Financial Services and Markets Act 2000

The FCA Reclassifies Cryptoassets, But Is It Moving Away From Its Technology Neutral Approach?

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On August 5, the Financial Conduct Authority (FCA) released final guidance on cryptoassets in a policy statement that includes feedback from their January consultation paper. It is important to note that the policy statement is of a limited scope and focuses on whether different types of cryptoassets fall within the regulatory perimeter of the Financial Services and Markets Act 2000 (FSMA) and Electronic Money Regulations 2011 (EMRs). While the policy statement does touch upon the use of cryptoassets for payment services, prospectus requirements and anti-money laundering issues, it does not provide much new guidance on these areas. Read the full Orrick-authored article here.

FSMA (OTC Derivatives, CCPs and TRs) (No. 2) Regulations Published

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On August 5, the Financial Services and Markets Act 2000 (FSMA) (OTC Derivatives, Central Counterparties (CCPs) and Trade Repositories (TRs)) (No. 2) Regulations 2013 SI 2013/1908 were published.  The regulations were made on July 30, and the majority of the regulations will come into force on August 26.

The regulations relate to the clearing of financial transactions through recognized clearing houses.  The regulations implement in part Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR) and amend the following:

  • Supervisory, investigatory and enforcement powers of the Bank of England and the Financial Conduct Authority.
  • Companies Act 1989 to facilitate segregation and transfer of indirect clients’ assets and positions.
  • Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges and Clearing Houses) Regulations 2001(S.I. 2001/995) (the Recognition Requirements Regulations).  They impose new requirements on recognized central counterparties and recognized clearing houses, which are not central counterparties.  Regulations. 

Financial Services and Markets Act 2000 Order 2013 Published in UK

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The Order, which amends the existing Financial Services and Markets Act 2000 (Regulated Activities) Order (SI 2001/544), specifies additional activities which from April 1, 2014 will become “regulated activities” for the purposes of the Financial Services and Markets Act 2000 (FSMA).

The new regulated activities include:

  • credit broking;
  • operating an electronic system in relation to lending;
  • entering into a regulated credit agreement as lender; and
  • providing credit information services and providing credit references.

Under FSMA, there is a general prohibition against carrying on regulated activities in the UK without being authorized or exempt.  Order.

FSA Consults on FCA Publication of Warning Notices

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On March 18, the FSA published a consultation paper (CP13/8) setting out proposals on how the Financial Conduct Authority (FCA) will use its new power under section 391(1)(c) of the Financial Services and Markets Act 2000 (FSMA) to publish information about the matter to which a warning notice relates.

The consultation paper stated that the FCA will consider each case on its merits but will generally publish a statement where it has issued a warning notice to which the power under section 391(1)(c) applies. When considering whether a publication would be unfair to the person against whom the action is proposed to be taken, the FCA will consider whether the person is an individual or a firm and to what extent they have been made aware of the case against them.  Information about the warning notice will be published in a statement by the FCA.  The statement will not normally contain details of any proposed sanctions, and if the FCA does intend to publish a warning notice statement, the person to whom the notice is given or copied will be consulted.

Consolidated Version of FSMA Published

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On 12 June 2012, HM Treasury published a revised consolidated version of the Financial Services and Markets Act 2000 (“FSMA”), which reflects the Financial Services Bill 2012-13 in the form introduced to the House of Lords on 11 June 2012. The consolidated version is intended as an illustrative document to aid scrutiny of the draft Financial Services Bill by Parliament and interested parties. Consolidated version of FSMA.

The Financial Services Bill will extensively amend FSMA and other existing legislation, such as the Bank of England Act 1998 and the Banking Act 2009.

The Committee stage of the Financial Services Bill in the House of Lords will commence on 27 June 2012.