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The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007

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Regulation 3(1)

SCHEDULE 1AMENDMENTS OF PART 13 OF THE ACT

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1.  Part 13 of the Act (incoming firms: intervention by Authority) is amended as follows.

2.  After section 194 of the Act (general grounds on which power of intervention is exercisable) insert—

Contravention by relevant EEA firm with UK branch of requirement under markets in financial instruments directive: Authority primarily responsible for securing compliance

194A.  (1)  This section applies if—

(a)a relevant EEA firm has a branch in the United Kingdom; and

(b)the Authority ascertains that the firm has contravened, or is contravening, a requirement falling within subsection (3) (in a case to which Article 62.2 of the markets in financial instruments directive applies).

(2) “Relevant EEA firm” means an EEA firm falling within paragraph 5(a) or (b) of Schedule 3 which is exercising in the United Kingdom an EEA right deriving from the markets in financial instruments directive.

(3) A requirement falls within this subsection if it is imposed on the firm—

(a)by any provision of or made under this Act which implements the markets in financial instruments directive; or

(b)by any directly applicable Community regulation made under that directive.

(4) The Authority must give the firm written notice which—

(a)requires the firm to put an end to the contravention;

(b)states that the Authority’s power of intervention will become exercisable in relation to the firm if the firm continues the contravention; and

(c)indicates any requirements that the Authority proposes to impose on the firm in exercise of its power of intervention in the event of the power becoming exercisable.

(5) The Authority may exercise its power of intervention in respect of the firm if—

(a)a reasonable time has expired since the giving of the notice under subsection (4);

(b)the firm has failed to put an end to the contravention within that time; and

(c)the Authority has informed the firm’s home state regulator of its intention to exercise its power of intervention in respect of the firm.

(6) Subsection (5) applies whether or not the Authority’s power of intervention is also exercisable as a result of section 194.

(7) If the Authority exercises its power of intervention in respect of a relevant EEA firm by virtue of subsection (5), it must at the earliest opportunity inform the firm’s home state regulator and the Commission of—

(a)the fact that the Authority has exercised that power in respect of the firm; and

(b)any requirements it has imposed on the firm in exercise of the power..

3.  After section 195 of the Act (exercise of power in support of overseas regulator) insert—

Contravention by relevant EEA firm of requirement under markets in financial instruments directive: home state regulator primarily responsible for securing compliance

195A  (1)  This section applies if the Authority has clear and demonstrable grounds for believing that a relevant EEA firm has contravened, or is contravening, a requirement falling within subsection (2) (in a case to which Article 62.1 or 62.3 of the markets in financial instruments directive applies).

(2) A requirement falls within this subsection if it is imposed on the firm—

(a)by or under any provision adopted in the firm’s home state for the purpose of implementing the markets in financial instruments directive; or

(b)by any directly applicable Community regulation made under that directive.

(3) The Authority must notify the firm’s home state regulator of the situation mentioned in subsection (1).

(4) The notice under subsection (3) must—

(a)request that the home state regulator take all appropriate measures for the purpose of ensuring that the firm puts an end to the contravention;

(b)state that the Authority’s power of intervention is likely to become exercisable in relation to the firm if the firm continues the contravention; and

(c)indicate any requirements that the Authority proposes to impose on the firm in exercise of its power of intervention in the event of the power becoming exercisable.

(5) The Authority may exercise its power of intervention in respect of the firm if—

(a)a reasonable time has expired since the giving of the notice under subsection (3); and

(b)conditions A to C are satisfied.

(6) Condition A is that—

(a)the firm’s home state regulator has failed or refused to take measures for the purpose mentioned in subsection (4)(a); or

(b)any measures taken by the home state regulator have proved inadequate for that purpose.

(7) Condition B is that the firm is acting in a manner which is clearly prejudicial to the interests of investors in the United Kingdom or the orderly functioning of the markets.

(8) Condition C is that the Authority has informed the firm’s home state regulator of its intention to exercise its power of intervention in respect of the firm.

(9) Subsection (5) applies whether or not the Authority’s power of intervention is also exercisable as a result of section 194 or 195.

(10) If the Authority exercises its power of intervention in respect of a relevant EEA firm by virtue of subsection (5), it must at the earliest opportunity inform the Commission of—

(a)the fact that the Authority has exercised that power in respect of the firm; and

(b)any requirements it has imposed on the firm in exercise of the power.

(11) In this section—

“home state”, in relation to a relevant EEA firm, means—

(a)

in the case of a firm which is a body corporate, the EEA State in which the firm has its registered office or, if it has no registered office, its head office; and

(b)

in any other case, the EEA State in which the firm has its head office;

“relevant EEA firm” has the same meaning as in section 194A..

4.  In section 199 of the Act (additional procedure for EEA firms in certain cases), in subsections (2)(b) and (8)(b), after “directives” insert “(other than the markets in financial instruments directive)”.

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