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REC 2.4 Suitability

REC 2.4.1UK

Schedule to the Recognition Requirements Regulations, Paragraph 2

2 (1) The [UK RIE] must be a fit and proper person to perform the [ relevant functions ] of a [ UK RIE ].

(2) In considering whether this requirement is satisfied, the [FCA]4 may (without prejudice to the generality of regulation 6(1)) take into account all the circumstances, including the [UK RIE's] connection with any person.

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2(3) The members of the management body5 must be of sufficiently good repute and possess sufficient knowledge, skill and experience to perform their duties5.

2(4) The persons who are in a position to exercise significant influence over the management of the [UK RIE], whether directly or indirectly must be suitable.

REC 2.4.2UK

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[deleted]

REC 2.4.3G

In determining whether a UK recognised body is a fit and proper person, the FCA4 may have regard to any relevant factor including, but not limited to:

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  1. (1)

    the commitment shown by the UK recognised body's management body5 to satisfying the recognition requirements and to complying with other obligations in or under the Act;

  2. (2)

    its arrangements, policies and resources for fulfilling its obligations under the Act in relation to its activities as a UK recognised body;

  3. (3)

    the extent to which its constitution and organisation provide for effective governance;

[Note: MiFID RTS 7 contains further governance requirements for a trading venue whose systems enable algorithmic trading]5

  1. (4)

    the arrangements made to ensure that its management body5 has effective oversight of the UK recognised body's relevant functions;

  2. (5)

    the access which its regulatory department has to the management body5;

  3. (6)

    [deleted]5

  4. (7)

    [deleted]5

  5. (8)

    [deleted]5

  6. (9)

    breaches of any relevant law, regulation or code of practice by the UK recognised body or its key individuals;

  7. (10)

    its arrangements for ensuring that it employs individuals who are honest and demonstrate high standards of integrity;

  8. (11)

    the effectiveness of its arrangements to control conflicts of interest (see also REC 2.5); and

  9. (12)

    the independence of its regulatory department from its commercial and marketing departments.

REC 2.4.4G

In determining whether a UK recognised body is a fit and proper person, the FCA4 may have regard to its connections with:

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  1. (1)

    any undertaking in the same group;

  2. (2)

    any owner or part-owner of the UK recognised body;

  3. (3)

    any person who has the right to appoint or remove members of the management body5;

  4. (4)

    any person who is able in practice to appoint or remove members of the management body5;

  5. (5)

    any person in accordance with whose instructions the management body5 is accustomed to act; and

  6. (6)

    any key individual in relation to the UK recognised body .

REC 2.4.5G

In assessing whether its connection with any person could affect whether a UK recognised body is a fit and proper person, the FCA4 may have regard to:

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  1. (1)

    the reputation and standing of that other person, including his standing with any relevant UK or overseas regulator;

  2. (2)

    breaches of any law or regulation by that other person;

  3. (3)

    the roles of any of the UK recognised body's key individuals who have a position within organisations under the control or influence of that other person, including their responsibilities in that organisation and the extent and type of their access to its senior management or governing body;

  4. (4)

    the extent to which the UK recognised body operates as a distinct entity notwithstanding its connection with that other person;

  5. (5)

    the extent to which the UK recognised body's management body5 is responsible for its day-to-day management and operations;

but nothing in this paragraph should be taken to imply any restriction on the ability of a UK recognised body to outsource any function to any person in a manner consistent with Regulation 6 of the Recognition Requirements Regulations.

REC 2.4.6G

2In assessing whether the persons who effectively direct the business and operations of the UK RIE are of sufficiently good repute and sufficiently experienced to ensure the sound and prudent management and operation of the financial markets operated by 3it, the FCA4 may have regard to the repute and experience of the UK RIE's key individuals.

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