Statutory Instruments
2014 No. 2080
Banks And Banking
The Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014
Made 23rd July 2014
Coming into force in accordance with article 1(2) and (3)

In accordance with section 142Z of the Financial Services and Markets Act 2000, a draft of this Order has been laid before Parliament and approved by a resolution of each House of Parliament.
The Treasury make the following Order in the exercise of the powers conferred on them by sections 142D, 142E and 142F of the Financial Services and Markets Act 2000 .
2000 c. 8. Sections 142A to 142Z1 were inserted into the Act by the Financial Services (Banking Reform) Act 2013 (c.33), section 4.

PART 1 GENERAL

Citation, commencement and interpretation
1. (1) This Order may be cited as the Financial Services and Markets Act 2000 (Excluded Activities and Prohibitions) Order 2014.
(2) This article, articles 2 and 3 and the Schedule to this Order come into force on 1st January 2015.
(3) The other provisions of this Order come into force on 1st January 2019.
(4) In this Order—
“account holder” means any person, other than a relevant financial institution, who has an account with a ring-fenced body ;
“the Act” means the Financial Services and Markets Act 2000;
“alternative investment fund” has the meaning given in regulation 3 of the Alternative Investment Fund Managers Regulations 2013, but as if in paragraph (1)(b) of that regulation for “UK UCITS” there were substituted “UCITS;
“alternative investment fund manager” means a legal person whose regular business is managing one or more alternative investment funds;
“Annex 1 activities” has the meaning given in article 4.1(26A) of the prudential requirements regulation;
“building society” means a building society incorporated (or deemed to be incorporated) under the Building Societies Act 1986 ;
“capital market arrangement” has the meaning given in paragraph 1 of Schedule 2A to the Insolvency Act 1986 ;
“charity” has the meaning given in section 1 of the Charities Act 2011, section 1 of the Charities Act (Northern Ireland) 2008 or section 106 of the Charities and Trustee Investment (Scotland) Act 2005;
“CIO” means a body constituted and registered as a charitable incorporated organisation under Part 11 of the Charities Act 2011 or Part 11 of the Charities Act (Northern Ireland) 2008, or as a Scottish charitable incorporated organisation under Part 1 of the Charities and Trustee Investment (Scotland) Act 2005;
“commodity” means any goods of a fungible nature that are capable of being delivered including metals and their ores and alloys, agricultural products, and energy such as electricity;
“conduit vehicle” of a ring-fenced body means an undertaking which satisfies the conditions set out in article 17(2) for the relevant financial institution described as D;
“core deposit” has the meaning given in article 2(2) of the Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014;
“correspondent banking” means an arrangement between two or more payment service providers pursuant to which one payment service provider provides payment services to the clients of one or more other payment service providers on behalf of those other payment service providers;
“covered bond vehicle” means a body corporate, partnership or unincorporated association—
(a) which is a party to a capital market arrangement, or a transaction in pursuance of a capital market arrangement, and
(b) whose business consists (apart from incidental activities) only of—
(i) providing guarantees, and
(ii) acquiring, owning and managing assets directly or indirectly forming the whole or part of the security for a capital market arrangement;
“credit institution” has the meaning given in Article 4.1(1) of the prudential requirements regulation;
“credit institutions directive” means the Directive of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC ;
“credit union” means a credit union as defined by section 31 of the Credit Unions Act 1979 or a credit union as defined by Article 2(2) of the Credit Unions (Northern Ireland) Order 1985 ;
“debentures” include any investment of the kind specified by article 77 of the Regulated Activities Order 2001 ;
“default risk”, in relation to a ring-fenced body, means the risk that—
(a) one or more persons will default under a transaction with a ring-fenced body or with a subsidiary undertaking of the ring-fenced body or will become unlikely, unwilling or unable to pay or repay sums owing at law or in equity to the ring-fenced body or to a subsidiary undertaking of the ring-fenced body,
(b) an obligation to pay or repay sums owing at law or in equity to the ring-fenced body or to a subsidiary undertaking of the ring-fenced body will be restructured so as to reduce or postpone the payments due as principal, interest or fees resulting in a loss to the ring-fenced body or to its subsidiary undertaking, or
(c) the value of any security or collateral taken by the ring-fenced body or a subsidiary undertaking of the ring-fenced body in connection with one or more transactions entered into by the ring-fenced body or its subsidiary undertaking will be insufficient to meet the obligations of the counterparty to the transaction when the security is enforced or the collateral is sold;
and for the purposes of paragraph (b), “restructuring” includes restructuring through a voluntary arrangement made with creditors, by court order or through the exercise of powers under the Banking Act 2009 or in equivalent legislation in other countries)
“derivative instrument” includes any instruments within the meaning of article 2.1(29) of the markets in financial instruments regulation;
“exposure” means—
(a) an asset referred to in Part Three, Title II, Chapter 2 of the prudential requirements regulation, or
(b) an off-balance sheet item listed in Annex I to the prudential requirements regulation ,
OJ L 176, 27.6.2013, p1.
without applying the risk weights or degrees of risk set out in the prudential requirements regulation;
“financial conglomerate” means—
(a) a financial conglomerate within the meaning of regulation 1(2) of the Financial Conglomerates and Other Financial Groups Regulations 2004 (but disregarding any decision taken under Article 3(3) of the conglomerates directive as applied and modified by those Regulations), or
(b) a financial conglomerate within the meaning of Article 2.14 of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate (but disregarding any decision taken under Article 3(3) of that directive);
“financial holding company” means a financial institution which is not a mixed financial holding company, the subsidiary undertakings of which are either exclusively or mainly credit institutions, investment firms or financial institutions and which has at least one subsidiary undertaking which is a credit institution or investment firm, and for the purposes of this definition, a financial institution is an undertaking other than a credit institution, the principal activity of which is to acquire holdings or to pursue one or more of the activities listed in points 2 to 12 and 15 of the Annex 1 activities;
“financial institution exposure” means an exposure to a relevant financial institution or an exposure to securities or other financial instruments issued by a relevant financial institution, but does not include an exposure where the sole or main purpose for which the ring-fenced body incurs the exposure to the relevant financial institution is to provide for—
(a) the safeguarding and administration of assets of the ring-fenced body by that financial institution, or
(b) client money or client assets to be held for the ring-fenced body by that relevant financial institution;
“financial year” has the meaning given in article 1(3) of the Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014;
...
“instruments giving an entitlement to shares or debentures” includes any instrument of the kind specified by article 79 (instruments giving entitlements to investments) of the Regulated Activities Order 2001 which relates to shares or, as the case may be, debentures;
...
“inter-bank payment system” means arrangements which are—
(a) a payment system as defined in section 182 of the Banking Act 2009, and
(b) designed to facilitate or control the transfer of money between banks and building societies which participate in the arrangements,
(and see article 13(11) for further provision as to the meaning of inter-bank payment system in that article);
“interest rate swap” has the meaning given in article 10(2)(c);
“liquid assets” means assets which qualify towards the liquidity coverage requirement provided for in Article 412 of Chapter 4 (Liquidity (Part Six CRR)) of the Liquidity (CRR) Part of the PRA Rulebook as further specified in Chapter 2 (Rules on standards for the liquidity coverage requirement for credit institutions) of the Liquidity Coverage Ratio (CRR) Part of the PRA Rulebook;
“liquidity risk” means the risk that the undertaking does not have, or is unable to obtain, sufficient financial resources to enable it to meet its financial obligations as they fall due;
“longevity risk” means that risk that a person to whom an undertaking has loaned money dies later than anticipated by the undertaking at the time when the loan was agreed;
“management company” means—
(a) an undertaking, within the meaning of section 1161 of the Companies Act 2006, whose regular business is the management of UK UCITS, or
(b) a company within the meaning of Article 2.1(b) of the UCITS directive;
“mixed financial holding company” means an undertaking which is not a credit institution, an insurance undertaking ... or an investment firm, which has at least one subsidiary undertaking which is a credit institution, an insurance undertaking ... or an investment firm and which, together with its subsidiary undertakings, constitutes a financial conglomerate ...
“mortality risk” means the risk that a person to whom an undertaking has loaned money dies earlier than anticipated by the undertaking at the time when the loan was agreed;
“own funds” means own funds as defined in Article 4.1(118) of the prudential requirements regulation;
“participating interest” has the meaning given in section 421A of the Act;
“payment exposures” means—
(a) in the case of foreign exchange transactions, exposures incurred in the ordinary course of settlement;
(b) in the case of transactions for the purchase or sale of securities, exposures incurred in the ordinary course of settlement;
(c) exposures arising from the provision of money transmission including—
(i) the execution of payment services,
(ii) clearing and settlement in any currency, and
(iii) correspondent banking; and
(d) exposures incurred by the ring-fenced body to satisfy a condition required for participation by it in an inter-bank payment system ... or in the services provided by a recognised clearing house ... , a third country central counterparty, a recognised CSD... or a third country CSD provided that such exposures are only to a relevant financial institution which is ... a member or operator of the inter-bank payment system or a member of the relevant recognised clearing house..., third country central counterparty, recognised CSD... or third country CSD;
Words in art. 1(4) omitted (30.11.2017) by virtue of The Banking Act 2009 (Service Providers to Payment Systems) Order 2017 (S.I. 2017/1167), arts. 1(2), 5(2)(b)
Defined in section 285(1)(b) of the Act. Paragraphs (b) to (d) of section 285(1) were substituted for the original paragraphs by S.I. 2013/504.
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(k)(i) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 41(2)(a) (with regs. 7(4), 9(1))
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(k)(ii) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Word in art. 1 omitted (1.12.2016) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(2)(e)
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(k)(iii) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) substituted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 41(2)(b) (with regs. 7(4), 9(1))
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(k)(iv) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
“payment service provider” means—
(a) a payment service provider as defined by regulation 2(1) of the Payment Services Regulations 2017, or
(b) an undertaking which—
(i) performs similar functions to an undertaking listed in paragraphs (a) to (g) of that definition,
(ii) carries out payment services, and
(iii) has a registered office or head office outside the United Kingdom;
“payment services” has the same meaning as in regulation 2(1) of the Payment Services Regulations 2017;
“prudential requirements regulation” means the Regulation of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms ;
“Regulated Activities Order 2001” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;
“related undertaking means—
(a) any subsidiary undertaking of a parent undertaking, other than a subsidiary undertaking that is a ring-fenced body, or
(b) any undertaking in which a parent undertaking or a subsidiary undertaking of a parent undertaking has a participating interest, other than an undertaking which is a ring-fenced body,
where the parent undertaking is subject to rules made by the appropriate regulator pursuant to section 192JA of the Act;
...
“relevant financial institution” has the meaning given in article 2;
“securitisation undertaking” has the meaning given in article 3(1)(a);
“securities” means, any investments of the kind specified by any of articles 76 to 82 of the Regulated Activities Order 2001 , or so far as relevant to any such investment, article 89 of that Order ;
“security interest” means any legal or equitable interest created or otherwise arising by way of security including—
(a) a pledge,
(b) a mortgage,
(c) a fixed charge,
(d) a floating charge,
(e) a lien;
“sell”, in relation to any investment, includes disposing of the investment for valuable consideration, and for these purposes “disposing of” includes—
(a) in the case of an investment consisting of rights under a contract—
(i) surrendering, assigning or converting those rights, or
(ii) assuming the corresponding liabilities under the contract,
(b) in the case of an investment consisting of other arrangements, assuming the corresponding liabilities under the arrangements,
(c) in the case of any other investment, issuing or creating the investment or granting the rights or interests of which it consists;
“shares” include any investment of the kind specified by article 76 of the Regulated Activities Order 2001;
“SME” means an undertaking which satisfies the condition in paragraph (6);
...
“sponsored structured finance vehicle” means a structured finance vehicle which satisfies the conditions in article 3(2);
“structured finance vehicle” means a securitisation undertaking or a covered bond vehicle;
...
...
“title transfer collateral arrangement” means an agreement or arrangement, including a repurchase agreement, evidenced in writing, where—
(a) the collateral provider transfers legal and beneficial ownership in the collateral to a collateral-taker on terms that when the relevant financial obligations are discharged the collateral-taker must transfer legal and beneficial ownership of the collateral (or equivalent collateral) to the collateral provider, and
(b) the purpose of the agreement or arrangement is to secure or otherwise cover the relevant financial obligations owed to the collateral-taker;
“UCITS” has the meaning given in section 236A of the Act;
“UK deposit-taker” means a body corporate incorporated in the United Kingdom which carries on the regulated activity of accepting deposits in relation to which it has a permission under Part 4A of the 2000 Act;
“UK UCITS” has the meaning given in section 237(3) of the Act;
“undertaking” includes a company, body corporate, partnership or unincorporated association.
“Ring-fenced body” is defined in section 142A of the Act.
Words in art. 1(4) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(a) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(b) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) inserted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(c) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
1986 c. 53.
1986 c.45. Schedule 2A was inserted by the Enterprise Act 2002 (c.40) s. 250(2) and Schedule 18. Paragraph 1 of that Schedule was amended by SI 2003/1468.
Words in art. 1 inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(2)(a)
Words in art. 1 inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(2)(b)
Words in art. 1(4) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(i)
Directive 2013/36/EU, OJ L 174 27.6.2013, p338.
1979 c. 34. Section 31 has been amended by the Co-operative and Community Benefit Societies and Credit Unions Act 2010 (c.7), section 2.
S.I. 1985/1205 (N.I. 12).
SI 2001/544. Article 77 was amended by S.I. 2010/86; 2011/133.
Words in art. 1(4) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(d) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) inserted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(e) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(f) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(ii)
Words in art. 1(4) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(iii)
Article 79 of the Regulated Activities Order 2001 was amended by S.I. 2010/86.
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(g) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) inserted (30.11.2017) by The Banking Act 2009 (Service Providers to Payment Systems) Order 2017 (S.I. 2017/1167), arts. 1(2), 5(2)(a)
Words in art. 1(4) substituted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 18(2)
Words in art. 1 substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(2)(d)
Words in art. 1(4) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(iv)
Words in art. 1(4) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(i) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) omitted (31.12.2024) by virtue of The Insurance and Reinsurance Undertakings (Overseas Insurance Regime, Transitional Provisions, etc.) Regulations 2024 (S.I. 2024/1116), regs. 1(2), 2(b)
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(j)(ii) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(v)
Words in art. 1(4) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(vi)
Words in art. 1(4) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(vii)
Year in art. 1(4) substituted (13.1.2018) by The Payment Services Regulations 2017 (S.I. 2017/752), reg. 1(6), Sch. 8 para. 18 (with reg. 3)
Regulation (EU) No 575/2013/EU, OJ L 176, 27.6.2013, p1.
S.I. 2001/544.
Words in art. 1(4) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(viii)
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(l) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
These articles were amended by S.I 2006/1969; 2010/86; 2011/133; 2011/2687, and article 77A was inserted by S.I. 2010/86.
Article 89 was amended by S.I. 2006/2383.
Words in art. 1(4) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(a)(ix)
Words in art. 1(4) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(m) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1(4) omitted (31.12.2024) by virtue of The Insurance and Reinsurance Undertakings (Overseas Insurance Regime, Transitional Provisions, etc.) Regulations 2024 (S.I. 2024/1116), regs. 1(2), 2(c)
Words in art. 1(4) omitted (31.12.2024) by virtue of The Insurance and Reinsurance Undertakings (Overseas Insurance Regime, Transitional Provisions, etc.) Regulations 2024 (S.I. 2024/1116), regs. 1(2), 2(d)
Words in art. 1(4) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(p) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Words in art. 1 inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(2)(g)
Words in art. 1(4) inserted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(2)(q) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(5) For the purposes of the definition of “liquid assets” in paragraph (4), “PRA Rulebook” means the rulebook published by the PRA containing rules made by that Authority under the Act as that rulebook has effect from time to time.
Art. 1(5) inserted (1.1.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2021 (S.I. 2021/1376), regs. 1(3), 18(3)
Words in art. 1(5) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(b)
(6) Subject to paragraphs (7), (8) and (9), an undertaking is an SME for the purposes of this Order—
(a) where the undertaking is not a member of a group, if the turnover for the undertaking in the relevant financial year was less than or equal to £50 million,
(b) where—
(i) the undertaking is a member of a group, and
(ii) the undertaking is included in the consolidated group accounts of that group for the relevant financial year,
if the turnover included in the consolidated group accounts for that financial year is less than or equal to £50 million, or
(c) where the undertaking is a member of a group and either—
(i) the group did not produce consolidated group accounts for the relevant financial year, or
(ii) the undertaking is not included in the consolidated group accounts of that group for that financial year,
if the sum of the turnover of each undertaking in the group for the relevant financial year of the undertaking concerned is less than or equal to £50 million.
Art. 1(6)-(10) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(1)(c)
(7) Where an undertaking has existed for less than one financial year, the maximum figure for turnover in paragraph (6)(a) is to be proportionately reduced.
(8) Where no undertaking in a group has existed for more than one financial year, the maximum figure for turnover in paragraph (6)(c) is to be reduced in proportion to the period for which the oldest undertaking in that group has existed.
(9) An undertaking does not cease to be an SME unless it exceeds one of the thresholds in paragraph (6) for two consecutive financial years, and for these purposes the threshold exceeded need not be the same in both financial years.
(10) For the purposes of paragraph (6)—
“included in the consolidated group accounts” is to be construed in accordance with section 474(1) of the Companies Act 2006;
“relevant financial year”—
(a) in relation to an undertaking, means—
(i) the last completed financial year for which accounts are available, or
(ii) where the undertaking has existed for less than one financial year, the period for which the undertaking has existed, and
(b) in relation to a group, means—
(i) the last completed financial year of the parent undertaking of the group for which accounts are available, or
(ii) where the parent undertaking of the group has existed for less than one financial year—
(aa) if a majority of undertakings in the group have the same financial year, the last completed financial year of that majority for which accounts are available, or
(bb) in any other case, the most recently completed financial year of any undertaking in the group for which accounts are available, or
(iii) where no undertaking in the group has existed for at least a full financial year, the period for which the oldest undertaking in the group has existed;
“turnover”, in relation to an undertaking, means the amounts derived from the provision of goods and services (“the gross receipts”), after deduction of—
(a) trade discounts,
(b) value added tax, and
(c) any other taxes based on the gross receipts.

Relevant financial institution
2. (1) For the purposes of this Order, a “relevant financial institution” is an institution which falls within one of the classes listed in paragraph (2), and which is not within one of the exceptions set out in paragraph (3).
(2) The classes are—
(a) credit institutions;
(b) investment firms;
(c) structured finance vehicles;
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Art. 2(2)(d) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(2)(a)
(e) UCITS (wherever established) and alternative investment funds;
(f) management companies or alternative investment fund managers; and
(g) financial holding companies and mixed financial holding companies.
(3) The exceptions are—
(a) ring-fenced bodies;
(b) building societies;
(c) bodies corporate—
(i) whose purpose, or principal purpose, is that of making loans which are secured on residential property and which are funded substantially by their members, ...
Word in art. 2(3)(c)(i) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(2)(b)(i)(aa)
(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Art. 2(3)(c)(ii) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(2)(b)(i)(bb)
(d) credit unions and other institutions referred to in Article 2.5 of the credit institutions directive (other than investment firms);
(e) recognised clearing houses ... and third country central counterparties ;
Words in art. 2(3)(e) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(3)(b) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Defined in section 285(1)(d) of the Act.
(ea) recognised CSDs... and third country CSDs;
Art. 2(3)(ea) inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 41(3) (with regs. 7(4), 9(1))
Words in art. 2(3)(ea) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(3)(c) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(f) investment firms which are not authorised to carry on by way of business (in the United Kingdom or the EEA) the activities specified by either article 14 (dealing in investments as principal) or article 21 (dealing in investments as agent) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;
S.I. 2001/544. Article 14 was amended by S.I. 2006/3384. Article 21 was amended by S.I. 2003/1476; 2006/3384.
(g) a credit institution which is a UK institution or an undertaking located in an EEA state, and which is not permitted—
(i) to carry on any excluded activities (and for these purposes “excluded activities” do not include anything which does not fall within the definition of excluded activities in relation to a ring-fenced body by virtue of articles 4 to 12 of this Order) or
(ii) to do anything that a ring-fenced body is prohibited from doing under articles 14 to 19C of this Order,
Words in art. 2(3)(g)(ii) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(2)(b)(ii)
by reason of requirements, limitations or other conditions imposed on the credit institution by the FCA or the PRA or (in the case of an undertaking located in an EEA state) by its home state regulator; or by EU law or the national law to which the credit institution is subject;
Words in art. 2(3)(g) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(3)(d) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(ga) an institution referred to in paragraph (2)(b), (e), (f) or (g) which is an SME;
Art. 2(3)(ga) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(2)(b)(iii)
(h) each of the institutions listed in the Schedule to this Order.

Securitisation companies and structured finance vehicles: definitions
3. (1) In this Order—
(a) “securitisation undertaking” means—
(i) an asset holding company,
(ii) a commercial paper funded company,
(iii) an intermediate borrowing company,
(iv) a note-issuing company, or
(v) a warehouse company; and
(b) “asset holding company”, “commercial paper funded company”, “intermediate borrowing company”, “note-issuing company” and “warehouse company” means a company of the kind mentioned in paragraph (a), (b), (c), (d) or (e) of section 83(2) of the Finance Act 2005 or in paragraph (a), (b), (c), (d) or (e) of regulation 4(2) of the Taxation of Securitisation Companies Regulations 2006 , except that for these purposes—
(i) “company” includes any body corporate, partnership or unincorporated association, and
(ii) the requirements in section 83(3)(b) of the Finance Act 2005 and regulation 5(3) of the Taxation of Securitisation Companies Regulations 2006 shall not apply.
2005 c. 7. Section 83 has been amended by the Finance Act 2006 (c.25), s.101; the Finance 2007 (c.11), s. 59 and the Corporation Tax Act 2009 (c.4), schedule 1, Part 2, paragraphs 648, 662.
S.I. 2006/3296.
(2) For the purposes of this Order, a structured finance vehicle is a sponsored structured finance vehicle of a ring-fenced body where the only assets held by the structured finance vehicle consist of any of—
(a) money provided by the ring-fenced body , another ring-fenced body which is a member of the group of companies to which the first ring-fenced body belongs (a “group ring-fenced body”), or a subsidiary of either ring-fenced body;
Words in art. 3(2)(a) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(3)
(b) assets, or an interest in assets, created by, acquired by, ... or comprising claims against, any one or more of the following—
(i) the ring-fenced body or a group ring-fenced body,
Words in art. 3(2)(b)(i) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(b)
(ii) a securitisation undertaking, provided that the only assets held by the securitisation undertaking are assets created ...by or acquired by the ring-fenced body , a group ring-fenced body or any of their subsidiary undertakings (provided that the assets concerned are assets that a ring-fenced body could hold), and assets within sub-paragraphs (c) to (h) below,...
Words in art. 3(2)(b)(ii) omitted (1.12.2016) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(a)(ii)(aa)
Words in art. 3(2)(b)(ii) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(c)(i)
Words in art. 3(2)(b)(ii) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(c)(ii)
Words in art. 3(2)(b)(ii) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(a)(ii)(bb)
Words in art. 3(2)(b)(ii) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(c)(iii)
Word in art. 3(2)(b)(ii) omitted (1.12.2016) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(a)(ii)(cc)
(iii) a subsidiary undertaking of the ring-fenced body or of a group ring-fenced body, provided that the assets concerned are assets which a ring-fenced body could hold , or
Words in art. 3(2)(b)(iii) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(d)(i)
Words in art. 3(2)(b)(iii) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(d)(ii)
Word in art. 3(2)(b)(iii) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(a)(iii)
(iv) a member of the group of companies to which the ring-fenced body (“A”) or a group ring-fenced body (“B”) belongs (other than one falling within paragraph (i), (ii) or (iii)) provided that—
(aa) the assets concerned were created or acquired no later than two years before A or B became a ring-fenced body,
Words in art. 3(2)(b)(iv)(aa) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(e)(ii)
Words in art. 3(2)(b)(iv)(aa) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(e)(iii)
(bb) the assets were transferred to the structured finance vehicle before A or B became a ring-fenced body, and
Words in art. 3(2)(b)(iv)(bb) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(e)(iii)
(cc) the assets concerned are assets that a ring-fenced body could hold;
Words in art. 3(2)(b)(iv)(cc) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(e)(iv)
Art. 3(2)(b)(iv) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(a)(iv)
Words in art. 3(2)(b)(iv) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(e)(i)
Words in art. 3(2)(b) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 8(4)(a)
Words in art. 3(2)(b) omitted (1.12.2016) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(a)(i)
(c) liquid assets, investments or facilities acquired by or made available to the structured finance vehicle to enable it to limit the extent to which its business may be adversely affected by any of the factors referred to in article 6(2);
(d) sums lent by the structured finance vehicle in connection with a capital market arrangement;
(e) rights arising under derivative instruments entered into with any person for the purpose of the protection of the structured finance vehicle against any difference between any rate, index or price and any other rate, index or price;
(f) rights arising under contracts with the ring-fenced body or with any other person for the provision of services to, or in connection with the transfer of assets to, the structured finance vehicle;
Words in art. 3(2)(f) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(b)
(g) rights arising under a contract with another sponsored structured finance vehicle of the ring-fenced body;
(ga) assets, or an interest in assets, that—
(i) were created by, or comprised of claims against, a company outside the group of companies to which the ring-fenced body (“B”) belongs,
(ii) were transferred to the structured finance vehicle from—
(aa) B,
(bb) a subsidiary undertaking of B, or
(cc) any other member of the group of companies to which B belongs,
(iii) were acquired by the company from which the transfer was made no later than two years before B became a ring-fenced body,
(iv) in the case of assets transferred by a company falling within paragraph (ii)(cc), were transferred to the structured finance vehicle before B became a ring-fenced body, and
(v) are assets that B itself could hold;
Art. 3(2)(ga)-(gd) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(c)
(gb) assets that—
(i) have at any time been transferred to the ring-fenced body pursuant to a ring-fencing transfer scheme within the meaning of section 106B of the Act, and
(ii) are assets that the ring-fenced body itself could hold;
(gc) assets, or an interest in assets, that were—
(i) created or owned at any time by—
(aa) a company (“C”) in respect of which an order has been made under the Banking (Special Provisions) Act 2008, or
(bb) a subsidiary undertaking of C (“D”), and
(ii) transferred to the structured finance vehicle from C or D pursuant to any agreement for that purpose, whether directly or through an intermediary—
(aa) at a time when all of the shares in C were owned by a nominee of the Treasury or a company wholly owned by the Treasury,
(bb) in the case of assets created or owned by D, at a time when D was a subsidiary undertaking of C,
(cc) in connection with a capital market arrangement to which the structured finance vehicle was a party, and
(dd) where the capital market arrangement referred to in sub-paragraph (cc) was established to finance, wholly or in part, the consideration payable to C or D in connection with the transfer of the relevant assets;
(gd) assets, or an interest in assets, that—
(i) have at any time been subject to any transfer effected pursuant to Part 1 of the Banking Act 2009, and
(ii) are assets that the ring-fenced body itself could hold;
(h) sums derived from any of the assets referred to in sub-paragraphs (a) to (gd) above, including rights in relation to any current account, payment account or deposit account to which such sums are credited or paid.
Words in art. 3(2)(h) substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(3)(d)

PART 2 EXCLUDED ACTIVITIES AND EXCEPTIONS

Excluded activities: dealing in investments as principal
4. The activity of dealing in investments as principal described in article 14 of the Regulated Activities Order 2001 is an excluded activity even where it is not a regulated activity by virtue of articles 15, 19 or 20 of that Order, except where it is carried on in accordance with any of articles 6 to 12 of this Order.

Excluded activities: commodities trading
5. (1) Dealing in commodities is an excluded activity, except where it is carried on in accordance with this article, or any of articles 6, 8, 9, 10, 11 and 12.
(2) A ring-fenced body may deal in commodities where the commodities in question are required for its own use or consumption or for use or consumption by a subsidiary undertaking of the ring-fenced body.
(3) A ring-fenced body may deal in commodities in order—
(a) to take a security interest over those commodities or to realise a security interest held over those commodities (including by selling the commodities), or
(b) to enter into a title transfer collateral arrangement in relation to commodities, or acquire and hold equivalent commodities in accordance with the arrangement or enforce that arrangement (including by selling the commodities which are subject to that arrangement).
(4) For the purposes of this article, “dealing” means buying or selling commodities as principal.

Excluded activities: general exceptions
6. (1) A ring-fenced body does not carry on an excluded activity by entering into a transaction with another person (including a structured finance vehicle) if the sole or main purpose for which the ring-fenced body entered into the transaction, either by itself or in combination with other transactions, is that of limiting the extent to which—
(a) the ring-fenced body,
(b) any subsidiary undertaking of the ring-fenced body,
(ba) another ring-fenced body within the same group as the ring-fenced body,
Art. 6(1)(ba)(bb) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(4)(a)(i)
(bb) a related undertaking within the same group as the ring-fenced body,
(bc) any undertaking in which the ring-fenced body has a participating interest,
Art. 6(1)(bc) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(a)
(c) any sponsored structured finance vehicle of the ring-fenced body,
(d) any conduit vehicle of the ring-fenced body, or
(e) any combination of the undertakings referred to in sub-paragraphs (a), (b), (ba), (bb), (c) and (d),
Words in art. 6(1)(e) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(4)(a)(ii)
will be adversely affected by any of the factors specified in paragraph (2).
(2) The factors specified in this paragraph are—
(a) changes in interest rates, exchange rates or commodity prices;
(b) changes in any index of retail prices or of residential or commercial property prices;
(c) changes in any index of the price of shares;
(d) default risk;
(e) liquidity risk;
(f) longevity risk;
Art. 6(2)(f)(g) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(b)
(g) mortality risk.
(3) A ring-fenced body does not carry on an excluded activity by—
(a) buying, selling or subscribing for investments which are liquid assets for the purpose of managing its liquidity, or
(b) buying or subscribing for investments to provide collateral in connection with a transaction falling within paragraph (1), or selling investments acquired for that purpose.
(4) A ring-fenced body does not carry on an excluded activity by—
(a) acquiring shares, debentures or instruments giving an entitlement to shares or debentures from an issuer where—
(i) the shares, debentures or instruments concerned are issued by the issuer, and
(ii) the consideration for the acquisition is the release by the ring-fenced body or by a subsidiary undertaking of the ring-fenced body of part or all of a debt owed by the issuer or by another undertaking within the same group as that issuer to the ring-fenced body or the subsidiary undertaking of the ring-fenced body;
(aa) acquiring shares, debentures or instruments giving an entitlement to shares or debentures from an issuer where—
(i) the shares, debentures or instruments concerned are issued by the issuer,
(ii) the acquisition of the shares, debentures or instruments concerned is undertaken as part of a restructuring of debt owed by the issuer or another undertaking (“the debtor”) to the ring-fenced body or a subsidiary undertaking of the ring-fenced body,
(iii) the restructuring is undertaken when the debtor has encountered, or is likely to encounter, financial difficulties which may affect their ability to carry on business as a going concern, and
(iv) the purpose of the restructuring is to prevent or mitigate the effect of those financial difficulties;
Art. 6(4)(aa)-(ac) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(c)
(ab) acquiring shares or debentures from an issuer through the exercise of rights granted in an instrument giving an entitlement to such shares or debentures where the acquisition of that instrument is permitted under sub-paragraph (a) or (aa);
(ac) acquiring further shares issued by an issuer whose shares they have acquired pursuant to sub-paragraph (a), (aa) or (ab) provided that the ring-fenced body does not acquire more shares in the new issue than are required to maintain the percentage of its shareholding in the issuer;
(b) dealing in—
(i) debentures or instruments giving an entitlement to shares or debentures issued by the ring-fenced body or by a subsidiary of the ring-fenced body, or
(ii) debentures issued by a parent undertaking of the ring-fenced body;
Defined in section 420 of the Act. Section 420(1) was amended by S.I. 2008/948.
(c) acquiring a debenture where—
(i) the debenture is acquired from the issuer, and
(ii) the debenture relates to any loan, credit, guarantee or other similar financial accommodation made by the ring-fenced body or a subsidiary undertaking of the ring-fenced body to the issuer or to an undertaking in the same group as the issuer;
(d) acquiring shares in a company—
(i) which is, or following such acquisition becomes, a subsidiary undertaking of the ring-fenced body, or
(ii) in which the ring-fenced body has, or following the acquisition will have, a participating interest .
Defined in section 421A of the Act. Section 421A was inserted by S.I. 2008/948.
(e) acquiring shares in—
(i) the operator of an inter-bank payment system ...where ownership of such shares is a condition of participation in the inter-bank payment system operated by that operator;
Words in art. 6(4)(e) omitted (30.11.2017) by virtue of The Banking Act 2009 (Service Providers to Payment Systems) Order 2017 (S.I. 2017/1167), arts. 1(2), 5(3)
(ii) a company whose principal business is the provision of electronically transmitted secure financial messaging services; ...
Word in art. 6(4)(e)(ii) omitted (28.11.2017) by virtue of The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 41(4)(a) (with regs. 7(4), 9(1))
(iii) a recognised clearing house... or a third country central counterparty where ownership of such shares is a condition of membership of any such body; or
Words in art. 6(4)(e)(iii) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(4)(a) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Art. 6(4)(e)(iv) and preceding word inserted (28.11.2017) by The Central Securities Depositories Regulations 2017 (S.I. 2017/1064), reg. 1, Sch. para. 41(4)(b) (with regs. 7(4), 9(1))
(iv) a recognised CSD, an EEA CSD or a third country CSD where ownership of such shares is a condition of membership of any such body;
Art. 6(4)(e)(f) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(4)(b)
(f) dealing in investments as principal in order to comply with an obligation imposed upon it by a recognised clearing house ... pursuant to Article 37 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.
Words in art. 6(4)(f) omitted (31.12.2020) by virtue of The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(4)(b) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(5) A ring-fenced body does not carry on an excluded activity by
(a) selling shares, debentures or instruments giving an entitlement to shares or debentures acquired or held by the ring-fenced body in accordance with paragraph (4)(a), , (aa), (ab), (ac),(b), (d), (e) or (f)
Words in art. 6(5) renumbered as art. 6(5)(a) (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(d)(i)
Words in art. 6(5)(a) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(d)(ii)
Words in art. 6(5) substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(4)(c)
(b) selling debentures acquired or held by the ring-fenced body in accordance with paragraph (4)(c), provided that the debenture is sold together with the loan, credit, guarantee or other similar financial accommodation referred to in paragraph (4)(c)(ii) to which the debenture relates.
Art. 6(5)(b) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(d)(iii)
(6) A ring-fenced body does not carry on an excluded activity by—
(a) taking or granting a security interest over investments, or realising a security interest held over investments (including selling the investment over which the security is held), or
(b) entering into a title transfer collateral arrangement in relation to investments, acquiring equivalent investments in accordance with the arrangement or enforcing the arrangement (including by selling the investments which are subject to that arrangement).
(7) A ring-fenced body does not carry on an excluded activity by dealing in investments as principal when acting as trustee or in Scotland, as a nominee, for or on behalf of any individual, minor, charity or CIO.
Art. 6(7) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(4)(d)
Words in art. 6(7) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(e)
(8) A ring-fenced body does not carry on an excluded activity by dealing in investments as principal—
(a) to remedy or prevent the failure of a transaction which it has or would have entered into as agent for a customer where the failure is or would have been due to a systems or operating error, provided that the investment concerned can be allocated to the customer and is so allocated as soon as practicable after the transaction, or
(b) to remedy a trade made by the ring-fenced body—
(i) as agent for a customer, and
(ii) as a result of an error of the ring-fenced body.
Art. 6(8)-(10) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(1)(f)
(9) A ring-fenced body does not carry on an excluded activity by dealing in investments as principal where—
(a) the ring-fenced body proposes to—
(i) launch a new product or service, or
(ii) make changes to an existing product or service,
(b) the ring-fenced body enters into a transaction to buy or sell a relevant security as principal,
(c) the only purpose of the transaction is to test the new or changed product or service, and
(d) the transaction concerns—
(i) a single relevant security, or
(ii) if it is not possible to buy or sell a single unit of the relevant security in question, the minimum amount of the relevant security which it is possible to buy or sell.
(10) In paragraph (9), “relevant security” means a security or contractually based investment, other than investments specified by article 87 or 89 of the Regulated Activities Order 2001, and for these purposes, “contractually based investment” has the meaning given in article 3(1) of the Regulated Activities Order 2001.

Excluded activities: securitisation and covered bonds
7. (1) A ring-fenced body does not carry on an excluded activity by selling investments to or buying investments from a sponsored structured finance vehicle of the ring-fenced body, or from a conduit vehicle of the ring-fenced body.
(2) A ring-fenced body does not carry on an excluded activity by acquiring any instrument creating or acknowledging indebtedness issued by one or more of its sponsored structured finance vehicles or its conduit vehicles.
Words in art. 7(2) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(2)
(3) Subject to the condition in paragraph (4) being met, a ring-fenced body does not carry on an excluded activity by selling any legal or beneficial interest in—
(a) investments acquired from a sponsored structured finance vehicle of the ring-fenced body, or
(b) instruments creating or acknowledging indebtedness issued by a sponsored structured finance vehicle of the ring-fenced body.
Art. 7(3)(4) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(5)
(4) The condition referred to in paragraph (3) is that the relevant investments or instruments must relate to assets that fall within the description set out in article 3(2)(gc).

Excluded activities: SME exception
7A. (1) A ring-fenced body does not carry on an excluded activity by entering into a transaction to—
(a) acquire or dispose of shares in a UK SME, provided that the ring-fenced body only has a minority interest in the UK SME concerned,
(b) invest in an SME investment undertaking by acquiring an interest in the SME investment undertaking, or disposing of that interest, provided that—
(i) the interest is not a debt instrument issued by the SME investment undertaking, and
(ii) where the SME investment undertaking is an investment company, the ring-fenced body only has a minority interest in the SME investment undertaking concerned, or
(c) acquire, dispose of or exercise rights under instruments giving an entitlement to shares issued by a UK SME in consideration or part consideration for a loan made by the ring-fenced body to the UK SME.
(2) Paragraph (1) does not apply unless the sum of the value of relevant investments held by the ring-fenced body does not exceed ten per cent of the value of the tier 1 capital of the ring-fenced body on a sub-consolidated basis where this is required under the prudential requirements regulation, and otherwise on an individual basis, for a continuous period of twelve months, and for these purposes—
(a) “relevant investments” means—
(i) shares, instruments giving an entitlement to shares or other interests acquired by the ring-fenced body under paragraph (1), and
(ii) shares in a UK SME acquired by the ring-fenced body under article 6(4)(d),
but does not include any shares in a UK SME during any time in which the UK SME is a subsidiary undertaking of the ring-fenced body, or in which the ring-fenced body has a participating interest in the UK SME;
(b) the value of relevant investments is their fair value, assessed in accordance with International Financial Reporting Standard 13 (fair value measurement) issued by the International Accounting Standards Board in May 2011, as amended from time to time;
(c) tier 1 capital has the meaning given in Article 25 of the prudential requirements regulation, and the value of the tier 1 capital of the ring-fenced body on an individual basis or a sub-consolidated basis, as applicable, is to be calculated in accordance with the prudential requirements regulation;
(d) references to holding capital on a sub-consolidated basis are to be interpreted in accordance with Article 4(1)(49) of the prudential requirements regulation.
(3) For the purposes of paragraph (1)(b), investing in an SME investment undertaking includes—
(a) the acquisition of shares or other interests issued by a parent undertaking of an SME investment undertaking, provided that the ring-fenced body only has a minority interest in that parent undertaking;
(b) the acquisition of an interest in a feeder scheme of an SME investment undertaking, provided that any master scheme in which the feeder scheme invests complies with all the conditions set out in paragraph (4).
(4) For the purposes of paragraph (3)(b), a “feeder scheme” means a collective investment scheme, which—
(a) invests at least 85% of the total property which is subject to the collective investment scheme in units or shares of—
(i) a single collective investment scheme (a “master scheme”), or
(ii) two or more master schemes which each have identical investment strategies, or
(b) has an exposure of at least 85% of its assets to such a master scheme.
(5) In this article, an “SME investment undertaking” means an eligible undertaking which satisfies all the following conditions—
(a) it has an investment strategy of investing at least 50% of its investment capital in UK SMEs;
(b) it does not at any time invest more than 50% of its investment capital in enterprises which are not UK SMEs;
(c) it does not have an investment strategy of investing in other eligible undertakings.
(6) For the purposes of this article—
(a) the “investment capital” of an eligible undertaking which is a collective investment scheme, or the sub-fund of a collective investment scheme, is the sum of—
(i) the capital which investors have provided for investment by the collective investment scheme, and
(ii) the capital which investors may be required to provide for such investment under the terms of their investment in the collective investment scheme,
after the deduction of all fees, charges and expenses which are directly or indirectly borne by investors and which are agreed between the manager of the collective investment scheme and the investors;
(b) the “investment capital” of an eligible undertaking which is an investment company is the sum of the assets of the investment company after the deduction of all fees, charges and expenses which are directly or indirectly borne by investors and which are agreed between the manager of the investment company and the investors;
(c) a ring-fenced body has a “minority interest” in an undertaking if—
(i) it does not hold a majority of the voting rights in that undertaking,
(ii) it is a member of the undertaking, but does not control alone, pursuant to an agreement with other members of the undertaking, a majority of the voting rights in that undertaking,
(iii) it is a member of the undertaking, but does not have the right to appoint or remove a majority of the board of directors, or equivalent management body, of that undertaking, and
(iv) it does not have the right to exercise, nor actually exercises, dominant influence or control over that undertaking.
(7) Schedule 7 to the Companies Act 2006 (parent and subsidiary undertakings: supplementary provisions) applies for the interpretation of paragraph (6)(c).
(8) In this article—
“debt instrument” is—
(a) a bond,
(b) any other instrument creating or acknowledging a debt, or
(c) an instrument giving rights to acquire a debt instrument;
“eligible undertaking” means—
(a) a collective investment scheme,
(b) the sub-fund of a collective investment scheme which is structured with a number of separate sub-funds, provided that the property subject to that sub-fund cannot be used to discharge any liabilities of, or meet any claims against, any person other than the participants in that sub-fund, and for the purposes of this sub-paragraph, “sub-fund” has the meaning given in section 90ZA(2) of the Act, or
(c) an investment company, as defined by section 833(1) of the Companies Act 2006;
“UK SME” is an undertaking which—
(a) is an SME at the time the ring-fenced body or SME investment undertaking first enters into a transaction to acquire shares, or instruments giving an entitlement to shares, in the undertaking, and
(b) is registered in, and has its principal place of business in, the United Kingdom.
Art. 7A inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(3)

Excluded activities: central bank exemption
8. (1) A ring-fenced body does not carry on an excluded activity where—
(a) it enters into a transaction with a central bank, or with a wholly owned subsidiary of a central bank, in the course of carrying on the activity specified in article 14 (dealing in investments as principal) of the Regulated Activities Order 2001, or which would fall within that activity if the transaction took place in the United Kingdom; or
(b) it sells commodities to, or buys commodities from, a central bank, or a wholly owned subsidiary of a central bank.
(2) For the purposes of this article—
(a) an undertaking is to be regarded as wholly owned by a central bank at any time if at that time—
(i) it is an undertaking of which no person other than the central bank or a nominee of the central bank is a member, or
(ii) it is a wholly owned subsidiary of an undertaking within paragraph (i);
(b) an undertaking (“A”) is a “subsidiary” of another undertaking (“B”) if B—
(i) holds a majority of the voting rights in A,
(ii) is a member of A and has the right to appoint or remove a majority of A's directors, or
(iii) is a member of A, and controls alone, pursuant to an agreement with other members, a majority of the voting rights in A;
(c) A is a subsidiary of B if it is a subsidiary of an undertaking that is itself a subsidiary of B.

Excluded activities: derivatives
9. A ring-fenced body does not carry on an excluded activity by entering into transactions with any one or more of its account holders if—
(a) the transaction satisfies the requirements listed in article 10 or 11(1), (2), (3) or (4), and
Words in art. 9(a) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(4)
(b) all the conditions set out in article 12 are satisfied.

Derivatives: forward contracts and swaps
10. (1) The requirements listed in this article are that the transaction is—
(a) a currency swap,
(b) an interest rate swap, ...
Word in art. 10(1)(b) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(5)(a)(i)
(c) a forward contract relating to currencies or commodities, where the relevant contract specifies—
(i) the description and amount of the currency or commodity concerned;
(ii) the date when delivery will be made or when settlement will be made in cash; and
(iii) the exchange rate or commodity price which will apply, or
Art. 10(1)(d) and word inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(5)(a)(ii)
(d) an inflation swap.
(2) For the purposes of this article—
(a) “currency swap” means a transaction under which—
(i) one person (“A”) agrees with another person (“B”) that A will at a specified date pay to B a specified amount in one specified currency, and B will pay A that amount in another specified currency, calculated by reference to a specified exchange rate, and
(ii) the amount concerned may consist of a specified principal amount and interest calculated at a specified fixed or floating rate;
(b) “forward contract” means a contract for the sale of a commodity, currency or property of any description (including futures, whether or not traded on an exchange or trading venue) under which delivery is to be made at a future date and at a price agreed on when the contract is made;
(ba) “inflation swap” means a transaction under which one person (“A”) agrees with another person (“B”) that A is liable to pay B an amount calculated by reference to a fixed or variable rate on a specified notional sum over a specified period which does not exceed thirty years, and B is liable to pay A an amount calculated by reference to a variable rate, linked to a specified price index on that notional sum and over the same specified period, and for these purposes, “price index” means an index of prices which is used for the purposes of measuring inflation;
Art. 10(2)(ba) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(5)(b)
(c) “interest rate swap” means a transaction under which—
(i) one person (“A”) agrees with another person (“B”) that A is liable to pay to B an amount equal to interest calculated by reference to an interest rate on a specified notional sum over a specified period, and that B is liable to pay to A an amount equal to interest calculated by reference to a different interest rate on that notional sum, and
(ii) the interest rates in question are either specified (in the case of a fixed interest rate), or determined in relation to a specified reference rate (in the case of a floating interest rate);
(d) “reference rate” means a foreign exchange or interest rate which is offered on an inter-bank market, or which is set out in an index published by any person who is not one of the parties to the contract;
(e) “specified” means specified in the transaction agreement.

Derivatives: options and swaptions
11. (1) The requirements listed in this paragraph are that—
(a) the transaction is an option exercisable by a customer (“X”) of the ring-fenced body requiring the ring-fenced body to buy or sell foreign currency or commodities, and
(b) the contract in which the option is granted specifies—
(i) the currency or commodity concerned;
(ii) the amount of currency or commodity which may be bought or sold under the option;
(iii) a single date on which the option may be exercised (which must be no later than 3 years from the date on which the contract is entered into); and
(iv) the exchange rate or commodity price which will apply to the transaction.
(2) The requirements listed in this paragraph are that—
(a) the transaction consists of a cap or floor (or both) under which—
(i) in respect of a cap, the ring-fenced body must pay X an amount equal to A minus B (provided that amount is a positive number), where “A” is the interest payable in relation to a specified notional amount at the interest rate prevailing during the specified calculation period (“the floating interest rate”), and “B” is the interest payable on that notional amount at the interest rate specified in the agreement (“the fixed interest rate”), or
(ii) in respect of a floor, X must pay the ring-fenced body an amount equal to C minus D (provided that amount is a positive number), where “C” is the interest payable in relation to a specified notional amount at the interest rate specified in the agreement (“the fixed interest rate”), and “D” is the interest payable in relation to that notional amount at the interest rate prevailing during the specified calculation period (“the floating interest rate”), and
(b) the agreement relating to the cap or floor specifies—
(i) the notional amounts and the fixed and floating interest rates referred to in sub-paragraph (a)(i) and (ii); and
(ii) the calculation period.
(3) The requirements listed in this paragraph are that—
(a) the transaction consists of an option for the customer to enter into an interest rate swap;
(b) the agreement granting the option specifies—
(i) a single date on which the option may be exercised (which must be no later than 5 years from the date on which the agreement is entered into);
(ii) the terms which will apply to the interest rate swap, including the interest rates to which the swap applies; and
(iii) the notional amount on which the swap payments are to be calculated.
(4) The requirements listed in this paragraph are that—
(a) the transaction consists of a cap and a floor, related to two specified currencies under which—
(i) if, on the specified exercise date, the prevailing rate of exchange (“the spot FX rate”) between the two specified currencies is above the cap rate, the customer and the ring-fenced body will exchange the specified currencies at the cap rate,
(ii) if, on the specified exercise date, the spot FX rate between the two specified currencies is below the floor rate, the customer and the ring-fenced body will exchange the specified currencies at the floor rate, and
(iii) if, on the specified exercise date, the spot FX rate between the two specified currencies is neither above the cap rate nor below the floor rate, the customer and the ring-fenced body will not exchange the specified currencies;
(b) the agreement relating to the cap specifies—
(i) the two currencies to which the cap relates;
(ii) the applicable cap rate;
(iii) the exercise date;
(iv) the identity of the party purchasing the cap, which must be the ring-fenced body or a customer of the ring-fenced body;
(c) the agreement relating to the floor specifies—
(i) the two currencies to which the floor relates;
(ii) the applicable floor rate;
(iii) the exercise date;
(iv) the identity of the party purchasing the floor, which must be the ring-fenced body or a customer of the ring-fenced body.
Art. 11(4)(5) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 9(6)
(5) The requirements in paragraph (4)(b) and (c) may be satisfied by a single agreement specifying the provisions required for both the cap and the floor.

Derivatives: general conditions
12. (1) The conditions in this article are that—
(a) the relevant risk requirement attributable—
(i) to all transactions entered into which meet the conditions in articles 9 to 11, and
(ii) to any investments traded by the ring-fenced body under article 6(1) for the purpose of hedging risks arising in relation to the transactions referred to in paragraph (i) (provided that those investments are hedged separately from any other investments entered into by the ring-fenced body under article 6(1)),
is at all times less than 0.5% of the ring-fenced body's own funds;
Words in art. 12(1) substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(6)(a)(i)
(b) the sum of the relevant risk requirements attributable to each individual transaction with an account holder under articles 9 to 11 is at all times less than 25% of the credit risk capital requirement of the ring-fenced body; and in calculating the sum of the relevant risk requirements, no relevant risk requirement may be set off against any other relevant risk requirement;
(c) the sum of the relevant risk requirements attributable to the transactions entered into by the ring-fenced body under article 11 is at all times less than 20% of the sum of the relevant risk requirements attributable to the transactions entered into by the ring-fenced body under articles 9 to 11;
(d) there is evidence available on the material date to assess the fair value of the investment concerned in accordance with international financial reporting standard 13 (“IFRS 13”) on fair value measurement issued by the International Accounting Standards Board, as that reporting standard is amended from time to time, and that evidence would be considered to constitute a level 1 input within the meaning of paragraph 76 of IFRS 13, or a level 2 input within the meaning of paragraphs 81 and 82 of IFRS 13 ;
Words in art. 12(1) substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(6)(a)(ii)
A copy of this IFRS can be obtained from the International Accounting Standards Board, 30 Cannon Street, London, EC4M 6XH.
(e) on the material date, the investments traded under article 10 or 11 fall within a class of derivatives that are traded on—
(i) a UK trading venue,
Art. 12(1)(e)(i)-(iii) substituted for art. 12(1)(e)(i)(ii) (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(5)(a) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(ii) a trading venue in the EEA, or
(iii) a non-EEA trading venue.
Words in art. 12(1) substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(6)(a)(iii)
(2) For the purposes of this article—
(a) subject to sub-paragraph (aa) the relevant risk requirement is the sum of the own funds requirements for—
(i) position risk calculated in accordance with Chapter 2 of Title IV of Part Three of the prudential requirements regulation;
(ii) foreign-exchange risk calculated in accordance with Chapter 3 of Title IV of Part Three of the prudential requirements regulation; and
(iii) commodities risk calculated in accordance with Chapter 4 of Title IV of Part Three of the prudential requirements regulation;
Art. 12(2)(a)(aa) substituted for art. 12(2)(a) (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(6)(b)(i)
(aa) the calculations referred to in sub-paragraph (a) are to be carried out as if the positions associated with the investments referred to in the relevant Chapters are all held in the trading book of the ring-fenced body;
(b) “credit risk capital requirement” means the own funds requirements set out in Article 92.3(a) of the prudential requirements regulation, excluding the risk-weighted exposure amounts determined in accordance with Title II of Part Three of that regulation for counterparty risk arising from positions which are not included in the trading book;
(c) “trading venue” has the meaning given in Article 2.1(16) of the markets in financial instruments regulation;
Words in art. 12(2)(c) substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(5)(b)(i) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(ca) “non-EEA trading venue” means a trading venue—
(i) which is not a UK trading venue or a trading venue in the EEA, and
(ii) which satisfies paragraph 1(d) of Article 28 of the markets in financial instruments regulation;
Art. 12(2)(ca)(cb) inserted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(5)(b)(ii) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
(cb) “UK trading venue” has the meaning given in Article 2.1(16A) of the markets in financial instruments regulation;
(d) the material date is to be determined as follows—
(i) in the case of a transaction entered into by a ring-fenced body, the material date is the date upon which the transaction is entered into; and
(ii) in the case of a transaction entered into by a body (“A”) before A became a ring-fenced body, the material date is the date upon which A became a ring-fenced body.
Art. 12(2)(d) substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(6)(b)(ii)
(e) “trading book” has the meaning given in Article 4.1(86) of the prudential requirements regulation.

PART 3 PROHIBITIONS AND EXCEPTIONS

Prohibitions: inter-bank payment systems
13. (1) A ring-fenced body (“A”) is prohibited from entering into any transaction enabling it to use services provided through an inter-bank payment system unless—
(a) A is a direct participant in the system, or
(b) where A is not a direct participant in the system, at least one of the conditions set out in paragraph (2) is satisfied.
(2) The conditions set out in this paragraph are—
(a) the intermediary through which A accesses the services provided by the inter-bank payment system is another ring-fenced body which—
(i) is a direct participant in that payment system, and
(ii) is a member of the same group as A;
(b) A is not eligible to become a direct participant in the inter-bank payment system concerned under the rules governing that payment system;
(c) should the intermediary through which A accesses the services of the inter-bank payment system concerned cease to be able to provide access to those services, A would be able to make the payments it proposes to make through that inter-bank payment system—
(i) through another intermediary, or
(ii) through another inter-bank payment system or by other means; or
(d) the PRA has, following an application made by A in accordance with paragraph (3), granted permission in accordance with paragraph (4) for A to access the services provided by the inter-bank payment system in question through the intermediary proposed by A.
(3) An application by A for permission under paragraph (2)(d) must be made in such manner and accompanied by such information as the PRA may direct.
(4) The PRA may only grant permission under paragraph (2)(d)—
(a) where it considers that the ring-fenced body needs to be able to access the services provided by the inter-bank payment system in question due to exceptional circumstances; and
(b) after it has published a statement under paragraph (9).
(5) The PRA shall keep any permission granted under paragraph (2)(d) under review, and shall withdraw that permission if it considers that the exceptional circumstances in question no longer apply, after following the procedure set out in paragraphs (6) and (7).
(6) If the PRA proposes—
(a) to refuse an application for permission under paragraph (2)(d), or
(b) to withdraw a permission granted under paragraph (2)(d),
it must give the ring-fenced body a warning notice, stating why it considers that the exceptional circumstances do not apply (if sub-paragraph (a) applies), or no longer apply (if sub-paragraph (b) applies).
(7) If the PRA has decided, after consideration of any representations received in writing from the ring-fenced body in response to the warning notice—
(a) to refuse an application for permission under paragraph (2)(d), or
(b) to withdraw permission granted under paragraph (2)(d),
it must give the ring-fenced body a decision notice.
(8) If the PRA decides—
(a) to refuse an application for permission under paragraph (2)(d), or
(b) to withdraw permission granted under paragraph (2)(d),
the ring-fenced body may refer the matter to the Tribunal, and Part 9 of the Act applies to any proceedings before the Tribunal in relation to the matter.
(9) The PRA must, before 1st July 2019, publish a statement containing guidance on what is meant by “exceptional circumstances” for the purposes of granting a permission under paragraph (2)(d) in a way appearing to the PRA to be best calculated to bring it to the attention of the public.
(10) Part 26 of the Act applies to any notices given by the PRA under this article.
(11) In this article—
“direct participant” means an institution which is able to provide services for the purpose of enabling the transfer of funds using the inter-bank payment system as a result of an arrangement made between the institution and the operator of the payment system;
“inter-bank payment system” ...does not include—
(a) a payment system the operator of which is—
(i) a recognised clearing house or recognised CSD, in each case within the meaning of section 285(1) of the Act , or
Words in art. 13(11) inserted (27.3.2019) by The Uncertificated Securities (Amendment and EU Exit) Regulations 2019 (S.I. 2019/679), regs. 1(2), 9(2)(a) (with regs. 10-12)
Section 285 has been amended by the Financial Services Act 2012 (c.21), section 28 and S.I. 2013/504.
(ii) the Operator of a relevant system for the purposes of the Uncertificated Securities Regulations 2001;
Words in art. 13(11) substituted (27.3.2019) by The Uncertificated Securities (Amendment and EU Exit) Regulations 2019 (S.I. 2019/679), regs. 1(2), 9(2)(b) (with regs. 10-12)
(b) arrangements made by A with another payment service provider for correspondent banking;
Words in art. 13(11) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(1)
(c) arrangements made to facilitate the physical transfer of money between financial institutions, including the Note Circulation Scheme set up by the Bank of England.
Words in art. 13(11) omitted (30.11.2017) by virtue of The Banking Act 2009 (Service Providers to Payment Systems) Order 2017 (S.I. 2017/1167), arts. 1(2), 5(4)

Prohibitions: financial institution exposures
14. (1) A ring-fenced body is prohibited from incurring a financial institution exposure unless at least one of the exemptions set out in paragraphs (2) to (6) or in articles 15 to 19C applies, and, for the avoidance of doubt, provided that one of these exemptions applies in relation to a particular exposure, it is irrelevant whether the conditions for any other exemption are satisfied by that exposure.
Word in art. 14(1) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(2)(a)
(2) A ring-fenced body may incur a financial institution exposure if the sole or main purpose of the transaction giving rise to the exposure (by itself or in combination with other transactions) is to limit the extent to which—
(a) the ring-fenced body,
(b) any subsidiary undertaking of the ring-fenced body,
(ba) another ring-fenced body within the same group as the ring-fenced body,
Art. 14(2)(ba)(bb) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(7)(b)(i)
(bb) a related undertaking within the same group as the ring-fenced body,
(bc) any undertaking in which the ring-fenced body has a participating interest,
Art. 14(2)(bc) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(2)(b)
(c) any sponsored structured finance vehicle of the ring-fenced body,
(d) any conduit vehicle of the ring-fenced body, or
(e) any combination of the undertakings referred to in sub-paragraphs (a), (b), (ba), (bb), (c) and (d),
Words in art. 14(2)(e) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(7)(b)(ii)
will be adversely affected by any of the factors specified in paragraph (3).
(3) The specified factors are—
(a) changes in interest rates, exchange rates or commodity prices;
(b) changes in any index of retail prices or of residential or commercial property prices;
(c) changes in any index of the price of shares;
(d) default risk;
(e) longevity risk;
Art. 14(3)(e)(f) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(2)(c)
(f) mortality risk.
(3A) A ring-fenced body may incur a financial institution exposure if the purpose of the transaction giving rise to the exposure is to allow the ring-fenced body to hold liquid assets in order to meet the general requirement set out in Article 412 of the Liquidity (CRR) Part of the PRA Rulebook, and other applicable requirements in relation to liquid assets set out in that Part of the PRA Rulebook published by the PRA containing rules made by that Authority under the Act, as it applies to CRR firms, and as amended from time to time.
Art. 14(3A) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(7)(c)
Words in art. 14(3A) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(2)(d)
(4) A ring-fenced body may incur a financial institution exposure where the relevant financial institution concerned is a member of the same group as the ring-fenced body, provided that—
(a) the exposure concerned is not prohibited under rules made by the FCA or the PRA under the Act; and
(b) the exposure arises as a result of—
(i) a commercial transaction conducted on arm's length terms, ...
Word in art. 14(4)(b)(i) omitted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(7)(d)(i)
(ii) a holding of shares or other securities issued by a subsidiary undertaking of the ring-fenced body.
(iii) the relevant financial institution entering into any guarantee, bond, contract of indemnity or otherwise giving security or becoming responsible for any pension liability of the ring-fenced body, or
Art. 14(4)(b)(iii)(iv) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(7)(d)(ii)
(iv) a shared liability arrangement within the meaning of regulation 1 of the Financial Services and Markets Act 2000 (Banking Reform) (Pensions) Regulations 2015 provided that either—
(aa) the shared liability arrangement is permitted by virtue of regulation 2(8) or (9) of those Regulations, or
(bb) the exposure ceases to be incurred on or after the specified date referred to in regulation 2(10) of those Regulations.
(5) A ring-fenced body may incur a financial institution exposure in the course of buying, selling or subscribing for investments for the purposes of a transaction falling within paragraph (2).
(6) A ring-fenced body may incur a financial institution exposure where—
(a) the exposure concerned is a payment exposure, and
(b) the ring-fenced body has complied with any rules made or requirements imposed by the FCA or the PRA under the Act in relation to payment exposures.
(7) A ring-fenced body may incur a financial institution exposure where—
(a) the relevant financial institution is an SME investment undertaking within the meaning of article 7A, and
(b) the transaction giving rise to the financial institution exposure satisfies the conditions in article 7A.
Art. 14(7)(8) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(2)(e)
(8) A ring-fenced body may incur a financial institution exposure where the exposure arises as a result of the ring-fenced body dealing in investments as principal as permitted under article 6(8) or (9).

Financial institutions exposures: trade finance
15. (1) A ring-fenced body may incur a financial institution exposure provided that both the following conditions are satisfied—
(a) the purpose of the transaction giving rise to the exposure is—
(i) to provide finance or make a payment in connection with the supply of goods or services by or to a person or an undertaking which is not a relevant financial institution; or
(ii) to guarantee or otherwise provide an indemnity or security for the obligations of a customer of the ring-fenced body or a third party in connection with the supply of goods or services by or to a person or an undertaking which is not a relevant financial institution;
(b) the ring-fenced body enters into a relevant agreement, which specifies, or together with other connected agreements specifies—
(i) the supplies of goods or services to which the transaction relates, and
(ii) the maximum payments which the ring-fenced body may be required to make under the relevant agreement and any connected agreements.
Words in art. 15(1)(b)(ii) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(3)(a)(ii)
Words in art. 15(1)(b) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(3)(a)(i)
(1A) For the purpose of paragraph (1)(b)—
(a) an agreement is a “relevant agreement” if—
(i) it gives effect to the transaction described in paragraph (1)(a) (“the finance transaction”),
(ii) it is made under a master agreement which gives effect to the finance transaction, or
(iii) it is one of a number of connected agreements entered into in relation to the finance transaction;
(b) an agreement is a “connected agreement” if it is one of a number of agreements which—
(i) are entered into by a party to the finance transaction, or to the supply of goods or services to which the finance transaction relates, with one or more other such parties; and
(ii) collectively give effect to the finance transaction.
Art. 15(1A) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(3)(b)
(2) For the purpose of paragraph (1)(b)(ii), the maximum payments payable under the agreement may be expressed—
(a) as a defined sum, or
(b) as a multiple of an average price of a commodity, where the average price is determined by reference to prices quoted on a specified index of prices for that commodity over a specified period, and for these purposes “specified” means specified in the agreement.

Financial institutions exposure: securitisation and covered bonds
16. A ring-fenced body may incur a financial institution exposure to—
(a) a sponsored structured finance vehicle of that ring-fenced body; or
(b) a covered bond vehicle which is a subsidiary of a ring-fenced body or a building society.
Art. 16 substituted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(8)

Financial institution exposures: conduit lending
17. (1) A ring-fenced body may incur a financial institution exposure to a relevant financial institution (“A”) where—
(a) the only business of A (apart from incidental activities) is to acquire, hold and manage assets from or for an undertaking which is not a relevant financial institution (“B”); and
(b) all or part of A's assets are being used to form the whole or part of the security for a loan or any other finance provided to A by the ring-fenced body or by a conduit vehicle of the ring-fenced body for the benefit of B.
(2) A ring-fenced body (“C”) may incur a financial institution exposure to a relevant financial institution (“D”) where—
(a) D was established by, or is operated for the benefit of, C; and
(b) the only business of D (apart from incidental activities) is—
(i) to acquire, hold and manage assets from or for C, or
(ii) to make loans or provide other finance at the direction or on the advice of C using resources provided by C or raised in the financial markets to entities which are not relevant financial institutions, or to relevant financial institutions which satisfy the conditions in paragraph (1)(a) and (b).

Financial institution exposures: repo transactions
18. A ring-fenced body (“A”) may incur a financial institution exposure to a relevant financial institution (“B”) pursuant to an agreement with B—
(a) for the transfer of its own assets to B on terms—
(i) imposing an obligation on A to buy those assets, or assets of the same description, from B at one or more subsequent times; or
(ii) imposing an obligation on B to transfer those assets, or assets of the same description, to A at one or more subsequent times;
(b) for the transfer of liquid assets from B to A for the purpose of managing A's liquidity risk on terms—
(i) imposing an obligation on B to buy those assets, or assets of the same description from A at one or more subsequent times; or
(ii) imposing an obligation on A to transfer those assets, or assets of the same description, to B at one or more subsequent times.

Financial institution exposures: ancillary exposures
19. (1) Subject to any rules made by the FCA or the PRA under the Act, a ring-fenced body may incur a financial institution exposure where the exposure concerned—
(a) arises in any of the circumstances set out in paragraphs (2) to (5), or
(b) is permitted under paragraph (6).
(2) The exposure arises in consequence of the provision—
(a) by the ring-fenced body of payment services to its customers in the United Kingdom or any other country;
(b) by the ring-fenced body to the relevant financial institution of—
(i) operational services, including in particular information technology, human resources or payment services, ...
Word in art. 19(2)(b)(i) omitted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(9)(a)
(ii) services as a trustee or agent in connection with a syndicated loan to an undertaking which is not a relevant financial institution; ...
Word in art. 19(2)(b)(ii) omitted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(9)(b)
(iii) services as a trustee or agent in connection with a syndicated invoice discounting or factoring arrangement pursuant to which payment is advanced to any entity which is not a relevant financial institution, or
Art. 19(2)(b)(iii)(iv) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(9)(c)
(iv) consultative services, including in particular the provision of business or financial advice; or
(c) to the ring-fenced body of services from a relevant financial institution which are ancillary to or facilitate—
(i) the divestment or acquisition by the ring-fenced body of one or more of its subsidiaries or other assets,
(ii) the continuing operation of a business, entity or assets which have been acquired by the ring-fenced body,
(iii) an issue of securities by the ring-fenced body, by a subsidiary undertaking of the ring-fenced body or by a sponsored structured finance vehicle,
(iv) the participation by the ring-fenced body in a syndicated loan to an undertaking which is not a relevant financial institution.
(v) the participation by the ring-fenced body in any syndicated invoice discounting or factoring arrangement pursuant to which payment is advanced to any entity which is not a relevant financial institution.
Art. 19(2)(c)(v) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(9)(d)
(3) The exposure arises where—
(a) the ring-fenced body is acting as distributor for a relevant financial institution in connection with the distribution of trade finance or other financial products or investments issued by or services provided by the relevant financial institution, or in respect of which that relevant financial institution is acting as distributor,
(b) the relevant financial institution is acting as a distributor for the ring-fenced body in connection with the provision by the ring-fenced body of trade finance or other financial products or investments issued by or services provided by the ring-fenced body to or for the benefit of an entity which is not a relevant financial institution.
(4) The exposure arises in consequence of guarantees, warranties, indemnities or covenants given to the ring-fenced body by a relevant financial institution as part of a permitted acquisition or disposal—
(a) by the ring-fenced body, or
(b) by a subsidiary undertaking of the ring-fenced body,
and for the purposes of this paragraph “permitted” means that the acquisition or disposal is not prohibited under the Act, this Order, or any rules made by the FCA or the PRA under the Act.
(5) The exposure arises in consequence—
(a) of a breach of a duty owed by the relevant financial institution to the ring-fenced body, or
(b) of the appointment of the ring-fenced body as executor of the estate of any person or of services provided by the ring-fenced body in that capacity.
(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Art. 19(6) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(4)(a)
(7) A ring-fenced body may incur a financial institution exposure that arises where the ring-fenced body is acting as trustee , or in Scotland as a nominee, for or on behalf of any individual, minor, charity or CIO.
Art. 19(7) inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(9)(e)
Words in art. 19(7) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(4)(b)(i)
Words in art. 19(7) substituted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(4)(b)(ii)

Financial institution exposures: financing of infrastructure projects
19A. (1) A ring-fenced body may incur a financial institution exposure to a relevant financial institution (“A”) where—
(a) A is an infrastructure special purpose vehicle; and
(b) the exposure arises from financial assistance given by the ring-fenced body to A.
(2) For the purposes of this article—
(a) “financial assistance” means—
(i) loans,
(ii) guarantees or indemnities, or
(iii) the purchase of bonds or notes.
(b) “infrastructure special purpose vehicle” means an entity the only business of which (apart from incidental activities) is financing the acquisition, design, construction, conversion, improvement, operation and repair of infrastructure ....
Words in art. 19A(2)(b) omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(5)
(c) “infrastructure” means—
(i) housing,
(ii) water, electricity, gas, telecommunications, sewerage or other services,
(iii) railway facilities (including rolling stock), roads or other transport facilities,
(iv) health or educational facilities, and
(v) court or prison facilities.
Arts. 19A, 19B inserted (1.12.2016) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2016 (S.I. 2016/1032), arts. 1(2), 3(10)

Financial institution exposures: changes in status of counterparties
19B. (1) Subject to paragraph (2), where a ring-fenced body incurs a prohibited financial institution exposure as a result of a counterparty to a transaction becoming a relevant financial institution at any time after the date upon which the transaction was entered into, that exposure is permitted for a period of twelve months commencing on the date upon which the counterparty became a relevant financial institution.
Word in art. 19B(1) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(6)(a)
(2) A ring-fenced body is not permitted to incur the prohibited financial institution exposure by virtue of paragraph (1) where, at the time the transaction was entered into, the ring-fenced body knew, or could reasonably be expected to have known, that the counterparty would become a relevant financial institution.
Word in art. 19B(2) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(6)(b)
(3) In this article, “prohibited financial institution exposure” means a financial institution exposure which would be prohibited under article 14(1) if it was not permitted under this article.
Art. 19B(3) inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(6)(c)

Financial institution exposures: small exposures
19C. (1) A ring-fenced body may incur a financial institution exposure where the total exposures of the ring-fenced body to the relevant financial institution are equal to or less than £100,000.
(2) The amount of a ring-fenced body’s exposure to a relevant financial institution must be determined in accordance with the fair value of the assets giving rise to that exposure, assessed in accordance with International Financial Reporting Standard 13 (fair value measurement) issued by the International Accounting Standards Board, as amended from time to time.
Art. 19C inserted (4.2.2025) by The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(7)

Prohibitions: Non-UK and non-EEA branches and subsidiaries
20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Words in art. 20 heading substituted (31.12.2020) by The Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/632), regs. 1(3), 192(7)(a) (with savings in S.I. 2019/680, reg. 11 (as amended by S.I. 2019/1212, regs. 1(3), 22(3)); 2020 c. 1, Sch. 5 para. 1(1)
Art. 20 omitted (4.2.2025) by virtue of The Financial Services and Markets Act 2000 (Ring-fenced Bodies, Core Activities, Excluded Activities and Prohibitions) (Amendment) Order 2025 (S.I. 2025/30), arts. 1(2), 10(8)

Transitional provision
21. A ring-fenced body does not carry on an excluded activity or contravene a prohibition imposed by this Order by holding or selling any investments on or after 1st January 2019 provided that—
(a) the investment in question was created or acquired by the ring-fenced body before 1st January 2019, and
(b) the period remaining until the investment matures is less than two years at 1st January 2019.
David Evenett
John Penrose
Two of the Lords Commissioners of Her Majesty's Treasury
SCHEDULE
Article 2
1. The European Union.
2. The European Atomic Energy Community.
3. The European Financial Stability Mechanism.
4. The European Financial Stability Facility.
5. The European Financial Stabilisation Mechanism.
6. The International Monetary Fund.
7. The Bank for International Settlements.
8. The European Investment Bank.
9. The European Investment Fund.
10. The Council of Europe Development Bank.
11. The International Bank for Reconstruction and Development.
12. The International Finance Corporation.
13. The African Development Bank.
14. The Asian Development Bank.
15. The Inter-American Development Bank.
16. The European Bank for Reconstruction and Development.
17. The Islamic Development Bank.
18. The International Finance Facility for Immunisation.
19. The Caribbean Development Bank.
20. The Nordic Development Bank.
21. The Multilateral Investment Guarantee Agency.

(This note is not part of the Order)
This Order defines the circumstances in which ring-fenced bodies will be able to deal with investments as principal by providing for exceptions to the excluded activity set out in section 142D of the Financial Services and Markets Act 2000 in relation to the management by the ring-fenced body of its own risks or of its liquid assets or the provision of derivatives to its clients. The Order also imposes prohibitions on ring-fenced bodies under section 142E, which (with the exceptions provided for) limit the way in which a ring-fenced body may have access to clearing and settlement services provided by a recognised inter-bank payment system, restrict the exposures a ring-fenced body may have to relevant financial institutions, and ensure that a ring-fenced body may not have a subsidiary or branch in any country outside the EEA (other than operational subsidiaries which do not provide banking services).
Article 1 defines the terms used in the Order.
Article 2 defines relevant financial institution for the purposes of the Order.
Article 3 defines terms used in connection with securitisation companies and structured finance vehicles for the purposes of the Order.
Part 2 provides for an additional excluded activity (commodities trading), and sets out the circumstances in which ring-fenced bodies may engage in dealing in investments as principal, and commodities trading, as exceptions to the excluded activities.
Article 4 provides for additional circumstances in which the activity of dealing in investments as principal will be an excluded activity, clarifying the relationship between the excluded activity and the regulated activity of dealing in investments as principal. Under section 142D(2) the regulated activity of dealing in investments as principal, defined in article 14 of the Financial Services and Markets Act (Regulated Activities) Order 2001 (“the Regulated Activities Order”) (and subject to a number of exceptions which are set out in articles 15 to 20 of that Order) is an excluded activity. Article 4 ensures that dealing in investments as principal which falls within the scope of articles 15, 19 or 20 of the Regulated Activities Order 2001, and is not therefore a regulated activity, is made an excluded activity. Dealing in investments as principal which falls within the exemptions from the regulated activity set out in articles 17, 18 or 18A of the Regulated Activities Order 2001 will remain outside the scope of the excluded activity.
Article 5 provides that a ring-fenced body may not engage in commodities trading except in the circumstances set out in that article.
Article 6 provides for exceptions to the excluded activity of dealing with an investment as principal where the ring-fenced body is managing the risks associated with its business, including for example its interest rate risk, exchange rate risk, or liquidity risk (paragraphs (1) and (2)). The ring-fenced body is also permitted to deal in liquid assets or to provide collateral required for derivative transactions entered into as part of its risk management (paragraph (3)). Article 6(4) further permits a ring-fenced body to acquire investments in exchange for a loan write-off (subparagraph (a)), and to acquire debentures issued by itself, one of its subsidiaries or its parent undertaking (subparagraph (b)) (no exception is necessary to permit the ring-fenced body to deal with its own shares, as, by virtue of article 18A of the Regulated Activities Order 2001, this is not an excluded activity). It may also acquire debentures directly from an issuer where the issuer chooses to structure its borrowing in this way (paragraph (4)(c)), and to acquire shares in subsidiaries or companies in which it has a participating interest (paragraph (4)(d)). Paragraph (5) sets out the circumstances in which investments acquired under these provisions may be sold (debentures acquired under paragraph (4)(c) may not be sold – the ring-fenced body must hold them to maturity). Finally, Article 6(6) permits the ring-fenced body to use investments as security.
Article 7 permits a ring-fenced body to deal in investments as principal where the other party to the transaction is a structured finance vehicle sponsored by the ring-fenced body which satisfies the conditions set out in article 3(2). The ring-fenced body may also buy debentures issued by such a structured finance vehicle or by a conduit vehicle of the ring-fenced body.
Article 8 provides for an exception to the excluded activities of dealing in investments as principal and commodities trading where the ring-fenced body is entering into a transaction with a central bank or a wholly owned subsidiary of a central bank.
Articles 9 to 12 set out the conditions which must be satisfied by a ring-fenced body which wishes to deal in derivative instruments with its account holders.
Article 10 permits a ring-fenced body to sell currency and interest swaps, forward contracts (including futures) relating to currency, commodities or other property to its account holders.
Article 11 permits a ring-fenced body to sell certain options to its account holders, including interest rate caps and floors, and interest rate swaptions.
Article 12 sets out the conditions which must be satisfied by derivative transactions between a ring-fenced body and its account holders.
Part 3 imposes a number of prohibitions on ring-fenced bodies, and provides for exemptions to those prohibitions.
Article 13 sets out the circumstances in which a ring-fenced body may use services provided through an inter-bank payment system indirectly by an intermediary.
Articles 14 to 19 set out the circumstances in which a ring-fenced body is permitted to have an exposure to a relevant financial institution.
Article 14 permits exposures arising in relation to transactions entered into by the ring-fenced body for risk management purposes, intra-group transactions and payments exposures.
Article 15 permits exposures arising in relation to trade finance.
Article 16 permits a ring-fenced body to incur exposures to its own sponsored structured finance vehicle (which must satisfy the conditions set out in article 3(2)).
Article 17 permits a ring-fenced body to incur exposures for the purpose of conduit lending to the special purpose vehicle of an undertaking which is not itself a financial institution or to the ring-fenced body's own special purpose vehicle.
Article 18 permits a ring-fenced body incur exposures arising in the course of repo transactions.
Article 19 permits a ring-fenced body to incur exposures to relevant financial institutions which are ancillary to the provision of the core services by the ring-fenced body.
Article 20 prohibits a ring-fenced body from having a branch or a subsidiary (other than a subsidiary which does not carry out any activities which would be regulated under the Financial Services and Markets Act 2000 if they were carried on in the UK) in a country or territory outside the EEA.
Article 21 makes transitional provision to ensure that a ring-fenced body is not required to divest itself of investments which have less than two years to maturity when this order comes into force.
An Impact Assessment of the effect of the Financial Services (Banking Reform) Act 2013, and the secondary legislation to be made under it (including this Order) on the costs of business and the voluntary sector has been prepared and is available on HM Treasury's website (www.gov.uk/treasury) or from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ and is annexed to the Explanatory Memorandum for this Order.

Art. 4 in force at 1.1.2019, see art. 1(3)
Art. 5 in force at 1.1.2019, see art. 1(3)
Art. 6 in force at 1.1.2019, see art. 1(3)
Art. 7 in force at 1.1.2019, see art. 1(3)
Art. 8 in force at 1.1.2019, see art. 1(3)
Art. 9 in force at 1.1.2019, see art. 1(3)
Art. 10 in force at 1.1.2019, see art. 1(3)
Art. 11 in force at 1.1.2019, see art. 1(3)
Art. 12 in force at 1.1.2019, see art. 1(3)
Art. 13 in force at 1.1.2019, see art. 1(3)
Art. 14 in force at 1.1.2019, see art. 1(3)
Art. 15 in force at 1.1.2019, see art. 1(3)
Art. 16 in force at 1.1.2019, see art. 1(3)
Art. 17 in force at 1.1.2019, see art. 1(3)
Art. 18 in force at 1.1.2019, see art. 1(3)
Art. 19 in force at 1.1.2019, see art. 1(3)
Art. 21 in force at 1.1.2019, see art. 1(3)
Art. 14(4) modified (13.3.2023 at 8.00 a.m.) by The Amendments of the Law (Resolution of Silicon Valley Bank UK Limited) Order 2023 (S.I. 2023/319), arts. 1(2), 2