regulations 2017 (S.I. 2017/752).

44

In section 110 (interpretation of Part), at the appropriate place insert—

• “digital settlement asset” has the meaning given by section 41(2A);

;

• “digital settlement asset exchange provider” has the meaning given by section 182(5B) of the Banking Act 2009;

.

45

In section 112 (interpretation: infrastructure companies), after subsection (2)(a) insert—

(aa) a recognised DSA service provider,

46

In section 113 (interpretation: other expressions), in subsection (1) at the appropriate place insert—

• “recognised DSA service provider” means a DSA service provider, as defined by section 182(5A) of the Banking Act 2009, in respect of which a recognition order under section 184A of that Act is in force;

.

47

• (1) Section 115 (objective of FMI administration) is amended as follows.

• (2) In the opening words of subsection (1) after system insert “, or a recognised DSA service provider,”.

• (3) In subsection (1)(a) after “system” in each place, insert “or provider”.

48

In section 143 (Parliamentary control of orders and regulations), after subsection (2)(a) insert—

(aa) regulations under section 41(2C) (meaning of “digital settlement asset”);

.

SCHEDULE 7

1

The Financial Services (Banking Reform) Act 2013 is amended as follows.

2

In section 39 (overview)—

• (a) after subsection (11) insert—

(11A) Sections 102A and 102B contain provision about Treasury powers to make recommendations in connection with the Payment Systems Regulator’s general duties and to specify matters to which the Regulator must have regard when exercising certain functions.

;

• (b) in subsection (12) for “107” substitute “107A”.

3

In section 53 (regulatory principles), in paragraph (c) at the end insert “, including in a way consistent with contributing towards achieving compliance by the Secretary of State with section 1 of the Climate Change Act 2008 (UK net zero emissions target) and section 5 of the Environment Act 2021 (environmental targets) where the Payment Systems Regulator considers the exercise of its functions to be relevant to the making of such a contribution;”.

4

After section 102 (power of PRA to require Regulator to refrain from specified action), insert—

(102A) (1) The Treasury may at any time by notice in writing to the Payment Systems Regulator make recommendations to the Regulator about aspects of the economic policy of His Majesty’s Government to which the Regulator should have regard when considering— (a) how to advance one or more of its payment systems objectives, (b) the application of the regulatory principles in section 53, and (c) its exercise of functions under— (i) Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions, (ii) the Payment Card Interchange Fee Regulations 2015 (S.I. 2015/1911), or (iii) the Payment Services Regulations 2017 (S.I. 2017/752). (2) The Treasury must make recommendations under subsection (1) at least once in each Parliament. (3) The Payment Systems Regulator must respond to each recommendation made to it under subsection (1) by notifying the Treasury in writing of— (a) action that the Regulator has taken or intends to take in accordance with the recommendation, or (b) the reasons why the Regulator has not acted or does not intend to act in accordance with the recommendation. (4) The notice under subsection (3) must be given before the end of 12 months beginning with the date the notice containing the recommendation was given under subsection (1). (5) Where the Payment Systems Regulator has given notice under subsection (3) in relation to a recommendation, the Regulator must by notice in writing update the Treasury on the matters mentioned in subsection (3)(a) and (b) before the end of each subsequent period of 12 months. (6) Subsection (5) does not apply if the Treasury have notified the Payment Systems Regulator in writing that no update (or further update) is required. (7) The Payment Systems Regulator is not required under subsection (3) or (5) to provide any information whose publication would in the opinion of the Regulator be against the public interest. (8) The Treasury must— (a) publish in such manner as they think fit any notice given under subsection (1), (3) or (5), and (b) lay a copy of it before Parliament.

5

Before section 103 (regulator’s general duty to consult) insert (under the italic heading “Consultation, accountability and oversight”)—

(102B) (1) This section applies where the Payment Systems Regulator proposes to impose a generally applicable requirement (as defined by section 104(1)). (2) The Regulator must have regard to any specified matters that are relevant to the imposition of the requirement in question. (3) “Specified” means specified in regulations made by the Treasury for the purposes of this section. (4) The specification of a matter for the purposes of this section may apply generally to the exercise of a function or be limited in whatever way the Treasury consider appropriate, including by reference to— (a) the power under which the function is carried out; (b) the persons to whom the carrying out of the function apply; (c) the activities or subject-matter to which the function relates. (5) The duty under subsection (2) is in addition to any other requirements to have regard to matters when exercising relevant functions imposed by another provision of this Act or by any other enactment.

6

In section 104 (consultation in relation to generally applicable requirements)—

• (a) in subsection (1), in the words before paragraph (a) for “section” substitute “Part”;

• (b) in subsection (3) after paragraph (b) insert—

(ba) an explanation of the ways in which having regard to specified matters under section 102B(2) has affected the proposed requirement,

;

• (c) after subsection (12) insert—

(12A) The duty to provide the explanation referred to in subsection (3)(ba) does not apply in relation to any proposed requirement which changes an existing requirement and the changes consist of, or include, changes which, in the Payment Systems Regulator’s opinion, are not material. (12B) Where an explanation is not provided by virtue of subsection (12A), the draft of the proposed requirement must be accompanied by a statement of the Payment Systems Regulator’s opinion.

7

After section 104 insert—

(104A) (1) This section applies where the Payment Systems Regulator issues a public consultation. (2) The Payment Systems Regulator must include information in the consultation about any engagement by the Payment Systems Regulator with the statutory panels of the Payment Systems Regulator, the FCA and the PRA in relation to the matters being consulted on. (3) The Payment Systems Regulator is not required under subsection (2) to include any information whose publication would in the opinion of the Payment Systems Regulator be against the public interest. (4) For the purposes of this section, the Payment Systems Regulator issues a public consultation if it publishes any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment). (5) In this section a “statutory panel”— (a) in relation to the Payment Systems Regulator, means a panel established under section 103(3), (b) in relation to the FCA, has the meaning given by section 1RA(8) of FSMA 2000, and (c) in relation to the PRA, has the meaning given by section 2NA(8) of FSMA 2000. (104B) The Payment Systems Regulator must keep under review generally any generally applicable requirements. (104C) (1) The Payment Systems Regulator must prepare and publish a statement of its policy with respect to its review of requirements under section 104B. (2) The statement must provide information about— (a) how representations (including by a relevant panel) can be made to the Regulator with respect to its review of requirements under section 104B, and (b) the arrangements to ensure that those representations are considered. (3) In this section “relevant panel” means— (a) a panel of the Payment Systems Regulator established under section 103(3), (b) a panel of the FCA mentioned in section 1RA(8) of FSMA 2000, and (c) a panel of the PRA mentioned in section 2NA(8) of FSMA 2000. (4) If a statement published under this section is altered or replaced by the Payment Systems Regulator, the Regulator must publish the altered or replaced statement. (5) A statement prepared under this section must be published by the Payment Systems Regulator in the way appearing to the Regulator to be best designed to bring it to the attention of the public. (104D) (1) The Treasury may by direction require the Payment Systems Regulator to carry out a review of any generally applicable requirement specified in the direction if— (a) the requirement has been in force for at least 12 months, (b) the Treasury consider that it is in the public interest that the requirement is reviewed, and (c) it does not appear to the Treasury that— (i) the regulator is carrying out, or proposes to carry out, a review of that requirement, or (ii) if the regulator proposes to carry out a review, the proposals are appropriate for the purposes of carrying out an effective review. (2) The Treasury must consult the Payment Systems Regulator before giving a direction under subsection (1). (3) In exercising the power under this section, the Treasury must have regard to the desirability of minimising any adverse effect that the carrying out of the review may have on the exercise by the Payment Systems Regulator of any of its other functions. (4) A direction under subsection (1) may— (a) specify the period within which a review must be carried out; (b) determine the scope and conduct of a review; (c) require the provision of interim reports during the carrying out of a review. (5) Provision made in a direction under subsection (4)(b) may include a requirement— (a) for a review to be carried out by a person appointed by the Payment Systems Regulator who is independent of the Regulator; (b) for any such appointment to be made only with the approval of the Treasury. (6) As soon as practicable after giving the direction the Treasury must— (a) lay before Parliament a copy of the direction, and (b) publish the direction in such manner as the Treasury think fit. (7) Subsection (6) does not apply where the Treasury consider that publication of the direction would be against the public interest. (8) A direction under this section may be varied or revoked by the giving of a further direction. (104E) (1) This section applies where the Treasury have given a direction to the Payment Systems Regulator under section 104D(1) to carry out a review. (2) The Payment Systems Regulator must provide a written report to the Treasury as to the opinion of the Regulator in relation to the following matters— (a) whether the requirements under review advance one or more of the payment systems objectives; (b) whether and to what extent the requirements are functioning effectively and achieving their intended purpose; (c) whether any amendments need to be made to the requirements and, if so, what those amendments should be; (d) whether any requirements should be withdrawn (with or without replacement); (e) whether any other action should be taken and, if so, what that action should be. (3) As soon as practicable after receiving the report the Treasury must— (a) lay before Parliament a copy of the report, and (b) publish the report in such manner as the Treasury think fit. (4) When complying with subsection (3) the Treasury may withhold material from the report if the Treasury consider that publication of the material would be against the public interest. (104F) (1) The Treasury may by regulations require the Payment Systems Regulator to exercise a power under this Part to impose a generally applicable requirement in relation to a specified activity or a specified description of person. (2) Regulations under this section may— (a) specify matters that the requirement must cover; (b) specify a period within which the requirement must be made. (3) But except so far as permitted by subsection (2), regulations under this section may not require the requirement to be imposed— (a) in a specified form or with specified content, or (b) to achieve or advance a specified outcome. (4) If no period is specified under subsection (2)(b) the requirement must be imposed as soon as reasonably practicable after the coming into force of the regulations. (104G) (1) Except as provided by subsection (2), the Payment Systems Regulator must consult the FCA Cost Benefit Analysis Panel, and that Panel must provide advice, about the following matters— (a) the preparation of a cost benefit analysis under section 104(3)(a) or (6); (b) the preparation of its statement of policy under section 104H. (2) The requirement to consult under subsection (1)(a) does not apply in such cases as may be set out in the statement of policy maintained under section 104H. (3) The FCA Cost Benefit Analysis Panel must— (a) keep under review how the Payment Systems Regulator is performing generally in carrying out its duties under section 104(3)(a) and (6), and (b) provide to the Payment Systems Regulator whatever recommendations the Panel thinks appropriate as a result of such review. (4) The Payment Systems Regulator must consider representations that are made to it by the FCA Cost Benefit Analysis Panel. (5) The Payment Systems Regulator must from time to time publish in such manner as it thinks fit responses to the representations. (6) In this section references to the “FCA Cost Benefit Analysis Panel” are to the panel established under section 138IA of FSMA 2000. (104H) (1) The Payment Systems Regulator must prepare and publish a statement of policy in relation to the preparation of cost benefit analyses for the purposes of section 104. (2) The statement must provide information about— (a) the methodology adopted in preparing cost benefit analyses; (b) matters to which the Payment Systems Regulator has regard in determining whether section 104(8) applies; (c) matters to which the Payment Systems Regulator has regard in determining whether section 104(10) or (11) applies in relation to the preparation of a cost benefit analysis; (d) arrangements to ensure that representations in connection with a cost benefit analysis that are made in accordance with section 104(3)(d) are considered; (e) cases in which the requirement to consult the FCA Cost Benefit Analysis Panel in relation to the preparation of a cost benefit analysis does not apply. (3) The statement may include whatever other information in relation to cost benefit analyses that the Payment Systems Regulator considers appropriate. (4) The Payment Systems Regulator may alter or replace a statement published under this section. (5) The Payment Systems Regulator must publish a statement as altered or replaced under subsection (4). (6) Publication under this section is to be made in such manner as the Payment Systems Regulator considers best designed to bring the statement to the attention of the public. (104I) (1) The Payment Systems Regulator must prepare and publish a statement of policy in relation to the appointment of members to any panel established under section 103(3). (2) The statement must provide information about— (a) the process adopted for making appointments; (b) matters considered in determining who is appointed. (3) The statement may provide whatever other information in relation to the making of appointments that the Payment Systems Regulator considers appropriate. (4) The Payment Systems Regulator may alter or replace a statement published under this section. (5) The Payment Systems Regulator must publish a statement as altered or replaced under subsection (4). (6) Before publishing a statement under this section the Payment Systems Regulator must— (a) consult the Treasury about the proposed statement, and (b) have regard to any representations the Treasury make in response to the consultation. (7) Publication under this section is to be made in such manner as the Payment Systems Regulator considers best designed to bring the statement to the attention of the public.

8

After section 107 insert—

(107A) (1) This section applies where it appears to the Payment Systems Regulator that there is a material risk that a relevant action it proposes to take would be incompatible with an international trade obligation. (2) The Payment Systems Regulator must give written notice to the Treasury of the proposed action before proceeding to take it. (3) Subsection (2) applies only if a duty to consult applies in respect of the taking of the relevant action. (4) For the purposes of subsection (1) the Payment Systems Regulator proposes to take a “relevant action” if it— (a) proposes to impose a generally applicable requirement, or (b) proposes to make changes to its general policies and practices. (5) For the purposes of subsection (3) a duty to consult applies in respect of a relevant action if— (a) the duty imposed by section 104 to publish a draft of a proposed requirement applies in respect of the action, or (b) any other duty (whether or not imposed by a provision of this Act) to publish the proposal to take the action in question applies. (6) The requirement imposed by subsection (2) must be carried out before the duty to consult in respect of the relevant action is carried out. (7) Subsection (8) applies in a case where a notice under subsection (2) is not given because of subsection (3). (8) The Payment Systems Regulator must give written notice to the Treasury of the relevant action it has taken as soon as reasonably practicable after taking it if it appears to the Regulator that there is a material risk that the action is incompatible with an international trade obligation. (9) In this section “international trade obligation” means an obligation of the United Kingdom that relates to financial services or markets under— (a) a free trade agreement, as defined by section 5(1) of the Trade Act 2021, or (b) the agreement establishing the World Trade Organisation signed at Marrakesh on 15 April 1994.

9

In section 110(1) (interpretation), at the appropriate place insert—

• “generally applicable requirement” has the meaning given by section 104(1);

.

10

In section 143 (orders and regulations: Parliamentary control), in subsection (2), after paragraph (b) insert—

(ba) regulations under section 102B (matters to consider when imposing generally applicable requirements); (bb) regulations under section 104F (power to require imposition of generally applicable requirements);

.

11

In Schedule 4 (the Payment Systems Regulator), after paragraph 7(2)(b) insert—

(ba) set out any engagement with a statutory panel established under section 103(3), (bb) set out how the Regulator has complied with the statement of policy on panel appointments prepared under section 104I in relation to the process for making appointments and the matters considered in determining who is appointed,

.

12

In Schedule 4, after paragraph 7 insert—

(7A) (1) The Treasury may (subject to this paragraph) at any time by direction require the Regulator to publish a report containing information about such matters as are specified in the direction. (2) The Treasury may give a direction under this paragraph requiring information to be published only if the Treasury consider that— (a) the information is reasonably necessary for the purpose of reviewing and scrutinising the discharge of the Regulator’s functions, and (b) other available information is not sufficient to meet that purpose. (3) Subject to sub-paragraph (4), the Regulator must publish a report prepared under a direction given under this paragraph in such manner, and within such period, as the direction may require. (4) Nothing in this paragraph requires the inclusion in the report of any information whose publication would be against the public interest. (5) A direction under this paragraph may not— (a) require a report to be published more than once in each quarter; (b) require the publication of information that is confidential information as defined by section 91(2). (6) The Treasury must consult the Regulator before giving a direction under this paragraph. (7) In exercising the power under this paragraph, the Treasury must have regard to the desirability of minimising any adverse effect that the preparation of the report required in accordance with the direction may have on the exercise by the Regulator of any of its other functions. (8) The Treasury must— (a) lay before Parliament a copy of a direction given under this paragraph, and (b) publish the direction in such manner as the Treasury think fit. (9) A direction under this paragraph may be varied or revoked by the giving of a further direction.

13

In Schedule 4, after paragraph 14 insert—

(14A) (1) This paragraph applies where the Regulator issues a relevant consultation. (2) For the purposes of this paragraph the Regulator issues a relevant consultation if it— (a) publishes proposed generally applicable requirements under section 104, (b) publishes a proposal under a duty imposed by another provision of this Act or by any other enactment, or (c) publishes other proposals about the exercise of any of its general functions. (3) The Regulator must, as soon as reasonably practicable after issuing the consultation, notify in writing the chair of each relevant Parliamentary Committee that the consultation has been issued. (4) The notification must specify the parts of the consultation (if any) that address the ways in which the proposals subject to consultation— (a) advance the Regulator’s payment systems objectives, (b) demonstrate that the Regulator has had regard to the regulatory principles in section 53 when preparing the proposals, and (c) engage with matters to which the Regulator must have regard under regulations made under section 102B. (5) The notification must also specify any other part of the consultation which the Regulator considers should be drawn to the attention of the relevant Parliamentary Committees. (6) References in this paragraph to the relevant Parliamentary Committees are references to— (a) the Treasury Committee of the House of Commons, (b) the Committee of the House of Lords which— (i) is charged with responsibility by that House for the purposes of this paragraph, and (ii) has notified the Regulator that it is a relevant Parliamentary Committee for those purposes, and (c) the Joint Committee of both Houses which— (i) is charged with responsibility by those Houses for the purposes of this paragraph, and (ii) has notified the Regulator that it is a relevant Parliamentary Committee for those purposes. (7) References in this paragraph to the Treasury Committee of the House of Commons— (a) if the name of that Committee is changed, are references to that Committee by its new name, and (b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, are to be treated as reference to the Committee by which the functions are exercisable. (8) Any question arising under sub-paragraph (7) is to be determined by the Speaker of the House of Commons. (14B) (1) This paragraph applies where— (a) the Regulator issues a public consultation, and (b) a Committee of the House of Commons or the House of Lords, or a joint Committee of both Houses, has provided to the Regulator representations in response to the consultation. (2) For the purposes of this paragraph, the Regulator issues a public consultation if it publishes the draft of any proposals for the purpose of bringing them to the attention of the public (whether or not under a duty to do so imposed by an enactment). (3) The Regulator must give to the chair of the Committee concerned a written response to the representations. (4) The duty to respond imposed by sub-paragraph (3) applies only so far as the Regulator would not be under a corresponding duty to do so imposed by another enactment. (5) The Regulator is not required under sub-paragraph (3) to provide any information whose publication would in the opinion of the Regulator be against the public interest.

SCHEDULE 8

PART 1 — New Part 8B of FSMA 2000

1

After Part 8A of FSMA 2000 (short selling) insert—