The Central Securities Depositories Regulations 2014

Made: 29th October 2014

Laid before Parliament: 30th October 2014

Coming into force: 21st November 2014

The Treasury are designated for the purposes of section 2(2) of the European Communities Act 1972 in relation to financial services.

The Treasury in exercise of the powers conferred by section 2(2) of the European Communities Act 1972 make the following Regulations:

Citation, commencement and interpretation

1

• (1) These Regulations may be cited as the Central Securities Depositories Regulations 2014 and come into force on 21st November 2014.

• (2) In these Regulations—

• “the Act” means the Financial Services and Markets Act 2000 ;

• “the Bank” means the Bank of England;

• “banking-type ancillary services” means the services set out in Section C of the Annex to the CSD regulation;

• “credit institution” means credit institution (defined in point (1) of Article 4(1) of Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms) authorised pursuant to Part 4A of the Act;

• “CSD regulation” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories ;

• ...

• “recognised body” has the meaning given in section 313(1) of the Act.

• “third country CSD” has the meaning given in section 285 of the Act.

• (3) Unless defined in these Regulations, any expression used in these Regulations which is defined for the purposes of the CSD regulation has the meaning given by the CSD regulation, and any other expression used in these Regulations which is defined for the purposes of the Act has the meaning given by the Act.

Designation of competent authorities

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• (1) The FCA is the competent authority responsible for—

• (a) the supervision of trading venues for the purposes of the CSD regulation;

• (b) the functions referred to in Article 4(3) of the CSD regulation.

• (c) the supervision of investment firms authorised pursuant to Part 4A of the Act for the purposes of the CSD regulation;

• (d) the supervision of participants in a securities settlement system for the purposes of the CSD regulation, other than recognised clearing houses or recognised CSDs.

• (2) The Bank is the competent authority responsible for—

• (za) the functions referred to in Article 9(1) of the CSD regulation;

• (a) authorisation and supervision of CSDs established in the United Kingdom ..., and all other competent authority functions under that regulation in relation to CSDs except as provided in paragraph (4);

• (aa) ... competent authority functions under the CSD regulation in relation to ... third country CSDs;

• (b) oversight of securities settlement systems in the United Kingdom referred to in ... the CSD Regulation; ...

• (c) authorisation of a CSD under Article 54 of the CSD regulation for the provision of banking-type ancillary services—

• (i) by a CSD under paragraph (2)(a) of that Article, or

• (ii) by a designated credit institution under paragraph (2)(b) of that Article; and

• (d) the supervision of CCPs for the purposes of the CSD regulation.

• (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) The PRA is the competent authority responsible for—

• (a) authorisation of a CSD referred to in Article 54(2)(a) of the CSD regulation as a credit institution; and

• (b) supervision in accordance with Article 60 of the CSD regulation—

• (i) of the provision of banking-type ancillary services authorised under Article 54 of the CSD regulation by a CSD referred to in Article 54(2)(a) of that Regulation and a credit institution referred to in Article 54(2)(b) of that Regulation, and

• (ii) of compliance with the prudential requirements referred to in Article 59 of the CSD regulation by a CSD referred to in Article 54(2)(a) of that Regulation and a credit institution referred to in Article 54(2)(b) of that Regulation.

Power of FCA to require information from a person who is not authorised

3

• (1) In this regulation and in regulation 4—

• “non-authorised counterparty” means a person, other than an authorised person or a recognised body, who is a party to a financial collateral arrangement referred to in the second sub-paragraph of Article 3(2) of the CSD regulation;

• “participant” means a participant in a securities settlement system as defined in Article 2(1)(19) of the CSD regulation, other than—an authorised person, ora recognised body.

• (2) Paragraph (3) applies where—

• (a) a non-authorised counterparty is subject to an obligation under the CSD regulation; or

• (b) it is necessary for the FCA to determine whether a person is a non-authorised counterparty.

• (3) The FCA may, by notice in writing, require the counterparty or person—

• (a) to provide specified information or information of a specified description; or

• (b) to produce specified documents or documents of a specified description,

so that it can verify whether the non-authorised counterparty has complied with the CSD regulation or whether the person is a non-authorised counterparty.

• (3A) Paragraph (3B) applies where a participant is subject to an obligation under Article 38(5) and (6) of the CSD regulation.

• (3B) The FCA may, by notice in writing, require the participant—

• (a) to provide specified information or information of a specified description; or

• (b) to provide specified documents or documents of a specified description,

so that it can verify whether the participant has complied with Article 38(5) and (6) of the CSD regulation.

• (4) The information or documents must be provided or produced—

• (a) before the end of such reasonable period as may be specified;

• (b) at such place as may be specified.

• (5) This regulation applies only to information and documents reasonably required in connection with the exercise by the FCA of its functions under the CSD regulation.

• (6) The FCA may require any information provided under this regulation to be provided in such a form as it may reasonably require.

• (7) The FCA may require—

• (a) any information provided, whether in a document or otherwise, to be verified in such a manner, or

• (b) any document produced to be authenticated in such a manner,

as it may reasonably require.

• (8) A requirement imposed under this regulation is a “relevant requirement” for the purposes of sections 380 (injunctions) and 382 (restitution orders) of the Act.

• (9) In this regulation, “specified” means specified in the notice.

Penalties and statements

4

• (1) If the FCA considers that—

• (a) a non-authorised counterparty , participant or any other person has contravened a relevant requirement imposed on it; or

• (b) a non-authorised counterparty or participant has contravened a requirement imposed by or under the CSD regulation,

the FCA may publish a statement to that effect or impose on it a penalty, in respect of the contravention, of such amount as the FCA considers appropriate.

• (2) If the FCA considers that a non-authorised counterparty , participant or any other person has in purported compliance with a relevant requirement knowingly or recklessly given the FCA information which is false or misleading in a material particular, the FCA may publish a statement to that effect or impose on it a penalty of such amount as it considers appropriate.

• (3) Where the FCA has published a statement or imposed a penalty under paragraph (1) or (2), it must comply with the requirements of Article 62 of the CSD regulation.

• (4) A penalty under paragraph (1) or (2) is payable to the FCA.

• (5) The FCA must in respect of each of its financial years pay to the Treasury any amounts received by it during the year by way of penalties imposed under this regulation.

• (6) The Treasury may give directions to the FCA as to how the FCA is to comply with its duty under paragraph (5).

• (7) The directions may in particular—

• (a) specify the time when any payment is required to be made to the Treasury, or

• (b) require the FCA to provide the Treasury at specified times with information relating to penalties that the FCA has imposed under this regulation.

• (8) The Treasury must pay into the Consolidated Fund any sums received by them under this regulation.

• (9) In this regulation, a “relevant requirement” means a requirement imposed under regulation 3.

Procedure in relation to regulation 4

5

• (1) If the FCA proposes to take action against a person under regulation 4, it must give the person concerned a warning notice.

• (2) A warning notice about a proposal to impose a penalty must state the amount of the penalty.

• (3) A warning notice about a proposal to publish a statement must set out the terms of the proposed statement.

• (4) If, having considered any representations made in response to the warning notice, the FCA decides to take action against a person under regulation 4, it must without delay give the person concerned a decision notice.

• (5) A decision notice about the imposition of a penalty must state the amount of the penalty.

• (6) A decision notice about the publication of a statement must set out the terms of the statement.

• (7) If the FCA decides to take action against a person under regulation 4, the person may refer the matter to the Tribunal .

• (8) Sections 210 (statements of policy) and 211 (statements of policy: procedure) of the Act apply in respect of the imposition of penalties under regulation 4 and the amount of such penalties as they apply in respect of the imposition of penalties under Part 14 of the Act (disciplinary measures) and the amount of penalties under that Part.

• (9) After a statement under regulation 4 is published, the FCA must send a copy of it to the person concerned and to any person to whom a copy of the decision notice was given under section 393(4) of the Act (as applied by paragraph (10)).

• (10) Sections 387(1), (2) and (3) (warning notices), 388 (decision notices), 389 (notices of discontinuance), 390 (final notices), 393 (third party rights) and 394 (access to FCA or PRA material) of the Act apply in relation to a warning notice or decision notice under this regulation.

• (11) Section 391 of the Act (publication) applies in relation to a warning notice, decision notice or final notice under this regulation subject to Article 62 of the CSD regulation.

• (12) Part 9 of the Act (hearings and appeals) applies to references to the Tribunal under this regulation as it applies to references to the Tribunal under the Act as if a decision to publish a statement or impose a penalty under regulation 4 was a “disciplinary reference” for the purposes of section 133 of the Act .

Amendments to the Financial Services and Markets Act 2000

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• (1) The Act is amended as follows.

• (2) In section 391 (publication of notices), after subsection (8) insert—

(8A) Where a decision notice or final notice relates to any decision or action under a provision of this Act in relation to the contravention of a requirement imposed by the CSD regulation or any directly applicable regulation made under the CSD regulation, this section has effect subject to Article 62 of the CSD regulation (publication of decisions).

• (3) In section 417 (definitions), in subsection (1) at the appropriate place insert—

“the CSD regulation” means Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories;

• (4) In Schedule 17A (further provision in relation to the exercise of Part 18 functions by the Bank of England)—

• (a) in paragraph 11(2)(d) after “the EMIR regulation” insert “ , the CSD regulation or any directly applicable regulation made under the CSD regulation ”;

• (b) in paragraph 23 after “the EMIR regulation” insert “ , the CSD regulation or any directly applicable regulation made under the CSD regulation ”.

Amendments to the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001

7

In Schedule 1 to the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 (disclosure of confidential information whether or not subject to single market restrictions), in Part 1, in the entry relating to the Bank of England, the European Central Bank and other central banks, for “and clearing and settlement systems” substitute “ , clearing and settlement systems and central securities depositories within the meaning of the CSD regulation ”.

Amendment to the Payment to Treasury of Penalties (Enforcement Costs) Order 2013

8

In article 2 of the Payment to Treasury of Penalties (Enforcement Costs) Order 2013 (enforcement powers), after paragraph (k) insert—

(l) regulation 4 of the Central Securities Depositories Regulations 2014.

Amendments to the Financial Services and Markets Act 2000 (Qualifying EU Provisions) Order 2013

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• (1) The Financial Services and Markets Act 2000 (Qualifying EU Provisions) Order 2013 is amended as follows.

• (2) In article 2 (qualifying EU provisions: general)—

• (a) after paragraph (2)(g) insert—

(h) the CSD regulation and any directly applicable regulation made under that Regulation.

• (b) after paragraph (6)(c) insert—

(d) the CSD regulation and any directly applicable regulation made under that Regulation.

• (c) after paragraph (8)(d) insert—

(e) the CSD regulation and any directly applicable regulation made under that Regulation.

• (3) In article 3 (qualifying EU provisions: disciplinary measures)—

• (a) after paragraph (2)(g) insert—

(h) the CSD regulation and any directly applicable regulation made under that Regulation.

• (b) after paragraph (3)(e) insert—

(f) in relation to a contravention of a requirement imposed by the CSD regulation or any directly applicable regulation made under the CSD regulation— (i) if the authorised person concerned is a PRA-authorised person, either the PRA or the FCA; (ii) in any other case, the FCA.

• (4) In article 4 (qualifying EU provisions etc.: recognised investment exchanges and clearing houses)—

• (a) after paragraph (3)(d) insert—

(e) the CSD regulation and any directly applicable regulation made under that Regulation.

• (b) after paragraph (5)(d) insert—

(e) the CSD regulation and any directly applicable regulation made under that Regulation.

• (c) after paragraph (7)(c) insert—

(d) the CSD regulation and any directly applicable regulation made under that Regulation.

• (d) after paragraph (9)(b) insert—

(c) the CSD regulation and any directly applicable regulation made under that Regulation.

• (5) In article 5 (qualifying EU provisions: injunctions and restitution)—

• (a) after paragraph (2)(g) insert—

(h) the CSD regulation and any directly applicable regulation made under that Regulation.

• (b) after paragraph (5)(f) insert—

(g) in relation to a contravention of the CSD regulation or any directly applicable regulation made under the CSD regulation— (i) if the authorised person concerned is a PRA-authorised person, the PRA or the FCA; (ii) in any other case, the FCA.

• (c) after paragraph (6)(b) insert—

(c) the CSD regulation and any directly applicable regulation made under that Regulation.

• (6) In article 6 (qualifying EU provisions: fees)—

• (a) after paragraph (2)(i) insert—

(j) the CSD regulation and any directly applicable regulation made under that Regulation.

• (b) after paragraph (4)(c) insert—

(d) the CSD regulation and any directly applicable regulation made under that Regulation.

• (c) after paragraph (6)(b) insert—

(c) the CSD regulation and any directly applicable regulation made under that Regulation.

Review

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Signed

Gavin Barwell — David Evennett — Two of the Lords Commissioners of Her Majesty's Treasury — 2014-10-29

Explanatory note

(This note is not part of the Regulations)

Footnotes

[^f00001]: S.I. 2012/1759.

[^f00002]: 1972 c.68; section 2(2) was amended by section 27 of the Legislative and Regulatory Reform Act 2006 (c. 51) and by section 3 of, and the Schedule to, the European Union (Amendment) Act 2008 (c. 7).

[^f00003]: 2000 c.8.

[^f00004]: OJ No L257, 28.8.2014, p1.

[^f00005]: Defined in section 417(1) of the Act.