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REC 3.26 Proposals to make regulatory provision

Statutory power

REC 3.26.1G

1Under section 300B(1) of the Act (Duty to notify proposal to make regulatory provision), a UK RIE3 that proposes to make any regulatory provision must give written notice of the proposal to the FCA 4without delay.

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REC 3.26.2G

1Under section 300B(2) of the Act, the FCA 4may, by rules under section 293 (Notification requirements):

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  1. (1)

    1specify descriptions of regulatory provision in relation to which, or circumstances in which, the duty in section 300B(1) does not apply, or

  2. (2)

    1provide that the duty applies only to specified descriptions of regulatory provision or in specified circumstances.

REC 3.26.3G

1Under section 300B(3) of the Act, the FCA 4may also by rules under section 293:

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  1. (1)

    1make provision as to the form and contents of the notice required, and

  2. (2)

    1require the UK recognised body to provide such information relating to the proposal as may be specified in the rules or as the FCA 4may reasonably require.

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1Disapplication of duty to notify proposal to make regulatory provision

REC 3.26.4R

1The duty in section 300B(1) of the Act does not apply to any of the following:

  1. (1)

    any regulatory provision which is required under EU2 law or any enactment or rule of law in the United Kingdom; or

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  2. (2)
    1. (a)

      the specification of the standard terms of any derivative which a UK RIE proposes to admission to trading, or the amendment of the standard terms of any derivative already admitted to trading; or

    2. (b)

      the specification or any amendment of standard terms relating to the provision of clearing facilitation services4for any derivative; or

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    3. (c)

      the specification or any amendment of operating procedures which are reasonably consequential on any regulatory provision falling within (a) or (b); or

  3. (3)

    any regulatory provision which is expressed to have effect for no longer than three months which is made by a UK recognised body in response to an emergency event (including, without limitation, a war, terrorist attack or labour strike); or

  4. (4)

    any regulatory provision which does not impose a requirement (including any obligation or burden) on persons affected (directly or indirectly) by it; or

  5. (5)

    any other regulatory provision which has not been excluded under (1), (2), (3) or (4) other than any such provision which (taken together with any other regulatory provision not otherwise the subject of a notice under section 300B(1) of the Act):

    1. (a)

      materially increases disclosure, reporting or corporate governance requirements imposed on any person (whether directly or indirectly); or

    2. (b)

      imposes a material limitation affecting any person (whether directly or indirectly including, without limitation, through an amendment to fees or charges) on the type or nature of financial instruments which may be listed or the subject of admission to trading on the facilities operated by the UK RIE proposing to make the regulatory provision; or

    3. (c)

      materially limits access to, or use by, any person (whether directly or indirectly including, without limitation, through an amendment to fees or charges) of the facilities operated by the UK recognised body proposing to make the regulatory provision;5 or

    4. (d)

      materially limits or restricts the ability of any person to supply services (including, without limitation, trading, clearing, settlement or information services) to persons who are users of the facilities operated by the UK RIE proposing to make the regulatory provision (whether directly or indirectly, including by the imposition of an obligation or burden on the supplier or on a user of the UK RIE); or5

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    5. (e)

      materially adds to the circumstances in which any person (whether directly or indirectly) may be liable to penalties or other sanctions or have liability in damages.5

Notice to the FCA

REC 3.26.5R

1A notice under section 300B(1) of the Act of a proposal to make a regulatory provision must be in writing and state expressly that it is a notice for the purpose of that section. To be effective, a notice must:

  1. (1)

    1contain full particulars of the proposal to make a regulatory provision which is the subject of that notice; and

  2. (2)

    1either be accompanied by sufficient supporting information to enable the FCA 4to assess the purpose and effect of the proposed regulatory provision or refer to such information in circumstances where such information has already been provided to the FCA.4

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REC 3.26.6G

1In determining whether a UK RIE 3has provided sufficient supporting information, the FCA 4may have regard to the extent to which the information includes:

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  1. (1)

    1clearly expressed reasons for the proposed regulatory provision; and

  2. (2)

    1an appropriately detailed assessment of the likely costs and benefits of the proposed regulatory provision.

REC 3.26.7R

1A UK RIE 3must provide such additional information in connection with a notice under section 300B(1) of the Act as the FCA 4may reasonably require.

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REC 3.26.8G

1Where a UK RIE 3wishes to give notice to the FCA 4for the purposes of section 300B(1) of the Act, it should in the first instance inform its usual supervisory contact at the FCA.4

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REC 3.26.9G

1The FCA 4expects that an advanced draft of any consultation document a UK RIE 3intends to publish in connection with a proposed regulatory provision could provide some or all of the information described in REC 3.26.5 R.3

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