REC 2.6 General safeguards for investors, suspension and removal of financial instruments from trading and order execution on regulated markets

In determining whether:

1. (1)

   business conducted by means of a UK RIE'sfacilities is conducted so;

2. (2)

   [deleted]

as to afford proper protection to investors, the FCA may, in addition to the matters dealt with in REC 2.7 to REC 2.12, have regard to all the arrangements made by the UK recognised body concerning the operation of its facilities.

The FCA may also have regard to the extent to which the UK recognised body's rules, procedures and the arrangements for monitoring and overseeing the use of its facilities:

1. (1)

   include appropriate measures to prevent the use of its facilities for abusive or improper purposes;

2. (2)

   provide appropriate safeguards for investors against fraud or misconduct, recklessness, negligence or incompetence by users of its facilities;

3. (3)

   provide appropriate information to enable users of its facilities to monitor their use of the facilities;

4. (4)

   include appropriate arrangements to enable users of its facilities to raise queries about any use of those facilities which they are reported to have made;

5. (5)

   include appropriate arrangements to enable users of its facilities to comply with any relevant regulatory or legal requirements; and

6. (6)

   include appropriate arrangements to reduce the risk that those facilities will be used in ways which are incompatible with relevant regulatory or legal requirements;

and in this paragraph "appropriate" should be taken to mean appropriate having regard to the nature and scale of the UK recognised body'sfacilities, the types of persons who will use the facilities and the use which they will make of those facilities.

In determining whether a UK RIE is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the FCA may have regard to the extent to which the UK RIE's rules and procedures:

1. (1)

   are consistent with the Market Abuse Regulation;

2. (2)

   prohibit abusive trading practices or the deliberate reporting or publication of false information about trades; and

3. (3)

   prohibit or prevent:

   1. (a)

      trades in which a party is improperly indemnified against losses;

   2. (b)

      trades intended to create a false appearance of trading activity ("wash trades");

   3. (c)

      cross trades executed for improper purposes;

   4. (d)

      improperly prearranged or prenegotiated trades;

   5. (e)

      trades intended to assist or conceal any potentially identifiable trading abuse ("accommodation trades"); and

   6. (f)

      trades which one party does not intend to close out or settle.

In determining whether a UK RIE is ensuring that business conducted by means of its facilities is conducted in an orderly manner (and so as to afford proper protection to investors), the FCA may have regard to whether the UK RIE's arrangements and practices:

1. (1)

   enable members and clients for whom they act to obtain the best price available at the time for their size and type of trade;

2. (2)

   demonstrate that the UK RIE is able to satisfy:

   1. (a)

      either or both of the following:

      1. (i)

         (for shares, depositary receipts, exchange traded funds, certificates and other similar financial instruments traded on its trading venues) the pre-trade transparency requirements in article 3 of MiFIR, unless waived by the FCA under article 4 of MiFIR in which case the FCA will have regard to the UK RIE’s ability to demonstrate that it is able to satisfy article 5(7) of MiFIR; or

      2. (ii)

         (for bonds, structured finance products, emission allowances and derivatives traded on its trading venues) the pre-trade transparency requirements in article 8 of MiFIR, unless waived or temporarily suspended by the FCA under article 9 of MiFIR; and

   2. (b)

      either or both of the following:

      1. (i)

         (for shares, depositary receipts, exchange traded funds, certificates and other similar financial instruments traded on its trading venues) the post-trade transparency requirements set out in article 6 of MiFIR, unless the FCA has provided for deferred publication in accordance with article 7 of MiFIR; or

      2. (ii)

         (for bonds, structured finance products, emission allowances and derivatives traded on its trading venues) the directly applicable post-trade transparency requirements set out in article 10 of MiFIR, unless the FCA has provided for deferred publication or temporarily suspended such post-trade transparency requirements in accordance with article 11 of MiFIR. In the event the FCA has provided for deferred publication of the post-trade transparency requirements, regard would be had to the UK RIE’s ability to demonstrate that it is able to satisfy any other requests made by the FCA pursuant to article 11(3) of MiFIR; and

   3. (c)

      (for all financial instruments referred to in REC 2.6.29G(2)(a) or REC 2.6.29(2)(b) traded on its trading venue) the obligation to make pre-trade and post-trade data available separately and on a reasonable commercial basis in accordance with articles 12 and 13 of MiFIR, and MiFID RTS 14 on the specification of the offering of pre-trade data and post-trade data and the level of disaggregation.

3. (2A)

   [deleted]

4. (3)

   [deleted]

5. (4)

   [deleted]

In addition to the matters set out in REC 2.6.29G, the FCA may have regard to the UK recognised body’s compliance with relevant requirements of MiFID RTS 7 on the prevention of disorderly trading conditions.