Recognised Exchanges (CRR)

1.1

This Part applies to:

1. (1) a firm that is a CRR firm; and
2. (2) a CRR consolidation entity.

2.1

A recognised exchange includes an investment exchange (other than a UK regulated market or a recognised overseas investment exchange) where:

1. (1) the market structure condition; and
2. (2) in respect of the relevant asset that is traded or listed on that exchange, the asset liquidity condition;
3. are both satisfied.
4. (a) the market structure condition is that the investment exchange:
   1. (i) brings together or facilitates the bringing together of parties for the purpose of buying and selling interests in financial instruments;
   2. (ii) is authorised (or otherwise recognised) and subject to ongoing supervision by a regulator or other public authority;
   3. (iii) functions regularly on every business day in the relevant jurisdiction;
   4. (iv) functions based on non-discretionary rules defining:
   5. 1. (1) the conditions for the operation of the investment exchange;
      2. (2) access to or membership of the investment exchange;
      3. (3) admission of financial instruments to trading; and
      4. (4) suspension or removal of financial instruments from trading;
   6. (v) has a robust clearing and settlement mechanism, including operational robustness, consistent with international standards; and
   7. (vi) applies margining practices consistent with international standards to contracts listed in Annex II of CRR;
5. (b) the asset liquidity condition is:
   1. (i) the value of the relevant asset that is traded or listed on the investment exchange must be capable of being determined on the basis of widely disseminated and easily available market prices, and in the absence of market-based prices, the value of the relevant asset must be capable of being determined on the basis of an easy-to-calculate formula that uses publicly available inputs and is not significantly dependent upon strong assumptions; and
   2. (ii) the investment exchange provides for an active and sizable market for outright sales of the relevant asset, taking into account:
      1. (1) historical evidence of market breadth and depth as proven by low bid-ask spreads, high trading volume and a large and diverse number of market participants; and
      2. (2) the presence of a robust market infrastructure.

[Note: This rule specifies conditions for the purpose of paragraph (c) of Article 4(1)(72) of CRR]