Section 2 Flashcards
How does a UK firm get authorised?
Part 4A FSMA 2000 through FCA/PRA
How does an EEA member state firm get authorised?
Passport through EU directive (MiFID)
Brexit and passporting
From 1 January 2021, UK firms have no longer been able to ‘passport’ financial services in the EU, as UK firms are now classified as third country firms. UK and EU firms are therefore limited in their ability to provide financial services to EU and UK clients, respectively.
Many UK firms have responded to this by setting up subsidiaries in EEA countries and seeking local authorisation, so as to ensure they can continue to enjoy passporting rights across the EEA.
HM Treasury has granted ‘Temporary Transitional Powers’ that will enable EU firms, with a branch in the UK, or looking to set up a branch in the UK to continue to comply with the respective EU legislation as it stood on 31 December 2020 until the end of the temporary transitional period – which is 31 March 2022.
FCA firms threshold conditions representing minimum requirements
FCA (location of offices, effective supervision, appropriate resources, suitability, business model)
Dual-regulated firms threshold conditions representing minimum requirements
PRA (legal status, location of offices, effective supervision, prudent conduct, suitability)
FCA (effective supervision, appropriate non-financial resources, suitability, business model)
Exempt persons:
Appointed representatives, Lloyd’s syndicate members, members of designated professional bodies, recognised investment exchanges, recognised clearing houses, other exempted bodies.
Designated professional bodies (DPBs)
Accountants, actuaries, solicitors, surveyors, conveyancers. The members
of these bodies are exempt if the activity is incidental and they are not
separately remunerated for that activity.
Other exempted bodies
These include supranational bodies, governments and central banks.
Appointed representatives
Although appointed representatives do not require authorisation, any individual involved may require approval from the FCA if they are fulfilling a controlled function.
Recognised Investment Exchange (RIE)
UK exchanges which operate markets in investments, meeting certain
standards set by the FCA. The London Stock Exchange is an example.
Recognised Clearing House (RCH)
UK clearing houses recognised by the FCA as providing appropriate
standards of protection in the provision of clearing and settlement facilities
to certain markets. LCH.Clearnet and Euroclear UK & Ireland are the two
organisations granted this status.
Although exempt from the need for authorisation, DPBs and Lloyd’s syndicate members are:
Not classified by FSMA 2000 as exempt persons
