The Central Securities Depositories Regulations 2014

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations implement in part certain Articles of Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories (“CSDs”) (OJ No L257, 28.8.2014, p1) (“the CSD regulation”).

Regulation 2 designates the Financial Conduct Authority (“FCA”) as the competent authority responsible for the supervision of trading venues (which include investment exchanges and multi-lateral trading facilities) and the functions referred to in Article 4(3) of the CSD regulation (supervision of requirement to record transactions in transferable securities in book entry form following a financial collateral arrangement). It designates the Bank of England (“the Bank”) as the competent authority responsible for matters including the authorisation and supervision of CSDs and oversight of securities settlement systems in the United Kingdom. The Prudential Regulation Authority (“PRA”) is designated as the competent authority responsible for matters including the supervision of banking-type ancillary services provided by a CSD or a credit institution designated for the purpose.

Regulation 3 grants powers to the FCA to obtain information from persons who are not authorised or recognised under the Financial Services and Markets Act 2000 (“the Act”). Regulation 4 gives the FCA the power to impose penalties and publish statements of censure, in particular for contravening regulation 3. Regulation 5 sets out the procedure that the FCA must follow if it proposes to take action under regulation 4.

Regulation 6 amends the Act to extend the Bank’s disclosure of information, information gathering and investigatory powers to functions under the CSD regulation and to secure that provision for publication of notices is compatible with the CSD regulation. Regulation 7 amends Schedule 1 to the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 (S.I. 2001/2188) to extend the purposes in connection with which information can be disclosed to the Bank, and the Bank can disclose information, to include its functions in connection with CSDs.

Regulation 8 amends the Payment to Treasury of Penalties (Enforcement Costs) Order 2013 (S.I. 2013/418) to enable the FCA to deduct its enforcement costs under these Regulations from penalty receipts paid to the Treasury.

Regulation 9 amends the Financial Services and Markets Act 2000 (Qualifying EU Provisions) Order 2013 (S.I. 2013/419) to apply provisions of the Act conferring functions on the FCA, PRA and Bank for purposes connected with the CSD regulation. These include sections 1A and 2A of the Act (the functions of the FCA and PRA); section 168 of the Act (power of the regulators to appoint an investigator); disciplinary measures imposed under Part 14 of the Act; powers to obtain injunctions or provide for restitution under Part 25 of the Act, and fee-raising powers of the FCA, PRA and Bank.

Regulation 10 requires the Treasury to review the operation and effect of these Regulations and publish a report by 21st November 2019 and within every five years after that. Following a review it will fall to the Treasury to consider whether the Regulations should remain as they are, or be revoked or amended. A further instrument would be needed to revoke or amend the Regulations.

An impact assessment has not been produced for this instrument as no significant impact on the costs of business or the voluntary sector is foreseen.