Legislation – Financial Services and Markets Act 2023

There are currently no known outstanding effects for the Financial Services and Markets Act 2023, Cross Heading: Financial market infrastructure: piloting powers.

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. At the current time any known changes or effects made by subsequent legislation have been applied to the text of the legislation you are viewing by the editorial team. Please see ‘Frequently Asked Questions’ for details regarding the timescales for which new effects are identified and recorded on this site.

PART 1Regulatory framework

CHAPTER 2New regulatory powers

Financial market infrastructure: piloting powers

13Testing of FMI technologies or practices

(1)

The Treasury may by regulations make provision for the purposes of—

(a)

testing, for a limited period, the efficiency or effectiveness of the carrying on of FMI activities in a particular way, and

(b)

assessing whether or how relevant enactments should apply in relation to FMI activities carried on in that way.

(2)

The reference in subsection (1)(a) to FMI activities being carried on in a particular way includes a reference to—

(a)

the use of developing technology in the carrying on of FMI activities;

(b)

the adoption of new or different practices in the carrying on of FMI activities.

(3)

Provision made in regulations under subsection (1) is referred to in this group of sections as an FMI sandbox.

(4)

An FMI sandbox must specify or otherwise provide for—

(a)

the FMI activities to which the FMI sandbox arrangements relate;

(b)

the description—

(i)

of FMI entities eligible to participate in the FMI sandbox arrangements, and

(ii)

of any other persons (including in particular the users of services provided by FMI entities) eligible to so participate;

(c)

the limited period for which the FMI sandbox arrangements apply.

(5)

An FMI sandbox may confer functions on the appropriate regulator in connection with the implementation and operation of the FMI sandbox arrangements.

(6)

An FMI sandbox may—

(a)

provide for a relevant enactment not to apply for the purposes of the FMI sandbox arrangements;

(b)

provide for modifications in the application of a relevant enactment for those purposes;

(c)

provide for the application of a relevant enactment (with or without modifications) for those purposes;

but provision under this subsection may not amend, repeal or revoke a relevant enactment.

(7)

In the case of a relevant enactment that is a rule or another instrument made by an appropriate regulator, provision under subsection (6) may provide for the powers under that subsection to be exercisable by that regulator.

(8)

Schedule 4 contains further examples of types of provision that an FMI sandbox may make.

(9)

An FMI sandbox—

(a)

may be replaced by another FMI sandbox of the same or similar effect;

(b)

may have effect at the same time as one or more other FMI sandboxes.

(10)

Regulations under this section are subject to the negative procedure.

(11)

For the purposes of this group of sections—

(a)

“FMI entity” means—

(i)

a recognised investment exchange that is not an overseas investment exchange;

(ii)

a recognised CSD;

(iii)

the operator of a multilateral trading facility;

(iv)

the operator of an organised trading facility;

(v)

such other persons as may be specified in regulations under this section as eligible to participate in the FMI sandbox arrangements concerned;

(b)

“FMI activities” are any activities carried on as part of the business of an FMI entity;

(c)

“FMI sandbox arrangements” means any arrangements implemented as part of an FMI sandbox.

14Reports on FMI sandboxes

(1)

This section applies where the Treasury make regulations under section 13 implementing FMI sandbox arrangements.

(2)

The Treasury must prepare and publish a report on the FMI sandbox arrangements.

(3)

The report must be prepared by a date no later than the date specified in the regulations.

(4)

The report must contain—

(a)

a description of the FMI sandbox arrangements;

(b)

an assessment of the efficiency or effectiveness of those arrangements;

(c)

whether, and if so how, the Treasury propose exercising the power under section 15 in relation to those arrangements.

(5)

The Treasury must consult the appropriate regulator in preparing the report.

(6)

The appropriate regulator must provide to the Treasury such information or other assistance as the Treasury may require for the purposes of preparing the report.

(7)

The Treasury must lay a copy of the report before Parliament.

15Permanent implementation of arrangements tested under an FMI sandbox

(1)

This section applies where, after testing the efficiency or effectiveness of FMI sandbox arrangements implemented under an FMI sandbox, the Treasury determine that arrangements of the same or similar effect should have effect after the expiry of the FMI sandbox.

(2)

The Treasury may by regulations make provision implementing the FMI sandbox arrangements—

(a)

as tested under the FMI sandbox, or

(b)

with such variations as the Treasury consider appropriate.

(3)

Regulations under this section that implement FMI sandbox arrangements may be made before (as well as after) the expiry of the FMI sandbox concerned.

(4)

Regulations under this section may include provision that amends, repeals or revokes a relevant enactment.

(5)

Regulations under this section that amend, repeal or revoke any provision of primary legislation are subject to the affirmative procedure.

(6)

Regulations under this section to which subsection (5) does not apply are subject to the negative procedure.

16Regulations

(1)

A power to make regulations under this group of sections includes power conferring a discretion on an appropriate regulator, or another specified person, to do anything under, or for the purposes of, the regulations.

(2)

Before making regulations under this group of sections the Treasury must consult—

(a)

the appropriate regulators;

(b)

such other persons as the Treasury consider appropriate.

17Interpretation

(1)

This section applies for the purposes of this section and sections 13 to 16.

(2)

The “appropriate regulator”, in relation to an FMI sandbox, means the regulator specified in that sandbox as the appropriate regulator (and both of the regulators may be specified); and for this purpose “regulator” means—

(a)

the FCA, or

(b)

the Bank of England.

(3)

“Relevant enactment” means any provision made by or under—

(a)

FSMA 2000;

(b)

the Companies Act 2006;

F1(ba)

the Stock Transfer (Gilt-edged Securities) (CGO Service) Regulations 1985 (S.I. 1985/1144);

(c)

the Financial Markets Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979);

(d)

the Uncertificated Securities Regulations 2001 (S.I. 2001/3755);

(e)

the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226);

F2(ea)

the Government Stock Regulations 2004 (S.I. 2004/1611);

(eb)

the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692);

(f)

Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation);

(g)

Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments;

(h)

Regulation (EU) No 909/2014 of the European Parliament and of the Council of 23 July 2014 on improving securities settlement in the European Union and on central securities depositories;

(i)

Commission Delegated Regulation (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive;

F3(j)

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC.

(4)

The following terms are defined as follows—

“FMI activities” has the meaning given by section 13(11)(b);

“FMI entity” has the meaning given by section 13(11)(a);

“FMI sandbox” has the meaning given by section 13(3);

“FMI sandbox arrangements” has the meaning given by section 13(11)(c);

“this group of sections” means the sections referred to in subsection (1).

(5)

The following terms have the same meanings as in Part 18 of FSMA 2000—

“multilateral trading facility”;

“organised trading facility”;

“overseas investment exchange”;

“recognised investment exchange”;

“recognised CSD”.

(6)

The Treasury may by regulations amend subsection (3) so as to add to the list of relevant enactments.

(7)

Regulations under subsection (6) are subject to the affirmative procedure.