# The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, Paragraph 3: Paragraph 4 of Part 1: exclusion of certain derivative contracts relating to currencies


(1) A derivative contract relating to a currency is not a financial instrument by virtue of the reference in paragraph 4 of Part 1 of this Schedule to “other derivative contracts” if the contract is—
(a) a spot contract as defined in sub-paragraph (2), or
(b) a means of payment that meets all the following conditions—
(i) it must be settled physically otherwise than by reason of a default or other termination event,
(ii) at least one of the parties is a person who is not a financial counterparty as defined in Article 2(8) of Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade depositories,
(iii) it is entered into in order to facilitate payment for identifiable goods, services or direct investment, and
(iv) it is not traded on a trading venue.
(2) For the purposes of sub-paragraph (1), a spot contract is a contract for the exchange of one currency against another currency, under the terms of which delivery is scheduled to be made within whichever of the following periods is applicable—
(a) where the contract for the exchange of those currencies is used for the main purpose of the sale or purchase of a transferable security or a unit in a collective investment undertaking, the period generally accepted in the market for the settlement of that transferable security or a unit in a collective investment undertaking as the standard delivery period or 5 trading days, whichever is shorter;
(b) in any other case—
(i) 2 trading days in respect of any pair of the major currencies specified in sub-paragraph (4), or
(ii) where at least one of the pair of currencies is not a major currency specified in sub-paragraph (4), the longer of 2 trading days or the period generally accepted in the market for that currency pair as the standard delivery period.
(3) A contract is not to be considered a spot contract where, irrespective of its explicit terms, there is an understanding between the parties to the contract that delivery of the currency is to be postponed and not to be performed within the period set out in sub-paragraph (2).
(4) The major currencies for the purposes of sub-paragraph (2) are the US dollar, Euro, Japanese yen, Pound sterling, Australian dollar, Swiss franc, Canadian dollar, Hong Kong dollar, Swedish krona, New Zealand dollar, Singapore dollar, Norwegian krone, Mexican peso, Croatian kuna, Bulgarian lev, Czech koruna, Danish krone, Hungarian forint, Polish złoty and Romanian leu.
(5) For the purposes of sub-paragraph (2), a trading day means any day of normal trading in the jurisdiction of both the currencies that are exchanged under the contract for the exchange of those currencies and in the jurisdiction of a third currency where any of the following conditions are met—
(a) the exchange of those currencies involves converting them through that third currency for the purposes of liquidity;
(b) the standard delivery period for the exchange of those currencies references the jurisdiction of that third currency.

---
Source: https://www.legislation.gov.uk/uksi/2001/544/schedule/2/part/2/paragraph/3 (the official version)
Page: https://openlegislation.uk/financial-services-and-markets-act-2000-regulated-activities-order-2001/schedule-2/part-2/paragraph-3
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.