The Investment Exchanges, Clearing Houses and Central Securities Depositories (Amendment) (EU Exit) Regulations 2019

Amendments of regulation 3

19.—(1) Regulation 3 (interpretation)(1) is amended as follows.

(2) In paragraph (1)—

(a) for the definition of “algorithmic trading” substitute—

““algorithmic trading” means trading in financial instruments where a computer algorithm automatically determines individual parameters of orders such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission, with limited or no human intervention, and does not include any system that is only used for the purpose of routing orders to one or more trading venues or for the processing of orders involving no determination of any trading parameters or for the confirmation of orders or the post-trade processing of executed transactions;”;

(b) omit the definition of “branch”;

(c) in the definition of “commodity derivatives”, for “Article 4.1.50 of the markets in financial instruments directive” substitute “Article 2(1)(30) of the markets in financial instruments regulation”;

(d) omit the definitions of “competent authority” and “credit institution”;

(e) in the definition of “depositary receipts”, for “Article 4.1.45 of the markets in financial instruments directive” substitute “Article 2(1)(25) of the markets in financial instruments regulation”;

(f) for the definition of “derivative” substitute—

““derivative” has the meaning given in Article 2(1)(29) of the markets in financial instruments regulation;”;

(g) for the definition of “direct electronic access” substitute—

““direct electronic access” means an arrangement where a member or participant or client of a trading venue permits a person to use its trading code so the person can electronically transmit orders relating to a financial instrument directly to the trading venue and includes arrangements which involve the use by a person of the infrastructure of the member or participant or client, or any connecting system provided by the member or participant or client, to transmit the orders (direct market access) and arrangements where such an infrastructure is not used by a person (sponsored access);”;

(h) for the definition of “emission allowances” substitute—

““emission allowances” has the meaning given in paragraph 11 of Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001;”;

(i) in the definition of “exchange traded fund”, for “Article 4.1.46 of the markets in financial instruments directive” substitute “Article 2(1)(26) of the markets in financial instruments regulations”;

(j) in the definition of “financial instrument”, for “Article 4.1.15 of the markets in financial instruments directive” substitute “Article 2(1)(9) of the markets in financial instruments regulation”;

(k) for the definition of “group” substitute—

““group” means a parent undertaking and all its subsidiary undertakings, and for those purposes, “parent undertaking” and “subsidiary undertaking” have the same meaning as in section 420 of the Act;”;

(l) for the definition of “high frequency algorithmic trading technique” substitute—

““high-frequency algorithmic trading technique” means an algorithmic trading technique characterised by—

(a)

infrastructure intended to minimise network and other types of latencies, including at least one of the following facilities for algorithmic order entry—

(i)

co-location;

(ii)

proximity hosting; or

(iii)

high-speed direct electronic access;

(b)

system-determination of order initiation, generation, routing or execution without human intervention for individual trades or orders; and

(c)

high message intraday rates which constitute orders, quotes or cancellations;”;

(m) for the definition of “liquid market” substitute—

““liquid market” means a market for a financial instrument or a class of financial instruments, where there are ready and willing buyers and sellers on a continuous basis, assessed in accordance with the following criteria, taking into consideration the specific market structures of the particular financial instrument or of the particular class of financial instrument—

(a)

the average frequency and size of transactions over a range of market conditions, having regard to the nature and cycle of products within the class of financial instrument;

(b)

the number and type of market participants, including the ratio of market participants to traded instruments in a particular product;

(c)

the average size of spreads, where available;”;

(n) after the definition of “market contract”, insert the following definition—

““market operator” has the meaning given in Article 2(1)(10) of the markets in financial instruments regulation;”;

(o) for the definition of “matched principal trading” substitute—

““matched principal trading” means a transaction where the facilitator interposes itself between the buyer and the seller to the transaction in such a way that it is never exposed to market risk throughout the execution of the transaction, with both sides executed simultaneously, and where the transaction is concluded at a price where the facilitator makes no profit or loss, other than a previously disclosed commission, fee or charge for the transaction;”;

(p) in the definition of “multilateral system”, for “Article 4.1.19 of the markets in financial instruments directive” substitute “Article 2(1)(11) of the markets in financial instruments regulation”;

(q) for the definition of “multilateral trading facility” substitute—

““multilateral trading facility” means a UK multilateral trading facility within the meaning given in Article 2(1)(14A) of the markets in financial instruments regulation;”;

(r) after the definition of “the Northern Ireland Order”, insert—

““organised trading facility” means a UK organised trading facility within the meaning given in Article 2(1)(15A) of the markets in financial instruments regulation;

“qualifying credit institution” has the meaning given in section 417 of the Act, and for the purposes of that definition, “Part 4A permission” and “the regulated activity of accepting deposits” have the same meaning as in the Act;”;

(s) for the definition of “regulated market” substitute—

““regulated market” means a UK regulated market within the meaning of Article 2(1)(13A) of the markets in financial instruments regulation;”;

(t) for the definition of “senior management” substitute—

““senior management” means natural persons who exercise executive functions within an investment firm, a market operator or a data reporting services provider and who are responsible, and accountable to the management body, for the day-to-day management of the entity, including for the implementation of the policies concerning the distribution of services and products to clients by the firm and its personnel;”;

(u) for the definition of “SME growth market” substitute—

““SME growth market” means a multilateral trading facility that is registered as an SME growth market in accordance with Part 5.10 of the Market Conduct sourcebook;”;

(v) in the definition of “sovereign debt”, for “Article 4.1.61 of the markets in financial instruments directive” substitute “Article 2(1)(46) of the markets in financial instruments regulation”;

(w) in the definition of “structured finance products”, for “Article 4.1.48 of the markets in financial instruments directive” substitute “Article 2(1)(28) of the markets in financial instruments regulation”;

(x) in the definition of “systematic internaliser”, for “Article 4.1.20 in the markets in financial instruments directive” substitute “Article 2(1)(12) of the markets in financial instruments regulation”;

(y) in the definition of “third country firm”, for “Article 4.1.57 of the markets in financial instruments directive” substitute “Article 2(1)(42) of the markets in financial instruments regulation”;

(z) in the definition of “transferable securities”, for “Article 4.1.44 of the markets in financial instruments directive” substitute “Article 2(1)(24) of the markets in financial instruments regulation”;

(aa) omit the definition of “UK firm”.

(3) After paragraph (1A) insert—

“(1B) Any reference in these Regulations to a sourcebook is to a sourcebook in the Handbook of Rules and Guidance published by the FCA containing rules made by the FCA under the 2000 Act as the sourcebook has effect on exit day.”.

(1)

Regulation 3 was amended by S.I. 2006/3386, 2009/1853, 2013/472, 2013/504, 2013/1908, 2013/3115 and 2017/1064.