The Financial Services and Markets Act 2000 (Markets in Financial Instruments) (Amendment No. 2) Regulations 2007

Amendment of the transitional provisions in the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007

2.—(1) The Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007 are amended as follows.

(2) After regulation 6 insert—

“Transitional provisions: EEA investment firms exercising passport rights under the investment services directive

6A.— (1) —(1) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations, or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to an investment service specified in the first column in table 1 in Schedule 7 to these Regulations,

that notice is on 1st November 2007 to be treated as having been given in relation to the investment service or activity specified in the second column of table 1 opposite that investment service.

(2) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations, or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to a non-core service specified in the first column in table 2 in Schedule 7 to these Regulations,

that notice is on 1st November 2007 to be treated as having been given in relation to the ancillary service specified in the second column of table 2 opposite that non-core service.

(3) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive (investment advice concerning one or more of the instruments listed in Section B), or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive,

that notice is on 1st November 2007 to be treated as having been given in relation to the investment service specified in paragraph 5 of Section A of Annex I to the markets in financial instruments directive (investment advice).

(4) Where on or before 31st October 2007 an EEA investment firm has exercised an EEA right deriving from the investment services directive to establish a branch or to provide services in the United Kingdom, and the Authority has received in respect of that firm—

(a) a consent notice under paragraph 13(1)(a) of Schedule 3 or a regulator’s notice under paragraph 14(1)(b) of Schedule 3 in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations, or

(b) notice of change under regulation 4(4) or 5(3) of the EEA Passport Rights Regulations in relation to an instrument specified in the first column in table 3 in Schedule 7 to these Regulations,

that notice is on 1st November 2007 to be treated as having been given in relation to the financial instrument specified in the second column of table 3 opposite that instrument.

(5) If this regulation conflicts with any law of an EEA investment firm’s home state, the law of the firm’s home state shall prevail.

(6) In this regulation—

“EEA investment firm” means an EEA firm falling within paragraph 5(a) of Schedule 3 (before its amendment by these Regulations);

“EEA right” has the meaning given in paragraph 7 of Schedule 3;

“home state” in relation to an EEA investment firm means the EEA State which is the firm’s home Member State for the purposes of the markets in financial instruments directive.”.

(3) In paragraph (3) of regulation 7 omit the words from “and the ancillary service” to the end of the paragraph.

(4) After regulation 7 insert—

“Transitional provision: investment research and financial analysis

7A.— (1) This regulation applies where a UK investment firm on or before 15th August 2007 has given—

(a) notice of intention under paragraph 19(2) or 20(1) of Schedule 3, or

(b) notice of change under regulation 11(3) or 12(2)(a) of the EEA Passport Rights Regulations,

in relation to the non-core service specified in paragraph 6 of Section C of the Annex to the investment services directive (investment advice concerning one or more of the instruments listed in Section B).

(2) The Authority may during the period starting on 1st September 2007 and ending on 31st October 2007 give notice to the UK investment firm’s host state regulator (within the meaning of paragraph 11 of Schedule 3) that from 1st November 2007 the firm will offer the ancillary service specified in paragraph 5 of Section B of Annex I to the markets in financial instruments directive (investment research and financial analysis).

(3) Regulation 11 or 12 of the EEA Passport Rights Regulations does not apply where the Authority has given a notice in accordance with paragraph (2).

(4) Where the UK investment firm concerned gave written notice to the Authority on or before 31st August 2007 to that effect, this regulation shall not apply to him.”.

(5) After regulation 9D insert—

“Transitional provision in relation to client classification

9E.— (1) Any person who immediately before 1st November 2007 had a Part IV permission containing a limitation or requirement—

(a) in relation to the carrying on of any regulated activity except an activity mentioned in paragraph (2); and

(b) described by reference to a category of clients specified in the first column in the table in Schedule 9,

is from 1st November 2007 to be treated as having a Part IV permission to carry on that regulated activity subject to the same limitation or requirement described by reference to the category of clients specified in the second column of that table opposite.

(2) The activities are—

(a) an insurance mediation activity (within the meaning of paragraph 2(5) of Schedule 6 to the Act) carried on in relation to a contract of insurance (within the meaning of article 3(1) of the principal Order) which is not a life policy (within the meaning of the Glossary (Conduct of Business and Other Sourcebooks) Instrument 2007 (2007/32) made by the Authority under the Act on 24th May 2007); and

(b) activities of the kind specified in any of the following provisions of the principal Order—

(i) article 25A (arranging regulated mortgage contracts),

(ii) article 25B (arranging regulated home reversion plans),

(iii) article 25C (arranging regulated home purchase plans),

(iv) article 53A (advising on regulated mortgage contracts),

(v) article 53B (advising on regulated home reversion plans),

(vi) article 53C (advising on regulated home purchase plans),

(vii) article 61 (entering into and administering regulated mortgage contracts),

(viii) article 63B (entering into and administering regulated home reversion plans), and

(ix) article 63F (entering into and administering regulated home purchase plans).

(3) Where the person concerned gave written notice to the Authority on or before 1st October 2007 to that effect, paragraph (1) shall not apply to him.”.

(6) In Schedule 7—

(a) for the shoulder note substitute “Regulations 6A and 7”;

(b) in the fourth entry in the first column of table 1, for “discriminatory” substitute “discretionary”.

(7) After Schedule 8 insert—

Regulation 9E

“SCHEDULE 9 TRANSITIONAL PROVISION IN RELATION TO CLIENT CLASSIFICATION

Category of clients in limitation or requirement in Part IV permission immediately before 1st November 2007	Category of clients in limitation or requirement in Part IV permission from 1st November 2007
Private customers only	Retail clients only
Intermediate customers only	Professional clients only
Private and intermediate customers only	Retail and professional clients only
Intermediate customers and market counterparties only	Professional clients and eligible counterparties only”.