OpenLegislation

Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Regulations)

These Regulations implement in part Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (OJ No L 145, 30.4.2004, p1) (“the Directive”). The Directive is also implemented by other statutory instruments including the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2007(S.I. 2007/126), the Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2007 (S.I. 2006/3386), the Financial Services and Markets Act 2000 (Recognition Requirements for Investment Exchanges and Clearing Houses) (Amendment) Regulations 2006 (S.I. 2006/3386) and the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment No. 3) Order 2006 (S.I. 2006/3384), and by the Financial Services Authority (“FSA”) using powers under the Financial Services and Markets Act 2000 (c. 8).

The Regulations amend the Financial Services and Markets Act 2000 (EEA Passport Rights) Regulations 2001 (S.I. 2001/2511) (“the principal Regulations”).

Changes made to implement Article 31 of the Directive (investment firms’ freedom to provide investment services and activities) are as follows:

  • amendments to regulation 3 of the principal Regulations to supplement the prescribed information which the home state regulator must provide to the FSA in relation to an EEA investment firm seeking to provide services in the UK;

  • the insertion of regulation 5A (which applies in place of regulation 5 of the principal Regulations) setting out the requirements to be complied with before an EEA investment firm which is providing services in the UK can make certain significant changes to its operations in the UK;

  • the insertion of regulation 12A (which applies in place of regulation 12 of the principal Regulations) setting out the requirements to be complied with before a UK investment firm which is providing services in another EEA State can make certain significant changes to its operations in that State.

Changes made to implement Article 32 of the Directive (investment firms’ freedom to establish a branch) are as follows:

  • amendments to regulation 2 of the principal Regulations to supplement the prescribed information which the home state regulator must provide to the FSA in relation to an EEA investment firm seeking to establish a branch in the UK;

  • the insertion of regulation 4A (which applies in place of regulation 4 of the principal Regulations) setting out the requirements to be complied with before an EEA investment firm which has established a branch in the UK can make certain significant changes to its operations in the UK;

  • the insertion of regulation 11A (which applies in place of regulation 11 of the principal Regulations) setting out the requirements to be complied with before a UK investment firm which has established a branch in another EEA State can make certain significant changes to its operations in that State.

The Regulations also make consequential amendments to the principal Regulations and transitional provision.

A transposition note has been prepared which sets out how the main elements of the Directive will be transposed into UK law. A Regulatory Impact Assessment of the effect of this instrument and the other instruments transposing the Directive on the costs of business has been prepared. Both may be obtained from the Financial Services Strategy Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ. They are also available on HM Treasury’s website (www.hm-treasury.gov.uk). Copies of both documents have been placed in the libraries of both Houses of Parliament.