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LR 19.1 Application

LR 19.1.1 R

1This chapter applies to an issuer of:

  1. (1)

    retail securitised derivatives;

  2. (2)

    specialist securitised derivatives; and

  3. (3)

    other derivative products if the FCA has specifically approved their listing under this chapter.

Other derivative products

LR 19.1.2 R

For the purposes of this chapter, an issuer of other derivative products that have received the specific approval of the FCA to be listed under this chapter must comply with the rules applicable to an issuer of specialist securitised derivatives unless otherwise stated.

LR 19.1.3 R

The FCA will not admit to listing, under this chapter, other derivative products that are likely to be bought and traded by investors who are not specialist investors, unless the derivative product falls within the scope of specified investments in Part III of the Regulated Activities Order.

LR 19.2 Requirements for listing

LR 19.2.1 R

An applicant for the admission of securitised derivatives must comply with LR 2 (Requirements for listing - all securities) and the following requirements.

Requirements for listing: the issuer

LR 19.2.2 R

An applicant for the admission of securitised derivatives must either:

  1. (1)

    have permission under the Act to carry on its activities relating to securitised derivatives and be either a bank or a securities and futures firm;

  2. (2)

    if the applicant is an overseas company:

    1. (a)

      be regulated by an overseas regulator responsible for the regulation of banks, securities firms or futures firms and which has a lead regulation agreement for financial supervision with the FCA; and

    2. (b)

      be carrying on its activities relating to securitised derivatives within the approved scope of its business; or

  3. (3)

    arrange for its obligations in relation to the securitised derivatives, to be unconditionally and irrevocably guaranteed by, or benefit from an arrangement which is equivalent in its effect to such a guarantee provided by, an entity which satisfies (1) or (2).

Requirements for listing

LR 19.2.3 R

For a securitised derivative to be listed, its underlying instrument must be traded on a regulated, regularly operating, recognised open market, unless it is:

  1. (1)

    a currency; or

  2. (2)

    an index; or

  3. (3)

    an interest rate; or

  4. (4)

    a basket of any of the above.

LR 19.2.4 R

The FCA may modify or dispense with the requirement in LR 19.2.3 R for other derivative products.

Requirements for listing: retail products

LR 19.2.5 R

To be listed, a retail securitised derivative must:

  1. (1)

    satisfy the requirements set out in LR 19.2.3 R; and

  2. (2)

    not be a contingent liability investment.

LR 19.2.6 R

To be listed, if a retail securitised derivative gives its holder a right of exercise, its terms and conditions must provide that:

  1. (1)

    for cash settled securitised derivatives that are in the money at the exercise time on the expiration date, the exercise of the securitised derivative is automatic; or

  2. (2)

    for physically settled securitised derivatives that are in the money at the exercise time on the expiration date, if the holder fails to deliver an exercise notice by the time stipulated in the terms and conditions, the issuer will, irrespective of the failure to exercise, pay to the holder an amount in cash in lieu of the holders failure to deliver the exercise notice, the amount and method of calculation of this amount to be determined by the issuer.

LR 19.3 Listing applications

Listing application procedures

LR 19.3.1 R

An applicant for admission of securitised derivatives must comply with:

  1. (1)

    LR 3.2 (Application for admission to listing); and

  2. (2)

    LR 3.4.4 R to LR 3.4.8 R.1

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LR 19.3.2 R

In addition to the documents referred to in LR 3.4.6 R, an applicant for admission of securitised derivatives must keep a copy of the securitised derivative agreement or securitised derivative instrument or similar document for six years after the admission of the relevant securitised derivative.1

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LR 19.4 Continuing obligations

Application

LR 19.4.1 R

An issuer that has only securitised derivativelisted is subject to the continuing obligations set out in this chapter.

LR 19.4.2 R

An issuer that has both securitised derivatives and other securitieslisted is subject to the continuing obligations set out in this chapter and the continuing obligations that are applicable to the other securities so listed.

Admission to trading

LR 19.4.3 R
  1. (1)

    An issuer'slistedsecuritised derivatives must be admitted to trading on a RIE's market for listed securities at all times.

  2. (2)

    An issuer must inform the FCA in writing as soon as possible if it has:

    1. (a)

      requested a RIE to admit or re-admit any of its listedsecuritised derivatives to trading; or

    2. (b)

      requested a RIE to cancel or suspend trading of any of its listedsecuritised derivatives; or

    3. (c)

      been informed by a RIE that the trading of any of its listedsecuritised derivatives will be cancelled or suspended.

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LR 19.4.4 R

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LR 19.4.5 R

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LR 19.4.6 R

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LR 19.4.7 R

If an issue is guaranteed by an unlisted company, an issuer must submit the guarantor's accounts to the FCA.

LR 19.4.8 R

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LR 19.4.9 R

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Settlement arrangements

LR 19.4.10 R
  1. (1)

    An issuer must ensure that appropriate settlement arrangements for its listedsecuritised derivatives are in place.

  2. (2)

    Listedsecuritised derivatives must be eligible for electronic settlement, which includes settlement by a relevant system, as that term is defined in the Uncertificated Securities Regulations 1995 (SI 1995/3272).

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1Disclosure requirements and transparency rules

LR 19.4.11 R

An issuer must comply with the obligations referred to under articles 17 and 18 of the Market Abuse Regulation2 as if it were an issuer for the purposes of those obligations and2 the transparency rules, subject to article 22 of the Market Abuse Regulation2.

LR 19.4.11A G

1An issuer, whose securities are admitted to trading on a regulated market, should consider its obligations under DTR 4 (Periodic financial reporting), DTR 5 (Vote holder and issuer notification rules) and DTR 6 (Access to information).

LR 19.4.11B R

1For the purposes of compliance with the transparency rules, the FCA considers that an issuer of securitised derivatives should comply with DTR 4, DTR 5 and DTR 6 as if it were an issuer of debt securities as defined in the transparency rules.

LR 19.4.11C G

1An issuer that is not already required to comply with the transparency rules must comply with DTR 6.3 as if it were an issuer for the purposes of the transparency rules.

Documents of title

LR 19.4.12 R

An issuer must comply with the requirements in LR 9.5.15 R (temporary documents of title) and LR 9.5.16 R (definitive documents of title) so far as relevant to securitised derivatives.

LR 19.5 Disclosures

LR 19.5.1 R

An issuer must submit to the FCA two copies of any document required by LR 19.5.2 R to LR 19.5.10 R at the same time as the document is issued.

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LR 19.5.2 R

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LR 19.5.3 R

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LR 19.5.4 R

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LR 19.5.5 R

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LR 19.5.6 R

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LR 19.5.7 R

An issuer must notify a RIS of all notices to holders of listedsecuritised derivatives no later than the date of despatch or publication.

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LR 19.5.8 R

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Underlying instruments

LR 19.5.9 R

An issuer must notify a RIS of any adjustment or modification it makes to the securitised derivative as a result of any change in or to the underlying instrument including details of the underlying event that necessitated the adjustment or modification.

Suspension of listing

LR 19.5.10 R

An issuer must inform the FCA immediately if it becomes aware that an underlying instrument that is listed or traded outside the United Kingdom has been suspended.

Note: LR 5.1.2G (7) and (8) and LR 5.4.6 G are of relevance to an issuer of securitised derivatives.