The Financial Services and Markets Act 2000 (Market Abuse) Regulations 2016

PART 2 U.K. Amendments to the Financial Services and Markets Act 2000

Amendments to Part 6 of the 2000 Act U.K.

8.—(1) Part 6 of the 2000 Act is amended as follows.

(2) In section 73A M1 (Part 6 Rules)—

(a) omit subsection (3); and

(b) in subsection (6) omit “, disclosure rules”.

(3) In section 91 M2 (penalties for breach of Part 6 rules)—

(a) omit subsection (1ZA); and

(b) in subsection (2) omit “(1ZA)(a),”.

(4) Omit sections 96A (disclosure of information requirements) to 96C (suspension of trading) M3 .

(5) In section 97(1)(b) M4 (appointment by FCA of persons to carry out investigations) omit “(1ZA)(a),”.

(6) For section 102A(4) M5 (meaning of “securities” etc) substitute—

“(4) “Financial instrument” has the meaning given in Article 4.1.17 of the markets in financial instruments directive M6 .”.

(7) In section 102B M7 (meaning of “offer of transferable securities to the public” etc.)—

(a) for subsection (5)(c) substitute—

“(c) a prescribed market.”; and

(b) after subsection (5) insert—

“(5A) The Treasury may make regulations to specify (whether by name or description) the markets which are prescribed markets for the purposes of subsection (5)(c).”.

(8) In section 102C(a) M8 (meaning of “home State” in relation to transferable securities) omit “and in section 96A”.

(9) In section 103(1) M9 (definitions) omit the definitions of “disclosure rules” and “inside information”.

(10) Omit Schedule 11B M10 (connected persons).

Marginal Citations

M1 Section 73A was inserted by S.I. 2005/381 and amended by section 16(4) of the Financial Services Act 2012.

M2 Section 91 was amended by S.I. 2005/1433, 2005/381, 2015/1755, paragraphs 6(2) to (4) of Schedule 15 to the Companies Act 2006 (c. 46) and by sections 16(3)(g) and 20 of the Financial Services Act.

M3 Sections 96A to 96C were inserted by S.I. 2005/381. Section 96A was amended by 2012/1538 and section 16(3) of the Financial Services Act 2012. Section 96B was amended by S.I. 2009/2461 and paragraph 7(a) and (b) of Schedule 15 to the Companies Act 2006 (c.46). Section 96C was amended by section 16(3)(g) of the Financial Services Act 2012.

M4 Section 97(1)(b) was amended by S.I. 2015/1755.

M5 Section 102A(4) was amended by S.I. 2008/3053.

M6 OJ No L 145, 30.04.2004, p1.

M7 Section 102B was amended by S.I. 2005/1433 and 2007/126.

M8 Section 102C was amended by S.I. 2015/1755.

M9 Section 103(1) was amended by S.I. 2005/1433, 2008/1886, 2012/1538, 2013/113, 2014/3293, 2015/1755, sections 16(3)(i) and (14)(g) of the Financial Services Act 2012 and by section 1265 and paragraphs 11(2) and (3) of Schedule 15 to the Companies Act 2006.

M10 Schedule 11B was inserted by S.I. 2009/2461.

Amendments to Part 8 of the 2000 Act U.K.

9.—(1) Part 8 of the 2000 Act is amended as follows.

(2) For the heading of Part 8 substitute “ Provisions relating to market abuse ”.

(3) Omit sections 118 (market abuse) to 122 (effect of the code) M11 , including the italic headings before section 118 and section 119.

(4) Before section 123 M12 (power to impose penalties in cases of market abuse) and the italic cross heading preceding that section insert—

“Powers to require information and supplemental provisions U.K.

Power to require information from issuers

122A.— (1) The FCA may require an issuer, a person discharging managerial responsibilities or a person closely associated with a person discharging managerial responsibilities to provide—

(a) any information the FCA reasonably requires for the purpose of protecting—

(i) the interests of users of financial markets and exchanges in the United Kingdom; or

(ii) the orderly operation of financial markets and exchanges in the United Kingdom; or

(b) any information or explanation the FCA reasonably requires to verify whether Article 17 (public disclosure of inside information) or Article 19 (managers' transactions) of the market abuse regulation M13 is being, or has been, complied with.

(2) Information required under this section must be provided—

(a) before the end of such reasonable period as may be specified by the FCA; and

(b) at such place as may be specified by the FCA.

(3) The FCA may require any information provided under this section to be provided in such form as it may reasonably require.

(4) The FCA may require any information provided, whether in a document or otherwise, to be verified in such manner as it may reasonably require.

(5) In this section—

“person closely associated” has the meaning given in Article 3.1(26) of the market abuse regulation (see section 131AC (meaning of “persons closely associated” in the market abuse regulation)); and

“person discharging managerial responsibilities” has the meaning given in Article 3.1(25) of the market abuse regulation.

(6) For the meaning of “issuer” in this Part, see section 131AB.

General power to require information

122B.— (1) The FCA may, by notice in writing, require a person—

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

(b) to produce specified documents or documents of a specified description.

(2) This section applies only to information and documents that the FCA reasonably requires for the purpose of the exercise by it of functions under the market abuse regulation or a supplementary EU regulation.

(3) Information or documents required under this section must be provided or produced—

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

(b) at such place as may be specified.

(4) The FCA may require any information provided under this section to be provided in such form as it may reasonably require.

(5) The FCA may require—

(a) any information provided, whether in a document or otherwise, to be verified in such manner as it may reasonably require; or

(b) any document produced to be authenticated in such manner as it may reasonably require.

(6) The FCA may exercise its powers under this section at the request of an EEA regulator where the regulator makes the request in the exercise of its functions under the market abuse regulation M14 or a supplementary EU regulation.

(7) If such a request is made to the FCA it must, in deciding whether or not to exercise its powers under this section in response to the request, consider whether it is necessary to do so to comply with the market abuse regulation or a supplementary EU regulation.

(8) In this section “specified” means specified in the notice.

Power to require information: supplementary

122C.— (1) If a document is produced in response to a requirement imposed under section 122B, the FCA may—

(a) take copies of, or extracts from, the document; or

(b) require the person producing the document, or any relevant person, to provide an explanation of the document.

(2) In subsection (1)(b) “relevant person”, in relation to a person who is required to produce a document, means a person who—

(a) has been, is, or is proposed to be, a director or controller of that person;

(b) has been or is an auditor of that person;

(c) has been or is an actuary, accountant or lawyer appointed or instructed by that person; or

(d) has been or is an employee of that person.

(3) If a person who is required under section 122B to produce a document fails to do so, the FCA may require the person to state, to the best of the person's knowledge and belief, where the document is.

(4) A lawyer may be required under section 122B to provide the name and address of the lawyer's client.

(5) A person (“P”) may not be required under section 122A or 122B to disclose information or produce a document in respect of which P owes an obligation of confidence by virtue of carrying on the business of banking unless condition A, B or C is met.

(6) Condition A is met if the FCA suspects that P or a member of P's group—

(a) has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation; or

(b) has contravened, or been knowingly concerned in the contravention of—

(i) a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or

(ii) a provision of a supplementary EU regulation.

(7) Condition B is met if the FCA suspects that the person to whom the obligation of confidence is owed or a member of that person's group—

(a) has contravened Article 14 or Article 15 of the market abuse regulation; or

(b) has contravened, or been knowingly concerned in the contravention of—

(i) a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or

(ii) a provision of a supplementary EU regulation.

(8) Condition C is met if the person to whom the obligation of confidence is owed consents to the disclosure or production.

(9) If a person claims a lien on a document, its production under section 122B does not affect the lien.

Entry of premises under warrant

122D.— (1) A justice of the peace may issue a warrant under this section if satisfied on information on oath given by or on behalf of the FCA that there are reasonable grounds for believing that the conditions in subsection (2) are met.

(2) The conditions are—

(a) that a person on whom a requirement has been imposed under section 122B or 122C has failed (wholly or in part) to comply with it; and

(b) that on the premises specified in the warrant—

(i) there are documents which have been required; or

(ii) there is information which has been required.

(3) A warrant under this section shall authorise a constable—

(a) to enter the premises specified in the warrant;

(b) to search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which a warrant under this section was issued (“the relevant kind”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them;

(c) to take copies of, or extracts from, any documents or information appearing to be of the relevant kind;

(d) to require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found; and

(e) to use such force as may be reasonably necessary.

(4) A warrant under this section may be executed by any constable.

(5) The warrant may authorise persons to accompany any constable who is executing it.

(6) The powers in subsection (3) may be exercised by a person authorised by the warrant to accompany a constable; but that person may exercise those powers only in the company of, and under the supervision of, a constable.

(7) In England and Wales, sections 15(5) to (8) M15 and 16(3) to (12) M16 of the Police and Criminal Evidence Act 1984 (execution of search warrants and safeguards) apply to warrants issued under this section.

(8) In Northern Ireland, Articles 17(5) to (8) M17 and 18(3) to (12) M18 of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989/1341 (N.I. 12)) apply to warrants issued under this section.

(9) In the application of this section to Scotland—

(a) for the reference to a justice of the peace substitute a reference to a justice of the peace or a sheriff; and

(b) for the references to information on oath substitute references to evidence on oath.

(10) The FCA may give information under subsection (1) or under section 176(1) M19 at the request of an EEA regulator where the regulator makes the request in the exercise of its functions under the market abuse regulation or a supplementary EU regulation.

(11) The FCA must, in deciding whether or not to exercise a power referred to in subsection (10), consider whether the exercise of that power is necessary to comply with an obligation under the market abuse regulation or a supplementary EU regulation.

Retention of documents taken under section 122D

122E.— (1) Any document of which possession is taken under section 122D (“a seized document”) may be retained so long as it is necessary to retain it (rather than copies of it) in the circumstances.

(2) A person claiming to be the owner of a seized document may apply to a magistrates' court or (in Scotland) the sheriff for an order for the delivery of the document to the person appearing to the court or sheriff to be the owner.

(3) If, on an application under subsection (2), the court or (in Scotland) the sheriff cannot ascertain who is the owner of the seized document the court or sheriff (as the case may be) may make such order as the court or sheriff thinks fit.

(4) An order under subsection (2) or (3) does not affect the right of any person to take legal proceedings against any person in possession of a seized document for the recovery of the document.

(5) Any right to bring proceedings (as described in subsection (4)) may only be exercised within 6 months of the date of the order made under subsection (2) or (3).

Offences

122F.— (1) If a person (“A”) fails to comply with a requirement imposed on A under section 122B or 122C the FCA may certify that fact in writing to the court.

(2) If the court is satisfied that A failed without reasonable excuse to comply with the requirement, it may deal with A (and where A is a body corporate, any director or other officer) as if A (or as the case may be the director or officer) were in contempt.

(3) A person (“B”) who, in purported compliance with a requirement imposed on B under section 122B or 122C—

(a) provides information which B knows to be false or misleading in a material particular; or

(b) recklessly provides information which is false or misleading in a material particular;

is guilty of an offence.

(4) A person guilty of an offence under subsection (3) is liable—

(a) on summary conviction—

(i) in England and Wales, to imprisonment for a term not exceeding three months or a fine, or both;

(ii) in Scotland, to imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum, or both;

(iii) in Northern Ireland, to imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum, or both;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.

(5) Any person who intentionally obstructs the exercise of any rights conferred by a warrant under section 122D is guilty of an offence and liable on summary conviction—

(a) in England and Wales, to imprisonment for a term not exceeding three months or a fine, or both;

(b) in Scotland, to imprisonment for a term not exceeding three months or a fine not exceeding level 5 on the standard scale, or both;

(c) in Northern Ireland, to imprisonment for a term not exceeding three months or a fine not exceeding level 5 on the standard scale, or both.

(6) In this section—

(a) “court” means—

(i) the High Court;

(ii) in Scotland, the Court of Session;

(b) “officer”, in relation to a limited liability partnership, means a member of the partnership.

Other administrative powers U.K.

Publication of information and corrective statements by issuers

122G.— (1) If condition A or B is met, the FCA may require an issuer to publish—

(a) specified information; or

(b) a specified statement.

(2) Condition A is met if the FCA considers that the publication of the information or statement is necessary for the purpose of protecting—

(a) the interests of users of financial markets and exchanges in the United Kingdom; or

(b) the orderly operation of financial markets and exchanges in the United Kingdom.

(3) Condition B is met if—

(a) the information or statement corrects false or misleading information made public, or a false or misleading impression given to the public, by that person; and

(b) the FCA considers that the publication of the information is necessary for the purpose of the exercise by it of functions under the market abuse regulation M20 or a supplementary EU regulation.

(4) Information or statements required to be published under this section must be published—

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

(b) by any method as may be specified.

(5) If a person fails to comply with a requirement to publish information or a statement under this section, the FCA may publish the information or statement.

(6) But before doing so, the FCA must give that person an opportunity to make representations to it regarding its decision to publish the information or statement under subsection (5).

(7) In this section “specified” means specified by the FCA.

(8) For the meaning of “issuer”, see section 131AB.

Publication of corrective statements generally

122H.— (1) If condition A or B is met, the FCA may, by notice in writing, require a person to publish—

(a) specified information; or

(b) a specified statement

correcting false or misleading information made public, or a false or misleading impression given to the public, by that person.

(2) Condition A is met if the FCA considers that the publication of the information or statement is necessary for the purpose of protecting—

(a) the interests of users of financial markets and exchanges in the United Kingdom; or

(b) the orderly operation of financial markets and exchanges in the United Kingdom.

(3) Condition B is met if the FCA considers that the publication of the information or statement is necessary for the purpose of the exercise by it of functions under the market abuse regulation or a supplementary EU regulation.

(4) Information or statements required to be published under this section must be published—

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

(b) by any method as may be specified.

(5) If a person fails to comply with a requirement to publish information or a statement under this section the FCA may publish the information or statement.

(6) But before doing so, the FCA must give that person an opportunity to make representations to it regarding its decision to publish the information or statement under subsection (5).

(7) In this section “specified” means specified in the notice.

Power to suspend trading in financial instruments

122I.— (1) The FCA may suspend trading of a financial instrument where it considers it necessary for the purpose of the exercise by it of functions under the market abuse regulation or a supplementary EU regulation.

(2) If the FCA does so the issuer of the financial instrument may refer the matter to the Tribunal.

(3) The FCA may—

(a) cancel a suspension under subsection (1); and

(b) impose such conditions for the cancellation to take effect as it considers appropriate.

(4) The provisions relating to suspension of listing of securities in section 78 M21 (discontinuance or suspension: procedure) apply to a suspension of trading in a financial instrument under subsection (1) and for the purposes of this section—

(a) the references in section 78 to listing are to be read as references to trading; and

(b) the references in section 78 to securities are to be read as references to financial instruments.

(5) For the meaning of “issuer” in this Part, see section 131AB.”.

(5) For section 123 M22 (power to impose penalties in cases of market abuse) and the italic heading before it substitute—

“Administrative sanctions U.K.

123.    Power to impose penalties or issue censure

(1) The FCA may exercise its power under subsection (2) if it is satisfied that—

(a) a person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;

(b) a person has contravened, or been knowingly concerned in the contravention of—

(i) a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or

(ii) a provision of a supplementary EU regulation; or

(c) a person other than an authorised person has contravened any requirement—

(i) imposed on that person under section 122A, 122B, 122C, 122G, 122H, 122I, 123A or 123B; or

(ii) relating to the market abuse regulation or any supplementary EU regulation imposed on that person under Part 11.

(2) The FCA's power under this subsection is a power to impose a penalty of such amount as it considers appropriate on the person.

(3) The FCA may, instead of imposing a penalty on a person, publish a statement censuring the person.

123A.    Power to prohibit individuals from managing or dealing

(1) The FCA may exercise its power under subsection (2) if it is satisfied that an individual—

(a) has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;

(b) has contravened, or been knowingly concerned in the contravention of—

(i) a provision of the market abuse regulation other than Article 14 or 15 of that regulation; or

(ii) a provision of a supplementary EU regulation; or

(c) has contravened a requirement imposed on that individual under this section or section 122A, 122B, 122C, 122G, 122H, 122I or 123B.

(2) The FCA's power under this subsection is a power to impose either or both of the following—

(a) a temporary prohibition on the individual holding an office or position involving responsibility for taking decisions about the management of an investment firm;

(b) a temporary prohibition on the individual acquiring or disposing of financial instruments, whether on his or her own account or the account of a third party and whether directly or indirectly.

(3) If the FCA is satisfied that an individual has contravened Article 14 or 15 of the market abuse regulation the FCA may impose a permanent prohibition on the individual holding an office or position involving responsibility for taking decisions about the management of an investment firm.

(4) A prohibition imposed under subsection (2) may be expressed to expire at the end of such period as the FCA may specify, but the imposition of a prohibition that expires at the end of a specified period does not affect the FCA's power to impose a new prohibition under subsection (2).

(5) A prohibition imposed under subsection (2)(a) or (3) may be expressed to prohibit an individual holding an office or position involving responsibility for taking decisions about the management of—

(a) a named investment firm;

(b) an investment firm of a specified description; or

(c) any investment firm.

(6) An investment firm must take reasonable care to ensure that no individual who is subject to a prohibition under subsection (2)(a) or (3) on the holding of an office or position involving responsibility for taking decisions about the management of the firm holds such an office or position.

(7) The FCA may vary or revoke a prohibition imposed under this section.

123B.    Suspending permission to carry on regulated activities etc

(1) The FCA may exercise its power under subsection (2) if it is satisfied that an authorised person—

(a) has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;

(b) has contravened, or been knowingly concerned in the contravention of—

(i) a provision of the market abuse regulation other than Article 14 and 15 of that regulation;

(ii) a provision of a supplementary EU regulation; or

(c) has contravened a requirement imposed on that person under this section or section 122A, 122B, 122C, 122G, 122H, 122I or 123A.

(2) The FCA's power under this subsection is a power to do either or both of the following —

(a) to suspend, for such period as it considers appropriate, any permission which the person has to carry on a regulated activity;

(b) to impose, for such period as it considers appropriate, such limitations or other restrictions in relation to the carrying on of a regulated activity by the person as it considers appropriate.

(3) In subsection (2) “permission” means any permission that the authorised person has, whether given (or treated as given) by the FCA or the PRA or conferred by any provision of this Act.

(4) The period for which a suspension or restriction is to have effect may not exceed 12 months.

(5) A suspension may relate only to the carrying on of an activity in specified circumstances.

(6) A restriction may, in particular, be imposed so as to require the person concerned to take, or refrain from taking, specified action.

(7) The FCA may—

(a) withdraw a suspension or restriction; or

(b) vary a suspension or restriction so as to reduce the period for which it has effect or otherwise to limit its effect.

(8) The power under this section may (but need not) be exercised so as to have effect in relation to all the regulated activities that the person concerned carries on.

123C.    Exercise of administrative sanctions

Any one or more of the powers under sections 123, 123A and 123B may be exercised in relation to the same contravention.”.

(6) In section 124 M23 (statement of policy)—

(a) for subsections (1) and (2) substitute—

“(1) The FCA must prepare and issue a statement of its policy with respect to the type and level of administrative sanctions it may impose on a relevant person.

(2) The FCA's policy in determining the type and level of administrative sanctions to be imposed must take into account all relevant circumstances including, where appropriate, the matters referred to in Article 31(1) of the market abuse regulation.”;

(b) omit subsection (3);

(c) for subsection (6) substitute—

“(6) When imposing, or deciding whether to impose, an administrative sanction on a relevant person the FCA must have regard to any statement published under this section in force at the time of the contravention.”; and

(d) after subsection (9) insert—

“(10) In this section—

“administrative sanction” means—

(a)

a penalty or statement of censure imposed or published under section 123;

(b)

a prohibition imposed under section 123A; or

(c)

a suspension or restriction imposed under section 123B; and

“relevant person” means a person—

(a)

who has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation;

(b)

who has contravened, or been knowingly concerned in the contravention of—

(i)

a provision of the market abuse regulation M24 other than Article 14 or 15 of that regulation; or

(ii)

a provision of a supplementary EU regulation; or

(c)

who has contravened—

(i)

any requirement imposed on the person under section 122A, 122B, 122C, 122G, 122H, 122I, 123A or 123B; or

(ii)

in the case of a person other than an authorised person, any requirement relating to the market abuse regulation or a supplementary EU regulation imposed on the person under Part 11.”.

(7) In section 126 M25 (warning notices)—

(a) for subsection (1) substitute—

“(1) If the FCA proposes—

(a) to impose a penalty on a person under section 123(2);

(b) to publish a statement censuring a person under section 123(3);

(c) to impose a temporary prohibition on an individual under section 123A(2)(a);

(d) to impose a temporary prohibition on an individual under section 123A(2)(b);

(e) to impose a permanent prohibition on an individual under section 123A(3); or

(f) to impose a suspension or restriction in relation to a person under section 123B;

it must give the person a warning notice.”;

(b) in subsection (2) after “a penalty” insert “ under section 123 ”;

(c) in subsection (3) after “a statement” insert “ under section 123 ”; and

(d) after subsection (3) insert—

“(4) A warning notice about a proposal to impose a prohibition under section 123A must set out the terms of the proposed prohibition.

(5) A warning notice about a proposal to impose a suspension or restriction under section 123B must state the period for which the suspension or restriction is to have effect.”.

(8) In section 127 (decision notices)—

(a) for subsection (1) M26 substitute—

“(1) If the FCA decides—

(a) to impose a penalty on a person under section 123(2);

(b) to publish a statement censuring a person under section 123(3);

(c) to impose a temporary prohibition on an individual under section 123A(2)(a);

(d) to impose a temporary prohibition on an individual under section 123A(2)(b);

(e) to impose a permanent prohibition on an individual under section 123A(3);

(f) to impose a suspension or restriction in relation to a person under section 123B;

it must give the person a decision notice.”;

(b) in subsection (2) after “a penalty” insert “ under section 123 ”;

(c) in subsection (3) after “a statement” insert “ under section 123 ”;

(d) after subsection (3) insert—

“(3A) A decision notice about the imposition of a prohibition under section 123A must set out the terms of the prohibition.

(3B) A decision notice about the imposition of a suspension or restriction under section 123B must state the period for which the suspension or restriction is to have effect.”; and

(e) for subsection (4) M27 substitute—

“(4) If the FCA decides—

(a) to impose a penalty on a person under section 123(2);

(b) to publish a statement censuring a person under section 123(3);

(c) to impose a prohibition on an individual under section 123A; or

(d) to impose a suspension or restriction in relation to a person under section 123B;

that person may refer the matter to the Tribunal.”.

(9) After section 127 (decision notices) insert—

“127A.    Consultation with the PRA in relation to administrative sanctions

(1) The FCA must consult the PRA before giving a warning notice under section 126(1)(a), (b), (d) or (f) or a decision notice under section 127(1)(a), (b), (d) or (f) in relation to a person who—

(a) is a PRA-authorised person; or

(b) is a member of a PRA-authorised person's immediate group.

(2) The FCA must consult the PRA before giving a warning notice under section 126(1)(c) or (e) or a decision notice under section 127(1)(c) or (e) if as a result of the prohibition in question an individual would be prohibited from holding an office or position involving responsibility for taking decisions about the management of a PRA-authorised investment firm.

(3) The FCA must consult the PRA before varying or revoking a prohibition under section 123A(2)(a) or (3) if as a result of the proposed variation or revocation an individual would no longer be prohibited from holding an office or position involving responsibility for taking decisions about the management of a PRA-authorised investment firm.

(4) In this section “PRA-authorised investment firm” means an investment firm which is a PRA-authorised person and carries on a regulated activity.”.

(10) In section 128 (suspension of investigations)—

(a) in subsection (1) M28 for “power relating to market abuse” substitute “ relevant power ”; and

(b) for subsection (3) M29 substitute—

“(3) In this section “relevant power” means the FCA's power—

(a) to impose a penalty or publish a statement of censure under section 123;

(b) to impose a prohibition under section 123A;

(c) to impose a suspension or restriction under section 123B;

(d) to appoint a person to conduct an investigation under section 168 in a case falling within subsection (2)(d) of that section; or

(e) to appoint a person to conduct an investigation under section 169 (investigation etc in support of an overseas regulator) in a case falling within subsection (2A) of that section.”.

(11) For section 129 M30 (power of court to impose penalty in cases of market abuse) substitute—

“129.    Power of court to impose administrative sanctions in cases of market abuse

(1) The FCA may, on an application to the court under sections 380 to 383 which relates to a market abuse requirement, request the court to consider whether it is appropriate to impose one or more of the following on the person to whom the application relates—

(a) a penalty;

(b) if the person concerned is an individual, a temporary prohibition or a permanent prohibition; or

(c) a suspension or restriction.

(2) The court may, if it considers it appropriate, make an order which does one or more of the following—

(a) requires the person concerned to pay to the FCA a penalty of such amount as the court considers appropriate;

(b) if the person concerned is an individual, imposes a temporary prohibition or a permanent prohibition on that individual; or

(c) imposes a suspension or restriction on the person concerned.

(3) But the court may impose a permanent prohibition only where it is satisfied the person concerned has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.

(4) Section 123A(4) to (6) apply to a prohibition imposed by an order made under subsection (2) as they do to a prohibition under section 123A, but with—

(a) references to a prohibition under section 123A having effect as references to a prohibition under this section; and

(b) references to the FCA having effect as references to the court which makes the order under this section.

(5) Section 123B(4) to (6) and (8) apply to a suspension or restriction imposed by an order under subsection (2) as they do to a suspension or restriction imposed under section 123B.

(6) The court may—

(a) vary or revoke a prohibition imposed under this section;

(b) withdraw a suspension or restriction imposed under this section; or

(c) vary a suspension or a restriction imposed under this section so as to reduce the period for which it has effect or otherwise to limit its effect.

(7) In this section—

“market abuse requirement” means a requirement imposed by the market abuse regulation or a supplementary EU regulation which is a relevant requirement for the purposes of section 380 or 382 (as the case may be);

“permanent prohibition” means a permanent prohibition on an individual holding an office or position involving responsibility for taking decisions about the management of an investment firm;

“suspension or restriction” means—

(a)

a suspension of any permission which a person has to carry on a regulated activity for such period as the court considers appropriate ; or

(b)

such limitations or other restrictions as the court considers appropriate in relation to the carrying on of a regulated activity by a person for such period as the court considers appropriate;

“temporary prohibition” means a temporary prohibition on an individual—

(a)

holding an office or position involving responsibility for taking decisions about the management of an investment firm; or

(b)

acquiring or disposing of financial instruments, whether on his or her own account or the account of a third party and whether directly or indirectly.”.

(12) In section 130 (guidance)—

(a) for subsection (1) M31 , substitute—

“(1) The Treasury may from time to time issue written guidance for the purpose of helping relevant authorities to determine the action to be taken in cases where—

(a) it appears a person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation; and

(b) in so doing the person appears to have committed an offence under Part 7 of the Financial Services Act 2012 M32 or Part 5 of the Criminal Justice Act 1993 M33 (insider dealing).”; and

(b) in subsection (5) M34 for “where behaviour mentioned in subsection (1) occurs” substitute “ mentioned in subsection (1) ”.

(13) Omit section 130A M35 (interpretation and supplementary provision).

(14) In section 131A (protected disclosures)—

(a) in subsection (2) M36 —

(i) for subsection (b) substitute—

“(b) gives him reasonable grounds for knowing or suspecting that another person has engaged in market abuse”; and

(ii) after that paragraph, and as the closing words of the subsection, insert—

“that another person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.”; and

(b) in subsection (4) M37 omit “to the FCA or”.

(15) After section 131A insert—

“131AA.    Reporting of infringements

(1) This section applies to employers who—

(a) provide regulated financial services;

(b) carry on regulated activities in reliance on the exemption in section 327; or

(c) are recognised bodies, EEA central counterparties, or third country central counterparties.

(2) Employers must have in place appropriate internal procedures for their employees to report contraventions of the market abuse regulation or any supplementary EU regulation.

(3) In this section—

• “employee” and “employer” have the meaning given in section 230 M38 of the Employment Rights Act 1996;

• “recognised body” has the meaning given in section 313 M39 ;

• “regulated financial services” has the meaning given in section 1H M40 .

131AB.    Interpretation

In this Part—

“EEA regulator” means the competent authority of an EEA State other than the United Kingdom for the purposes of the market abuse regulation M41 ;

“financial instrument” has the meaning given in Article 4.1(17) of the markets in financial instruments directive M42 ;

“issuer” has the meaning given in Article 3.1(21) of the market abuse regulation; and

“supplementary EU regulation” means a directly applicable EU regulation made under the market abuse regulation.

131AC.    Meaning of “persons closely associated” in the market abuse regulation

(1) In Article 3.1(26)(a) (definitions) of the market abuse regulation “partner considered to be equivalent to a spouse” includes a civil partner.

(2) In Article 3.1(26)(b) of the market abuse regulation “dependent child” means a child who—

(a) is under the age of 18 years;

(b) is unmarried; and

(c) does not have a civil partner.

(3) In this section “child” includes a stepchild.

131AD.    Individual liability in respect of legal persons under Articles 8 and 12 of the market abuse regulation

(1) An individual participates in a decision by a body corporate for the purposes of Article 8.5 (insider dealing) or Article 12.4 (market manipulation) of the market abuse regulation where—

(a) the individual was an officer of the body corporate when the decision was made; and

(b) the FCA are satisfied that the individual was knowingly concerned in the decision.

(2) In this section “officer”, in relation to a body corporate, means–

(a) a director, member of the committee of management, chief executive, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity; or

(b) an individual who is a controller of the body.

131AE.    Liability for contraventions of Article 14 or 15 of the market abuse regulation

For the purposes of any enactment a person contravenes Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) whether the contravention is by that person alone or by that person and one or more other persons jointly or in concert.”.

Marginal Citations

M11 Sections 118 to 118C were substituted for the original section 118 by S.I. 2005/381 and sections 118 and 118A were further amended by S.I. 2014/3081. Sections 119 to 122 were amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012 and section 121 was also amended by paragraph 9(3) of that Schedule.

M12 Section 123 was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M13 OJ No L 173, 14.04.2014, p31.

M14 OJ No L 173, 14.04.2014, p31.

M15 1984 c. 60; section 15(5) was amended and section 15(5A) was inserted by section 114(5) and (6) of the Serious Organised Crime and Police Act 2005 (c.15), section 15(6) was amended by section 113(8) the Serious Organised Crime and Police Act 2005 and further amended by S.I. 2005/3496, and section 15(7) was amended by section 114(7) of the Serious Organised Crime and Police Act 2005.

M16 Section 16(3) was amended by section 114(8) of the Serious Organised Crime and Police Act 2005, section 16(3A) was inserted by section 113(9), section 16(10) and (10A) was substituted for section 16(10) by section 114(8) of the Serious Organised Crime and Police Act 2005, section 16(9) was amended by S.I. 2005/3496 and section 16(11) was amended by paragraph 281 of Schedule 8 to the Courts Act 2003 (c. 39).

M17 S.I. 1989/1341 (N.I. 12); Article 17(5) was amended by S.I. 2007/288 (N.I. 2), Article 17(5A) inserted by S.I. 2007/288 (N.I. 2) and Article 17(6) and (7) was amended by S.I. 2007/288 (N.I. 2).

M18 Article 18(3) was amended by S.I. 2007/288 (N.I. 2), Article 18(3A) and (3B) were inserted by S.I. 2007/288 (N.I. 2), Article 18(9) was amended by S.I. 2007/288 (N.I. 2), Article 18(10) was substituted by S.I. 2007/288 (N.I. 2), Article 18(10A) was inserted by S.I. 2007/288 (N.I. 2), and Article 12 was amended by S.I. 2007/288 (N.I. 2).

M19 Section 176(1) was amended by paragraph 14(1) and (2) of Schedule 12 to the Financial Services Act 2012.

M20 OJ No L 173, 14.04.2014, p31.

M21 Section 78 was amended by S.I. 2007/1973, section 16(1) to (3) of the Financial Services Act 2012 and by S.I. 2014/3329.

M22 Section 123(1) and (3) was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M23 Section 124 was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M24 OJ No L 173, 14.04.2014, p31.

M25 Section 126 was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M26 Section 127(1) was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M27 Section 127(4) was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M28 Section 128(1) was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M29 Section 128(3) was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M30 Section 129 was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M31 Section 130(1) was amended by paragraph 9(4) of Schedule 9 to the Financial Services Act 2012.

M32 2012 c. 21.

M33 1993 c. 36.

M34 Section 130(5) was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M35 Section 130A was amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M36 Section 131A(2) was inserted by S.I. 2005/381.

M37 Section 131A(4) was inserted by S.I. 2005/381 and further amended by paragraph 9(1) and (2) of Schedule 9 to the Financial Services Act 2012.

M38 1996 c. 18; section 230 was amended by section 15(1) of the Public Interest Disclosure Act 1989 (c.23), paragraph 41 of Schedule 7 to the Children and Families Act 2014 (c.6) and by section 149(3) of the Small Business, Enterprise and Employment Act 2015 (c.26).

M39 Section 313 was amended by S.I. 2007/126, paragraph 36(3) of Schedule 8 to the Financial Services Act 2012 (c.21) and by S.I. 2013/504 and 2014/892.

M40 Section 1H was inserted by section 6(1) of the Financial Services Act 2012 and further amended by S.I. 2013/1881; there are other amending instruments but none is relevant.

M41 OJ No L 173, 14.04.2014, p31.

M42 OJ No L 145, 30.04.2004, p1.

Other amendments to the 2000 Act U.K.

10.—(1) The 2000 Act is amended as follows.

(2) In section 1D(2)(c) M43 (the integrity objective) for “behaviour that amounts to market abuse” substitute “ contraventions by persons of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation ”.

(3) After section 55J(7ZA) M44 (variation or cancellation on initiative of regulator) insert—

“(7ZB) Without prejudice to the generality of subsections (1) and (2), the FCA may, in relation to an authorised person who is an investment firm, exercise its power under this section if it appears to it that the authorised person has failed to comply with a requirement of the market abuse regulation or of a directly applicable EU regulation made under the market abuse regulation.”.

(4) For section 133(7A)(h) M45 (proceedings before Tribunal: general provision) substitute—

“(h) a decision to impose a penalty or publish a statement of censure under section 123, impose a prohibition under section 123A or impose a suspension or restriction under section 123B;”.

(5) In section 137Q (price stabilising rules)—

(a) after subsection (2)(a) M46 insert—

“(aa) must not apply to transactions, orders, behaviour, actions or omissions to which the market abuse regulation applies;”;

(b) for subsection (3) M47 substitute—

“(3) The FCA may make rules which, for the purposes of the relevant exemption provisions, treat a person who acts or engages in conduct in conformity with specified provisions as acting, or engaging in that conduct, in conformity with the relevant provisions of Article 5 (exemption for buy-back programmes and stabilisation) of the market abuse regulation.

(3A) “Specified provisions” means such provisions—

(a) corresponding to the relevant provisions of Article 5 of the market abuse regulation, and

(b) made by a body or authority outside the EEA as may be specified in rules made by the FCA,

as may be specified in rules made by the FCA.”;

(c) in subsection (4) M48 —

(i) in paragraph (a) for “section 90(9)(b)” substitute “ section 90(9)(d) ”; and

(ii) in paragraph (b) for “section 91(4)(a)” substitute “ section 91(4)(c) ”;

(d) after subsection (4) insert—

“(5) In this section references to Article 5 of the market abuse regulation include any directly applicable EU regulation made under that Article.”

(6) In section 139A(4) M49 (power of the FCA to give guidance), after “short selling regulation” insert “ or the market abuse regulation or a directly applicable EU regulation made under the market abuse regulation ”.

(7) In section 140A(1) M50 (interpretation) in the definition of “regulating provisions” omit paragraph (a)(iv).

(8) In section 168 (appointment of persons to carry out investigations in particular cases)—

(a) in subsection (1)(b) M51 after “section” insert “ 122F, ”;

(b) for subsection (2)(d) substitute—

“(d) a person has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.”; and

(c) in subsection (4)(ja)(iv) M52 omit “or”; and

(d) after subsection (4)(ja) insert—

“(jb) a person may have contravened any provision made by or under this Act for the purposes of the market abuse regulation; or”.

(9) After section 169(2) (investigations etc in support of overseas regulator) insert—

“(2A) But where the investigator is—

(a) appointed by the FCA, and

(b) the appointment is in response to a request to the FCA to investigate a possible contravention by a person of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation,

the investigator has the same powers as an investigator appointed under section 168(3) (as a result of subsection (2) of that section).”.

(10) In section 174 (admissibility of statements made to investigators)—

(a) in subsection (2) M53 after “section 123” insert “ to which this subsection applies ”;

(b) after subsection (3) insert—

“(3A) Subsection (2) applies to proceedings in relation to action to be taken under section 123(2) or (3) against a person who may have contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation.”; and

(c) in subsection (4), after “or (5)” insert “ , or a person appointed under section 169 who has the powers conferred by virtue of subsection (2A) of that section ”.

(11) For section 177(7) (offences) substitute—

“(7) In this section—

“court” means—

(a)

the High Court;

(b)

in Scotland, the Court of Session;

“investigator appointed by the FCA” means an investigator appointed by the FCA under section 167 M54 , 168 M55 or 169 M56 ;

“officer of the FCA” means an officer authorised by the FCA for the purposes of section 165(3).”.

(12) After section 206A(1A) M57 (suspending permission to carry on regulated activities etc) insert—

“(1B) The power conferred by subsection (1) may not be exercised in relation to a contravention of a requirement imposed under section 122A, 122B, 122C, 122G, 122H, 122I, 123A or 123B.”.

(13) In section 300(4) (extension of functions of Tribunal) for “market abuse by persons subject to the rules” substitute “ a contravention of Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation by a person subject to the rules. ”.

(14) In section 381 (injunctions in cases of market abuse)—

(a) in subsection (1) M58 —

(i) in paragraph (a) for “engage in market abuse” substitute “ contravene Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation ”;

(ii) in paragraph (b)—

(aa) for “engaged in market abuse” substitute “ contravened Article 14 or 15 of the market abuse regulation ”; and

(bb) for “market abuse” substitute “ contravention ”; and

(iii) in the closing words for “market abuse” substitute “ contravention ”;

(b) in subsection (2) M59 —

(i) in paragraph (a) for “engaged in market abuse” substitute “ contravened Article 14 or 15 of the market abuse regulation ”; and

(ii) in paragraph (b) for “market abuse” substitute “ contravention ”;

(c) in subsection (3) M60 —

(i) in paragraph (a) for “engaged in market abuse” substitute “ contravening Article 14 or 15 of the market abuse regulation ”; and

(ii) in paragraph (b) for “been engaged in market abuse” substitute “ contravened Article 14 or 15 of the market abuse regulation ”; and

(d) in subsection (6) for “market abuse” substitute “ contravention ”.

(15) In section 383 (restitution orders in cases of market abuse)—

(a) for subsection (1) M61 substitute—

“(1) The court may, on the application of the FCA, make an order under subsection (4) if it is satisfied that—

(a) a person (“the person concerned”) has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation M62 ; and

(b) the condition mentioned in subsection (2) is fulfilled.”; and

(b) omit subsection (3).

(16) in section 384 (power of FCA or PRA to require restitution)—

(a) for subsection (2) M63 substitute—

“(2) The FCA may exercise the power in subsection (5) M64 if it is satisfied that—

(a) a person (“the person concerned”) has contravened Article 14 (prohibition of insider dealing and of unlawful disclosure of inside information) or Article 15 (prohibition of market manipulation) of the market abuse regulation; and

(b) the condition mentioned in subsection (3) is fulfilled.”;

(b) in subsection (3) for “market abuse” (in each place) substitute “ contravention of Article 14 or 15 of the market abuse regulation ”;

(c) omit subsection (4) M65 .

(17) In section 391 (publication)—

(a) in subsection (7B) M66 omit paragraphs (a) and (b);

(b) after subsection (8A) M67 insert—

“(8B) 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 market abuse regulation or a directly applicable EU regulation made under the market abuse regulation, this section has effect subject to Article 34 of the market abuse regulation (publication of decisions).”.

(18) In section 395(13) (the FCA's and PRA's procedures)—

(a) omit paragraph (ba) M68 ; and

(b) after paragraph (bb) M69 insert—

“(bbza) 122I;”.

(19) In section 398(1A) (misleading FCA or PRA: residual cases)—

(a) omit “or” following paragraph (e) M70 ; and

(b) in paragraph (f) M71 omit the full stop after “Funds”; and insert—

“; or

(g) the market abuse regulation.”.

(20) Omit section 415B(3)(c) M72 (consultation in relation to taking certain enforcement action).

(21) In section 417(1) (definitions)—

(a) omit the definition of “market abuse”;

(b) in the appropriate place insert—

““market abuse regulation” means Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC;”.

(22) Omit paragraph 8(3)(b) of Schedule 1ZA M73 (arrangements for discharging functions).

Marginal Citations

M43 Section 1D(2)(c) was inserted by section 6(1) of the Financial Services Act 2012.

M44 Section 55J(7) was inserted by section 11(2) of the Financial Services Act 2012.

M45 Section 133(7A)(h) was inserted by section 23(2)(c) of the Financial Services Act 2012.

M46 Section 137Q(2)(a) was inserted by section 24(1) of the Financial Services Act 2012.

M47 Section 137Q(3) was inserted by section 24(1) of the Financial Services Act 2012.

M48 Section 137Q(4) was inserted by section 24(1) of the Financial Services Act 2012.

M49 Section 139A(4) was inserted by section 24(1) of the Financial Services Act 2012.

M50 Section 140A(1) was inserted by section 24(1) of the Financial Services Act 2012 and the definition of “regulating provisions” was further amended by paragraph 10(a) and (b) of Schedule 3 to the Pensions Act 2013 (c.8); there are other amending instruments but none is relevant.

M51 Section 168(1)(b) was amended by paragraph 8(2)(b) of Schedule 12 to the Financial Services Act 2012.

M52 Section 168(4)(ja) was amended by S.I. 2013/1773.

M53 Section 174(2) was amended by paragraph 12 of Schedule 12 to the Financial Services Act 2012.

M54 Section 167 was amended by S.I. 2007/126, paragraph 7(2) and (3) of Schedule 12 to the Financial Services Act 2012, and by S.I. 2015/575.

M55 Section 168 was amended by S.I. 2007/126, paragraph 33(3) of Schedule 7 to the Counter-Terrorism Act 2008 (c.28), paragraph 16(2) and (3) of Schedule 2 to the Financial Services Act 2010, paragraph 8(2)(a) to (c), (3)(a) and (b), (4)(a) to (g), (5), and (6) of Schedule 12 to the Financial Services Act 2012, S.I. 2012/2554 and 2013/1773, paragraph 11 of Schedule 3 to the Pension Schemes Act 2015 (c.8), and 2016/225.

M56 Section 169 was amended by S.I. 2011/1043 and by paragraph 9(2) to (9) of Schedule 12 to the Financial Services Act 2012.

M57 Section 206A was inserted by section 9 of the Financial Services Act 2010 and subsection (1A) was inserted by paragraph 13(3) of Schedule 9 to the Financial Services Act 2012.

M58 Section 381(1) was amended by paragraph 20(2) of Schedule 9 to the Financial Services Act 2012.

M59 Section 381(2) was amended by paragraph 20(2) of Schedule 9 to the Financial Services Act 2012.

M60 Section 381(3) was amended by paragraph 20(2) of Schedule 9 to the Financial Services Act 2012.

M61 Section 383(1) was amended by paragraph 22 of Schedule 9 to the Financial Services Act 2012.

M62 OJ No L 173, 14.04.2014, p31.

M63 Section 384(2) was amended by paragraph 23(2)(a) of Schedule 9 to the Financial Services Act 2012.

M64 Section 384(5) was amended by paragraph 23(4)(a) and (b) of Schedule 9 to the Financial Services Act 2012.

M65 Section 384(4) was amended by paragraph 23(3) of Schedule 9 to the Financial Services Act 2012.

M66 Section 391(7B) was inserted by S.I. 2012/916.

M67 Section 391(8A) was inserted by S.I. 2014/2879.

M68 Section 395(13)(ba) was inserted by S.I. 2005/381.

M69 Section 395(13)(bb) was inserted by S.I. 2005/1433.

M70 Section 398(1A)(e) was inserted by S.I. 2013/1773.

M71 Section 398(1A)(f) was inserted by S.I. 2015/1882.

M72 Section 415B(3)(c) was inserted by paragraph 41 of Schedule 9 to the Financial Services Act 2012.

M73 Paragraph 8(3)(b) of Schedule 1ZA was inserted by paragraph 1 of Schedule 3 to the Financial Services Act 2012 and amended by paragraph 16(a) of Schedule 3 to the Financial Services (Banking Reform) Act 2013 (c.33).