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REC 3.18 Membership

30/04/2021G
  1. (1)

    The purpose of REC 3.18 is to enable the FCA to monitor changes in the types of member admitted by UK recognised bodies and to ensure that the FCA has notice of foreign jurisdictions in which the members of UK recognised bodies are based. UK recognised bodies may admit persons who are not authorised persons or persons who are not located in the United Kingdom, provided that the recognition requirements or (for RAPs) RAP recognition requirements continue to be met.

  2. (2)

    REC 3.18.2 R focuses on the admission of persons who are not authorised persons (whether or not they are located in the United Kingdom) and on whether the specific recognition requirement or (for a RAP) RAP recognition requirement relating to access to facilities can still be met. REC 3.18.3 R focuses on the admission of members from outside the UK and whether all relevant recognition requirements or (for a RAP) RAP recognition requirements can be met. In the case of investment firms and credit institutions, only UK entities will be eligible to bid on a RAP.

  3. (3)

    The information required under REC 3.18 is relevant to the FCA's supervision of the UK recognised body's obligations in relation to the enforceability of compliance with the UK recognised body's rules. It is also relevant to the FCA's broader responsibilities concerning integrity of the UK financial system and, in particular, its functions in relation to market abuse and financial crime. It may also be necessary in the case of members based outside the United Kingdom to examine the implications for the enforceability of default rules or collateral and the settlement of transactions, and thus the ability of the UK RIE to continue to meet the recognition requirements. It follows that the admission of a member from outside the United Kingdom who is not an authorised person could require notification under both REC 3.18.2 R and REC 3.18.3 R, although a single report from the UK recognised body covering both notifications would be acceptable to the FCA.

[Note: Paragraph 3A of the Schedule to the Recognition Requirements Regulations (REC 2.5.1UK) requires a UK RIE to inform the FCA about the content of a written agreement entered into with a member investment firm pursuing a market making strategy on a trading venue operated by the UK RIE]

30/04/2021R

Where a UK recognised body admits a member who is not an authorised person of a type of which, immediately before that time, that UK recognised body had not admitted to membership, it must immediately give the FCA notice of that event, and:

  1. (1)

    a description of the type of person whom it is admitting to membership; and

  2. (2)

    (in relation to a UK RIE ) particulars of its reasons for considering that, in admitting that type of person to membership, it is able to continue to satisfy the recognition requirement in paragraph 4(2)(a) of the Schedule to the Recognition Requirements Regulations which applies to it.

  3. (3)

    (in relation to a RAP) particulars of its reasons for considering that, in admitting that type of person to membership, it is able to continue to satisfy the RAP recognition requirement in regulation 20 of the RAP regulations (Access to auctions) which applies to it.

30/04/2021R

Where a UK recognised body admits for the first time a member whose head or registered office is in a jurisdiction from which that UK recognised body has not previously admitted members, it must immediately give the FCA notice of that event, and:

  1. (1)

    the name of that jurisdiction;

  2. (2)

    the name of any regulatory authority in that jurisdiction which regulates that member in respect of activities relating to specified investments or (for a RAP) relating to emissions auction products; and

  3. (3)

    particulars of its reasons for considering that, in admitting a member from that jurisdiction to membership, it is able to continue to satisfy the recognition requirements or (for a RAP) the RAP recognition requirements which apply to it.

21/06/2001G

A type of member means the description of any group of members to whom the same generic description could be applied. For example, the description of any group of members separately identified or defined in the rules might constitute a type of member for the purposes of this section.