OpenLegislation

Explanatory note

Original text. Later amendments are not shown.

(This note is not part of the Regulations)

These Regulations are made in connection with the revocation by section 1(1) of, and Part 3 of Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29) of 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 (“the Commission Delegated Regulation”).

These Regulations restate with modifications the following provisions of the Commission Delegated Regulation—

  • Article 2(6), which defines “commodity” (see regulation 3(2)(b) of these Regulations);

  • Articles 5, 7, 8, 10 and 11, which contain supplementary provisions relating to the list of financial instruments in Part 1 of Schedule 2 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (“the Regulated Activities Order”) (see the new Part 2 substituted in Schedule 2 to that Order by regulation 7(2) of these Regulations);

  • Article 18, which relates to the meaning of “algorithmic trading” in the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701) (see the amendment made by regulation 13(2)(b) of these Regulations);

  • Article 19(1) to (4), which relate to the meaning of “a high message intraday rate” for the purposes of certain definitions of “high-frequency algorithmic trading” (see the amendments made by regulations 10 and 13(3) of these Regulations);

  • Article 20, which relates to the cases in which a person is to be regarded as having “direct electronic access” to a trading venue (see the amendment made by 13(2)(b) of these Regulations);

  • Article 80, which relates to circumstances constituting significant damage to investors’ interests and the orderly functioning of the market, so far as that Article relates to the Financial Conduct Authority or a recognised investment exchange (see the amendments made by regulations 2 and 11 of these Regulations).

These Regulations contain related amendments dealing with the interpretation of provisions about algorithmic trading in Schedule 3 to the Regulated Activities Order and in the Recognition Requirements Regulations (see the amendments made by paragraphs 8(3) and 9(3) of these Regulations).

These Regulations also contain—

  • amendments consequential on the restatement of those provisions in amendments made by these Regulations,

  • amendments consequential on the revocation of provisions of the Commission Delegated Regulation that are to be replaced by rules made by the Financial Conduct Authority under the Financial Services and Markets Act 2000 (c. 8), and

  • in regulation 8(2), an amendment correcting a cross-reference in text that was inserted in Schedule 3 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 by the Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018 (S.I. 2018/1403).

The consequential amendments include (in Part 4) amendments of assimilated direct legislation that remains in force but is also to be revoked by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023.

Regulation 17 makes saving provision in relation to PISCES operators governed by the Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025 (S.I. 2025/583) to exclude them from the application of the amendments made by these Regulations.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.