Qualifying for authorisation under the Act

Part

SUP Supervision manual

Chapter

Qualifying for authorisation under the Act

Printed on: 15/05/2024

Rulebook at: 03/03/2014

SUP 13A

Qualifying for authorisation under the Act

SUP 13A.1

Application and purpose

01/02/2006

Application

SUP 13A.1.1

(1) This chapter applies to an EEA firm that wishes to exercise an entitlement to establish a branch in, or provide cross border services into, the United Kingdom under a Single Market Directive or the auction regulation. (The Act refers to such an entitlement as an EEA right and its exercise is referred to in the Handbook as "passporting".) (See SUP App 3 (Guidance on passporting issues) for further guidance on passporting.)

(2) This chapter also applies to:

(a) a Treaty firm that wishes to exercise rights under the Treaty in respect of regulated activities, those rights not being covered by passporting rights provided by the Single Market Directives, and qualifies for authorisation under Schedule 4 to the Act (Treaty Rights); and

(b) a UCITS qualifier, that is, an operator, trustee or depositary of a recognised collective investment scheme, constituted in another EEA State, and which qualifies for authorisation under Schedule 5 to the Act (Persons concerned in collective investment schemes).

(3) The provisions implementing the Single Market Directives are within the coordinated field (see PERG 2.9.18G (1)). So, where an incoming ECA provider intends to provide electronic commerce activity that consists of activities that fall within one of the Single Market Directives, the passporting requirements on exercising an EEA right in this chapter will apply.

01/04/2013

SUP 13A.1.2

This chapter does not apply to:

(1) an EEA firm that wishes to carry on in the United Kingdom activities which are outside the scope of its EEA right and the scope of a permission granted under Schedule 4 to the Act; in this case the EEA firm requires a "top-up permission" under Part 4A of the Act (see the appropriate UK regulator's website http://www.fca.org.uk/firms/about-authorisation/getting-authorised for the FCA and www.bankofengland.co.uk/pra/Pages/authorisations/newfirm/default.aspx for the PRA); or
(2) an EEA firm that carries on any insurance activity:

(a) by the provision of services; and
(b) pursuant to a community co-insurance operation in which the firm is participating otherwise than as leading insurer (see Article 11 of the Regulated Activities Order); or

(3) a Treaty firm that wishes to provide electronic commerce activities into the United Kingdom; or
(4) a market operator that operates a regulated market or an MTF in an EEA State other than the UK and wishes to make appropriate arrangements so as to facilitate access to and use of its system by remote users or participants in the UK. See SUP App 3.6.25 G for guidance.

01/04/2013

SUP 13A.1.3

(1) Under the Gibraltar Order made under section 409 of the Act, a Gibraltar firm is treated as an EEA firm under Schedule 3 to the Act if it is:

(a) authorised in Gibraltar under the Insurance Directives; or
(aA) authorised in Gibraltar under the Reinsurance Directive; or
(b) authorised in Gibraltar under the CRD; or
(c) authorised in Gibraltar under the Insurance Mediation Directive; or
(d) authorised in Gibraltar under the MiFID;
(e) authorised in Gibraltar under the UCITS Directive.

(1A) Similarly, an EEA firm which:

(a) has satisfied the Gibraltar establishment conditions and has established a branch in the UK; or
(b) has satisfied the Gibraltar service conditions and is providing cross border services into the UK;

is treated as having satisfied the establishment conditions or service conditions (as appropriate) under Schedule 3 to the Act. Regulations 4 to 7 of the EEA Passport Rights Regulations will apply to the establishment of the branch or the provision of cross border services.
(2) Gibraltar insurance companies, credit institutions, insurance intermediaries, investment firms and management companies are allowed to passport their services into the United Kingdom if they comply with the relevant notification procedures. So, any references in this chapter to EEA State or EEA right include references to Gibraltar and the entitlement under the Gibraltar Order where appropriate.
(3) [deleted]

28/02/2014

Purpose

SUP 13A.1.4

(1) This chapter explains how an EEA firm and a Treaty firm can qualify for authorisation under Schedules 3 and 4 to the Act and how a UCITS qualifier is authorised under Schedule 5 to the Act.

(2) This chapter also provides guidance on Schedule 3 to the Act for an incoming EEA firm that wishes to establish a branch in the United Kingdom instead of, or in addition to, providing cross border services into the United Kingdom or vice versa.

01/04/2013

SUP 13A.1.5

(1) EEA firms should note that this chapter only addresses the procedures which the appropriate UK regulator will follow under the Act.So, an EEA firm should consider this guidance in conjunction with the requirements with which it will have to comply in its Home State.

(2) The guidance in this chapter represents the appropriate UK regulator's interpretation of the Single Market Directives, the auction regulation,the Act and the secondary legislation made under the Act. The guidance is not exhaustive and should not be seen as a substitute for a person consulting the legislation or taking legal advice.

01/04/2013

SUP 13A.2

EEA firms and Treaty firms

01/02/2006

SUP 13A.2.1

A person will only be an EEA firm or a Treaty firm if it has its head office in an EEA State other than the United Kingdom. EEA firms and Treaty firms are entitled to exercise both the right of establishment and the freedom to provide services under the Treaty. The difference, however, is that an EEA firm has a right to passport under a Single Market Directive or the auction regulation, whereas a Treaty firm carries on activities for which the right to carry on those activities does not fall within the scope of a Single Market Directive or the auction regulation. An EEA firm may also be a Treaty firm if it carries on such activities. A person may be a Treaty firm, where, for example, it carries on business thatincludes regulated activities, the right to carry on which does not fall within the scope of the Single Market Directiveor the auction regulationunder which it is entitled to exercise an EEA right, for example, reinsurance in the case of a direct insurer to which the Insurance Directives apply.

(1) [deleted]

(2) [deleted]

01/04/2013

SUP 13A.2.2

An EEA firm may passport those activities which fall within the scope of the relevant Single Market Directiveor the auction regulationas long as they are included in its Home State authorisation.

01/04/2013

SUP 13A.3

Qualifications for authorisation under the Act

01/02/2006

EEA firms

SUP 13A.3.1

Section 31 of the Act (Authorised persons) states that an EEA firm is authorised for the purposes of the Act if it qualifies for authorisation under Schedule 3 to the Act (EEA Passport Rights). Under paragraph 12 of Part II of that Schedule, an EEA firmthat is an EEA pure reinsurer, or an EEA firm that has received authorisation under article 18 of the auction regulation, qualifies for authorisation without condition. Other than those two types of EEA firm, an EEA firm qualifies for authorisation if:

(1) it is seeking to establish a branch in the United Kingdom in exercise of an EEA right and satisfies the establishment conditions (see SUP 13A.4.1 G and SUP 13A.4.2 G); or

(2) it is seeking to provide cross border services into the United Kingdom in exercise of an EEA right and satisfies the service conditions (see SUP 13A.5.3 G).

01/04/2013

SUP 13A.3.1A

If an EEA MiFID investment firm seeks to use a tied agent established in the UK, the EEA MiFID investment firm will be treated as if it were seeking to establish a branch and must satisfy the establishment conditions (see SUP 13A.4.1 G).

01/04/2013

SUP 13A.3.1B

A pure reinsurer with its head office in an EEA State that has not fully implemented the Reinsurance Directive may nevertheless be accepted as satisfying the conditions to be an EEA pure reinsurer if the firm provides satisfactory evidence that the prudential requirements of the Reinsurance Directive have been implemented by that EEA State and that they apply to the firm. The firm may then be deemed to be authorised under the Reinsurance Directive in that EEA State.

01/04/2013

SUP 13A.3.2

(1) On qualifying for authorisation, subject to SUP 13A.3.1C G (1), an EEA firm (except for an EEA firm that has received authorisation under article 18 of the auction regulation) will have permission to carry on each permitted activity (see (3) below) which is a regulated activity.

(2) [deleted]

(3) The permitted activities of an EEA firm (except for an EEA firm that has received authorisation under article 18 of the auction regulation) are those activities identified in the consent notice, regulator's notice or notice of intention. Those permitted activities may include activities that are within the scope of a Single Market Directive but which are unregulated activities in the United Kingdom.

(3A) An EEA firm that received authorisation under article 18 of the auction regulation has permission to carry on bidding in emissions auctions.

(4) The permission will be treated as being on terms equivalent to those appearing in the consent notice, regulator's notice, notice of intention or (in respect of an EEA firm that has received authorisation under article 18 of the auction regulation) to those appearing in the authorisation granted to the EEA firm under article 18 of the auction regulation. For example, it will reflect any limitations or requirements which are included in the firm's Home State authorisation.

01/04/2013

SUP 13A.3.3

An EEA firm which has qualified for authorisation is referred to in the Handbook as an incoming EEA firm.

01/04/2013

Treaty firms

SUP 13A.3.4

Under section 31 of the Act, a Treaty firm is authorised for the purposes of the Act if it qualifies for authorisation under Schedule 4 (Treaty Rights), that is:

(1) the Treaty firm is seeking to carry on a regulated activity; and

(2) the conditions set out in paragraph 3(1) of Schedule 4 to the Act are satisfied.

01/04/2013

SUP 13A.3.5

On qualifying for authorisation a Treaty firm will have permission to carry on each permitted activity which is a regulated activity. This permission will be treated on the same terms as those which apply to the Treaty firm's Home State authorisation. For example, it will reflect any limitations or requirements which are included in the firm's Home State authorisation.

01/04/2013

SUP 13A.3.6

The effect of paragraph 5(1) and 5(2) of Schedule 4 to the Act is that a Treaty firm which qualifies for authorisation under that Schedule must, at least seven days before it carries on any of the regulated activities covered by its permission, give the appropriate UK regulator written notice of its intention to do so. Failure to do so is a criminal offence under paragraph 6(1) of that Schedule.

01/04/2013

SUP 13A.3.6A

Where the PRA receives a notification, it will give a copy to the FCA, and where the FCA receives a notification, it will give a copy to the PRA where relevant.

01/04/2013

SUP 13A.3.7

(1) A written notice from a Treaty firm under paragraph 5(2) of Schedule 4 to the Act must be:

(a) addressed for the attention ofthe authorisations team in the PRA or FCA, as appropriate; and

(b) delivered to the appropriate UK regulator by one of the methods in (2).

(2) The written notice may be delivered by:

(a) post to either of the following addresses, as appropriate:

(i) the address for notices to the FCA: The Financial Conduct Authority, 25 The North Colonnade, Canary Wharf, London, E14 5HS; or

(ii) the address for notices to the PRA: The Prudential Regulation Authority, 20 Moorgate, London, EC2R 6DA; or

(b) leaving the application at the address in SUP 13A.3.9 G below and obtaining a time-stamped receipt; or

01/04/2013

SUP 13A.3.8

The written notice required by paragraph 5(2) of Schedule 4 to the Act should be accompanied by confirmation of the Treaty firm's authorisation from the Home State regulator, as referred to in paragraph 3(2) of Schedule 4 to the Act.

01/04/2013

SUP 13A.3.9

(1) For further information, a Treaty firm should contact the FCA and/or PRA authorisations teams using the details provided on that regulator's website.

01/04/2013

SUP 13A.3.10

(1) The guidance in PERG 2 is relevant to Treaty firms to help them determine if they require authorisation under the Act.

(2) A Treaty firm which qualifies for authorisation is referred to in the Handbook as an incoming Treaty firm.

01/04/2013

SUP 13A.3.11

(1) An EEA firm that is carrying on both direct insurance and reinsurance business will be entitled to passport under Schedule 3 to the Act in relation to the direct insurance business. It will also have a Treaty right under Schedule 4 to the Act in relation to the reinsurance business if the firm has received Home State authorisation for the regulated activity of effecting and/or carrying out the relevant class of insurance business that includes reinsurance business for that class and the relevant provisions of the law of the Home State satisfy the conditions laid down by the Insurance Directives relating to the carrying on of that activity (see SUP App 3.10.13 G).

(1A) An insurance company with its head office in an EEA State other than the United Kingdom that is carrying on pure reinsurance business in that State, and which has received authorisation (or is deemed to be authorised) under the Reinsurance Directive from its Home State (an EEA pure reinsurer), has an automatic EEA right to passport into the United Kingdom by establishing a branch in the United Kingdom or by the provision of cross border services. Under the General Protocol, Home State regulators have agreed to inform Host State regulators if a pure reinsurer carries on business through a branch in the Host State.

(2) An insurance company with its head office in an EEA State other than the United Kingdom that is carrying on pure reinsurance business in that State, and which wishes to carry on such business in the United Kingdom and is authorised by its Home State but not yet under the Reinsurance Directive, is advised to discuss its particular requirements with the authorisations team in the PRA. It may be entitled to exercise a Treaty right provided it satisfies the conditions in paragraph 3(1) of Schedule 4 to the Act (see SUP 13A.3.4 G). Otherwise, it will have to seek a Part 4A permission (see www.bankofengland.co.uk/pra/Pages/authorisations/newfirm/default.aspx ).

01/04/2013

SUP 13A.4

EEA firms establishing a branch in the United Kingdom

01/02/2006

The conditions for establishing a branch

SUP 13A.4.2

Where an EEA firm exercises its EEA right to establish a branch in the United Kingdom under the Insurance Mediation Directive, the Act requires it to satisfy the establishment conditions, as set out in paragraph 13(1A) of Part II of Schedule 3 to the Act.

01/04/2013

SUP 13A.4.3

For the purposes of paragraph 13(2)(b) of Part II of Schedule 3 to the Act, the applicable provisions may include the appropriate UK regulator's rules. The EEA firm is required to comply with relevant rules when carrying on a passported activity through a branch in the United Kingdom as well as with relevant UK legislation.

01/04/2013

SUP 13A.4.3A

Guidance on the matters that are reserved to a firm's Home State regulator is located in SUP 13A Annex 2.

01/04/2013

The notification procedure

SUP 13A.4.4

(1) When the appropriate regulator receives a consent notice from the EEA firm's Home State regulator, it will, under paragraphs 13(2)(b), (c) and 13(3) of Part II of Schedule 3 to the Act, notify the applicable provisions (if any) to:

(a) the EEA firm; and

(b) in the case of an EEA firm passporting under the Insurance Directives, the Home State regulator;

within two months of the notice date.

(1A) The notice date is:

(a) for a MiFID investment firm, the date on which the Home State gave the consent notice; and

(b) in any other case, the date on which the appropriate UK regulator received the consent notice.

(2) Although the appropriate UK regulator is not required to notify the applicable provisions to an EEA firm passporting under the Insurance Mediation Directive, MIFID or AIFMD, these provisions are set out in SUP 13A Annex 1 (Application of the Handbook to Incoming EEA Firms).

23/07/2013

SUP 13A.4.4A

(1) Where the PRA receives a consent notice, it will give a copy to the FCA without delay, and where the FCA receives a consent notice it will give a copy to the PRA, where relevant, without delay.

(2) In a case where the FCA is the appropriate UK regulator, the consent of the PRA is required for any notification by the FCA which relates to:

(a) a PRA-regulated activity;

(b) a PRA-authorised person; or

01/04/2013

SUP 13A.5

EEA firms providing cross border services into the United Kingdom

01/02/2006

Is the service provided within the United Kingdom?

SUP 13A.5.1

There is guidance for UK firms in SUP Appendix 3.6 on when a service is provided cross border. EEA firms may find this of interest although they should follow the guidance of their Home State regulators.

01/04/2013

SUP 13A.5.2

An EEA firm (other than an EEA pure reinsurer or an EEA firm that received authorisation under article 18 of the auction regulation) should note that the requirement under the Single Market Directives to give a notice of intention to provide cross border services applies whether or not:

(1) it has established a branch in the United Kingdom; or

(2) those cross border services are regulated activities.

01/04/2013

The conditions for providing cross border services into the United Kingdom

SUP 13A.5.3

(1) Before an EEA firm (other than an EEA pure reinsurer or an EEA firm that has received authorisation under article 18 of the auction regulation) exercises an EEA right to provide cross border services into the United Kingdom, the Act requires it to satisfy the service conditions, as set out in paragraph 14 of Part II of Schedule 3 to the Act.

(2) For the purposes of paragraph 14(1)(b) of Part II of Schedule 3 to the Act, the information to be contained in the regulator's notice has been prescribed under regulation 3 of the EEA Passport Rights Regulations and in the case of CRD, the information has been prescribed in the technical standards issued pursuant to and under Article 39 of the CRD.

(3) An EEA UCITS management company may not exercise an EEA right to provide collective portfolio management services for a UCITS scheme on a cross border services basis until approved by the FCA to do so (see SUP 13A.3.1C G).

(4) An EEA firm that has received authorisation under article 18 of the auction regulation is not subject to the service conditions in its exercise of an EEA right under the auction regulation to provide services in the United Kingdom. The notification procedure in SUP 13A.5.4 G does not apply to it and it does not need to notify the FCA prior to providing services into the United Kingdom because there are presently no applicable provisions that apply in these circumstances. Instead, its provision of these services is supervised by its Home State regulator.

01/01/2014

The notification procedure

SUP 13A.5.4

(1) Unless the EEA firm (other than an EEA pure reinsurer or an EEA firm that received authorisation under article 18 of the auction regulation) is passporting under the Insurance Mediation Directive, if the appropriate UK regulator receives a regulator's notice or, where no notice is required , is informed of the EEA firm's intention to provide cross border services into the United Kingdom, the appropriate UK regulator will, under paragraphs 14(2) and 14(3) of Part II of Schedule 3 to the Act, notify the EEA firm of the applicable provisions (if any) within two months of the day on which the appropriate UK regulator received the regulator's notice or was informed of the EEA firm's intention.

(2) Although the appropriate UK regulator is not required to notify the applicable provisions to an EEA Firm passporting under the Insurance Mediation Directive, MIFID or AIFMD these provisions are set out in SUP 13A Annex 1 (Application of the Handbook to Incoming EEA Firms).

01/01/2014

SUP 13A.5.4A

Where the PRA receives a notice, it will give a copy to the FCA without delay and where the FCA receives a notice, it will give a copy to the PRA without delay, where relevant.

01/04/2013

SUP 13A.5.5

An EEA firm (other than an EEA UCITS management company) that has satisfied the service conditions in paragraph 14 of Part II of Schedule 3 to the Act is entitled to start providing cross border services into the United Kingdom. In the case of an EEA UCITS management company, FCA approval must first be obtained, as explained in SUP 13A.5.3 G (see also SUP 13A.3.1C G). However, an EEA firm that wishes to start providing cross border services but has not yet received notification of the applicable provisions may wish to contact the authorisations team in the FCA or PRA, as appropriate (see SUP 13A.8.1G (2)).

01/04/2013

SUP 13A.6

Which rules will an incoming EEA firm be subject to?

01/02/2006

SUP 13A.6.1

(1) SUP 13A Annex 1 summarises how the Handbook applies to incoming EEA firms.

(2) SUP 13A Annex 2 summarises the matters that are reserved to a firm's Home State regulator.

01/04/2013

SUP 13A.6.2

An incoming EEA firm (other than an EEA pure reinsurer or an EEA firm that has received authorisation under article 18 of the auction regulation and only provides services in the United Kingdom) or incoming Treaty firm carrying on business in the United Kingdom must comply with the applicable provisions (see SUP 13A.4.4 G, SUP 13A.4.6 G, and SUP 13A.5.4 G) and other relevant UK legislation. For example where the business includes:

(1) business covered by the Consumer Credit Act 1974, then an incoming EEA firm or incoming Treaty firm must comply with the provisions of that Act, as modified by paragraph 15(3) of Schedule 3 to the Act; or

(2) effecting or carrying out contracts covering motor vehicle third party liability risks as part of direct insurance business, then an incoming EEA firm or incoming Treaty firm is required to become a member of the Motor Insurers' Bureau.

01/04/2013

SUP 13A.6.3

In particular, an EEA firm (other than an EEA pure reinsurer) or Treaty firm must comply with the applicable provisions in SUP 10 (Approved persons). An EEA firm or Treaty firm should also refer to SUP 10.1 (Application) which sets out the territorial provisions of the approved persons regime.

01/04/2013

SUP 13A.6.4

Under the EEA Passport Rights Regulations, references in section 60 of the Act (applications for approval for persons to perform controlled functions) to "the authorised person concerned" include:

(1) an EEA MiFID investment firm whose Home State regulator has given a consent notice under paragraph 13 of Schedule 3 to the Act (see SUP 13A.4.1G (1) and SUP 13A.4.2 G) or a regulator's notice under paragraph 14 of that Schedule (see SUP 13A.5.3G (1)), and which will be the authorised person concerned if the EEA firm qualifies for authorisation under that Schedule; and

(2) any other EEA firm with respect to which the appropriate UK regulator has received a consent notice or regulator's notice under paragraph 13 of Schedule 3 to the Act (see SUP 13A.4.1G (1) and SUP 13A.4.2 G) or a regulator's notice under paragraph 14 of that Schedule (see SUP 13A.5.3G (1)), and which will be the authorised person concerned if the EEA firm qualifies for authorisation under that Schedule.

01/04/2013

SUP 13A.6.5

SUP 13A Annex 1 does not apply to incoming ECA providers acting as such.

01/04/2013

SUP 13A.7

Top-up permission

01/02/2006

SUP 13A.7.1

If a person established in the EEA:

(1) does not have an EEA right;

(2) does not have permission as a UCITS qualifier; and

(3) does not have, or does not wish to exercise, a Treaty right (see SUP 13A.3.4 G to SUP 13A.3.11 G);

to carry on a particular regulated activity in the United Kingdom, it must seek Part 4A permission from the appropriate UK regulator to do so (see the appropriate UK regulator's website: http://www.fca.org.uk/firms/about-authorisation/getting-authorised for the FCA and www.bankofengland.co.uk/pra/Pages/authorisations/newfirm/default.aspx for the PRA). This might arise if the activity itself is outside the scope of the Single Market Directives, or where the activity is included in the scope of a Single Market Directive but is not covered by the EEA firm's Home State authorisation. If a person also qualifies for authorisation under Schedules 3, 4 or 5 to the Act as a result of its other activities, the Part 4A permission is referred to in the Handbook as a top-up permission.

01/04/2013

SUP 13A.7.2

Where the appropriate UK regulator grants a top-up permission to an incoming EEA firm to carry on regulated activities for which it has neither an EEA right nor a Treaty right, the appropriate UK regulator is responsible for the prudential supervision of the incoming EEA firm, to the extent that the responsibility is not reserved to the incoming EEA firm's Home State regulator.

01/04/2013

SUP 13A.7.4

For guidance on how to apply for Part 4A permission under the Act, see the appropriate UK regulator's website: http://www.fca.org.uk/firms/about-authorisation/getting-authorised for the FCA and www.bankofengland.co.uk/pra/Pages/authorisations/newfirm/default.aspx for the PRA. If an EEA firm or Treaty firm wishes to make any subsequent changes to its top-up permission, it can make an application for variation of that permission (see SUP 6 (Applications to vary and cancel Part 4A permission)).

01/04/2013

SUP 13A.8

Sources of further information

01/02/2006

SUP 13A.8.1

For further information on UK regulation, an EEA firm, a Treaty firm or a UCITS qualifier should contact the authorisations team in the FCA or PRA, if and when appropriate. To contact the FCA and/or PRA authorisations teams, please see the details provided on that regulator's website.

01/04/2013

SUP 13A Annex 1

Application of the Handbook to Incoming EEA Firms

01/02/2006

1. The table below summarises the application of the Handbook to an incoming EEA firm. Where the table indicates that a particular module of the Handbook may apply, its application in relation to any particular activity is dependent on the detailed application provisions in that module. The table does not apply to incoming ECA providers. These should refer to COBS 1 Annex 1 Part 3 section 7 for guidance on how COBS applies to them. The table does not apply to EEA pure reinsurersor to an EEA firm in relation to its exercise of an EEA right under the auction regulation to provide services in the United Kingdom.

2. In some cases, the application of the Handbook depends on whether responsibility for a matter is reserved under an EU instrument to the incoming EEA firm's Home State regulator. Guidance on the reservation of responsibility is contained in SUP 13A Annex 2 (Matters reserved to a Home State regulator). Guidance on the territorial application of MiFID is contained in PERG 13.6 and PERG 13.7 and SUP 13A Annex 2.

3. For an incoming EEA firm which has permission for cross-border services only, many parts of the Handbook apply only if the firm carries on regulated activities in the United Kingdom. Those parts of the Handbook will therefore not apply if the firm confines its activities to those within the overseas persons exclusions in article 72 of the Regulated Activities Order, or which would not be regarded as carried on in the United Kingdom. Further guidance may be found in PERG 2.4 (Link between activities and the United Kingdom) and PERG 2.9.15 G to PERG 2.9.17 G (Overseas persons).

4. An EEA firm that exercises an EEA right under the auction regulation to establish a branch in the United Kingdom to provide auction regulation bidding is subject to a limited set of requirements in the Handbook that apply to that activity. These are the rules listed in paragraph 2.6A of SYSC 1 Annex 1, GEN 4 and SUP (in particular, the money laundering reporting function in SUP 10A and requirements to notify the FCA). Aside from this note, the table does not apply to those firms.

5. An EEA firm that exercises an EEA right under MiFID to carry on MiFID business bidding is subject to the applicable provisions relating to its carrying on of MiFID business.

(1) Module of Handbook

(2) Potential application to an incoming EEA firm with respect to activities carried on from an establishment of the firm (or its appointed representative) in the United Kingdom

(3) Potential application to an incoming EEA firm with respect to activities carried on other than from an establishment of the firm (or its appointed representative) in the United Kingdom

PRIN

The Principles apply only in so far as responsibility for the matter in question is not reserved by an EU instrument to the firm's Home State regulator (PRIN 3.1.1 R (1)).
For an incoming EEA firm which is a CRD credit institution without a top-up permission, Principle 4 applies only in relation to the liquidity of a branch established in the United Kingdom (PRIN 3.1.1 R (2)).

The Principles do not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (PRIN 3.1.1 R (2)).
The Principles have limited application for activities which are not carried on from a UK establishment (see PRIN 3.1.1 R).
Otherwise, see column (2).

SYSC

SYSC 1 and SYSC 1 Annex 1 (Application of SYSC 2 and SYSC 3) contain application provisions only. SYSC 2 and SYSC 3 apply only to an insurer, a managing agent and the Societyas set out in SYSC 1 Annex 1.1.1R , which include the following exceptions:
(1) SYSC 2.1.1 R (1) and SYSC 2.1.2 G do not apply;
(2) SYSC 2.1.3 R to SYSC 2.2.3 G apply, but only in relation to allocation of the function in SYSC 2.1.3 R (2) and only in so far as responsibility for the matter in question is not reserved by an EU instrument to the firm's Home State regulator; and
(3) SYSC 3 applies, but only in so far as responsibility for the matter in question is not reserved by an EU instrument to the firm's Home State regulator. SYSC 1 Annex 1, Part 1, 1.8 R (Where?) further restricts the territorial application of SYSC 1 to SYSC 3 for an incoming EEA firm. Further guidance is contained in SYSC 2.1.6 G, Question 12. SYSC 18 applies to the extent that the Public Interest Disclosure Act 1998 applies to the firm.
The common platform requirements in SYSC 4 - 10 apply as set out in Part 2 of SYSC 1 Annex 1 (Application of the common platform requirement).
SYSC 1 Annex 1 row 2.6F provides that the common platform requirements do not apply to an incoming EEA AIFM branch, except the AIFMD Host State requirements and certain requirements regarding financial crime.
SYSC 1 Annex 1.2.7G reminds EEA MiFID investment firms that they must comply with the common platform record-keeping requirements in relation to a branch in the United Kingdom.
SYSC 1 Annex 1, Part 2, 2.7AG provides guidance on the application of the common platform requirements to the UK branch of an EEA UCITS management company.
SYSC 9 applies to activities carried on from an establishment in the United Kingdom, unless another applicable rule which is relevant to the activity has a wider territorial scope, in which case the common platform record-keeping requirements apply with that wider scope in relation to the activity described in that rule ( SYSC 1 Annex 1.2.17R).
SYSC 12 does not apply (SYSC 12.1.3 R).
SYSC 13 does not apply (SYSC 13.1.1 G).
SYSC 14 does not apply (SYSC 14.1.1 R).
SYSC 15 does not apply (SYSC 15.1.1 G).
SYSC 16 does not apply (SYSC 16.1.1 G).
SYSC 17 does not apply (SYSC 17.1.1 G).
SYSC 18 applies.

SYSC 19A and 19B do not apply.

SYSC 2 and SYSC 3 do not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom ( SYSC 1 Annex 1.1.1 R). SYSC 2 and SYSC 3 have limited application for activities which are not carried on from a UK establishment (see SYSC 1 Annex 1.1.1 R (2A)).
Otherwise, see column (2).
The common platform requirements in SYSC 4 - SYSC 10 apply as set out in SYSC 1 Annex 1.2.2R.
SYSC 11 - SYSC 17 do not apply.
SYSC 18 applies.
SYSC 19A does not apply.

COND

COND does not apply if the firm does not have, or apply for, a top-up permission.
Otherwise, the threshold conditions apply in a limited way
(1)in the case of a top-up permission under Part 4A of the Act (that is, a permission to carry on regulated activities in addition to those permitted through its authorisation under Schedule 3 to the Act (EEA Passport Rights)); and
(2) the exercise of the FCA's powers under sections 55J and 55L of the Act in relation to the top-up permission. (COND 1.2.4 G)

As column (2).

APER

APER applies to approved persons (APER 1.1.1 G). See below under SUP 10 as to whether controlled functions are performed, and approval therefore required.

Not relevant because SUP 10 does not apply.

FIT

FIT applies to a firm wishing to establish a branch in the United Kingdom or to apply for a top-up permission in respect of any application that it makes for the approval of a person to perform a controlled function (FIT 1.1). See under SUP 10 below as to whether such approval is required.
FIT applies in a limited way in relation to an incoming MiFID investment firm (see FIT 1.2.4A G).

Does not apply.

GEN

GEN applies (GEN 1.1, GEN 2.1, GEN 4.1, GEN 5.1 and GEN 6.1). However, (a) GEN 4 does not apply to the extent that the firm is subject to equivalent rules imposed by its Home State (GEN 4.1.1 R (3)), and (b) GEN 6 only applies to business that can be regulated undersections 137A and 137G of the Act (The FCA's General rules) and (The PRA's General rules), respectively. It does not therefore apply if, or to the extent that, responsibility has been reserved to an incoming firm's Home State regulator by an EU instrument. Only GEN 4.5 applies in relation to MiFID or equivalent third country business (see GEN 4.1.1 R).

GEN 4 does not apply if the firm has permission only for cross-border services and does not carry on regulated activities in the United Kingdom (see GEN 4.1.1 R).
Otherwise, as column (2).

FEES

Applies to the extent a firm is required to pay a fee in regards to carrying out any regulated activity in the UK, normally this would be the case when the firm holds a top-up permission

As column (2)

GENPRU

Does not apply.

Does not apply if the firm has permission only for cross border services and does not carry on regulated activities in the United Kingdom.

BIPRU

EEA firms that are CAD investment firms are subject to the prudential standards of their home state regulator (BIPRU 1.1.7 R). However, BIPRU 12 applies to an EEA firm that is an IFPRU investment firm or BIPRU firm as respects the activities of its UK branch, but in relation to liquidity risk only.

Does not apply if the has only for and does not carry on in the .

IFPRU

EEA firms that are investment firms (as defined in the EU CRR) are subject to the EU CRR as implemented by their home state regulator (IFPRU 1.1.5 R).

Does not apply if the firm has permission only for cross border services and does not carry on regulated activities in the United Kingdom.

MIPRU

MIPRU 1 (Application and general provisions) does not apply unless the firm has a top-up permission.
MIPRU 2 (Responsibility for insurance mediation activity) does not apply unless the firm has a top-up permission.
MIPRU 3 (Requirement to hold professional indemnity insurance) does not apply unless the firm has a top-up permission.
MIPRU 4 (Requirement to hold capital resources) does not apply unless the firm has a top-up permission.
See MIPRU 4.1.2 G for more detailed guidance.
MIPRU 5 (Insurance undertakings and mortgage lenders using insurance or mortgage mediation services) does not apply unless the firm has a top-up permission.

As column (2)

INSPRU

INSPRU does not apply unless the firm is an insurer to which INSPRU 1.5.33R applies.

IPRU(FSOC)

Does not apply because an incoming EEA firm cannot be a friendly society (IPRU(FSOC)) 1.1).

Does not apply because an incoming EEA firm cannot be a friendly society (IPRU(FSOC) 1.1).

IPRU(INV)

IPRU(INV) does not apply unless the firm:
(1) has a top-up permission;
(2) is an authorised professional firm, investment management firm, members' adviser, personal investment firm, securities and futures firm, service company or underwriting agent; and
(3) is not a lead regulated firm, a media firm or a BIPRU investment firm.
(IPRU(INV) 1.1.1R and 1.2R)

As column (2).

COBS

Guidance on the territorial application of COBS is contained in COBS 1 Annex 1 Part 3.

ICOBS

ICOBS applies except to the extent necessary to be compatible with European law. Guidance on the territorial application of ICOBS is contained in ICOBS 1 Annex 1 Part 4.

ICOBS 8.4 applies except to the extent necessary to be compatible with European law. Other chapters of ICOBS do not apply, except to the extent necessary to be compatible with European law. Guidance on the territorial application of ICOBS is contained in ICOBS 1 Annex 1 Part 4.

MCOB

Applies where the activity is carried on with or for a customer resident in the United Kingdom or another EEA State at the time that the activity is carried on, but see the territorial scope in MCOB 3.3 (Application: where?).

Applies where the activity is carried on with or for a customer resident in the United Kingdom at the time that the activity is carried on but see MCOB 1.3.4 R (Distance contracts entered into from an establishment in another EEA State) and MCOB 3.3 (Application: where?).

CASS

CASS does not apply with respect to the firm's passported activities unless the firm is an insurer (CASS 1.2.3 R (2)).

As column (2).

MAR

MAR 1 (Code of market conduct)
Applies if the firm is seeking guidance as to whether or not behaviour amounts to market abuse (MAR 1.1.1 G).

MAR 1 (Code of market conduct)
As column (2).

MAR 2 (Price stabilising rules)
Applies if the firm undertakes stabilising action and wishes to show that it has acted in conformity with price stabilising rules, or that its behaviour conforms with rules in accordance with section 118A(5)(a) of the Act (Market abuse) (MAR 2.1 Application).

MAR 2 (Price stabilising rules)
Only applies in so far as the firm undertakes stabilising action and wishes to rely on a defence that it has acted in conformity with price stabilising rules, or that its behaviour conforms with rules in accordance with section 118A(5)(a) of the Act (Market abuse) (MAR 2.1 and in particular MAR 2.1.3 R).

[deleted]

MAR 4 (Endorsement of the Take-over Code)
Applies to firms whose permission includes, or ought to include, any designated investment business, except as set out in MAR 4.4.1 R.

MAR 4 (Endorsement of the Take-over Code)
Does not apply (MAR 4.4.1 R (4)(b)).

MAR 5 (Multilateral Trading Facilities)
Does not apply (MAR 5.1.1 R).

MAR 8 (Benchmarks)
Applies only to firms whose top-up permission includes providing information in relation to a regulated benchmark.

MAR 8 (Benchmarks)
As column (2)

TC applies, but only in so far as responsibility for any matter it covers is not reserved by an EU instrument to the firm's Home State regulator.

TC Appendix 1 sets out the activities to which TC applies.

TC Appendix 2 sets out the sourcebook's territorial scope.
TC Appendix 3 sets out the limitations on TC App 2.

SUP

SUP 1A (The FCA's approach to supervision)
Applies, but contains only guidance.

SUP 1A (The FCA's approach to supervision)
As column (2).

SUP 2 (Information gathering by the [FCA & PRA] on its own initiative)
The application of this chapter is the same as for Principle 11 (see under PRIN above).

SUP 2 (Information gathering by the [FCA & PRA] on its own initiative).
As column (2)

SUP 3 (Auditors)
Applies to the firm (and its auditor) only if the firm has a top-up permission.

SUP 3 (Auditors)
As column (2)

SUP 4 (Actuaries)
Does not apply.

SUP 5 (Skilled persons)
Applies only if the firm is required by the FCA or PRA to provide a report under section 166 of the Act (Reports by skilled persons).

SUP 5 (Skilled persons)
As column (2).

SUP 6 (Applications to vary and cancel Part 4A permission)
Applies only if the firm has a top-up permission

SUP 6 (Applications to vary and cancel Part 4A permission)
As column (2).

SUP 7 (Individual requirements)
Applies only if the firm has a top-up permission. It contains only guidance on the exercise of the FCA's powers under sections 55J and 55L of the Act. The FCA has similar, but more limited, powers of intervention under Part 13 of the Act in relation to the permission of the firm under Schedule 3 to the Act (see EG 8).

SUP 7 (Individual requirements)
As column (2).

SUP 8 (Waiver and modification of rules)
Applies only if the firm wishes to apply for, or consent to, or has been given, a waiver of the appropriate regulator's rules (SUP 8.1.1 R).

SUP 8 (Waiver and modification of rules)
As column (2).

SUP 9 (Individual guidance)
Applies only if the firm wishes to obtain individual guidance from the FCA or if the FCA gives the firm individual guidance on its own initiative (SUP 9.1.1 G).

SUP 9 (Individual guidance)
As column (2).

SUP 10A (Approved persons)
Applies, but the applicable controlled functions are limited. See SUP 10A.1 (Application) for more detailed guidance.

SUP 10A (Approved persons)
Does not apply (SUP 10A.1.6 R).

SUP 10B (Approved Persons)
Does not apply

SUP 10B (Approved Persons)
As column (2)

SUP 11 (Controllers and close links)
Does not apply (SUP 11.1.1 R (2)).

SUP 12 (Appointed representatives)
Applies only if the firm has permission to carry on designated investment business, insurance mediation activity or mortgage mediation activity and wishes to appoint, or has appointed, an appointed representative (SUP 12.1.1 R (1)).

SUP 12 (Appointed representatives)
As column (2).

SUP 13 (Exercise of passport rights by UK firms)
Does not apply.

SUP 13A (Qualifying for authorisation under the Act)
SUP 13A applies to the firm if it:
(1) is considering carrying on activities in the United Kingdom which may fall within the scope of the Act and is seeking guidance on whether it needs a top-up permission; or
(2) is, or is considering, applying to the appropriate regulator to carry on regulated activities in the United Kingdom under a top-up permission; or
(3) is, or is considering, establishing a branch or providing cross-border services into the United Kingdom using EEA rights.

SUP 13A (Qualifying for authorisation under the Act)
As column (2).

SUP 14 (Incoming EEA Firms: Changing detail and cancelling qualifications for authorisation)
Applies.

SUP 15 (Notifications to the FCA or PRA)
Applies in full if the firm has a top-up permission. Otherwise, the application is modified as set out in SUP 15 Annex 1.

SUP 15 (Notifications to the FCA or PRA)
Does not apply if the firm has permission only for cross border services and does not carry on regulated activities in the United Kingdom (SUP 15 Annex 1).
Otherwise, as column (2).

SUP 16 (Reporting requirements)
Parts of this chapter may apply if the firm has a top-up permission or if the firm is:
(a) a bank; or
(c) an OPS firm; or
(e) an insurer with permission to effect or carry out life policies; or
(f) a firm with permission to establish, operate or wind up a personal pension scheme or a stakeholder pension scheme; or
(g) a firm with permission to advise on investments, arrange (bring about) deals in investments, make arrangements with a view to transactions in investments, or arrange safeguarding and administration of assets.
(SUP 16.1)

SUP 16 (Reporting requirements)
Parts of this chapter may apply if the firm has a top-up permission or if the firm is:
(b) an OPS firm; or
(d) an insurer with permission to effect or carry out life policies; or
(e) a firm with permission to establish, operate or wind up a personal pension scheme or a stakeholder pension scheme; or
(f) a firm with permission to advise on investments, arrange (bring about) deals in investments, make arrangements with a view to transactions in investments, or arrange safeguarding and administration of assets.
(SUP 16.1)

SUP 17 (Transaction reporting)
Applies to UK branches of incoming EEA firms which are MiFID investment firms in respect of reportable transactions executed in the course of services provided, whether within in the United Kingdom and outside. (SUP 17.1.2 G and SUP 17.1.3A G)

SUP 17 (Transaction reporting)
Applies as appropriate to incoming EEA firms which are MiFID investment firms in respect of reportable transactions. (SUP 17.1.1 R and SUP 17.1.4 R).

SUP 18 (Transfers of business)
SUP 18.4 does not apply. SUP 18.1, SUP 18.2 and SUP 18.3 may be relevant if the firm proposes to transfer the whole or part of its business by an insurance business transfer scheme or to accept such a transfer or proposes to accept certain transfers of insurance business taking place outside the United Kingdom.

SUP 18 (Transfers of business)
As column (2).

SUP App 2 (Insurers: Scheme of operations)
Does not apply (SUP App 2.1.1 R).

DEPP

DEPP applies and contains a description of the FCA's procedures for taking statutory notice decisions, the FCA's policy on the imposition and amount of penalties and the conduct of interviews to which a direction under section 169(7) of the Act has been given or the FCA is considering giving.

DISP

Generally applies (DISP 1.1.1 G)but in a limited way in relation to MiFID business.
For an incoming EEA AIFM branch DISP applies (subject to some limitations, see DISP 1.1.3 R), except for an incoming EEA AIFM branch of a closed-ended corporate AIF, when DISP does not apply.

Generally does not apply (DISP 1.1.1 G).
However, for an incoming EEA firm which is a UCITS management company managing a UCITS scheme or an AIFM managing an authorised AIF, DISP applies (subject to some limitations, see DISP 1.1.3 R).

COMP

Applies, except in relation to the passported activities of a MiFID investment firm, a CRD credit institution (other than an electronic money institution within the meaning of article 1(3)(a) of the E-Money Directive that has the right to benefit from the mutual recognition arrangements under the CRD ), an IMD insurance intermediary. a UCITS management company carrying on non-core services under article 6.3 of the UCITS Directive and an incoming AIFM branch carrying on either AIFM management functions for an unauthorised AIF or non-core services under article 6.4 of AIFMD (see the definition of "participant firm"). However, a firm specified above may be able to apply for top-up cover in relation to its passported activities (see COMP 14 (Participation by EEA Firms)).

Does not apply in relation to the passported activities of an MiFID investment firm, a CRD credit institution, an IMD insurance intermediary or a UCITS management company carrying on non-core services under article 6.3 of the UCITS Directive or an incoming EEA AIFM regarding AIFM management functions carried on for an unauthorised AIF or non-core services under article 6.4. Otherwise, COMP may apply, but the coverage of the compensation scheme is limited for non-UK activities (see COMP 5).

COLL

A.The following provisions of COLL apply to an EEA UCITS management company providing collective portfolio management services for a UCITS scheme:
(a) COLL 6.6A.2 R (Duties of AFMs of UCITS schemes and EEA UCITS schemes to act in the best interests of the scheme and its unitholders);
(b) COLL 6.6A.4 R (Due diligence requirements of AFMs of UCITS schemes and EEA UCITS schemes);
(c) COLL 6.6A.5 R (Compliance with the regulatory requirements applicable to the conduct of business activities of a UCITS management company);
(d) COLL 12.3.4 R (Provision of documentation to the FSA: EEA UCITS management companies);
(e) the fund application rules (see COLL 12.3.5 R (COLL fund rules under the management company passport: the fund application rules);
(f) COLL 12.3.6 R (Requirement to make information available to the public or the FSA);
(g) COLL 12.3.7 G (EEA UCITS management companies: compliance with FSA rules); and
(h) COLL 12.3.8 G (EEA UCITS management companies: conduct of business rules).
An EEA UCITS management company providing collective portfolio management services for a UCITS scheme should be aware that it will be expected to comply with the above rules in relation to all aspects of the functioning of the relevant UCITS scheme where, for example, the firm:
(a) [deleted]
(b) wishes to apply for an authorisation order to establish an AUT, ACS or ICVCas a UCITS scheme; or
(ba) is the management company of a UCITS scheme that wishes to exercise an EEA right to market its units in another EEA State; or
(c) is the operator of a recognised scheme.
B. Subject to FUND 1.1.2 R, COLL applies to an incoming EEA AIFM as relevant.

For an EEA UCITSmanagement company providing collective portfolio management services for a UCITS scheme, as column (2)A.(d), (e), (f) and (g) and the other parts of COLL specified.
For an incoming EEA AIFM, as column (2) B.

FUND

FUND 3.8 (Prime brokerage firms) applies to an incoming EEA AIFM branch.
FUND 10 (Operating on a cross-border basis), provides guidance for an incoming EEA AIFM branch.

Does not apply, except FUND 10 (Operating on a cross border basis) which provides guidance for an EEA AIFM managing an AIF on a services basis or marketing an AIF using the marketing passport under AIFMD.

CREDS

Does not apply.

PROF

PROF applies only if the firm is an authorised professional firm.

As column (2).

REC

Does not apply.

LR (Listing Rules)
May apply if the firm is applying for listing in the United Kingdom, is a listed issuer in the United Kingdom, is a sponsor or is applying for approval as a sponsor.

LR (Listing Rules)
As column (2).

PR (Prospectus Rules)
May apply if the firm makes an offer of transferable securities to the public in the United Kingdom or is seeking the admission to trading of transferable securities on a regulated market situated or operating in the United Kingdom.

PR (Prospectus Rules)
As column (2).

DTR

DTR (Disclosure Rules and Transparency Rules)
May apply if the firm is an issuer, any class of whose financial instruments have been admitted to trading on a regulated market, or are the subject of an application for admission to trading on a regulated market, other than issuers who have not requested or approved admission of their financial instruments to trading on a regulated market.

DTR (Disclosure Rules and Transparency Rules)
As column (2).

EG describes the FCA's approach to exercising the main enforcement powers given to it by FSMA and by regulation 12 of the Unfair Terms Regulations. EG is a Regulatory Guide and as such does not form part of the Handbook.

EG (Enforcement Guide) As column (2).

CONRED

Applies to a firm which made a personal recommendation in relation to an Arch cru fund, after which a consumer made an investment in the Arch cru fund, and to which the suitability requirements (specified at paragraph 5.1R of the instructions in CONRED 2 Annex 13 ) applied (CONRED 2.1.1R).

Does not apply

Notes to Annex 1

Note 1: The following modules or chapters are relevant to firms in both the PRA Handbook and the FCA Handbook: PRIN, SYSC, APER, FIT, GEN, FEES, GENPRU, BIPRU, MIPRU, IPRU(INV), SUP 2 to 6, 8, 11, 13 to 16, 18 & Appendix 2 and COMP.

Note 2: The following modules or chapters are relevant in the FCA Handbook only: COND, INSPRU, COBS, ICOBS, MCOB, CASS, MAR, TC, SUP 1A, 7, 9, 10A, 12 & 17, DEPP, DISP, COLL, FUND, PROF, LR, PR, DTR and EG.

28/02/2014

SUP 13A Annex 2

Matters reserved to a Home State regulator

01/11/2007

Introduction

The application of certain provisions in the Handbook to an incoming EEA firm or incoming Treaty firm depends on whether responsibility for the matter in question is reserved to the firm's Home State regulator. This annex contains guidance designed to assist such firms in understanding the application of those provisions. This annex is not concerned with the FCA or the PRA's rights to take enforcement action against an incoming EEA firm or an incoming Treaty firm, which, in the case of the FCA, are covered in the Enforcement Guide (EG), or with the position of a firm with a top-up permission.

Requirements in the interest of the general good

The Single Market Directives, and the Treaty (as interpreted by the European Court of Justice) adopt broadly similar approaches to reserving responsibility to the Home State regulator. To summarise, the FCA or PRA, as Host State regulator, is entitled to impose requirements with respect to activities carried on within the United Kingdom if these can be justified in the interests of the "general good" and are imposed in a non-discriminatory way. This general proposition is subject to the following in relation to activities passported under the Single Market Directives:

(1)

the Single Market Directives expressly reserve responsibility for the prudential supervision of a MiFID investment firm, CRD credit institution , UCITS management company AIFM or passporting insurance undertaking to the Firm's Home State regulator. The Insurance Mediation Directivereaches the same position without expressly referring to the concept of prudential supervision. Accordingly, the FCA, as Host State regulator, is entitled to regulate only the conduct of the firm's business within the United Kingdom;

(2)

there is no explicit "general good" provision in MiFIDor AIFMD. Rather, the responsibilities for a Host State regulator under MiFID are contained in paragraphs 8 to 10 and under AIFMD are contained in paragraphs 11G to 11J;

(3)

for a CRD credit institution, the PRA or FCA, as Host State regulator, is jointly responsible with the Home State regulator under article 156of the CRD for supervision of the liquidity of a branch in the United Kingdom;

(4)

for a MiFID investment firm including a CRD credit institutions which is a MiFID investment firm), the protection of clients' money and clients' assets is reserved to the Home State regulator under MiFID; and

(5)

responsibility for participation in compensation schemes for CRD credit institutions and MiFID investment firm is reserved in most cases to the Home State regulator under the Deposit Guarantee Directive and the Investor Compensation Directive.

It is necessary to refer to the case law of the European Court of Justice to interpret the concept of the "general good". To summarise, to satisfy the general good test, Host State rules must come within a field which has not been harmonised at EU level, satisfy the general requirements that they pursue an objective of the general good, be non-discriminatory, be objectively necessary, be proportionate to the objective pursued and not already be safeguarded by rules to which the firm is subject in its Home State.

Application of SYSC 2 and SYSC 3

SYSC 2 and SYSC 3 only apply to an insurer, a managing agent and the Society. See paragraph 8 below for a discussion of how the common platform requirements apply. SYSC 2.1.1 R and SYSC 2.1.2 G do not apply for a relevant incoming Treaty firm. The FCA and PRA consider that they are entitled, in the interests of the general good, to impose the requirements in SYSC 2.1.3 R to SYSC 2.2.3 G (in relation to the allocation of the function in SYSC 2.1.3 R (2)) and SYSC 3 on an incoming EEA firm and an incoming Treaty firm; but only in so far as they relate to those categories of matter responsibility for which is not reserved to the firm's Home State regulator.

Should the FCA or PRA become aware of anything relating to an incoming EEA firm or incoming Treaty firm (whether or not relevant to a matter for which responsibility is reserved to the Home State regulator), the PRA or FCA may disclose it to the Home State regulator in accordance with any directive and the applicable restrictions in Part 23 of the Act (Public Record, Disclosure of Information and Co-operation).

This Annex represents the FCA's and PRA's views, but a firm is also advised to consult the relevant EU instrument and, where necessary, seek legal advice. The views of the European Commission in the banking and insurance sectors are contained in two Commission Interpretative Communications (Nos. 97/C209/04 and C(1999)5046).

[deleted]

Application of the common platform requirements in SYSC to EEA MiFID investment firms

Whilst the common platform requirements (located in SYSC 4 - SYSC 10) do not generally apply to incoming EEA firms (but for EEA UCITS management companies, see 8A below), EEA MiFID investment firms must comply with the common platform record-keeping requirements in relation to a branch in the United Kingdom.

Requirements under MiFID

Article 31(1) of MiFID prohibits Member States from imposing additional requirements on a MiFID investment firm in relation to matters covered by MiFID if the firm is providing services on a cross-border basis. Such firms will be supervised by their Home State regulator.

10.

Article 32 of MiFID requires the FSA as the Host State regulator to apply certain obligations to an incoming EEA firm with an establishment in the UK. In summary, these are Articles:

(1)

19 (conduct of business obligations);

(2)

21 (execution of orders on terms most favourable to the client);

(3)

22 (client order handling);

(4)

25 (upholding the integrity of markets, reporting transactions and maintaining records);

(5)

27 (making public firm quotes); and

(6)

28 (post-trade disclosure).

The remaining obligations under MiFID are reserved to the Home State regulator.

11.

MiFID is more highly harmonising than other Single Market Directives. Article 4 of the MiFID implementing Directive permits Member States to impose additional requirements only where certain tests are met. The FSA has made certain requirements that fall within the scope of Article 4. These requirements apply to an EEA MiFID investment firm with an establishment in the United Kingdom as they apply to a UK MiFID investment firm, in the circumstances contemplated by article 32(7) MiFID.

The auction regulation

11E

Where an incoming EEA firm exercises an EEA right under the auction regulation to provide services or establish a branch in the United Kingdom, it is carrying on auction regulation bidding. Authorisation and supervision of a firm under the auction regulation are almost exclusively matters reserved to the Home State regulator. The only requirements which the FCA has applied as Host State regulator under the auction regulation in respect of auction regulation bidding is on a UK branch in relation to safeguards against money laundering and financial crime as well as a statutory status disclosure obligation and requirements to notify the FCA (see Note 4 of SUP 13A Annex 1 G).

Requirements under AIFMD

11L

Under article 34(2) of the MCD, ensuring compliance with the obligations in articles 7(1), 8, 9, 10, 11, 13, 14, 15, 16, 17, 20, 22 and 39 of the MCD by incoming EEA branches is the responsibility of the Host State. Responsibilities for ensuring compliance with all other obligations are the responsibility of the Home State.

11M

Ensuring compliance with the obligations in articles 7(1), 8, 9, 10, 11, 13, 14, 15, 16, 17, 20, 22 and 39 of the MCD by EEA firms providing cross border services is the responsibility of the Home State.

12.

Further guidance on the territorial application of the Handbook can be found at PERG 13.6 and PERG 13.7.

13.

Examples of how SYSC 3 and/or the common platform provisions apply in practice.

(1)

The Prudential Standards part of the Handbook (with the exception of INSPRU 1.5.33 R on the payment of financial penalties and the Interim Prudential sourcebook (insurers) (IPRU(INS)) (rules 3.6 and 3.7) do not apply to an insurer which is an incoming EEA firm. Similarly, SYSC 3 does not require such a firm:

(a)

to establish systems and controls in relation to financial resources (SYSC 3.1.1 R); or

(b)

to establish systems and controls for compliance with that Prudential Standards part of the Handbook (SYSC 3.2.6 R); or

(c)

to make and retain records in relation to financial resources (SYSC 3.2.20 R and SYSC 9.1.1 R to 9.1.4 G).

(2)

The Conduct of Business sourcebook (COBS) applies to an incoming EEA firm. Similarly, SYSC 3 and SYSC 4-10 do require such a firm:

(a)

to establish systems and controls in relation to those aspects of the conduct of its business covered by applicable sections of COBS (SYSC 3.1.1 R and SYSC 4.1.1 R);

(b)

to establish systems and controls for compliance with the applicable sections of COBS (SYSC 3.2.6 R and SYSC 6.1.1 R); and

(c)

to make and retain records in relation to those aspects of the conduct of its business (SYSC 3.2.20 R and SYSC 9.1.1 R to 9.1.4 G).

See also Question 12 in SYSC 2.1.6 G for guidance on the application of SYSC 2.1.3 R (2)

01/01/2014