FSMA

Securitization Regulations 2018 Published

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On December 4, the Securitization Regulations 2018 (SI 2018/1288) were published on legislation.gov.uk, together with an explanatory memorandum. A link to the Securitization Regulations 2018 can be found here and a link to the explanatory memorandum can be found here.

The Regulations reflect the application of the Securitization Regulation ((EU) 2017/2402)) in the UK. The Securitization Regulation harmonizes and reforms existing rules on due diligence, risk retention, disclosure and credit-granting that will apply in a uniform way to all securitizations, securitizing entities and all types of EU regulated institutional investors. It also creates a new framework for simple, transparent and standardized long-term securitizations and asset-backed commercial paper programs.

Among other things, the Regulations designate the FCA and PRA as the competent authorities in relation to the Securitization Regulation and require the FCA to maintain and update a register of all persons it has authorized as third-party verification agents. They also amend the Financial Services and Markets Act 2000 (“FSMA“), and other UK legislation, to create the new supervisory, investigative and sanctioning powers required by the Securitization Regulation and ensure UK legislation is compatible with the Securitization Regulation.

The Regulations will come into force on January 1, 2019.

FCA Issues Consultation Paper on Proposed Changes to the Senior Managers and Certification Regime

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The FCA has launched a consultation paper setting out a number of technical rule changes to the Senior Managers and Certification Regime (SM&CR). The changes are being made as a result of HM Treasury’s announcement in October 2015 that it would be amending the current SM&CR legislation as it applies to the banking sector. This included the repeal of section 64B(5) of the Financial Services and Markets Act 2000 (FSMA), which required firms to report to the FCA known and suspected breaches of the FCA Rules of Conduct, before the SM&CR regime enters into force on 7 March 2016.

The FCA proposes to remove references to notifications of known and suspected rule breaches in the associated forms, thereby streamlining reporting requirements so that the forms only require firms to inform the FCA of disciplinary action taken against staff as a result of a breach of one or more Rules of Conduct. The pre-existing obligation to report material breaches will, however, remain in place.

The Consultation Paper sets out how the FCA intends to implement the consequential changes to rules and forms that will be required prior to commencement of the regime, as well as examining the likely impact the changes will have on the industry and on consumers.

Financial Services and Markets Act 2000 (Market Abuse) Regulations 2014 Published

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On November 20, the Financial Services and Markets Act 2000 (Market Abuse) Regulations 2014 were published with an accompanying explanatory memorandum.  The Regulations were made on November 19, and come into force on December 15.  They amend the Financial Services and Markets Act 2000 (FSMA) to extend until July 3, 2016 the expiry dates of:

  • the prohibition on market manipulation (s118(8) FSMA);
  • the associated provisions (s118A(2) and (3) FSMA); and
  • the definition of “regular user” (s130A FSMA).

On July 3, 2016, the Market Abuse Regulation (MAR) will take effect and the above FSMA provisions will then expire.  The s118(8) prohibition will be replaced by a prohibition with similar scope under MAR.  Regulation.  Explanatory Memorandum.

Former Broker Banned by FCA for Encouraging Market Abuse

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On November 14, the FCA published the final notice it has issued to Rahul Shah.  The FCA’s statement is that Mr. Shah encouraged another person to engage in behavior which, had Mr. Shah engaged in that same behavior, would amount to market abuse (insider dealing) as per section 118(2) of the Financial Services and Markets Act (FSMA).

Mr. Shah has been prohibited by an FCA order from performing any function in relation to any regulated activities carried on by any authorized or exempt persons or exempt professional firm.  In light of his financial position, no financial penalty was imposed on Mr. Shah.

The prohibition on Mr. Shah arises from the fact that he had agreed, while a broker, to be made an insider by a financial advisor acting on behalf of Vyke Communications plc.  Final notice.

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.