Financial Services and Markets Act 2000

[F1[F2313CBASignificant damage to investors’ interests or orderly functioning of marketU.K.

This section has no associated Explanatory Notes

(1)This section applies for the purposes of sections 313CA(3) and 313CB(3).

(2)The following are circumstances in which a suspension or removal from trading of a financial instrument could cause significant damage to the interests of investors or the orderly functioning of the market—

(a)where it would create a systemic risk undermining financial stability, such as where the need exists to unwind a dominant market position, or where settlement obligations would not be met in a significant volume;

(b)where the continuation of trading on the market is necessary to perform critical post-trade risk management functions when—

(i)as a result of the default of a clearing member there is a need for the liquidation of financial instruments under the default procedures of a central counterparty, and

(ii)a central counterparty would be exposed to unacceptable risks as a result of an inability to calculate margin requirements;

(c)where the financial viability of the issuer would be threatened, such as where it is involved in a corporate transaction or capital raising.

(3)In determining in any other circumstance whether a suspension or removal could cause significant damage to the interests of investors or the orderly functioning of the market, the FCA must have regard (among other things) to the following—

(a)the liquidity of the market concerned, taking account of the fact that the consequences of a suspension or removal are likely to be greater where the market is more liquid;

(b)the nature of the suspension or removal, where actions with a sustained or lasting impact on the ability of investors to trade a financial instrument on trading venues, such as removals, are likely to have a greater impact on investors than other actions;

(c)the knock-on effects of a suspension or removal on sufficiently related derivatives, indices or benchmarks for which the removed or suspended instrument serves as an underlying or constituent;

(d)the effects of a suspension on the interests of market end-users who are not financial counterparties, such as entities trading in financial instruments to hedge commercial risks.

(4)In this section—

  • “central counterparty” has the same meaning as in Part 18 (see section 313(1));

  • “clearing member”, in relation to a central counterparty, means an undertaking which participates in the central counterparty and which is responsible for discharging the financial obligations arising from that participation;

  • “financial counterparty” has the meaning given in Article 2(8) of Regulation (EU) 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories.]]

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