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Contents
- Preliminary Material
- Main Text
- Part I Financial Markets
- 1 Financial Markets and Exchanges
- Preliminary Material
- Introduction
- Origin and development
- Financial markets and instruments
- Markets and exchanges
- Financial crisis and financial reform
- UK regulatory reform
- Financial evolution
- 2 Exchange Review, Regulation, and Evolution
- Preliminary Material
- Introduction
- 2.01
- 2.02
- 2.03
- 2.04
- 2.05
- 2.06
- 2.07
- UK markets
- London Stock Exchange (LSE)
- London International Financial Futures Exchange (Euronext.LIFFE)
- London Metal Exchange (LME)
- ICE Futures Europe
- PLUS Stock Exchange
- SIX Swiss Exchange
- OMX
- Alternative trading systems
- CREST
- London Clearing House (LCH.Clearnet)
- Gilt and cheque clearing
- Exchange regulation, structure, and operation
- Market and exchange evolution
- 3 UK Central Banking and Financial Stability
- Preliminary Material
- The Bank of England
- The Bank as banker
- The Bank and monetary policy
- The Bank’s money market operations
- The Bank and financial stability
- 1 Financial Markets and Exchanges
- Part II UK Securities Markets
- 4 Recognized Investment Exchanges (RIEs) and Recognized Clearing Houses (RCHs)
- Preliminary Material
- Introduction
- Background
- Regulation under the Financial Services and Markets Act 2000
- Power to refuse recognition on grounds of excessive regulatory provision
- Recognition requirements
- 4.16
- 4.17
- 4.18
- UK bodies: general requirements
- 4.19
- 4.20
- 4.21
- Financial resources: paras 1 (RIEs) and 16 (RCHs) of the Schedule to the Recognition Requirements Regulations
- Suitability (paras 2 and 17)
- Systems and controls (paras 3 and 18)
- Safeguards for investors (paras 4 and 19)
- Admission of financial instruments to trading (UK RIEs only) (para 7A)
- Pre- and post- trade transparency requirements (UK RIEs only) (paras 4A and 4B)
- Promotion and maintenance of standards (paras 6 and 20)
- Rules and consultation (paras 7 and 21)
- Discipline (paras 8 and 22)
- Complaints (paras 9 and 23)
- Suspension and removal of financial instruments from trading
- Default rules
- Recognition requirements for overseas bodies
- Application procedure
- Supervision of recognized bodies
- Competition
- Immunity under s 291 FSMA
- The European framework
- Approval of overseas investment exchanges and clearing houses under the Insolvency Act 1989
- Designated investment exchange status
- MiFID II
- 5 The Listing, Prospectus, and Disclosure and Transparency Rules
- Preliminary Material
- Introduction
- Listing Rules
- 5.07
- Standard and premium listing
- Preliminary matters (LR 1)
- Requirements for listing (LR 2)
- Listing applications (LR 3)
- The Professional Securities Market (LR 4)
- Suspending, cancelling, and restoring listing (LR 5)
- Transfers between premium and standard listings (LR 5.4A)
- Additional requirements for premium listing (LR 6)
- Listing principles (LR 7)
- Sponsor regime (LR 8)
- Continuing obligations (LR 9)
- The Model Code (LR 9, Annex 1)
- Significant transactions (LR 10)
- Related party transactions (LR 11)
- Dealing in own securities and treasury shares (LR 12)
- Contents of circulars (LR 13)
- Standard listing (LR 14)
- Closed-ended investment funds (LR 15)
- Open-ended investment companies (LR 16)
- Debt and debt-like securities (LR 17)
- Certificates representing certain securities (LR 18)
- Securitized derivatives (LR 19)
- Miscellaneous securities (LR 20)
- Prospectus Rules
- 5.99
- 5.100
- Home and host member States
- When a prospectus is required (PR 1.2)
- Meaning of ‘offer to the public’ (ss 85(1) and 102B FSMA)
- Admission of securities to trading on a regulated market (s 85(2) FSMA)
- Exceptions to the requirements for a prospectus
- Exempt offers to the public (PR 1.2.2)
- Exempt admissions to trading (PR 1.2.3)
- General contents of prospectus (PR 2.1 and 2.3)
- Prospectus summary (PR 2.1.2)
- Format of prospectus (PR 2.2)
- Incorporation by reference (PR 2.4)
- Omission of information (PR 2.5)
- Approval and publication of prospectus (PR 3.1)
- Filing and publication of prospectus (PR 3.2)
- Supplementary prospectus (PR 3.4)
- Use of languages and third-country issuers (PR 4)
- Validity of prospectus (PR 5.1)
- Annual information update (PR 5.2)
- Passporting (PR 5.3)
- Persons responsible for a prospectus (PR 5.5)
- Schedules and building blocks
- Disclosure and Transparency Rules
- 5.154
- 5.155
- Disclosure of inside information (DTR 2.2)
- Delaying disclosure of inside information (DTR 2.5)
- Monitoring and control of inside information (DTR 2.6)
- Insider lists (DTR 2.8)
- Transactions by PDMRs and their connected persons (DTR 3)
- Periodic financial reporting (DTR 4)
- Notification of acquisitions or disposals of major shareholdings (DTR 5)
- Continuing obligations and access to information (DTR 6)
- Audit committee (DTR 7.1)
- Corporate governance (DTR 7.2)
- 6 Multilateral Trading Facilities (MTFs)
- Preliminary Material
- Introduction
- 6.01
- History/development
- Regulatory challenges posed by alternative trading infrastructure
- Pre-MiFID regime for alternative trading systems
- EU regulatory framework under MiFID
- Definition of an MTF
- Licensing requirement
- Obligations associated with the operation of an MTF
- Monitoring
- Transparency
- Other provisions specific to MTFs
- Other provisions of MiFID relevant to investment firms operating MTFs
- Capital requirements
- MiFID passport
- UK regulation of MTFs
- UK regulatory framework
- Licensing requirement: the requirement for authorization/exemption under the Financial Services and Markets Act 2000
- 6.71
- 6.72
- 6.73
- 6.74
- Operating an MTF (art 25D RAO)
- Agreeing
- ‘Carried on in the United Kingdom’: territorial scope of the UK regime
- Interpretation of the term ‘carried on in the United Kingdom’: application of the regime to inward provision of services
- Overseas persons exclusion
- Dealing as principal or agent
- Arranging
- Agreeing
- Licensing alternatives: authorization vs recognition
- Obligations specific to MTFs: superequivalent requirements
- General regulatory obligations of authorized firms operating MTFs
- Differences between RIEs and MTFs
- 6.111
- General
- Relationship with the FSA
- Regulated markets
- Rules
- Clearing and settlement
- Admission of financial instruments
- Monitoring and enforcement
- Communication of members and participants
- Safeguards for investors
- Systems and controls
- Monitoring and enforcement
- Suspension and removal of instruments
- Fees
- Regulatory capital and liquidity requirements
- Exemption from liability
- Insolvency protections
- Competition
- MiFID II/MiFIR
- 7 Transaction Reporting
- Preliminary Material
- Introduction
- Transaction reporting and market abuse
- Transaction reporting and the European Economic Area
- 7.16
- 7.17
- 7.18
- The European Securities and Markets Authority
- The UK market abuse regime
- Data quality
- History
- Application to firms
- Reportable instruments
- Approved reporting mechanisms
- Execution of a transaction
- Direct market access trading
- Outsourcing
- Identifying counterparties and instruments
- Trading capacities
- The future of transaction reporting
- 4 Recognized Investment Exchanges (RIEs) and Recognized Clearing Houses (RCHs)
- Part III UK Money, Debt, and Derivatives Markets
- 8 London Money Markets
- Preliminary Material
- Introduction
- Sterling money markets and the Financial Services and Markets Act 2000
- FSA regulation prior to 1 November 2007
- FSA regulation subsequent to 1 November 2007
- New client categorization regime: the Conduct of Business Sourcebook and the eligible counterparty regime
- MiFID business and the ECP regime
- Non-MiFID business and client categorization
- Disapplication of COBS requirements to business done with or for ECPs
- Effect of the abolition of the IPC Code
- MiFID II changes on the horizon
- Non-FSMA wholesale business: important market codes and market committees in the London money markets and gilts markets
- 9 UK Government Debt Management and the Gilt Market
- Preliminary Material
- Introduction
- Institutional structure for debt management
- Legal and institutional framework
- Debt management policy framework
- The gilt market
- DMO operations in the gilt market
- Short-term debt instruments (Treasury bills)
- Annex A
- 10 UK Derivatives and Commodities Markets
- Preliminary Material
- Introduction
- Derivatives
- Spot trading of commodities
- Organized markets in the UK
- OTC markets in the UK
- The future of the UK markets
- 8 London Money Markets
- Part IV UK Payment and Settlement
- 11 UK Payment Systems
- Preliminary Material
- Introduction
- Payment systems oversight
- Definition: the financial stability objective
- Overview: risks and objectives
- The Bank of England
- 11.50
- The Bank of England Act 1998
- The Banking Act 2009
- Publication of principles
- 11.54
- 11.55
- 11.56
- 11.57
- 11.58
- Core Principle I: ‘a well-founded legal basis’
- Core Principle II: ‘rules and procedures should enable participants to have a clear understanding of … the financial risks’
- Core Principle III: ‘the management of credit risks and liquidity risks’
- Core Principle IV: ‘prompt final settlement on the day of value’
- Core Principle V: ‘A system in which multilateral netting takes place should … [ensure] the timely completion of daily settlements’
- Core Principle VI: ‘Assets used for settlement should preferably be a claim on the central bank’
- Core Principle VII: ‘high degree of security and operational reliability, and should have contingency plans’
- Core Principle VIII: ‘a means of making payments which is practical for users and efficient for the economy’
- Core Principle IX: ‘objective and publicly disclosed criteria for participation, which permit fair and open access’
- Core Principle X: ‘governance arrangements should be effective, accountable and transparent’
- Core Principle XI: ‘The system should manage its business risks [to ensure] continuity’
- Core Principle XII: ‘The system should regularly review the risks’
- Core Principle XIII: ‘The system should understand and manage risks that are brought to the system as a result of … indirect participants’
- Core Principle XIV: ‘The systems should manage its outsourced relationships prudently’
- Failure to comply with the Principles and ‘compliance failure’
- Sanctions
- Financial penalties
- Other means employed by the Bank of England in oversight
- Oversight process
- International cooperation
- Bank of England assessment of the UK payment systems in the 2010 Payments Oversight Report
- Financial Markets and Insolvency (Settlement Finality) Regulations 1999
- Developing areas
- 12 UK Settlement
- Preliminary Material
- General
- CREST
- LCH.Clearnet Limited
- 11 UK Payment Systems
- Part V European Markets and Exchanges
- 13 The European System of Financial Supervision
- Preliminary Material
- Introduction
- The European Systemic Risk Board
- The European Supervisory Authorities
- Key EU legislative instruments
- Objectives
- Technical standards
- Guidelines and recommendations
- Opinions
- Consumer protection, including powers to prohibit or restrict financial activities temporarily
- Powers in case of breach of EU law
- Actions in emergency situations
- Settlement of disagreements between national competent authorities
- Direct EU-level supervisory powers
- Systemic risk
- Collection of information
- Common supervisory culture
- Colleges of Supervisors
- Recent EU instruments and legislative proposals: implications for the powers of the ESAs
- 13.58
- The CRA II Regulation
- The Alternative Investment Fund Management Directive (AIFMD)
- The Short Sales and CDS Regulation
- The proposed European Market Infrastructure Regulation (EMIR)
- The proposed Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation (MiFIR)
- Organization of the ESAs
- Joint bodies of the ESAs
- Accountability
- Impartiality
- Confidentiality
- Review
- Concluding remarks
- 14 Regulation and Consolidation of European Markets and Exchanges
- Preliminary Material
- Introduction
- The integration of European financial markets
- Exchanges as the traditional marketplaces in EU member States
- Regulation of the trading sector of securities markets: the Markets in Financial Instruments Directive (MiFID)
- The effects of MiFID
- Revision of the Markets in Financial Instruments Directive (MiFID II)
- Further EU legal Acts regulating the trade sector of securities markets
- Regulation of the post-trading sector of securities markets
- Regulation of the market for payments
- Consolidation of exchanges and financial markets
- Conclusion
- 15 European E-Commerce and E-Money
- Preliminary Material
- Introduction
- The Electronic Commerce Directive (ECD)
- Objectives
- ‘Country of origin’ approach
- Definition of ‘information society services’
- ‘Electronic commerce activities’; ‘electronic commerce communications’; ‘outgoing’ and ‘incoming’ ECA providers
- The effect of the ECD
- The Distance Marketing Directive (DMD)
- The Second Electronic Money Directive (2EMD)
- Conclusion
- 13 The European System of Financial Supervision
- Part VI International Markets and Exchanges
- 16 The Architecture of International Financial Regulation
- Preliminary Material
- Overview: the evolving international financial architecture
- The post-war Bretton Woods arrangements
- The post-Bretton Woods system
- The Asian crisis and the Financial Stability Forum
- The Financial Stability Board and the G20 processes
- The FSB
- International standards and standard-setting bodies
- Conclusion
- 17 International Settlement
- Preliminary Material
- General
- Clearstream
- Euroclear
- Related international settlement issues
- 18 Global Custody
- 19 Credit Rating Agencies
- Preliminary Material
- Introduction
- History/development
- The role and function of the credit rating agency
- The CRA industry
- International market regulation of the CRAs
- Issues facing CRAs and further proposals for reform
- Conclusion
- 20 US Equity Market Structure
- Preliminary Material
- Introduction
- Overview of significant laws governing US equity markets
- US financial system regulators
- Regulated equity market participants
- The US equity market structure
- The national market system
- Regulation NMS
- Non-NMS markets
- Current market structure policy issues
- The Dodd–Frank Act
- Regulation of trading
- Clearance and settlement
- 21 Hong Kong Markets and Exchanges
- Preliminary Material
- Introduction
- Background
- Hong Kong’s financial markets and institutions
- Hong Kong as Asia’s financial centre
- Financial law and regulation
- Financial regulatory framework
- Insurance
- Pensions
- Financial conglomerates
- Conclusion
- 22 Islamic Securities Exchanges
- Preliminary Material
- Introduction
- Principles of Islamic finance
- Country analysis
- International Islamic institutions
- The International Islamic Financial Market
- The Accounting and Auditing Organization for Islamic Financial Institutions
- The International Financial Services Board
- The Malaysia International Islamic Financial Centre
- The International Islamic Liquidity Management Corporation
- The Labuan International Business and Financial Centre
- The Kuala Lumpur Regional Centre for Arbitration
- Conclusion
- 16 The Architecture of International Financial Regulation
- Part I Financial Markets
- Further Material
