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REC 2.7 Access to facilities

REC 2.7.1UK

Schedule to the Recognition Requirements Regulations, Paragraph 4(2)(a)

2Without prejudice to the generality of sub-paragraph [4(1)], the [UK RIE] must ensure that -

access to the [UK RIE's] facilities is subject to criteria designed to protect the orderly functioning of the market and the interests of investors and is in accordance with paragraph 7B;

REC 2.7.1AUK

Schedule to the Recognition Requirements Regulations, Paragraph 7B

2(1)

The [UK RIE] must make transparent and non-discriminatory rules, based on objective criteria, governing access to, or membership of, its facilities.

(2)

In particular those rules must specify the obligations for users or members of its facilities arising from -

(a)

the constitution and administration of the [UK RIE];

(b)

rules relating to transactions on the market;

(c)

its professional standards for staff of any investment firm or credit institution having access to or membership of a financial market operated by the [UK RIE];

(d)

conditions established under sub-paragraph (3)(c) for access to or membership of a financial market operated by the [UK RIE] by persons other than investment firms or credit institutions; and

(e)

the rules and procedures for clearing and settlement of transactions concluded on a financial market operated by the [UK RIE].

(3)

Rules of the [UK RIE] about access to, or membership of, a financial market operated by it must permit the [UK RIE] to give access to or admit to membership (as the case may be) only -

(a)

an investment firm,

(b)

a credit institution, or

(c)

a person who -

(i)

is fit and proper,

(ii)

has a sufficient level of trading ability and competence,

(iii)

where applicable, has adequate organisational arrangements, and

(iv)

has sufficient resources for the role he is to perform, taking into account the [UK RIE's] arrangements under paragraph 4(2)(d).

(4)

Rules under this paragraph must enable -

(a)

an investment firm authorised under Article 5 of [MiFID], or

(b)

a credit institution authorised under the Banking Consolidation Directive,

by the competent authority of another EEA State (including a branch established in the United Kingdom of such a firm or institution) to have direct or remote access to or membership of, any financial market operated by the [UK RIE] on the same terms as a UK firm.

(5)

The [UK RIE] must make arrangements regularly to provide the [FCA]3 with a list of users or members of its facilities.

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(6)

This paragraph is without prejudice to the generality of paragraph 4.

REC 2.7.1BUK

Schedule to the Recognition Requirements Regulations, Paragraph 7C

2(1)

This paragraph applies to [a UK RIE] which provides central counterparty, clearing or settlement facilities.

(2)

The [UK RIE] must make transparent and non-discriminatory rules based on objective criteria, governing access to those facilities.

(3)

The rules under sub-paragraph (2) must enable an investment firm or a credit institution authorised by the competent authority of another EEA State (including a branch established in the United Kingdom of such a firm or institution) to have access to those facilities on the same terms as a UK firm for the purposes of finalising or arranging the finalisation of transactions in financial instruments.

(4)

The [UK RIE] may refuse access to those facilities on legitimate commercial grounds.

REC 2.7.2UK

[deleted]3

REC 2.7.2AUK

[deleted]3

REC 2.7.3G

In assessing whether access to a UK recognised body's facilities is subject to criteria designed to protect the orderly functioning of the market, or of those facilities, and the interests of investors, the FCA3 may have regard to whether:

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  1. (1)

    the UK recognised body limits access as a member to persons:

    1. (a)

      over whom it can with reasonable certainty enforce its rules contractually;

    2. (b)

      who have sufficient technical competence to use its facilities;

    3. (c)

      whom it is appropriate to admit to membership having regard to the size and sophistication of users of its facilities and the nature of the business effected by means of, or cleared through, its facilities; and

    4. (d)

      (if appropriate) who have adequate financial resources in relation to their exposure to the UK recognised body or its central counterparty;

  2. (2)

    [deleted]2

    2
  3. (3)

    indirect access to the UK recognised body'sfacilities is subject to suitable criteria, remains the responsibility of a member of the UK recognised body and is subject to its rules; and

  4. (4)

    where access is granted to members outside the United Kingdom, there are adequate safeguards against financial crime (see also REC 2.10).

REC 2.7.3AG

2REC 2.7.3 G does not apply to a UK RIE's arrangements to grant access to investment firms or credit institutions.

Electronic access

REC 2.7.4G

The FCA3 may have regard to the arrangements made to permit electronic access to the UK recognised body's facilities and to prevent and resolve problems likely to arise from the use of electronic systems to provide indirect access to its facilities by persons other than its members, including:

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  1. (1)

    the rules and guidance governing members' procedures, controls and security arrangements for inputting instructions into the system;

  2. (2)

    the rules and guidance governing the facilities members provide to clients to input instructions into the system and the restrictions placed on the use of those systems;

  3. (3)

    the rules and practices to detect, identify, and halt or remove instructions breaching any relevant restrictions;

  4. (4)

    the quality and completeness of the audit trail of any transaction processed through an electronic connection system; and

  5. (5)

    procedures to determine whether to suspend trading by those systems or access to them by or through individual members.