The Financial Services and Markets Act 2000 (Prospectus and Markets in Financial Instruments) Regulations 2018

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Financial Services and Markets Act 2000 (c.8) (“the Act”), the Companies Act 2006 (c.46) and the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701).

Regulation 2(2) and 2(6) gives effect to Articles 1(3) and 3(2) of Regulation (EU) No 2017/1129 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (OJ L168 30/06/2017 p.12).

Regulation 2(2) implements Article 3(2) by amending section 86 of the Act. Section 86 provides for exemptions from the obligation to publish a prospectus in relation to offers from the public. The threshold for offers to the public that are exempt from the obligation to publish a prospectus is increased from euros 100,000 to euros 8,000,000. Regulation 2(6) implements Article 1(3) by amending Schedule 11A to the Act. Schedule 11A provides for exemptions for securities from the scope of the prospectus regime altogether and the threshold for securities exempt from the regime has been reduced from euros 5,000,000 to euros 1,000,000.

Regulation 2(3) to 2(5) makes amendments to the Act to update references following the transposition of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (“MiFID II”) and the coming into force of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 (“MiFIR”). Regulation 2(4)(a) also contains an amendment to more fully transpose Article 71(3) of MiFID II by imposing an obligation on the regulator to provide ESMA with the final judgment in any criminal convictions which have been brought about as a result of an infringement of MiFID II or MiFIR.

Regulation 3 amends the Companies Act 2006. It updates a reference to the instrument implementing MiFID II and makes a correction to the definition of “MiFID investment firm” which was erroneously omitted during implementation of MiFID II.

Regulation 4 amends the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701). It contains an amendment to more fully transpose Article 79(5) of MiFID II by imposing an obligation on the regulator to notify the Agency for the Cooperation of Energy Regulators (ACER) of restrictions on position limits and the ability of persons to enter into a commodity derivative in cases relating to wholesale energy products.

A transposition note setting out how MiFID II is transposed into UK law is available from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ or www.gov.uk.

A full impact assessment of the effect that regulation 2(2) and 2(6) will have on the costs of business, the voluntary sector and the public sector is available from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ or www.gov.uk and is published alongside these Regulations on www.legislation.gov.uk.

A full impact assessment on the amendments relating to the implementation of MiFID II and MiFIR has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.