SCHEDULE 2Amendments to the Financial Services and Markets Act 2000

Amendments to Part 15 (the financial services compensation scheme)23

1

Section 213 (the compensation scheme) is amended as follows.

2

In subsection (1) M1—

a

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

b

after paragraph (a) insert—

aa

relevant exchanges are unable, or likely to be unable, to satisfy claims made against them in connection with a regulated activity relating to a trading facility carried on by the exchange, or

c

in paragraph (b) after “relevant persons” insert “ or relevant exchanges ”.

3

In subsection (3)—

a

for paragraphs (a) and (b) substitute—

a

to assess and pay compensation, in accordance with the scheme, to claimants in respect of claims made in connection with—

i

a regulated activity carried on (whether or not with permission) by relevant persons; and

ii

a regulated activity relating to a trading facility carried on (whether or not in accordance with any requirements relating to that activity resulting from section 286) by relevant exchanges; and

b

to have power to impose levies for the purpose of meeting its expenses (including in particular expenses incurred, or expected to be incurred, in paying compensation, borrowing or insuring risks)—

i

on authorised persons, or any class of authorised person;

ii

on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or

iii

on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges.

4

For subsection (4) substitute—

4

The compensation scheme may provide for the scheme manager to have power to impose levies—

a

on authorised persons, or any class of authorised person;

b

on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or any class of such exchanges; or

c

on authorised persons and on recognised investment exchanges carrying on a regulated activity relating to a trading facility, or on any class of such persons and exchanges,

for the purpose of recovering the cost (whenever incurred) of establishing the scheme.

5

For subsection (5) M2 substitute—

5

In making any provision of the scheme by virtue of subsection (3)(b), the regulators must take account of the desirability of ensuring that the amount of the levies imposed on a particular —

a

class of authorised person;

b

class of recognised investment exchange carrying on a regulated activity relating to a trading facility; or

c

class of authorised person and of recognised investment exchanges carrying on a regulated activity relating to a trading facility;

reflects, so far as is practicable, the amount of claims made, or likely to be made in respect of that class of person, exchange, or persons and exchanges.

6

After subsection (11) M3 insert—

12

In this Part (except in sections 220 and 224) “relevant exchange” means a body corporate or unincorporated association which was a recognised investment exchange carrying on a regulated activity relating to a trading facility at the time the act or omission giving rise to the claim against it, or against a successor falling within subsection (1)(b), took place.

13

In this Part “regulated activity relating to a trading facility” means—

a

the regulated activity of operating a multilateral trading facility; or

b

the regulated activity of operating an organised trading facility.