S.I. No. 60/2007 — European Communities (Markets in Financial Instruments) Regulations 2007

STATUTORY INSTRUMENT

S.I. No. 60 OF 2007

REGULATIONS

entitled

European Communities (Markets in Financial Instruments) Regulations 2007

I, BRIAN COWEN, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act 1993 (No. 25 of 1993), for the purpose of giving effect to Directive 2004/39/EC, dated 21 April 2004, of the European Parliament and of the Council as amended by Directive 2006/31/EC of 5 April 2006 and Directive 2006/73/EC of 10 August 2006, hereby make the following Regulations:

Part 1 - Preliminary and General Provisions

Citation and commencement

1.        (1)        These Regulations may be cited as the European Communities (Markets in Financial Instruments) Regulations 2007.

(2)       These Regulations come into operation on 1 November 2007.

Part 2 - Definitions and Scope

Object and scope of these Regulations

2.        (1)        The object and scope of these Regulations is to give effect to -

(a)       Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments, as amended by Directive 2006/31/EC of 5 April 2006, as regards certain deadlines and

(b)       Directive 2006/73/EC of 10 August 2006 as regards organisational requirements and operating conditions for investment firms and defined terms for Directive 2004/39/EC.

(2)       The following provisions shall also apply to credit institutions authorised under Directive 2006/48/EC, when providing one or more investment services:

(a)        Regulations 4, 5(2), 31, 33 and 41,

(b)        Part 7 (excluding Regulation 109),

(c)        Part 8,

(d)        Part 9 (excluding Regulations 123(2) to (6), 124(1) to (6), 125(1) to (5) 127(1) to (5) and (7) to (8);

(e)        Part 12 and Part 13; and

(f)        Regulations 134, 138 and 139.

Interpretation

3.        (1)        In these Regulations, except where the context otherwise requires -

“ancillary services” means the services specified in Part 2 of Schedule 1;

“authorised investment firm” means an investment firm which -

(a)        is deemed to be authorised under Regulation 6, or

(b)        is authorised by the Bank under Regulation 11;

“authorised officer” means a person authorised under Regulation 164;

“Bank” means the Central Bank and Financial Services Authority of Ireland;

“branch” means a place of business, other than the head office, which place of business -

(a)        is a part of an investment firm,

(b)        has no legal personality,

(c)        provides investment services, and

(d)        may also perform ancillary services for which the investment firm has been authorised

and includes all of the places set up in the State that under paragraph (5) are to be regarded as a single branch;

“client” means any natural or legal person to whom an investment firm provides investment services, ancillary services or both;

“close link” means a situation in which two or more natural or legal persons are linked by -

(a)        participation, being the ownership, direct or by way of control, of 20% or more of the voting rights or capital of an undertaking,

(b)        control, being the relationship between a parent undertaking and a subsidiary, in all the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC, or

(c)        a similar relationship between any person and an undertaking, any subsidiary undertaking of a subsidiary undertaking also being considered a subsidiary of the parent undertaking which is at the head of those undertakings,

and includes a situation in which 2 or more persons are permanently linked to one and the same other person by a control relationship;

“control”, in relation to an undertaking, means control of the undertaking by a parent undertaking or by a person in the cases referred to in Article 1(1) and (2) of Directive 83/349/EEC;

“Court” means the High Court;

“credit institution” means the holder of an authorisation issued by the Bank or by a competent authority of another Member State for the purposes of Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions;

“dealing on own account” means trading against proprietary capital resulting in the conclusion of transactions in one or more financial instruments;

“execution of orders on behalf of clients” means acting to conclude agreements to buy or sell one or more financial instruments on behalf of clients;

“Directive” means the Markets in Financial Instruments Directive 2004/39/EC of 21 April 2004;

“durable medium” means any instrument which -

(a)        enables a client to store information addressed personally to that client in a way accessible for future reference and for a period of time adequate for the purposes of the information, and

(b)        allows the unchanged reproduction of the information stored;

“financial analyst” means a relevant person who produces the substance of investment research;

“financial instruments” means the instruments specified in Part 3 of Schedule 1;

“group”, in relation to an investment firm, means a group of which that firm forms a part consisting of -

(a)        a parent undertaking and that undertaking's subsidiaries,

(b)        the entities in which that undertaking holds, or its subsidiaries hold, a participation described in subparagraph (a) of the definition in this paragraph of “close link”, and

(c)        any other undertakings linked to each other by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC on consolidated accounts;

“home Member State” means -

(a)        in relation to an investment firm -

(i)         that is a natural person, the Member State in which the firm's head office is situated,

(ii)        that is a legal person, the Member State in which the firm's registered office is situated, or

(iii)       if the investment, firm under the firm's national law, has no registered office, the Member State in which the firm's head office is situated, and

(b)        in relation to a regulated market, the Member State in which the registered office of the market operator of the regulated market is situated or, if under the law of that Member State the market operator has no registered office, the Member State in which the head office of the market operator of the regulated market is situated;

“host Member State” means -

(a)        the Member State, other than the home Member State, in which an investment firm has a branch or performs services or carries on activities, or

(b)        the Member State in which the market operator of a regulated market provides appropriate arrangements so as to facilitate access to trading on the system of the regulated market by remote members or participants established in that same Member State;

“insurance undertaking” has the same meaning as in the Insurance Act 1989;

“investment advice”, subject to paragraph (4), means the provision of personal recommendations to a client, either upon the client's request or at the initiative of the investment firm, in respect of one or more transactions relating to financial instruments;

“investment firm” means, subject to paragraph (2), any person, other than a tied agent, which person's regular occupation or business is the provision of one or more investment services to third parties on a professional basis, or the activity of dealing on own account on a professional basis, but does not include a natural person unless -

(a)        his or her legal status ensures a level of protection for third parties’ interests equivalent to that afforded by legal persons,

(b)        he or she is subject to equivalent prudential supervision appropriate to his or her legal status, and,

(c)        if paragraph (3) is applicable, he or she ensures that the conditions set out in that paragraph are fulfilled;

“investment services” means any of the services listed in Part 1 of Schedule 1 relating to any of the instruments listed in Part 3 of Schedule 1, and a reference to the provision of investment services in these Regulations shall be interpreted as including a reference to the carrying on of the activity of dealing on own account;

“ISD firm” means an investment firm within the meaning of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field;

“limit order” means an order to buy or sell a financial instrument at its specified price limit or better and for a specified size;

“market maker” means a person who holds himself, herself or itself out on the financial markets on a continuous basis as being willing to deal on own account by buying and selling financial instruments against the person's proprietary capital at prices defined by the person;

“market operator”, in relation to a regulated market, means -

(a)        a person who operates the business of the regulated market other than a regulated market described in subparagraph (b), or

(b)        the regulated market if it is a legal person and itself operates the business of the regulated market;

“Member State” means a Member State of the European Community;

“Minister” means the Minister for Finance;

“money-market instruments” means those classes of instruments which are normally traded on the money market, such as treasury bills, certificates of deposit and commercial papers but does not include instruments of payment;

“multilateral trading facility” and “MTF” mean a multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party buying and selling interests in financial instruments, in the system and in accordance with non-discretionary rules, in a way that results in a contract;

“outsourcing” means an arrangement of any form between an investment firm and a service provider by which the service provider performs a process, a service or an activity which would otherwise be undertaken by the investment firm itself;

“parent undertaking” means an undertaking as defined by Articles 1 and 2 of Seventh Council Directive 83/349/EEC of 13 June 1983 on consolidated accounts;

“person with whom a relevant person has a family relationship” means any of the following:

(a)        the spouse of the relevant person or any partner of that person considered by national law as equivalent to a spouse;

(b)        a dependent child or stepchild of the relevant person;

(c)        any other relative of the relevant person who has shared the same household as that person for at least one year on the date of the personal transaction concerned:

“portfolio management” means managing portfolios in accordance with mandates given by clients on a discretionary client-by-client basis where such portfolios include one or more financial instruments;

“professional client” means a client meeting the criteria laid down in Schedule 2 to these Regulations;

“qualifying holding” means a direct or indirect holding of shares or other interest in an investment firm, proposed investment firm, market operator of a regulated market, or proposed market operator of a regulated market, which holding represents -

(a)        10 per cent. or more of the capital or of the voting rights, or

(b)        any direct or indirect holding of less than 10 per cent which, in the opinion of the Bank, makes it possible to control or exercise a significant influence over the management of the investment firm or proposed investment firm in which a holding subsists;

“regulated market” means a multilateral system operated or managed by a market operator which

(a)        brings together, or facilitates the bringing together of, multiple third-party buying and selling interests in financial instruments, in the system and in accordance with its non-discretionary rules, in a way that results in a contract in respect of the financial instruments admitted to trading under its rules or systems, and

(b)        is authorised and functions regularly and in accordance with Part 6;

“relevant person”, in relation to an investment firm, means any of the following:

(a)        a director, partner or equivalent, manager or tied agent of the firm;

(b)        a director, partner or equivalent, or manager of any tied agent of the firm;

(c)        a person who is

(d)        an employee of the firm or of a tied agent of the firm,

(e)        another natural person -

(i)        whose services are placed at the disposal, and under the control of the firm or a tied agent of the firm, and

(ii)       who is involved in the provision by the firm of investment services and activities;

(e)        a natural person who is directly involved in the provision of services to the investment firm or to its tied agent under an outsourcing arrangement for the purpose of the provision by the firm of investment services and activities;

“retail client” means a client who is not a professional client;

“securities financing transaction” has the meaning given to it in Article 2(10) of Commission Regulation (EC) No 1287/2006 of 10 August 2006;

“senior management” means the person or persons who effectively direct the business of the investment firm;

“State” means the Republic of Ireland;

“subsidiary” means a subsidiary undertaking as defined in Articles 1 and 2 of Directive 83/349/EEC including any subsidiary of a subsidiary undertaking of an ultimate parent undertaking;

“systematic internaliser” means an investment firm which, on an organised, frequent and systematic basis, deals on own account by executing client orders outside a regulated market or an MTF;

“tied agent” means a person appointed under Regulation 109 as a tied agent by an investment firm;

“third country” means a country that is not a Member State, and includes a state, province region or dependent territory of such a country;

“transferable securities” means, with the exception of instruments of payment, those classes of securities which are negotiable on the capital market, such as the following:

(a)        shares in companies and other securities equivalent to shares in companies, partnerships or other entities, and depositary receipts in respect of shares;

(b)        bonds or other forms of securitised debt, including depositary receipts in respect of such securities;

(c)        any other securities giving the right to acquire or sell any such transferable securities or giving rise to a cash settlement determined by reference to transferable securities, currencies, interest rates or yields commodities or other indices or measures;

“UCITS management company” means a management company as defined in EU Council Directive 85/611/EEC of 20 December 1985 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities;

(2)       For the purposes of the definition in paragraph (1) of “investment firm”, where an individual -

(a)        provides an investment or ancillary service, or

(b)        carries on the activity of dealing on own account,

and the service or activity is carried on solely for the account of and under the full and unconditional responsibility of an investment firm, an insurance undertaking or a credit institution, the activity or service, as the case may be, shall be regarded as that of the investment firm, insurance undertaking or credit institution itself.

(3)       For the purposes of the definition in paragraph (1) of “investment firm”, where a natural person provides services involving the holding of third parties’ funds or transferable securities, the natural person may be considered as an investment firm only if, without prejudice to the other requirements imposed in these Regulations and in Directive 2006/49/EC, he or she ensures that the following conditions are fulfilled:

(a)        the ownership rights of third parties in instruments and funds must be safeguarded, especially in the event of the insolvency of the investment firm or of its proprietors, seizure, set-off or any other action by creditors of the firm or of its proprietors;

(b)        the investment firm must be subject to rules designed to monitor the firm's solvency and that of its proprietors;

(c)        the investment firm's annual accounts must be audited by one or more persons empowered, under Irish law, to audit accounts;

(d)        where the investment firm has only one proprietor, he or she must make provision for the protection of investors in the event of the

investment firm's cessation of business following his or her death incapacity or any other such event.

(4)       For the purposes of the definition in paragraph (1) of “investment advice” “personal recommendations” means recommendations -

(a)        that are made to persons in their capacity -

(i)        as investors or potential investors, or

(ii)       as agents for an investors or potential investors,

(b)        that are presented as suitable for those persons or are based on a consideration of their circumstances, and

(c)        must constitute recommendations to take one of the following sets of steps:

(i)        to buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular financial instrument;

(ii)       to exercise or not to exercise any right conferred by a particular financial instrument to buy, sell, subscribe for, exchange, or redeem a financial instrument,

but does not include recommendations that are issued exclusively through distribution channels or to the public.

(5)       For the purposes of these Regulations, all of the places of business set up in the State by an investment firm with headquarters in another Member State shall be regarded as a single branch;

Competent Authority

4.        The Bank is the competent authority in the State for the purposes of the Directive.

Exemptions

5.        (1)        These Regulations do not apply to any of the following:

(a)        insurance undertakings as defined in Article 1 of Directive 73/239/EEC, assurance undertakings as defined in Article 1 of Directive 2002/83/EC, or reinsurance undertakings as defined in Directive 2005/68/EC;

(b)        persons which provide investment services exclusively for their -

(i)        parent undertakings,

(ii)       subsidiaries, or

(ii)       other subsidiaries of their parent undertakings;

(c)        persons who do not provide any investment services or activities other than dealing on own account, unless -

(i)        they are market makers, or

(ii)       deal on own account outside -

(A)      a regulated market, or

(B)      an MTF,

on an organised, frequent and systematic basis by providing a system accessible to third parties in order to engage in dealings with them;

(d)        persons who provide investment services consisting exclusively in the administration of employee-participation schemes;

(e)        persons who provide investment services which only involve both administration of employee-participation schemes and the provision of investment services exclusively for their parent undertakings, for their subsidiaries or for other subsidiaries of their parent undertakings;

(f)        the members of the European System of Central Banks, the National Treasury Management Agency and other public bodies charged with or intervening in the management of the public debt;

(g)        An Post, including any postmaster acting on it's behalf, the Prize Bond Company Ltd. or any successor to the Prize Bond Company Ltd, as operator of the Prize Bond scheme, any of them is acting as an agent of, or otherwise on behalf of, the Minister of the National Treasury Management Agency;

(h)        persons -

(i)         dealing on own account in financial instruments, or

(ii)        providing, to the clients of their main business, investment services in commodity derivatives or derivative contracts referred to in subparagraph (8) of Part 3 of Schedule 1,

if doing so is ancillary in each case to the main businesses, when considered on a group basis, if the main businesses is not the provision of investment services within the meaning of these Regulations or any of the services mentioned in Annex I of Directive 2006/48/EC;

(i)        persons providing investment advice in the course of providing another professional activity not covered by these Regulations if the provision of the advice is not specifically remunerated;

(j)        persons whose main business consists of dealing on own account in commodities, commodity derivatives or both unless those persons are part of a group the main business of which is the provision of -

(i)         investment services within the meaning of these Regulations, or

(ii)        one or more of the services specified in Annex I of Directive 2006/48/EC;

(k)        firms which provide investment services, perform investment activities, or do both, and in doing so deal only on own account on markets in one or more of -

(i)         financial futures,

(ii)        options, or

(iii)       other derivatives

and on cash markets for the sole purpose of one or both of -

(I)         hedging positions on derivatives markets, and

(II)       dealing for the accounts of other members of those markets or making prices for them,

where the markets are guaranteed by clearing members of the same markets and responsibility for ensuring the performance of contracts entered into by those firms is assumed by clearing members of the same markets;

(l)        an investment business firm which the Bank has determined does not require an authorisation because the provision of investment business services is only carried out as necessary in relation to the main activities of the investment business firm, and, for these purposes, the determination of the Bank shall be -

(i)         for a fixed period only, and

(ii)        subject to whatever reporting requirements the Bank considers appropriate;

(m)       a personal representative as defined in section 3 of the Succession Act 1965, in respect of actions as personal representative of a deceased person;

(n)        a trustee, as defined in section 3 of the Trustee Act 1893, in respect of actions as trustee of a trust, unless the principal objective of the trust is to provide investment services to members of the public;

(o)        notwithstanding the obligations imposed on liquidators and receivers under this Act, a person appointed as a liquidator or receiver of a company in respect of activities relating to the liquidation or receivership;

(p)        any collective investment undertaking or pensions fund including the depository or manager of the undertaking or fund that has -

(i)         received approval from the Bank, under the its powers under other enactments, to market units of the undertaking in the State, or

(ii)        been authorised by the competent authority of another Member State under Directive 85/611/EEC;

(q)        a practising member of an approved professional body as defined in section 55 of the Investment Intermediaries Act 1995, not being a certified person as defined in that section, who holds at the member's principal place of business, on behalf of clients, share certificates in private limited companies owned by those clients where -

(i)         the member holds the share certificates only in order to facilitate the orderly management of the private limited company's statutory records, and

(ii)        the holding of the share certificates arises from the provision of professional services by the member to the client.

(2)       The rights conferred by these Regulations do not extend to the provision of services as counterparty in transactions carried out -

(a)        by public bodies dealing with public debt,

(b)        by members of the European System of Central Banks,

(i)         performing their tasks as provided for by the Treaty and the Statute of the European System of Central Banks, or

(ii)        performing equivalent functions under national provisions, or

(c)        by the European Central Bank.

(3)       These Regulations do not apply to persons whose home Member State is the State, and whose activities are regulated by the Bank, if the persons -

(a)        are not allowed to hold clients’ funds or securities and therefore are not allowed at any time to place themselves in debit with their clients,

(b)        are not allowed to provide any investment service except as follows:

(i)         receiving and transmitting orders in transferable securities and units in collective investment undertakings;

(ii)        providing investment advice in relation to those securities and units, and

(c)        in the course of providing the services referred to in subparagraph (b) are allowed to transmit orders only to any or all of the following:

(i)         investment firms authorised in accordance with the Directive;

(ii)        credit institutions authorised in accordance with Directive 2006/48/EC;

(iii)       branches of investment firms or of credit institutions which are authorised in a third country and are subject to, and comply with, prudential rules considered by the competent authorities to be at least as stringent as the rules under the Directive Directive 2006/48/EC or Directive 2006/49/EC;

(iv)       collective investment undertakings authorised under the law of a Member State to market units to the public and to the managers of the undertakings;

(v)       investment companies with fixed capital, as defined in Article 15(4) of Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards

(4)       A certified person as defined in section 55 of the Investment Intermediaries Act 1995 does not require an authorisation under these Rules while -

(a)        that person remains a certified person, and

(b)        any investment advice and investment services are provided by that person in an incidental manner and within the limits, conditions or constraints of the certificate granted by that person's approved professional body.

(5)       In paragraph (4):

“investment advice” includes “investment advice” within the meaning of that expression used in Part VII of the Investment Intermediaries Act 1995 in relation to a certified person;

“investment services” includes “investment business services” within the meaning of that expression used in Part VII of the Investment Intermediaries Act 1995 in relation to a certified person.

(6)       On application by a person described in paragraph (3), the Bank may direct that these Regulations apply to that person, notwithstanding that paragraph and while the direction remains in effect these Regulations apply to that person.

Part 3 - Transitional

Existing regulation

6.         (1)       Effective on 1 November 2007, the Investment Intermediaries Act, 1995 does not apply to an investment firm.

(2)       Notwithstanding Regulation 7, a person who, immediately before 1 November 2007, is an -

(a)        “authorised investment business firm” under the Investment Intermediaries Act 1995, or

(b)        “authorised member firm” under the Stock Exchange Act 1995,

is deemed for the purposes of these Regulations to be an authorised investment firm.

(3)       Notwithstanding Regulation 7, for the purposes of these Regulations,

(a)        the Main Market of the Irish Stock Exchange is deemed to be a regulated market, and

(b)        the Irish Stock Exchange Limited is deemed to be the market operator of that regulated market.

(4)       If Regulations made by the Bank under the Investment Intermediaries Act 1995 or the Stock Exchange Act, 1995, in this Regulation called “the former Regulations”,

(a)        were in force immediately before 1 November 2007, and

(b)        at that time, the former Regulations applied to the firms referred to in paragraph (2) or to the Irish Stock Exchange Limited and, on 1 November 2007, the Bank, has the discretion under these Regulations to make similar Regulations,

then, notwithstanding this Regulation, the former Regulations continue to apply to investment firms and market operators of regulated markets as if the former Regulations were made by the Bank under these Regulations.

(5)       If a direction to a firm referred to in paragraph (2), or to the Irish Stock Exchange Limited, given by the Bank under the Investment Intermediaries Act, 1995 or the Stock Exchange Act, 1995, in this Regulation called the “former direction”,

(a)        was in force immediately before the time of the coming into operation these Regulations, and

(b)        at that time the former direction applied to the a firm referred to in paragraph (2), or to the Irish Stock Exchange Limited, and the Bank on the coming into operation of these Regulations, has the discretion under these Regulations to give a similar direction,

the former direction continues to apply to the firm or the Irish Stock Exchange Limited as if the former direction were given by the Bank under these Regulations.

(6)       If an order made, or a notice sent, by the Bank to a firm referred to in paragraph (2), or to the Irish Stock Exchange Limited, under the Investment Intermediaries Act, 1995 or the Stock Exchange Act, 1995, in this Regulation called the “former order or notice”,

(a)        was in force immediately before the time of the coming into operation of these Regulations, and

(b)        at that time the former order or notice applied to the firm referred to in paragraph (2), or to the Irish Stock Exchange Limited, and the Bank on 1 November 2007, has the discretion under these Regulations to make a similar order, or send a similar notice,

the former order or notice continues to apply to the firm referred to in paragraph (2), or to the Irish Stock Exchange Limited, as if the former order or notice had been made or sent by the Bank under these Regulations.

(7)       A person who, immediately before 1 November 2007, was holding office as an authorised officer under the Investment Intermediaries Act, 1995 or the Stock Exchange Act 1995, is deemed for the purposes of these Regulations to be an authorised officer, as if appointed as such under Regulation 164.

Part 4 - Authorisation of Investment Firms

Requirement for authorisation

7.        (1)        Subject to paragraph (2), a person shall not act as an investment firm in the State, claim to be an investment firm in the State or represent that the person is an investment firm in the State, unless the person is -

(a)        an authorised investment firm,

(b)        is authorised to do so for the purposes of the Directive by a competent authority in another Member State, or

(c)        is deemed authorised as described in Regulation 6(2),

and is acting as authorised.

(2)       A market operator may operate an MTF in the State, subject to the prior verification of the market operator's compliance with Part 4 and with Part 5 excluding Regulations 31 and 43.

(3)       At the request of the market operator of a regulated market, the Bank may authorise as an MTF a multilateral system that, immediately before 1 November 2007, was both in existence and operated by the market operator if -

(a)        the multilateral system is in compliance with rules equivalent to those required by these Regulations for the authorisation and operation of MTFs, and

(b)        the request concerned is made on or before 31 July 2008.

When investment firm may be regarded as operating in the State

8.        (1)        For the purposes of Regulation 7, an investment firm shall not be regarded as operating within the State, if -

(a)        the firm has no branch in the State,

(b)        the firm's head or registered office is -

(i)         in a state other than a Member State, or

(ii)        in a Member State outside the State and the firm does not provide any investment services in respect of which it is required to be authorised in its home Member State for the purposes of the Directive, or

(c)        the firm is authorised in a Member State outside the State, under the Directive, but provides only investment services of a kind for which authorisation under the Directive is not available during the provision of the investment services.

(5)       Notwithstanding paragraph (1), an investment firm, for the purposes of Regulation 7, shall be regarded as operating within the State if the firm provides investment services to individuals in the State who do not themselves provide one or more investment services on a professional basis.

Bank to establish and maintain register of investment firms

9.        The Bank shall -

(a)        establish and maintain a register of all authorised investment firms for which the Bank is the competent authority, and

(b)        ensure that the register is publicly accessible and contains information on the investment services for which the investment firms are authorised under these Regulations.

Requirements of investment firm authorisations

10.      It is a requirement of an authorisation granted by the Bank that -

(a)        an investment firm which is a legal person must have its head office and its registered office (if required by law) in the State, and

(b)        an investment firm other than one referred to in subparagraph (a) that is a branch of another investment firm whose head or registered office is in a State other than a Member State must have a registered office in the State.

Application to Bank for an authorisation to operate as an investment firm

11.      (1)        The Bank -

(a)        may grant or refuse to grant to any person applying to it under this Regulation an authorisation to operate as an investment firm, and

(b)        shall not grant an authorisation under subparagraph (a) unless satisfied that the applicant complies with this Part.

(2)       The grant of an authorisation under paragraph (1) may be given -

(a)        unconditionally, or

(b)        as the Bank considers fit, subject to conditions or requirements.

(3)       If the Bank decides under paragraph (1) to refuse to grant an authorisation for an applicant to operate as an investment firm, the Bank shall promptly serve notice on the applicant of the decision, stating the reasons for the refusal.

(4)       An application for authorisation under paragraph (1) shall be in the form and contain or be accompanied by the records and information as the Bank may specify including but not limited to -

(a)        particulars of the type of business to be carried on or likely to be carried on by the proposed investment firm,

(b)        information about any person or persons having a qualifying shareholding in, or having control or ownership of, the proposed investment firm, including but not limited to, any natural or legal person whose shareholding in, or other commercial relationship with the proposed investment firm might influence the conduct of the proposed investment firm to a material degree, and

(c)        a certified copy of -

(i)         the memorandum of association, if any, and articles of association, if any, of the proposed investment firm, or

(ii)        other constituting documents, if any.

Prerequisites relating to qualifying holdings in investment firms

12.      (1)        The Bank shall not grant an authorisation under Regulation 11(1) to a person unless the Bank has been informed of -

(a)        the identities of the shareholders or members,

(b)        whether the shareholders or members, as the case may be,

(i)         are direct or indirect,

(ii)        are natural or legal persons,

(iii)       have qualifying holdings, and

(iv)       the amounts of those qualifying holdings, if any.

(2)       The Bank shall not grant an authorisation under Regulation 11(1) unless taking into account the need to ensure sound and prudent management of investment firms the Bank is satisfied as to the suitability of the shareholders or members that have or will have qualifying holdings in the investment firm that is the subject of the application under Regulation 11(1).

Prerequisites to granting authorisations for investment firms

13.      Without limiting the generality of Regulation 11(1), the Bank shall not grant an authorisation under that Regulation to a person to operate as an investment firm unless the firm satisfies the bank as follows -

(a)        that the proposed investment firm is -

(i)         a company incorporated by statute or under the Companies Acts,

(ii)        incorporated outside the State,

(iii)       a company made under Royal Charter, or

(iv)       constituted under a partnership agreement as an unincorporated body of persons,

(v)       an industrial provident society, or

(vi)       a sole trader;

(b)        that the memorandum of association and articles of association or other constituting documents of the proposed investment firm contain sufficient provision so as to enable the firm to operate in accordance with -

(i)         these Regulations, and

(ii)        any conditions, requirements or both, as the Bank may impose;

(c)        that the proposed investment firm -

(i)         has the minimum level of capital which shall be specified by the Bank, and

(ii)        is in compliance with Regulation 32;

(d)        as to the probity and competence of each of the directors and managers of the proposed investment firm;

(e)        as to the suitability of each of the qualifying shareholders of the proposed investment firm;

(f)        as to the organisational structure and management skills of the proposed investment firm and that adequate levels of staff and expertise will be employed to carry out the firm's proposed activities;

(g)        that the proposed investment firm has and will follow established procedures to enable -

(i)         the Bank to be supplied with all information necessary for the Bank's supervisory functions, and

(ii)        the public to be supplied with any information which the Bank may specify;

(h)        that the organisation of the business structure of the proposed investment firm is such that it and any of its associated or related undertakings, are capable of being supervised adequately by the Bank;

(i)        as to the conduct of -

(i)         the proposed investment firm's business and financial resources, and

(ii)        any other matters as the Bank considers necessary in the interests of the proper and orderly regulation and supervision of investment firms or in the interests of the protection of investors.

Bank may obtain further information from applicant by request, inquiry or investigation

14.      (1)        At any time before the grant or refusal of an authorisation under Regulation 11(1), the Bank may -

(a)        request the applicant for the authorisation to supply further information and records relating to the proposed investment firm, or

(b)        instruct an authorised officer to -

(i)         make inquiries, or

(ii)        carry out investigations

as may be necessary for the purpose of evaluating properly the application.

(2)       The inquiries or investigations referred to in subparagraph (1)(b) shall be carried out in accordance with these Regulations.

Time frame for granting and refusing applications for authorisations for investment firms

15.      (1)        The applicant under Regulation 11(1) for an authorisation to operate as an investment firm shall be informed -

(a)        within 6 months after the receipt by the Bank of the complete application, or

(b)        where additional information in relation to the application has been sought by the Bank, within -

(i)         6 months after the receipt by the Bank of the additional information, or

(ii)        12 months after the receipt by the Bank of the complete application,

whether or not an authorisation has been granted, whichever is the sooner;

(2)       If the applicant under Regulation 11(1) does not provide a complete application, as required under Regulations 11 to 14, within the 12 months referred to in paragraph (1) of this Regulation, the Bank may refuse the application.

Investment firms -capital, management, structure, control

16.      (1)        The Bank may impose conditions, requirements or both, in respect of the level of capital to be maintained by an investment firm.

(2)       The Bank may require that an appointment with an investment firm, as a director, as chief executive, as manager or as the holder of an equivalent position, requires the Bank's prior approval in writing which it may refuse, if not satisfied as to the probity and competence of the proposed appointee.

(3)       The Bank may direct an investment firm to alter the firm's memorandum of association, articles of association or other constituting documents in the interest of the proper and orderly regulation and supervision of investment firms or the protection of investors.

(4)       The Bank may require an investment firm or proposed investment firm to organise its business or corporate structure or its control of any associated undertaking or related undertaking not supervised by the Bank such that -

(a)        the investment firm when authorised under these Regulations, and

(b)        where appropriate and practicable, the business of any associated undertaking or related undertaking, either collectively or individually,

is capable of being supervised to the satisfaction of the Bank under these Regulations.

Unincorporated investment firms - special provisions

17.      (1)        Without prejudice to Regulation 16, the Bank may impose conditions requirements or both on an investment firm which is constituted as an unincorporated body of persons or which is a natural person in order to monitor the solvency of the firm, its proprietors or both.

(2)       The Bank may impose conditions, requirements or both on an investment firm which is constituted as an unincorporated body of persons or which is a natural person in order to achieve an equivalent level of supervision to that pertaining to an investment firm which is constituted as a corporate body.

Investment firms, dividing responsibility between their home and host Member States

18      The Bank shall apply these Regulations, having regard to the division of responsibilities between the home and host Member States of an investment firm, which are set out in the Directive and Directive 2006/49/EC and the relevant provisions of these Regulations shall be construed accordingly.

Prohibition against false or misleading application for investment firm authorisation

19.      A person shall not, knowingly or recklessly -

(a)        apply under these Regulations for an authorisation to operate as an investment firm using false or misleading information, or

(b)        make false or misleading statements to the Bank in relation to an application for -

(i)         an authorisation under this Regulation to operate as an investment firm, or

(ii)        an approval or permission from the Bank concerning the operation of an investment firm.

Scope of authorisation

20.      (1)        An authorisation granted to an investment firm under Regulation 11(1) -

(a)        shall specify -

(i)         the investment services which the firm is to provide, and

(ii)      the types of financial instruments in which the firm may deal,

(b)        may cover one or more ancillary services but shall not be granted solely for the provision of ancillary services, and

(c)        may -

(i)         extend to the provision of any investment business services, or

(ii)        cover any investment instruments,

as defined in the Investment Intermediaries Act 1995.

(2)       A person shall not provide any -

(a)        investment business services referred to in paragraph (1)(c)(i), or

(b)        services in respect of investment instruments referred to in paragraph (1)(c)(ii)

unless the person is an authorised investment firm.

(3)       An investment firm seeking authorisation to extend its business to additional investment services or ancillary services for which the firm is not authorised under these Regulations may apply to the Bank for the appropriate extension of the firm's authorisation and the Bank may grant the extension if the Bank considers the extension appropriate in the circumstances.

(4)       An authorisation granted to an investment firm under Regulation 11(1) together with an extension, if any, under subsection (3) of this Regulation -

(a)        is valid for the entire European Community if the investment firm complies with Regulation 124, and

(b)        allows an investment firm or a branch established by it to provide the services or perform the activities, for which the firm has been authorised, throughout the European Community.

Withdrawal of authorisations for investment firms

21.      (1)        The Bank may withdraw an authorisation, granted under Regulation 11 to operate as an investment firm if the firm -

(a)        fails to operate as an investment firm during the 12 month period following after the date of the authorisation,

(b)        expressly renounces the authorisation,

(c)        obtained the authorisation by making false statements or by any other irregular means,

(d)        no longer meets the conditions under which the authorisation was granted or the prerequisites to authorisation listed in Regulation 13(a to (i).

(e)        is being wound up, or

(f)        has seriously or systematically infringed the provisions of these Regulations governing the operation of investment firms.

(2)       Other than in the circumstances outlined in paragraph (1)(a), the Bank may withdraw an authorisation, granted under Regulation 11, to operate as an investment firm if the firm has not provided investment services for the immediately preceding 6 months.

Court may revoke authorisation on application by Bank

22.      (1)        Without prejudice to the power of the Bank to withdraw an authorisation under Regulation 21(1), the Bank may apply to the Court in a summary manner for an order revoking an authorisation to operate as an investment firm if the revocation is expedient -

(a)        in the interests of the proper and orderly regulation and supervision of investment firms,

(b)        in order to protect investors, or

(c)        in one or more of the circumstances described in paragraph (2).

(2)       The circumstances referred to in paragraph (1) are as follows:

(a)        the investment firm has been convicted on indictment of any offence -

(i)         under these Regulations,

(ii)        under any enactment under which the Bank exercises statutory functions, or

(iii)       involving fraud, dishonesty or breach of trust;

(b)        circumstances have materially changed since the granting of the authorisation such that, if an application for the authorisation were made at the time of the application to the Court, a different decision would be taken in relation to the application for authorisation;

(c)        the authorisation was obtained by a person knowingly or recklessly -

(i)         making false or misleading statements, or

(ii)        using false or misleading information,

(d)        the investment firm has systematically failed to comply with a condition or requirement of these Regulations;

(e)        the investment firm has failed to comply to a material degree with a condition or requirement of these Regulations;

(f)        the investment firm no longer fulfils any or all of the conditions or requirements which were -

(i)         imposed when the authorisation was granted, or

(ii)        subsequently imposed;

(g)        the investment firm -

(i)         no longer complies with capital or any other financial requirements specified by the Bank, or

(ii)        is not maintaining, or is unlikely to be able to maintain, having regard to the nature and volume of the firm's business adequate capital resources or adequate other resources;

(h)        the investment firm becomes unable or, in the opinion of the Bank, is likely to become unable, to meet its obligations to its creditors or suspends payments lawfully due;

(i)        the investment firm has infringed to a material degree a code of conduct or rules of conduct specified in or set out under Regulation 79;

(j)        a director, manager or qualifying shareholder of the investment firm no longer satisfies the Bank as to the matters specified in Regulation 13(d and (e);

(k)        the investment firm -

(i)         has not complied with a condition, requirement or direction imposed by or under these Regulations, and

(ii)        the circumstances are such that the Bank is of the opinion that the stability and soundness of the firm is or has been materially affected by the non-compliance;

(l)        the investment firm has so organised its business or corporate structure that -

(i)         the firm, and,

(ii)        where appropriate, any related undertaking or associated undertaking,

either collectively or individually, is no longer capable of being supervised to the satisfaction of the Bank under these Regulations.

(3)       On an application by the Bank to the Court under this Regulation, the Court may make interim or interlocutory orders as it thinks fit in the circumstances.

(4)       An application by the Bank to the Court under this Regulation or under Regulation 27(4) may be heard otherwise than in public.

(5)       The Bank shall not apply to the Court to revoke an authorisation on the grounds set out in paragraph (2)(j) unless the Bank has given the authorised investment firm concerned an opportunity to -

(a)        remove the director, manager or qualifying shareholder, or

(b)        otherwise deal with the concerns of the Bank in relation to the probity or competence of the director, manager or qualifying shareholder,

within such period of time as the Bank may specify.

Bank to give notice of proposed withdrawal or revocation of authorisation

23.      When the Bank proposes to withdraw an authorisation to operate as an investment firm or to apply to the Court for an order to revoke an authorisation to operate as an investment firm, the Bank shall -

(a)        serve notice on the investment firm of its intention, and

(b)        state its reasons in the notice.

Publication of withdrawal or revocation of authorisation

24      Within 28 days after withdrawal or revocation of an authorisation to operate as an investment firm, the Bank may publish notice of the withdrawal or revocation in the Iris Oifigiúil or in one or more newspapers circulating in the State.

Definitions for Regulations 25 to 28

25.      In this Regulation and Regulations 26 to 28:

“former authorised investment firm” means a person whose authorisation to operate as an investment firm has been withdrawn or revoked;

“obligations” includes duties and liabilities;

“person responsible”, in relation to a termination process, means the person who is responsible under the law for that process;

“termination process”, in relation to a former authorised investment firm (including a natural person where appropriate), means any -

(a)        proceedings relating to the winding-up, dissolution or termination of the firm,

(b)        receivership or bankruptcy proceedings of which the firm is the subject, or

(c)        any other such proceedings under law under which an assignee or other person becomes responsible for the firm's affairs pending the firm ceasing to carry on business.

Continued responsibilities of former authorised investment firms

26.      (1)        A former authorised investment firm that is not the subject of any termination process continues to be responsible for arranging the discharge of all liabilities, duties and obligations of the firm existing immediately before announcement of the withdrawal or revocation of the firm's authorisation, unless the Bank states otherwise.

(2)       Without limiting the generality of paragraph (1), a former authorised investment firm, whether or not the subject of any termination process, continues to be subject to -

(a)        the obligations that were imposed on the firm by these Regulations, in the firm's previous capacity as an authorised investment firm, and

(b)        any codes of conduct, rules of conduct, client money requirements and other conditions and requirements that were imposed on the firm by the Bank under these Regulations, in the firms previous capacity as an authorised investment firm.

until all the obligations of the firm have been discharged to the satisfaction of the Bank, to the extent that the obligations pertain to the firm's business as an investment firm before the withdrawal or revocation of the firm's authorisation.

(3)       A former authorised investment firm, as soon as possible after the withdrawal or revocation of the firm's authorisation, shall notify the Bank and such other persons as the Bank directs, of the measures proposed to discharge without undue delay the obligations of the firm, to the extent that the obligations pertain to the firm's business as an investment firm before the withdrawal or revocation.

Bank supervision of certain activities of former authorised investment firms

27.      (1)        If a former authorised investment firm -

(a)        has notified the Bank in accordance with Regulation 26(3) and the Bank is of the opinion that the measures proposed are not satisfactory,

(b)        has failed to notify the Bank in accordance with Regulation 26(3), or

(c)        the Bank is of opinion that the firm has failed to take all reasonable steps to notify persons which under Regulation 26(3) the Bank has directed are to be notified,

then, subject to paragraph (3) of this Regulation, the Bank, by written direction given to the firm, may prohibit the firm for a period, not exceeding 6 months, from doing one or more of the activities set out in paragraph (2) without the prior written approval of the Bank.

(2)       The following are the activities referred to in paragraph (1):

(a)        creating any liabilities;

(b)        dealing with or disposing of any assets or specified assets of the former authorised investment firm in any manner;

(c)        engaging in any transaction or class of transaction or specified transaction;

(d)        making payments.

(3)       Having given a written direction under paragraph (1) to a former authorised investment firm, the Bank, by further written direction given to the firm, may require the firm to prepare and submit to the Bank, within 2 months after the initial direction, a scheme for the Bank's approval under which the firm will carry out the orderly discharge in full of the firm's obligations, to the extent that the obligations pertain to the firm's business as an investment firm before the withdrawal or revocation of the firm's authorisation.

(4)       Where the Bank gives a direction under paragraph (1) or (3),

(a)        the Bank may apply to the Court, on being satisfied that the direction has not been complied with, and

(b)        the Court may confirm, vary or set aside the direction on the terms and for the period as the Court thinks fit.

Certain obligations of person responsible during firm's termination process

28.      (1)        Where a former authorised investment firm is the subject of any termination process, the person responsible is, from the date of the commencement of that process subject to -

(a)        the obligations that were imposed on the firm by these Regulations, in the firm's previous capacity as an authorised investment firm, and

(b)        any codes of conduct, rules of conduct, client money requirements and other conditions and requirements that were imposed on the firm by the Bank under these Regulations, in the firms previous capacity as an authorised investment firm,

until all the obligations of the firm have been discharged to the satisfaction of the Bank.

(2)       The obligations imposed on a person responsible under paragraph (1) are additional to the obligations of that person during the termination process.

(3)       Notwithstanding paragraph (1), if the Bank considers it appropriate in the circumstances, the Bank, on giving notice in writing to the person responsible for a former authorised investment firm referred to in paragraph (1) may in writing -

(a)        waive any obligations that the Bank, under paragraph (1), imposed on the person responsible, and

(b)        impose on the person responsible other obligations which correspond to those set out in paragraph (1).

Part 5 — Regulation and Supervision of Investment Firms

Persons who effectively direct the business

29.      (1)        Persons who effectively direct the business and the operations of an investment firm must satisfy the Bank that they are -

(a)        of sufficiently good repute, and

(b)        sufficiently experienced,

so as to ensure the sound and prudent management and operation of the firm.

(2)       Where a market operator seeks authorisation to operate an MTF and the persons that effectively direct the business of the MTF are the same as those that effectively direct the business of the regulated market, those persons are deemed to comply with paragraph (1).

(3)       An investment firm must notify the Bank of any changes to its management along with all information needed to assess whether persons appointed or to be appointed to manage the firm are of sufficiently good repute and sufficiently experienced.

(4)       The Bank shall require that the management of investment firms is undertaken by at least two persons meeting the requirements laid down in paragraph (1).

(5)       However, by way of derogation from the paragraph (1), the Bank may grant authorisation to investment firms -

(a)        that are natural persons, or

(b)        that are legal persons managed by a single natural person,

if the Bank is satisfied that there are arrangements in place which ensure the sound and prudent management of the investment firms.

Shareholders and members with qualifying holdings

30.      (1)        Where close links exist between the proposed investment firm and other natural or legal persons, the Bank shall grant authorisation only if those links do not prevent the effective exercise of the Bank's supervisory functions.

(2)       If the proposed acquirer of any qualifying holding in an investment firm is -

(a)        an investment firm, a credit institution, an insurance undertaking or a UCITS management company authorised in another Member State,

(b)        the parent undertaking of an investment firm, credit institution insurance undertaking or a UCITS management company authorised in another Member State, or

(c)      a person controlling an investment firm, credit institution, insurance undertaking or a UCITS management company authorised in another Member State,

and, if as a result of that acquisition, the undertaking would become the acquirer's subsidiary or come under the acquirer's control, the assessment of the acquisition shall be subject to the prior consultation provided for in Regulation 137.

Membership of an authorised Investor Compensation Scheme

31.      The Bank shall seek confirmation from a proposed investment firm that it will meet its obligations under the Investor Compensation Act 1998.

Initial capital endowment

32.      The Bank shall not grant authorisation unless the applicant investment firm has sufficient initial capital in accordance with the requirements of EU Directive 2006/49/EC on the capital adequacy of investment firms, having regard to the nature of the investment services a proposed investment firm seeks an authorisation to provide.

Organisational requirements

33.      (1)        An investment firm shall -

(a)        establish adequate policies and procedures sufficient to ensure compliance of the firm and the persons who are the firm's managers employees or tied agents with the firm's obligations under these Regulations,

(b)        maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to prevent conflicts of interest, as identified under Regulations 74 and 75 from adversely affecting the interests of the firm's clients,

(c)        ensure continuity and regularity in the performance of investment services and activities by implementing and carrying out appropriate and proportionate systems, resources and procedures,

(d)        ensure that the firm takes reasonable steps to avoid undue additional operational risk when relying on a third party for the performance of operational functions which are critical for -

(i)         the provision of continuous and satisfactory service to clients and

(ii)        the performance of investment activities on a continuous and satisfactory basis,

(e)        ensure that any outsourcing by the firm of important operational functions is not be undertaken in such a way as to impair materially -

(i)         the quality of the firm's internal control, or

(ii)        the ability of the Bank to monitor the firm's compliance with all of the firm's obligations,

(f)        ensure that the firm has in place and uses -

(i)         sound administrative and accounting procedures and internal control mechanisms,

(ii)        effective risk assessment procedures, and

(iii)       effective control and safeguard arrangements for information processing systems,

(g)        keep records of all services and transactions undertaken by the firm and ensure that the records are sufficient to enable the Bank to monitor compliance with these Regulations and, in particular, to ascertain whether the firm is complying with its obligations with respect to clients or potential clients,

(h)        when holding financial instruments belonging to clients, make adequate arrangements to -

(i)         safeguard clients’ ownership rights, especially in the event of the investment firm's insolvency, and

(ii)        prevent the use of a client's instruments on own account except with the client's express consent,

(i)        when holding funds belonging to clients, make adequate arrangements to safeguard the clients’ rights and, except in the case of credit institutions, prevent the use of client funds for the firm's own account.

(2)       If a branch of an investment firm is located in the State, the Bank, without prejudice to the possibility of the competent authority of the home Member State of the firm having direct access to those records, shall enforce paragraph (1)(g) with regard to transactions undertaken by the branch.

Further - business procedures, internal control mechanisms and reporting, etc.

34.      (1)        An investment firm shall -

(a)       establish, implement and maintain decision-making procedures and an organisational structure which clearly and in documented manner specifies reporting lines and allocates functions and responsibilities,

(b)        ensure that their relevant persons are aware of the procedures which must be followed for the proper discharge of their responsibilities,

(c)        establish, implement and maintain adequate internal control mechanisms designed to secure compliance with decisions and procedures at all levels of the investment firm,

(d)        employ personnel with the skills, knowledge and expertise necessary for the discharge of the responsibilities allocated to them,

(e)        establish, implement and maintain effective internal reporting and communication of information at all relevant levels of the investment firm,

(f)        maintain adequate and orderly records of their business and internal organisation,

(g)        ensure that the performance of multiple functions by their relevant persons does not and is not likely to prevent those persons from discharging any particular function soundly, honestly, and professionally.

(2)       In carrying out responsibilities under this Part, an investment firm shall take into account the nature, scale and complexity of the business of the firm, and the nature and range of investment services and activities undertaken in the course of that business.

(3)       Investment firms shall establish, implement and maintain -

(a)        systems and procedures that are adequate to safeguard the security integrity and confidentiality of information, taking into account the nature of the information in question,

(b)        an adequate business continuity policy aimed at ensuring, in the case of an interruption to their systems and procedures, the preservation of essential data and functions, and the maintenance of investment services and activities, or, where that is not possible, the timely recovery of such data and functions and the timely resumption of their investment services and activities,

(c)        accounting policies and procedures that enable them, at the request of the Bank, to deliver in a timely manner to the Bank financial reports which reflect a true and fair view of their financial position and which comply with all applicable accounting standards and rules,

(d)        adequate policies and procedures designed to detect any risk of failure by the firm to comply with the provisions of these Regulations, as well as the associated risks,

(4)       Investment firms shall put in place adequate measures and procedures designed -

(a)        to minimise the risks and associated risks referred to in paragraph (3)(d), and

(b)        to enable the Bank to exercise its powers effectively under these Regulations.

(5)       Investment firms, for the purposes of paragraph (3)(d) and (4), shall take into account the nature, scale and complexity of the business of the firm, and the nature and range of investment services and activities undertaken in the course of that business.

Further - monitoring and evaluating systems, control mechanisms and the like

35.      (1)        Investment firms shall monitor and, on a regular basis, evaluate the adequacy and effectiveness of -

(a)        their systems, internal control mechanisms and arrangements established, implemented or maintained, and

(b)        any other things for which the firms are responsible

under Regulation 34, and take appropriate measures to address any deficiencies.

(2)       Investment firms shall maintain a permanent and effective compliance function which operates independently and which has the following responsibilities:

(a)        to monitor and, on a regular basis, to assess the adequacy and effectiveness of the measures and procedures put in place in accordance with Regulation 34(4), and the actions taken to address any deficiencies in the firm's compliance with its obligations;

(b)        to advise and assist the relevant persons responsible for carrying out investment services and activities to comply with the firm's obligations under these Regulations.

(3)       In order to enable the compliance function to discharge its responsibilities properly and independently, investment firms shall ensure that the following conditions are satisfied:

(a)        the compliance function must have the necessary authority, resources expertise and access to all relevant information;

(b)        a compliance officer must be appointed and must be responsible for the compliance function and for any reporting as to compliance required by Regulation 36(2);

(c)       the relevant persons involved in the compliance function must not be involved in the performance of services or activities they monitor;

(d)        the method of determining the remuneration of the relevant persons involved in the compliance function must not compromise their objectivity and must not be likely to do so.

(4)       However, an investment firm shall not be required to comply with paragraph (3)(c) or (d) if the firm is able to demonstrate that in view of -

(a)        the nature, scale and complexity of the firm's business, and

(b)        the nature and range of the firm's investment services and activities,

the requirement under paragraph (3)(c) or (d) is not proportionate and that its compliance function continues to be effective.

Risk management function

36      (1)        Investment firms shall take the following actions:

(a)        establish, implement and maintain adequate risk management policies and procedures which identify the risks relating to the firm's activities processes and systems, and where appropriate, set the level of risk tolerated by the firm;

(b)        adopt effective arrangements, processes and mechanisms to manage the risks relating to the firm's activities, processes and systems, in light of that level of risk tolerance;

(c)        monitor the following:

(i)         the adequacy and effectiveness of the investment firm's risk management policies and procedures;

(ii)        the level of compliance by the investment firm and its relevant persons with the arrangements, processes and mechanisms adopted in accordance with subparagraph (b);

(iii)       the adequacy and effectiveness of measures taken to address any deficiencies in those arrangements and procedures including failures by the relevant persons to comply with such arrangements or follow such procedures.

(2)       Investment firms, where appropriate and proportionate in view of the nature scale and complexity of their business and the nature and range of the investment services and activities undertaken in the course of that business, shall establish and maintain a risk management function that operates independently and facilitates carrying out the following tasks:

(a)        implementation of the policies and procedures referred to in paragraph (1);

(b)        provision of reports and advice to senior management in accordance with Regulation 37(5).

(3)       Where an investment firm is not required under paragraph (2) to maintain a risk management function that functions independently, the firm must nevertheless be able to demonstrate that the policies and procedures adopted by the firm in accordance with paragraph (1) satisfy the requirements of that paragraph and are consistently effective.

Internal audit function, supervisory function and senior management

37.      (1)        In this section, “supervisory function” means the function within an investment firm that ensures the proper supervision of the firm's senior management.

(2)       An investment firm, where appropriate and proportionate in view of the nature, scale and complexity of firm's business and the nature and range of investment services and activities undertaken in the course of that business, shall establish and maintain an internal audit function that -

(a)        is separate and independent from the other functions and activities of the firm, and

(b)        ensures the carrying out of the following responsibilities:

(i)         to establish, implement and maintain an audit plan to examine and evaluate the adequacy and effectiveness of the investment firm's systems, internal control mechanisms and arrangements;

(ii)        to issue recommendations based on the result of work carried out in accordance with subparagraph (i);

(iii)       to verify compliance with those recommendations;

(iv)       to report in relation to internal audit matters in accordance with paragraph (5).

(3)       An investment firm, when allocating functions internally, shall ensure that senior management, and, where appropriate, the persons performing the supervisory function are responsible for ensuring that the firm complies with its obligations under these Regulations.

(4)       In particular, an investment firm shall ensure that senior management and where appropriate, the persons performing the supervisory function assess and periodically review the effectiveness of the policies, arrangements and procedures put in place to comply with the obligations under these Regulations and to take appropriate measures to address any deficiencies.

(5)       An investment firm shall ensure that the firm's senior management receive on a frequent basis, and at least annually, written reports on the matters covered by Regulations 34(3)(d), 35 and 36, indicating in particular whether the appropriate remedial measures have been taken in the event of any deficiencies.

(6)       An investment firm shall ensure that the person in charge of the supervisory function, if any, receives regular written reports on the same matters.

Complaint procedures

38.      (1)        An investment firm shall -

(a)        maintain effective and transparent procedures for the reasonable and prompt handling of complaints received from retail clients or potential retail clients, and

(b)        keep a record of each complaint and the measures taken for the resolution of the complaint.

Personal transaction procedures

39.      (1)        In this Regulation “personal transaction” means a trade in a financial instrument effected by or on behalf of a relevant person, where -

(a)        that relevant person is acting outside the scope of the activities the person carries out in that capacity, or

(b)        the trade is carried out for the account of any of the following persons:

(i)         the relevant person;

(ii)        any person with whom the relevant person has a family relationship or has close links;

(iii)       a person whose relationship with the relevant person is such that the relevant person has a direct or indirect material interest in the outcome of the trade, other than a fee or commission for the execution of the trade.

(2)       In relation to any relevant person who -

(a)        is involved in activities that may give rise to a conflict of interest, or

(b)        has access to inside information within the meaning of Article 1(1) of Directive 2003/6/EC, or to other confidential information relating to clients or transactions with or for clients by virtue of an activity carried out by the person on behalf of the firm,

an investment firm shall establish, implement and maintain adequate arrangements aimed at preventing the relevant person from doing any of the following activities:

(i)         entering into a personal transaction which meets at least one of the following criteria:

(I)         Directive 2003/6/EC prohibits the person from entering into the transaction;

(II)       the transaction involves the misuse or improper disclosure of the inside information or confidential information;

(III)     the transaction conflicts or is likely to conflict with an obligation of the investment firm under these Regulations;

(ii)        other than in the proper course of the relevant person's employment or contract for services, advising or procuring, any other person to enter into a transaction in financial instruments which, if a personal transaction of the relevant person, would be covered by subparagraph (i) of this paragraph, Regulation 155 (2)(a) or (b) or Regulation 107(3 and (4);

(iii)       without prejudice to Article 3(a) of Directive 2003/6/EC, disclosing other than in the normal course of employment or contract for services any information or opinion to any other person if the relevant person knows, or reasonably ought to know, that as a result of that disclosure the other person will or would be likely to take either of the following steps:

(I)         entering into a transaction in financial instruments which, if a personal transaction of the relevant person, would be covered by subparagraph (i) of this paragraph, Regulation 155 (2)(a) or (b) or Regulation 107(3) and (4);

(II)       advising or procuring another person to enter into such a transaction.

(3)       Without prejudice to the generality of paragraph (2), an investment firm must ensure that the arrangements required under paragraph (2) are, in particular, designed so that -

(a)        a relevant person to which paragraph (2) applies is aware of

(i)         the restrictions on personal transactions, and

(ii)        the measures established by the investment firm in connection with personal transactions and disclosure, in accordance with that paragraph,

(b)        the firm is informed promptly of any personal transaction entered into by a relevant person, either by notification of that transaction or by other procedures enabling the firm to identify such transactions, and

(c)        a record is made of the personal transaction notified to the firm or identified by it, including any authorisation or prohibition in connection with such a transaction.

(4)       Paragraphs (2) and (3) do not apply to the following kinds of personal transaction:

(a)        personal transactions effected under a discretionary portfolio management service where there is no prior communication in connection with the transaction between the portfolio manager and the relevant person or other person for whose account the transaction is executed;

(b)        personal transactions in units in collective undertakings that -

(i)         comply with the conditions necessary to enjoy the rights conferred by Directive 85/611/EEC, or

(ii)        are subject to supervision under law which requires an equivalent level of risk spreading in the undertaking's assets,

where the relevant person and any other person for whose account the transactions are effected is not involved in the management of that undertaking.

Retention of records

40.      (1)        Investment firms shall retain -

(a)        all the records required under these Regulations for a period of at least 5 years, and

(b)        records which set out

(i)         the respective rights and obligations of the firm and the client under an agreement to provide services, or

(ii)        the terms on which the firm provides services to the client,

for at least the duration of the relationship with the client.

(2)       However, the Bank, in exceptional circumstances, may require investment firms to retain any or all of the records referred to in paragraph (1) for such longer period as is justified by the nature of the instrument or transaction, if that is necessary to enable the Bank to exercise its supervisory functions under these Regulations.

(3)       Following the termination of the authorisation of an investment firm, the Bank may require the firm to retain records for the balance of the period required under paragraph (1).

(4)       The investment firm or former investment firm shall ensure that the records are retained in a durable medium, and in such a form and manner that the following conditions are met:

(a)        the Bank must be able to access the records readily and to reconstitute each key stage of the processing of each transaction;

(b)        it must be possible for any corrections or other amendments, and the contents of the records prior to such corrections or amendments, to be easily ascertained;

(c)        it must not be possible for the records otherwise to be manipulated or altered.

(5)       The Bank shall prepare and maintain a list of the minimum records investment firms are required to keep under these Regulations.

(6)       Record-keeping obligations under these Regulations are without prejudice to the right of the Bank, following consultation with the Minister and other interested parties, to impose obligations on investment firms relating to the recording of telephone conversations or electronic communications involving client orders.

Trading process and finalisation of transactions in an MTF

41.      (1)        Without prejudice to the application of Regulation 33 to investment firms when operating an MTF, an investment firms or a market operator shall -

(a)        establish -

(i)         transparent and non-discretionary rules and procedures for fair and orderly trading, and

(ii)        objective criteria for the efficient execution of orders,

(b)        establish transparent rules regarding the criteria for determining the financial instruments that can be traded within their systems,

(c)        satisfy the Bank that there is access to sufficient publicly available information to enable the users of the MTF to form an investment judgement, taking into account both the nature of the users and the types of instruments traded,

(d)        establish and maintain transparent rules, based on objective criteria governing access to the MTF facility and ensure that the rules comply with the conditions and requirements established under Regulation 66,

(e)        clearly inform the users of the MTF of their respective responsibilities for the settlement of the transactions executed in that facility,

(f)        ensure that the necessary arrangements are in place in order to facilitate the efficient settlement of the transactions concluded under the systems of the MTF,

(g)        comply without delay with any instruction from the Bank to suspend or remove a financial instrument from trading.

(2)       Regulations 76, 106 and 108 are not applicable to the transactions concluded under the rules governing an MTF between its members or participants, or between the MTF and its members or participants in relation to the use of the MTF.

(3)       However, the members of, or participants in, the MTF shall comply with Regulations 76, 106 and 108 with respect to their clients when the members or participants on behalf of their clients, execute the clients’ orders within the systems of an MTF.

(4)       Where a transferable security, which has been admitted to trading on a regulated market, is also traded on an MTF without the consent of the issuer of the transferable security, that issuer is not subject to any obligation relating to initial, ongoing or ad hoc financial disclosure with regard to the trades on that MTF.

Relations with third countries

42.      (1)        The Bank shall inform the European Commission of any general difficulties which investment firms encounter in establishing themselves or providing investment services or performing investment activities in any third country.

(2)       The Bank shall cooperate with the European Commission on matters relating to third countries pertaining to the Directive.

Part 6 - Regulated Markets

Authorisation and applicable law

43.      (1)        An authorisation under these Regulations to operate a regulated market shall be -

(a)        reserved to a person using, for the operation of the regulated market, a system which complies with these Regulations, and

(b)        granted only if the person satisfies the Bank that both the person, as market operator, and the system comply at least with this Part.

(2)       In the case of a regulated market that -

(a)        is a legal person, and

(b)        is operated by a market operator other than the regulated market itself,

the Bank shall establish how the obligations imposed on the market operator under these Regulations are to be allocated between the regulated market and the market operator.

(3)       Without prejudice to any relevant provisions of Directive 2003/6/EC on insider dealing and market manipulation, the trading conducted under the systems of a regulated market established in the State are governed by Irish law.

Trading under regulated markets subject to Irish law

44.      Without prejudice to any relevant provisions of Directive 2003/6/EC on insider dealing and market manipulation, the trading conducted under the systems of a regulated market established in the State are governed by Irish law.

Market operator's responsibility for establishing regulated market

45.      (1)        The market operator of a regulated market shall provide all information including a programme of operations setting out, inter alia, the types of business envisaged and the organisational structure, necessary to enable the Bank to satisfy itself that the regulated market has established, at the time of initial authorisation, all the necessary arrangements to meet its obligations under this Part.

(2)       The market operator of a regulated market shall perform tasks relating to the organisation and operation of the regulated market under the supervision of the Bank.

(3)       The market operator of a regulated market -

(a)        is responsible for ensuring that the regulated market operated by the market operator is in compliance with this Part, and

(b)        is entitled to exercise the rights conferred by these Regulations in respect of the regulated market.

Regular review by Bank of market operators and regulated markets

46.      The Bank shall -

(a)        keep under regular review the compliance with this Part of market operators and of regulated markets operated by them, and

(b)        monitor regulated markets to ensure compliance with the conditions and requirements for initial authorisation.

Application to Bank for an authorisation to operate a regulated market

47.      (1)        The Bank -

(a)        may grant or refuse to grant to any person applying to it under these Regulations an authorisation to operate a regulated market, and

(b)        shall not grant an authorisation under subparagraph (a) unless satisfied that the applicant complies with these Regulations.

(2)       The grant of an authorisation under paragraph (1) may be given -

(a)        unconditionally, or

(b)        as the Bank considers fit, subject to conditions or requirements.

(3)       If the Bank decides under paragraph (1) to refuse to grant an authorisation for an applicant to operate a regulated market, the Bank shall promptly serve notice on the applicant of the Bank's decision, stating the reasons for the refusal.

(4)       An application for authorisation under paragraph (1) shall be in the form and contain or be accompanied by the records and information as the Bank may specify including but not limited to all or any of the following:

(a)        particulars of the type of business to be carried on or likely to be carried on by the market operator of the proposed regulated market, or by the proposed regulated market if it is a legal person and will itself operate its own business as a regulated market;

(b)        information about any person or persons having a qualifying shareholding or having control or ownership of the market operator of the proposed regulated market, including but not limited to any natural or legal person whose shareholding in or other commercial relationship with the person who will be the market operator might influence the latter's conduct to a material degree;

(c)        where relevant, a certified copy of the memorandum of association and articles of association of the market operator of the proposed regulated market.

Prerequisites to granting authorisations for regulated markets

48.      Without limiting the generality of Regulation 47(1), the Bank shall not grant an authorisation under that Regulation to operate a regulated market, unless satisfied -

(a)        that the proposed market operator is a company incorporated by statute or under the Companies Acts,

(b)        where relevant, that the memorandum of association and articles of association or other constituting documents of the proposed market operator contain sufficient provision so as to enable the market operator to operate in accordance with -

(i)         these Regulations, and

(ii)        any condition or requirement as the Bank may impose, and

(c)        that the proposed market operator has the minimum level of capital which shall be specified by the Bank,

(d)        as to the probity and competence of each of the proposed market operator's directors and managers,

(e)        as to the suitability of each shareholder of the proposed market operator who would have a qualifying holding,

(f)        as to the organisational structure and management skills of the proposed market operator and that adequate levels of staff and expertise will be employed to carry out the market operator's proposed activities,

(g)        that the proposed market operator has and will follow established procedures to enable -

(i)         the Bank to be supplied with all information necessary for the Bank's supervisory functions, and

(ii)        the public to be supplied with any information which the Bank may specify,

(h)        that the organisation of the proposed market operator's business structure is such that the proposed market operator and any associated or related undertakings are capable of being supervised adequately by the Bank, and

(i)        as to the conduct of -

(i)         the proposed market operator's business and financial resources, and

(ii)        any other matters,

as the Bank considers necessary in the interests of the proper and orderly regulation and supervision of market operators and regulated markets or in the interests of the protection of investors.

Bank may obtain further information from applicant by request, inquiry or investigation

49.      (1)        At any time before the grant or refusal of an authorisation under Regulation 47(1), the Bank may -

(a)        request the applicant to supply further information and records relating to the proposed regulated market or its proposed market operator, or

(b)        instruct an authorised officer to -

(i)         make inquiries, or

(ii)        carry out investigations

in accordance with these Regulations and as necessary for the purpose of properly evaluating an application

Time frame for granting or refusing applications for authorisations for regulated markets

50.      (1)        The applicant under Regulation 47(1) for an authorisation to operate a proposed regulated market shall be informed whether or not an authorisation has been granted—

(a)        within 6 months after the date of receipt of the complete application, or

(b)        where additional information in relation to the application has been sought by the Bank, within -

(i)         6 months after the receipt by the Bank of the additional information, or

(ii)        12 months after the receipt by the Bank of the complete application,

whichever is the sooner.

(2)       If the applicant under Regulation 47(1) does not provide a complete application to the Bank, as required under Regulations 47 to 49, within the 12 months referred to in paragraph (1), the Bank may refuse the application.

Regulated markets - management, structure, control

51.      (1)        The Bank may require that an appointment with the market operator of a regulated market as a director, as chief executive, as manager or as the holder of an equivalent position, shall be subject to the prior approval in writing of the Bank.

(2)       The prior approval in writing or the Bank under paragraph (1) may not be granted unless the market operator of a regulated market satisfies the Bank as to the probity and competence of the proposed appointee.

(3)       The Bank may direct the market operator of a regulated market to alter the market operator's memorandum of association, articles of association or other constituting documents in the interest of the proper and orderly regulation and supervision of market operators, regulated markets or the protection of investors.

(4)       The Bank may impose requirements on the market operator of a regulated market to organise the business, corporate structure or control of any associated undertaking or related undertaking not supervised by the Bank such that -

(a)        when authorised under these Regulations, the market operator and the regulated market operated by it, and

(b)        where appropriate and practicable, the business of any associated undertaking or related undertaking, either collectively or individually,

is capable of being supervised to the satisfaction of the Bank under these Regulations.

Prohibition against false or misleading application to operate regulated market

52.      A person shall not knowingly or recklessly -

(a)        apply under this Regulation for an authorisation to operate a regulated market using false or misleading information, or

(b)        make false or misleading statements to the Bank in relation to an application for -

(i)         an authorisation under this Regulation to operate a regulated market, or

(ii)        an approval or permission from the Bank concerning the operation of a regulated market.

Withdrawal of authorisations for regulated markets

53.      (1)        The Bank may withdraw an authorisation granted under Regulation 47 to operate a regulated market if the market operator of the regulated market -

(a)        does not make use of the authorisation within 12 months after the date the authorisation was granted;

(b)        expressly renounces the authorisation;

(c)        obtained the authorisation by making false statements or by any other irregular means;

(d)        no longer meets the conditions under which the authorisation was granted or the prerequisites to authorisation listed in Regulation 48(a to (i);

(e)        is being wound up; or

(f)        has seriously or systematically infringed the provisions of these Regulations governing the operation of regulated markets;

(2)       Other than in the circumstances outlined in paragraph (1)(a), the Bank may withdraw an authorisation, granted under Regulation 47(1), to operate a regulated market if the regulated market has not been in operation for the immediately preceding 6 months.

Bank may apply to Court for order revoking authorisation

54.      (1)        Without prejudice to the power of the Bank under Regulation 53 to withdraw an authorisation, the Bank may apply to the Court in a summary manner for an order revoking an authorisation to operate a regulated market if the revocation is expedient -

(a)        in the interests of the proper and orderly regulation and supervision of the market operator and the regulated market,

(b)        in order to protect investors, or

(c)        in one or more of the circumstances described in paragraph (2).

(2)       The circumstances referred to in paragraph (1) are as follows:

(a)        the market operator has been convicted on indictment of any offence -

(i)         under these Regulations,

(ii)        under any enactment or Regulation under which the Bank exercises statutory functions, or

(iii)       involving fraud, dishonesty or breach of trust;

(b)        circumstances have materially changed since the granting of the authorisation such that, if an application for the authorisation were made at the time of the application to the Court, a different decision would be taken in relation to the application for authorisation;

(c)        the authorisation was obtained by knowingly or recklessly -

(i)         making false or misleading statements, or

(ii)        using false or misleading information;

(d)        the market operator has systematically failed to comply with a condition or requirement of these Regulations;

(e)        the market operator has failed to comply to a material degree with a condition or requirement of these Regulations;

(f)        the market operator no longer fulfils one or more of the conditions or requirements which were -

(i)         imposed when the authorisation was granted, or

(ii)        were subsequently imposed;

(g)        the market operator -

(i)         no longer complies with capital or any other financial requirements specified by the Bank, or

(ii)        is not maintaining, or is unlikely to be able to maintain, having regard to the nature and volume of the firm's business adequate capital resources or adequate other financial resources;

(h)        the market operator becomes unable or, in the opinion of the Bank, is likely to become unable, to meet the market operator's obligations to its creditors or suspends payments lawfully due;

(i)        the market operator has infringed to a material degree a code of conduct or rules of conduct specified in or set out under Regulation 79;

(j)        a director, manager or qualifying shareholder of the market operator no longer satisfies the Bank as to the matters specified in Regulation 48 (d) or (e);

(k)        the market operator -

(i)         has failed to comply with a condition, requirement or direction imposed under these Regulations, and

(ii)        the circumstances are such that the Bank is of the opinion that the stability and soundness of the market operator or the regulated market is or has been materially affected by the non-compliance;

(l)        the market operator has so organised its business or corporate structure or the business or corporate structure of the regulated market that -

(i)         the market operator or the regulated market, and,

(ii)        where appropriate, any related undertaking or associated undertaking,

either collectively or individually, is no longer capable of being supervised to the satisfaction of the Bank under these Regulations.

(3)       On an application to the Court under this Regulation, the Court may make interim or interlocutory orders as it thinks fit in the circumstances.

(4)       An application to the Court under this Regulation or under Regulation 59 may be heard otherwise than in public.

(5)       The Bank shall not apply to the Court to revoke an authorisation on the grounds set out in paragraph (2)(j) unless the Bank has given the regulated market an opportunity to -

(a)        remove the director, manager or qualifying shareholder, or

(b)        otherwise deal with the concerns of the Bank in relation to the probity or competence of the person concerned,

within such period of time as the Bank may specify.

Bank to give notice of proposed withdrawal or revocation of authorisation

55.      When the Bank proposes to withdraw an authorisation to operate a regulated market or to apply to the Court for an order to revoke an authorisation to operate a regulated market the Bank shall -

(a)        serve notice on the operator of the regulated market of the Bank's intention, and

(b)        state its reasons in the notice.

Publication of withdrawal or revocation of authorisation

56.      Within 28 days after withdrawal or revocation of an authorisation to operate a regulated market, the Bank may publish notice of the withdrawal or revocation in the Iris Oifigiúil or in one or more newspapers circulating in the State.

Definitions for Regulations 57 to 60

57.      In this Regulation and Regulations 58 to 60:

“former market operator” means a person whose authorisation to operate a regulated market has been withdrawn or revoked;

“obligations” includes duties and liabilities;

“person responsible”, in relation to a termination process, means the person who is responsible under the law for that process;

“termination process”, in relation to a former market operator (including a natural person where appropriate), means any -

(a)        proceedings relating to the winding-up, dissolution or termination of the market operator,

(b)        receivership or bankruptcy proceedings of which the firm is the subject, or

(c)        any other such proceedings under law under which an assignee or other person becomes responsible for the market operator's affairs pending the market operator ceasing to carry on business.

Continued responsibilities of former market operators

58.      (1)        A former market operator that is not the subject of any termination process continues to be responsible for arranging the discharge of all liabilities, duties and obligations of the firm existing immediately before announcement of the withdrawal or revocation of the firm's authorisation, unless the Bank states otherwise.

(2)       Without limiting the generality of paragraph (1), a former market operator whether or not the subject of any termination process, continues to be subject to -

(a)        the obligations that were imposed on the firm by these Regulations, in the operator's previous capacity as an authorised market operator, and

(b)        any codes of conduct, rules of conduct, client money requirements and other conditions and requirements that were imposed on the operator by the Bank under these Regulations, in the operator's previous capacity as an authorised market operator,

until all the obligations of the operator have been discharged to the satisfaction of the Bank to the extent that the obligations pertain to the operator's business as a market operator before the withdrawal or revocation of the operator's authorisation.

(3)       A former market operator, as soon as possible after the withdrawal or revocation of the operator's authorisation, shall notify the Bank and such other persons as the Bank directs, of the measures being taken to discharge without undue delay the obligations of the operator, to the extent that the obligations pertain to the operator's business as a market operator before the withdrawal or revocation.

Bank supervision of certain activities of former market operators

59.      (1)        If a former market operator -

(a)        has notified the Bank in accordance with Regulation 58(3) and the Bank is of the opinion that the measures referred to in that provision that are proposed to be taken are not satisfactory,

(b)        has failed to notify the Bank in accordance with Regulation 58(3), or

(c)        the Bank is of the opinion that the operator has failed to take all reasonable steps to notify persons which under Regulation 58(3) the Bank has directed are to be notified,

then, subject to paragraph (3) of this Regulation, the Bank by written direction given to the former market operator may prohibit the operator for a period, not exceeding 6 months, from doing one or more of the activities set out in paragraph (2) without the prior authorisation of the bank.

(2)       The following are the activities referred to in paragraph (1):

(a)        creating any liabilities,

(b)        dealing with or disposing of any assets or specified assets of the former regulated market in any manner,

(c)        engaging or facilitating any transaction or class of transaction or specified transaction, or

(d)        making payments.

(3)       Having given a written direction under paragraph (1) to a former market operator, the Bank, by further written direction given to the operator, may require the operator to prepare and submit to the Bank, within 2 months after the initial direction, a scheme for the Bank's approval under which the operator will carry out the orderly discharge in full of the operator's obligations, to the extent that the obligations pertain to the firm's business as a market operator before the withdrawal or revocation of the operator's authorisation.

(4)       Where the Bank gives a direction under paragraph (1) or (3),

(a)        the Bank may apply to the Court, on being satisfied that the direction has not been complied with, and

(b)        the Court may confirm, vary or set aside the direction on the terms and for the period as the Court thinks fit.

Certain obligations of former market operators during operator's termination process

60.      (1)        Where a former authorised market operator is the subject of any termination process, the person responsible is, from the date of the commencement of that process subject to -

(a)        the obligations that were imposed on the operator by these Regulations, in the operator's previous capacity as an authorised market operator, and

(b)        any conditions and requirements that were imposed on the operator by the Bank under these Regulations, in the operator's previous capacity as an authorised market operator,

until all the obligations of the operator have been discharged to the satisfaction of the Bank.

(2)       The obligations imposed on a person responsible under paragraph (1) are additional to the obligations of that person during the termination process.

(3)       Notwithstanding paragraph (1), if the Bank considers it appropriate in the circumstances, the Bank, on giving notice in writing to the person responsible for a former authorised market operator referred to in paragraph (1) may in writing -

(a)        waive any obligations that the Bank, under paragraph (1), imposed on the person responsible, and

(b)        impose on the person responsible other obligations which correspond to those set out in paragraph (1).

Requirements for the management and operation of the regulated market

61.      (1)        Persons who effectively direct the business and the operations of a regulated market must satisfy the Bank that they are sufficiently -

(a)        of good repute, and

(b)        experienced,

so as to ensure the sound and prudent management and operation of the regulated market.

(2)       The market operator of a regulated market shall -

(a)        inform the Bank of the identity of the persons who effectively direct the business and the operations of the regulated market, and

(b)        notify the Bank before any changes to this information,

(c)        satisfy the Bank that the persons are fit and proper persons to occupy their positions and responsibilities in that regard.

(3)       The Bank may refuse to approve proposed changes if the Bank is of the opinion that the persons identified in any notification to it pose a material threat to the sound and prudent management and operation of the regulated market.

(4)       The person or persons who effectively direct the business and the operations of an approved stock exchange immediately before 1 November 2007 are deemed to be in compliance with paragraph (1) as of the 1 November 2007.

(5)       The Bank shall refuse authorisation if -

(a)        not satisfied that the persons who will effectively direct the business of the regulated market are of sufficiently good repute or sufficiently experienced, or

(b)        there are objective and demonstrable grounds for believing that proposed changes to the management of the firm pose a threat to its sound and prudent management.

(6)       The market operator of a regulated market shall ensure that the management of a regulated market is in the charge of at least 2 persons who are in compliance with paragraph (1).

Requirements relating to persons exercising significant influence over the management of the regulated market

62.      (1)        The market operator of a regulated market must satisfy the Bank that the persons who are in a position to exercise significant influence over the management of the regulated market are suitable.

(2)       The market operator of a regulated market shall -

(a)        provide the Bank with all information as the Bank may request regarding -

(i)         the ownership of the regulated market,

(ii)        the market operator, and

(iii)       the identity and scale of interests of any parties in a position to exercise significant influence over the management of the regulated market,

(b)        inform the Bank of any transfer of ownership which gives rise to a change in the identity of the persons exercising significant influence over the operation of the regulated market, and

(c)        make public the information referred to in subparagraphs (a) and (b) in the manner and at the times as the Bank may direct.

(3)       The Bank may refuse to approve proposed changes to the controlling interests of the market operator of a regulated market if the Bank is of the opinion that the proposed changes pose a material threat to the sound and prudent management and operation of the market operator of the regulated market.

Organisational requirements

63.      The market operator of a regulated market shall -

(a)        have and maintain arrangements to identify clearly and manage the potential adverse consequences for the operation of the regulated market or for participants in the regulated market of any conflict of interest between -

(i)         the interest of the regulated market, its owners or its operator and

(ii)        the sound functioning of the regulated market,

in particular where the conflict might prove prejudicial to the accomplishment of any functions delegated to the regulated market by the Bank;

(b)        be adequately equipped to -

(i)         manage the risks to which the regulated market is exposed,

(ii)        implement appropriate arrangements and systems to identify all significant risks to its operation, and

(iii)       put in place effective measures to mitigate those risks;

(c)        have arrangements for the sound management of the technical operations of the system, including the establishment of effective contingency arrangements to cope with risks of systems disruptions;

(d)        have transparent and non-discretionary rules and procedures that provide for fair and orderly trading and establish objective criteria for the efficient execution of orders;

(e)        have effective arrangements to facilitate the efficient and timely finalisation of transactions executed under its systems;

(f)        have available, at the time of authorisation and on an ongoing basis sufficient financial resources to facilitate its orderly functioning having regard to the nature and extent of the transactions concluded on the market and the range and degree of the risks to which it is exposed.

Admission of financial instruments to trading

64.      (1)        The market operator of a regulated market shall establish and maintain clear and transparent rules regarding the admission of financial instruments to trading, in order to ensure that financial instruments admitted to trading in a regulated market -

(a)        are capable of being traded in a fair, orderly and efficient manner, and

(b)        in the case of transferable securities, are freely negotiable.

(2)       In the case of derivatives, the market operator of a regulated market shall ensure in particular that the design of the derivative contract allows for its orderly pricing as well as for the existence of effective settlement conditions.

(3)       In addition to the obligations set out in paragraphs (1) and (2), the market operator of a regulated market shall establish and maintain effective arrangements-

(a)        to verify that issuers of transferable securities that are admitted to trading on the regulated market comply with the issuers’ initial ongoing and ad hoc disclosure obligations, and

(b)        which facilitate the regulated market's members or participants in obtaining access to information which has been made public under Community law.

(4)       The market operator of a regulated market shall establish the necessary arrangements to review regularly the compliance with the admission requirements of the financial instruments which the regulated market admits to trading.

(5)       A transferable security that has been admitted to trading on a regulated market can subsequently be admitted to trading on other regulated markets -

(a)        without the consent of the issuer, and

(b)        in compliance with the relevant provisions of EU Directive 2003/71/EC in relation to the prospectus to be published when securities are -

(i)         offered to the public, or

(ii)        admitted to trading.

(6)       The regulated market shall inform the issuer of the fact that the issuer's securities are traded on that regulated market.

(7)       The issuer is not subject to any obligation to provide information required under paragraph (3) directly to any regulated market which has admitted the issuer's securities to trading without the issuer's consent.

Suspension and removal of instruments from trading

65.      (1)        The market operator of a regulated market may suspend or remove from trading a financial instrument which no longer complies with the rules of the regulated market unless doing so would likely cause significant damage to -

(a)        the investors’ interests, or

(b)        the orderly functioning of the market.

(2)       Without prejudice to paragraph (1), the Bank may direct the suspension or removal of an instrument from trading.

(3)       The market operator of a regulated market that suspends or removes from trading a financial instrument shall without delay -

(a)        make public the suspension or removal, and

(b)        communicate all relevant information to the Bank

and the Bank shall inform the competent authorities of the other Member States.

(4)       Where the Bank directs the suspension or removal of a financial instrument from trading on one or more regulated markets the Bank shall without delay -

(a)        make public its decision, and

(b)        inform the competent authorities of the other Member States.

(5)       Where the Bank is informed by the competent authority of another Member State of the suspension or removal of a financial instrument from trading on one or more regulated markets, the Bank shall direct the suspension or removal of that financial instrument from trading -

(a)        on the regulated markets in the State, and

(b)        on MTFs that operate under the authority of one or more of those regulated markets,

unless doing so could cause significant damage to -

(i)         the investors’ interests. or

(ii)        the orderly functioning of the markets.

Access to the regulated market

66.      (1)        The market operator of a regulated market shall establish and maintain transparent and non-discriminatory rules, based on objective criteria, governing access to or membership of the regulated market.

(2)       The market operator of a regulated market shall ensure that its rules specify any obligations for the members or participants arising from any or all of the following:

(a)        the constitution and administration of the regulated market;

(b)        rules relating to transactions on the market;

(c)        professional standards imposed on the staff of the investment firms or credit institutions that are operating on the market;

(d)        the conditions established, for members or participants other than investment firms and credit institutions, under paragraph (3) of this Regulation;

(e)        the rules and procedures for the clearing and settlement of transactions concluded on the regulated market.

(3)       The market operator of a regulated market may only admit as members of or participants in the regulated market, investment firms, credit institutions authorised under Directive 2006/48/EC and other persons who, in the opinion of the regulated market,

(a)        are fit and proper,

(b)        have a sufficient level of trading ability and competence,

(c)        have, where applicable, adequate organisational arrangements, and

(d)        have sufficient resources for the role they are to perform, taking into account the different financial arrangements that the regulated market may have established in order to guarantee the adequate settlement of transactions.

(4)       Without prejudice to the obligations, provided for in Regulations 76, 106 and 108, of a member of, or a participant in, a regulated market to a client on whose behalf the member or participant executes orders in that market, the obligations under those Regulations do not apply to transactions concluded on that market between the member and the participant.

(5)       The rules on access to or membership of a regulated market shall provide for the direct or remote participation of investment firms and credit institutions.

(6)       The market operator of a regulated market in another Member State may provide appropriate arrangements in the State to facilitate access to and trading on that market by remote members or participants established in the State,

(a)        without further legal or administrative requirements, and

(b)        in accordance with the procedures and provisions under these Regulations.

(7)       Where the market operator of a regulated market is authorised in the State and wishes to conduct business in another Member State -

(a)        the market operator shall communicate to the Bank -

(i)         the name of the Member State, and

(ii)        the regulated market's intention to conduct business in the Member State and to make arrangements in that regard, and

(b)        within one month after the communication under subparagraph (a), the Bank shall in turn communicate to the competent authority of that Member State the information referred to in subparagraph (a).

(8)       The Bank, on the request of the competent authority referred to in Paragraph (7)(b) and within a reasonable time, shall communicate to the competent authority the identity of the members and participants of the regulated market authorised in the State.

(9)       The market operator of a regulated market shall communicate to the Bank when and as required by the Bank, an accurate and up-to-date list of the regulated market's members and participants.

Monitoring of compliance with the rules of the regulated market and with other legal obligations

67.      (1)        The market operator of a regulated market shall -

(a)        establish and maintain effective arrangements and procedures for the regular monitoring of the compliance by their members and participants with the rules of the regulated market, and

(b)        monitor transactions undertaken by the regulated market's members and participants, in order to identify, in relation to those transactions any -

(i)         breaches of the rules of the regulated market,

(ii)        disorderly trading conditions, or

(iii)       conduct that may involve market abuse.

(2)       The market operator of a regulated market shall -

(a)        report to the Bank without delay, in relation to any transactions referred to in paragraph (1) (b), any -

(i)         significant breaches of the rules of the regulated market,

(ii)        disorderly trading conditions, or

(iii)       conduct that may involve market abuse,

(b)        supply to the Bank without delay the particulars of the relevant information about any matter referred to in subparagraph (a), and

(c)        provide full assistance in investigating and prosecuting market abuse occurring on or through the regulated market.

Pre-trade transparency requirements for regulated markets

68.      (1)        The market operator of a regulated market shall make public on reasonable commercial terms and on a continuous basis during normal trading hours -

(a)        current bid and offer prices, and

(b)        the depth of trading interests at those prices which are advertised through the regulated market's systems for shares admitted to trading.

(2)       The market operator of a regulated market may give access, on reasonable commercial terms and on a non-discriminatory basis, to the arrangements that the regulated market employs for making public the information referred to in paragraph (1) to investment firms that are obliged to publish their quotes in shares pursuant to Regulation 114.

(3)       The Bank may waive the obligation under paragraph (1) -

(a)        based on the market model or the type and size of orders in the cases defined in accordance with Commission Regulation (EC) 1287/2006 or

(b)        for transactions that are large in scale compared with transactions of normal market size for the share or type of share in question, as set out in Commission Regulation (EC) 1287/2006.

Post-trade transparency requirements for regulated markets

69.      (1)        The market operator of a regulated market shall make public on reasonable commercial terms and on a continuous basis -

(a)        the price, volume and time of transactions executed on that market in respect of shares admitted to trading, and

(b)        the details of those transactions.

(2)       The market operator of a regulated market may give access, on reasonable commercial terms and on a non-discriminatory basis, to the arrangements the regulated market employs for making public the information referred to in Paragraph (1) to investment firms that are obliged to publish the details of their transactions in shares pursuant to Regulation 119.

(3)       The Bank on application may permit a regulated market to defer publication of the details of transactions if the Bank is of the opinion that the deferral is appropriate, given the particular circumstances.

(4)       In particular, the Bank may authorise the deferred publication in respect of transactions that are large in scale compared with transactions of normal market size for that share or that class of shares.

(5)       Arrangements for deferred trade-publication approved by the Bank must be clearly disclosed to market participants and the public.

Provisions regarding central counterparty and clearing and settlement arrangements

70.      (1)        The market operator of a regulated market in the State shall not be prevented from entering into appropriate arrangements with -

(a)        a central counterparty, or

(b)        a clearing house settlement system,

of another Member State, with a view to providing for the clearing, settlement or both of some or all trades concluded by market participants under the other Member State's settlement system.

(2)       The Bank may not oppose the use by the market operator of a regulated market of central counterparty, clearing houses or settlement systems in another Member State except as demonstrably necessary in order to maintain the orderly functioning of that regulated market.

(3)       In order to avoid undue duplication of control, the Bank shall take into account the oversight and supervision of the clearing and settlement system already exercised by the Bank.

List of regulated markets

71.      The Bank shall -

(a)        prepare and keep a list of the regulated markets for which the State is the home Member State,

(b)        amend the list as necessary to keep it current, and

(c)        forward the list and any amendments to it to the other Member States and to the EU Commission.

Part 7 — Operating Conditions for Investment Firms

Review of conditions for initial authorisation

72.      (1)        An authorised investment firm or an entity deemed to be one under Regulation 6 shall comply at all times with the conditions and requirements of its initial authorisation.

(2)       The Bank shall monitor compliance by an investment firm with obligations under these Regulations.

(3)       An investment firm shall notify the Bank of any material changes to the conditions that were prerequisites to the firm's initial authorisation.

(4)       The Bank, with the consent of the Minister, may delegate administrative preparatory or ancillary tasks related to the review of the conditions and requirements for initial authorisation for investment firms which only provide investment advice.

General obligation in respect of on-going supervision

73.      (1)        The Bank -

(a)        shall monitor the activities of investment firms so as to assess compliance with the operating conditions provided for in these Regulations,

(b)        is entitled to obtain information from the person who possesses it if the Bank considers the information necessary for the purposes of assessing the compliance of an investment firm with those operating conditions and

(c)        may require the person to provide the information to the Bank.

(2)       A person required under paragraph (1)(c) to provide information shall do so without delay.

(3)       In the case of investment firms which provide only investment advice, the Bank may delegate to a person* the Bank considers to be appropriate any administrative preparatory or ancillary tasks related to the regular monitoring of operational requirements.

Conflicts of Interest

74.      (1)        An investment firm shall take all reasonable steps to identify conflicts of interest that arise in the course of providing any investment or ancillary services or both -

(a)        within the firm,

(b)        between or among the firm or its organisation and any third parties including but not limited to -

(i)         their managers, employees and tied agents,

(ii)        one or more persons directly or indirectly linked to the investment firm or that organization by control, or

(iii)       the firm and the clients of the investment firm, or

(c)        between or among a client of the firm and one or more of the other clients of the firm.

(2)       Where organisational or administrative arrangements made by an investment firm to manage conflicts of interest are insufficient to ensure, with reasonable confidence that risks of damage to client interests will be prevented, the investment firm shall clearly disclose to the client

(a)        the general nature, and

(b)        the sources of,

the conflicts of interest before undertaking business on the client's behalf.

Conflicts of interest continued

75.      (1)        For the purposes of identifying the types of conflict of interest referred to in Regulation 74(1) the existence of which may damage the interests of a client, an investment firm shall take into account, by way of minimum criteria, the question of whether the investment firm or a relevant person, or a person directly or indirectly linked by control to the firm is in any of the following situations, whether as a result of providing investment or ancillary services or investment activities or otherwise:

(a)        the firm or that person is likely to make a financial gain, or avoid a financial loss, at the expense of the client;

(b)        the firm or that person has an interest in the outcome of a service provided to the client or of a transaction carried out on behalf of the client, which is distinct from the client's interest in that outcome;

(c)        the firm or that person has a financial or other incentive to favour the interest of another client or group of clients over the interests of the client;

(d)        the firm or that person carries on the same business as the client;

(e)        the firm or that person receives or will receive from a person other than the client an inducement in relation to a service provided to the client in the form of monies, goods or services, other than the standard commission or fee for that service.

(2)       An investment firms shall establish, implement and maintain an effective written conflicts of interest policy -

(a)        that is appropriate to the size and organisation of the firm and the nature, scale and complexity of the firm's business, and

(b)        that, in the case of a firm that is a member of a group, takes into account any circumstances, of which the firm is or should be aware which may give rise to a conflict of interest arising as a result of the structure and business activities of other members of the group.

(3)       The conflicts of interest policy referred to in paragraph (2) must -

(a)        identify, with reference to the specific investment services and activities and ancillary services carried out by or on behalf of the investment firm, the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of one or more clients, and

(b)        specify procedures to be followed, and measures to be adopted, in order to manage such conflicts.

(4)       An investment firm shall ensure that the procedures and measures referred to in paragraph (3)(b) are designed to ensure that relevant persons, engaged in different business activities involving a conflict of interest of the kind specified in paragraph (3)(a), carry on those activities at a level of independence appropriate to -

(a)        the size and activities of the firm and of the group, if any, to which the firm belongs, and

(b)        the materiality of the risk of damage to the interests of clients.

(5)       For the purposes of paragraph (3)(b), the procedures to be followed and measures to be adopted shall include such of the following as are necessary and appropriate for the firm to ensure the requisite degree of independence:

(a)        effective procedures to prevent or control the exchange of information between relevant persons engaged in activities involving a risk of a conflict of interest where the exchange of that information may harm the interests of one or more clients;

(b)        the separate supervision of relevant persons whose principal functions involve carrying out activities on behalf of, or providing services to clients whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the firm;

(c)        the removal of any direct link between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities;

(d)        measures to prevent or limit any person from exercising inappropriate influence over the way in which a relevant person carries out investment or ancillary services or activities;

(e)        measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate investment or ancillary services or activities where such involvement may impair the proper management of conflicts of interest.

(6)       If the adoption or the practice of one or more measures and procedures under this Regulation does not ensure the requisite degree of independence, the investment firm concerned shall adopt such alternative or additional measures and procedures as are necessary and appropriate for those purposes.

(7)       Disclosure to clients, pursuant to Regulation 74(2), shall -

(a)        be made in a durable medium, and

(b)        include sufficient detail, taking into account the nature of the client, to enable that client to make an informed decision with respect to the investment or ancillary service, in the context of which the conflict of interest arises.

(8)       Investment firms shall maintain and regularly update a record of the kinds of investment or ancillary service or investment activity carried out by or on behalf of the firm in which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen or, in the case of an ongoing service or activity, may arise.

Conduct of business obligations when providing investment services to clients

76.      (1)        When providing investment services or, where appropriate, ancillary services to its clients, an investment firm shall -

(a)        act honestly, fairly and professionally in accordance with the best interests of its clients, and

(b)        comply with the principles set out in paragraphs (2) to (6) of this Regulation and in Regulation 98.

(2)       Without limiting its obligations under paragraph (1)(a), an investment firm shall ensure that -

(a)        all information, including but not limited to marketing communications, addressed by an investment firm to clients or potential clients are fair, clear and not misleading,

(b)        marketing communications are clearly identifiable as such, and

(c)        appropriate information is provided in a comprehensible form to clients or potential clients about -

(i)         the investment firm and its services,

(ii)        financial instruments and proposed investment strategies including but not limited to appropriate guidance on and warnings of the risks associated with investments in those instruments or in respect of particular investment strategies,

(iii)       execution venues, and

(iv)       costs and associated charges,

so that the clients or potential clients are reasonably able to understand the nature and risk of the investment service and of the specific type of financial instrument that is being offered and, consequently, to take investment decisions on an informed basis. Information to be given for the purposes of this paragraph may be provided in a standardised format.

(3)       When providing investment advice or portfolio management an investment firm shall obtain all of the information about -

(a)        the client's or potential client's knowledge and experience in the investment field relevant to the specific type of product or service offered to the client by the investment firm,

(b)        the client's financial situation, and

(c)        the client's investment objectives,

that is necessary for the firm to obtain so the firm is able to recommend to the client or potential client those investment services and financial instruments that are suitable for the client.

(4)       When providing investment services other than those referred to in paragraph (3), an investment firm shall -

(a)        ask the client or potential client to provide information regarding the client's knowledge and experience in the investment field relevant to the specific type of product or service offered or demanded, and

(b)        take that information into account in order to assess whether the investment service or product envisaged is appropriate for the client.

(5)       If the investment firm considers, on the basis of the information received under paragraph (4), that the investment service or product is not appropriate to the client or potential client,

(a)        the investment firm shall warn the client or potential client, and

(b)        the warning may, but need not, be provided in a standardised format.

(6)       Where the client or potential client -

(a)        does not provide the information referred to in paragraph (4), or

(b)        provides insufficient information regarding the client's or potential client's knowledge and experience,

the investment firm -

(i)         shall warn the client or potential client that not providing the information, or providing insufficient information, will not allow the firm to determine whether the service or product envisaged is appropriate for the client, and

(ii)        the warning may, but need not, be provided in a standardised format.

Provision of certain types of information by investment firms to clients

77.      (1)        Where, for the purposes of these Regulations, information is required to be provided in a durable medium, an investment firm may provide the information in a durable medium other than on paper only if -

(a)        the provision of that information in that medium is appropriate to the context in which the business between the firm and the client is, or is to be, carried on; and

(b)        the client to whom the information is to be provided -

(i)         is offered a choice between information on paper or in that other durable medium, and

(ii)        specifically chooses the provision of the information in that other medium.

(2)       Where, pursuant to these Regulations, an investment firm provides information to a client by means of a website and that information is not addressed personally to the client, the investment firm shall ensure that the following conditions are satisfied:

(a)        the provision of that information in that medium is appropriate to the context in which the business between the firm and the client is, or is to be, carried on;

(b)        the client specifically consents to the provision of that information in that form;

(c)        the client must be notified electronically of the address of the website and the place on the website where the information may be accessed;

(d)        the information must be up-to-date;

(e)        the information must be accessible continuously by means of that website for such period of time that the client may reasonably need to inspect it.

Certain conduct not regarded as in client's best interests

78.      (1)        An investment firms is not to be regarded as acting honestly, fairly and professionally in accordance with the best interests of a client if, in relation to the provision of an investment or ancillary service to the client, the firm pays or is paid any fee or commission, or provides or is provided with any non-monetary benefit, other than the following:

(a)       a fee, commission or non-monetary benefit paid or provided to or by the client or a person on behalf of the client;

(b)       a fee, commission or non-monetary benefit paid or provided to or by a third party or a person acting on behalf of a third party, where the following conditions are satisfied:

(i)         the existence, nature and amount of the fee, commission or benefit, or, where the amount cannot be ascertained, the method of calculating that amount, is clearly disclosed to the client, in a manner that is comprehensive, accurate and understandable prior to the provision of the relevant investment or ancillary service;

(ii)        the payment of the fee or commission, or the provision of the non-monetary benefit

(I)        is designed to enhance the quality of the relevant service to the client, and

(II)      does not impair compliance with the firm's duty to act in the best interests of the client;

(c)       proper fees which -

(i)         enable or are necessary for the provision of investment services, such as custody costs, settlement and exchange fees regulatory levies or legal fees, and

(ii)        by their nature, cannot give rise to conflicts with the firm's duties to act honestly, fairly and professionally in accordance with the best interests of its clients.

(2)       For the purposes of paragraph (1)(b)(i), an investment firm may disclose the essential terms of the arrangements relating to the fee, commission or non-monetary benefit in summary form, if the firm -

(a)       undertakes to disclose further details at the request of the client, and

(b)       honours that undertaking.

Bank may impose additional requirements in exceptional cases

79      (1)        Subject to the prior approval of the Minister and to the European Commission having been notified in accordance with the Directive 2006/73/EC, the Bank may impose requirements additional to those in these Regulations, but only in exceptional cases where such requirements -

(a)        are objectively justified and proportionate,

(b)        address specific risks to investor protection or to market integrity that are not fully addressed by these Regulations, and

(c)        at least one of the following conditions is met:

(i)         the specific risks addressed by the requirements are of particular importance, in the circumstances, to the market structure of the State;

(ii)        the requirement addresses risks or issues that -

(I)         emerge or become evident after 1 November 2007, and

(II)       that are not otherwise regulated by other legal measures.

(2)       A requirement imposed under paragraph (1) shall not restrict or otherwise affect the rights of investment firms under Regulations 123 and 125.

(3)       Any requirements imposed by the Bank under section 52 of the Investment Intermediaries Act 1995 or under section 52 of the Stock Exchange Act 1995 which were in force immediately before 1 November 2007 continues to apply to investment firms as if those requirements were imposed by the Bank under this Regulation.

(4)       The restrictions under this Regulation do not apply in respect of the imposition by the Bank of specific conditions or requirements on a specific person in the exercise by the Bank of any of the Bank's powers under these Regulations.

Information for clients and potential clients

80.      (1)        An investment firm shall ensure that all information the firm -

(a)        addresses to retail clients, or

(b)        disseminates in such a way that the information is likely to be received by retail clients or potential retail clients, including marketing communications,

satisfies the conditions set out in paragraph (2).

(2)       The conditions referred to in paragraph (1) are that the information—

(a)        includes the name of the investment firm,

(b)        is accurate,

(c)        does not emphasise any potential benefits of an investment service or financial instrument without also giving a fair and prominent indication of any relevant risks,

(d)        is sufficient for, and is presented so that it is likely to be understood by,

(i)         the average member of the group to whom the information is directed, or

(ii)        the person likely to receive the information,

(e)        does not disguise, diminish or obscure important items, statements or warnings,

(f)        if it compares investment or ancillary services, financial instruments or persons providing investment or ancillary services, that -

(i)         the comparison is meaningful and presented in a fair and balanced way,

(ii)        the sources of the information used for the comparison are specified,

(iii)       the key facts and assumptions used to make the comparison are included,

(g)        if it contains an indication of past performance of a financial instrument, of a financial index or of an investment service,

(i)         the indication is not be the most prominent feature of the communication,

(ii)        the information includes appropriate performance information based on complete 12 month periods, for -

(I)        the immediately preceding 5 years,

(I)        if less than for the immediately preceding 5 years, the lesser period for which the financial instrument has been offered, the financial index established, or the investment service provided or such longer period as the firm may decide,

(iii)       the reference period and the source of information are both clearly stated,

(iv)       the information contains a prominent warning that the figures refer to the past and that past performance is not a reliable indicator of future results,

(v)       the indication, if it relies on figures denominated in a currency other than the euro, the currency is clearly stated, together with a warning that the return may increase or decrease as a result of currency fluctuations, and

(vi)       the indication, if based on gross performance, discloses the effect of any commissions, fees and other charges,

(h)        if it includes or refers to simulated past performance,

(i)         the information relates to a financial instrument or a financial index and

(ii)        the simulated past performance is based on the actual past performance of one or more financial instruments or financial indices which are the same as, or underlie, the financial instrument concerned,

(iii)       in respect of the actual past performance referred to in subparagraph (ii), the conditions set out in subparagraph (g)(i)to (iii), (v) and (vi) are complied with, and

(iv)       contains a prominent warning that the figures refer to simulated past performance and that past performance is not a reliable indicator of future performance;

(i)        if it contains an indication of and information on future performance,

(i)         the information is not based on and does not refer to simulated past performance,

(ii)        the information is based on reasonable assumptions supported by objective data,

(iii)       if the indication is based on gross performance, the effect of commissions, fees or other charges is disclosed, and

(iv)       it also contains a prominent warning that such forecasts are not a reliable indicator of future performance;

(j)        if it refers to a particular tax treatment, the information prominently states that the tax treatment depends on the individual circumstances of each client and may be subject to change in the future,

(k)        does not use the name of the Bank in a way that would indicate or suggest endorsement or approval by the Bank of the products or services of the investment firm.

Information for retail clients, professional clients and eligible counterparties

81.      (1)        An investment firm shall -

(a)        notify new clients and existing clients of their categorization, as retail clients, professional client or eligible counterparties,

(b)        inform clients in a durable medium about -

(i)         any right of the client to request a different categorization, and

(ii)        about any limitations as to the level of client protection that the different categorization would entail.

(2)       An investment firm, either on the firm's own initiative or at the request of the client concerned, may -

(a)        treat as a professional or retail client a client that might otherwise be classified as an eligible counterparty, or

(b)        treat as a retail client a client that is considered as a professional client pursuant to Schedule 2.

(3)       An investment firm, in good time before -

(a)        a retail client or potential retail client is bound by any agreement for the provision of investment services or ancillary services, or

(b)         the provision of those services,

whichever is the earlier, shall provide the client or potential client with the following information:

(i)         the terms of the agreement;

(ii)        the information required by Regulations 82 and 83 relating to the agreement or the investment or ancillary services.

(4)       An investment firm, shall provide to retail clients or potential retail clients the information referred to in Regulations 82 to 92, in good time before the provision to them of investment services or ancillary services.

(5)       An investment firm shall provide to professional clients the information referred to in Regulations 89 and 90 in good time before the provision to them of investment services or ancillary services.

(6)       The information referred to in paragraphs (3) to (5) shall be provided—

(a)        in a durable medium, or

(b)        in the case of information required under Regulations 77(1) and 82 to 92 by means of a website (where that does not constitute a durable medium), if the conditions specified in Regulation 77(2) are satisfied.

(7)       Notwithstanding paragraphs (3) and (4), investment firms may provide the information required under -

(a)        paragraph (3) to a retail client immediately after that client is bound by any agreement for the provision of investment services or ancillary services, and

(b)        paragraph (4) immediately after starting to provide the service,

in the following circumstances:

(i)         the firm was unable to comply with the time-limits specified in paragraphs (3) and (4) because, at the request of the client, the agreement was concluded using a means of distance communication which prevents the firm from providing the information in accordance with paragraph (3) or (4);

(ii)        in any case where Article 3(3) of Directive 2002/65/EC does not otherwise apply, the investment firm complies with the requirements of that Article in relation to the retail client or potential retail client, as if -

(I)         that client or potential client were a consumer, and

(II)       the investment firm were a supplier,

within the meaning of that Directive.

(8)       An investment firm shall -

(a)        notify a client in good time about any material change to the information provided under Regulations 82 to 92 which is relevant to a service that the firm is providing to that client, and

(b)       ensure that the notification is given in a durable medium if the information to which the notification relates is given in a durable medium.

(9)       An investment firm shall ensure that information contained in a marketing communication is consistent with any information the firm provides to clients in the course of carrying on investment and ancillary services.

(10)       Where a marketing communication of an investment firm contains an offer or invitation of the following nature and specifies the manner of response or includes a form by which any response may be made, the firm shall ensure that the communication includes such of the information referred to in Regulations 82 to 92 as is relevant to that offer or invitation:

(a)        an offer to enter into an agreement, in relation to a financial instrument, investment service or ancillary service, with;

(b)        an invitation to make an offer to enter into an agreement in relation to a financial instrument, investment service or ancillary service to,

any person who responds to the communication.

(11)       However, paragraph (10) does not apply if, in order to respond to the offer or invitation contained in the marketing communication, a potential retail client must refer to another document or documents, which, alone or in combination, contain that information.

Providing certain general information for clients

82.      Investment firms shall provide retail clients or potential retail clients with the following general information, where relevant:

(a)        the name and address of the firm, and the contact details necessary to enable clients to communicate effectively with the firm;

(b)        the languages in which the client may communicate with the firm, and receive documents and other information from the firm;

(c)        the methods of communication to be used between the firm and the client including, where relevant, those for the sending and reception of orders;

(d)        a statement of the fact that the firm is authorised and the name and contact address of the competent authority that has authorised it;

(e)        where the investment firm is acting through a tied agent, a statement of this fact, specifying the Member State in which that agent is registered;

(f)        the nature, frequency and timing of the reports on the performance of the service to be provided by the investment firm to the client in accordance with Regulation 88;

(g)        if the firm holds client financial instruments or client funds, a summary description of the steps which the firm takes to ensure their protection including summary details of any relevant investor compensation or deposit guarantee scheme which applies to the firm by virtue of its activities in the State;

(h)        a description, which may be provided in summary form, of the conflicts of interest policy maintained by the firm in accordance with Regulations 74 and 75;

(i)        at any time that the client requests it, further details of that conflicts of interest policy in -

(i)         a durable medium, or

(ii)        by means of a website (where that does not constitute a durable medium), provided that the conditions specified in Regulation 77(2) are satisfied.

Portfolio management

83.      (1)        When providing the service of portfolio management, an investment firm shall establish an appropriate method of evaluation and comparison such as a meaningful benchmark, based on -

(a)        the investment objectives of the client, and

(b)        the types of financial instruments included in the client portfolio,

so as to enable the client for whom the service is provided to assess the firm's performance.

(2)       Where an investment firm proposes to provide portfolio management services to a retail client or potential retail client, the firm shall provide the client, in addition to the information required under paragraph (1), with such of the following information as is applicable:

(a)        information on the method and frequency of valuation of the financial instruments in the client portfolio;

(b)        details of any delegation of the discretionary management of all or part of the financial instruments or funds in the client portfolio;

(c)        a specification of any benchmark against which the performance of the client portfolio will be compared;

(d)        the types of financial instrument that may be included in the client portfolio and types of transaction that may be carried out in such instruments, including any limits;

(e)        the management objectives, the level of risk to be reflected in the manager's exercise of discretion, and any specific constraints on that discretion.

Information about nature and risks of financial instruments

84      (1)        An investment firm shall provide clients or potential clients or potential clients with a general description of the nature and risks of financial instruments,

(a)        taking into account, in particular, the client's categorisation as either a retail client or a professional client, and

(b)        ensuring that the description explains -

(i)         the nature of the specific type of instrument concerned, and

(ii)        the risks particular to that specific type of instrument,

in sufficient detail to enable the client to make informed investment decisions.

(2)       The investment firm shall ensure that the description of risks includes, where relevant to the specific type of instrument concerned and the status and level of knowledge of the client, the following elements:

(a)        the risks associated with that type of financial instrument including an explanation of leverage and its effects and the risk of losing the entire investment;

(b)        the volatility of the price of such instruments and any limitations on the available market for such instruments;

(c)        the fact that an investor might assume, as a result of transactions in such instruments, financial commitments and other additional obligations, including contingent liabilities, additional to the cost of acquiring the instruments;

(d)        any margin requirements or similar obligations, applicable to instruments of that type.

(3)       The Bank may specify the precise terms, or the contents, of the description of risks required under this paragraph.

Information about financial instrument subject to public offering

85.      If an investment firm provides a retail client or potential retail client with information about a financial instrument that is the subject of a current offer to the public and a prospectus has been published in connection with that offer in accordance with Directive 2003/71/EC, the firm shall inform the client or potential client if that prospectus is made available to the public.

Information about financial instrument subject to public offering

86.      Where the risks associated with a financial instrument composed of 2 or more different financial instruments or services are likely to be greater than the risks associated with any of the components, an investment firm shall provide -

(a)        an adequate description of the components, and

(b)        the way in which the interaction of the financial instruments or services and the components increases the risks.

Information about financial instrument with guarantee by third party

87.      Where a financial instrument incorporate a guarantee by a third party, an investment firm shall provide information about the guarantee that includes sufficient detail about the guarantor and the guarantee to enable the retail client or potential retail client to make a fair assessment of the guarantee.

Information about financial instrument belonging to retail clients

88      (1)        Where an investment firms holds financial instruments or funds belonging to a retail client, or potential retail client, the firm shall provide them with such of the information specified in this Regulation and in Regulations 89 to 91 as is relevant.

(2)       Where the financial instruments or funds of that client may be held by a third party on behalf of the investment firm, the investment firm shall inform the retail client or potential retail client, of the responsibility of the firm, under the applicable national law, for -

(a)        any acts or omissions of the third party, and

(b)        the consequences for the client of the insolvency, if any, of the third party.

(3)       Where the financial instruments of a retail client or potential retail client may if permitted by national law, be held in an omnibus account by a third party, an investment firm shall -

(a)        inform the client of this fact, and

(b)        provide a prominent warning of the resulting risks.

(4)       Where it is not possible under national law for client financial instruments held with a third party to be separately identifiable from the proprietary financial instruments of that third party or of an investment firm, the firm shall -

(a)        inform the retail client or potential retail client, and

(b)        provide a prominent warning of the resulting risks.

Accounts subject to another jurisdiction

89.      An investment firm shall -

(a)        inform the client or potential client if accounts that contain financial instruments or funds belonging to that client or potential client are or will be subject to the law of a jurisdiction other than the State, and

(b)        indicate that the rights of the client or potential client relating to those financial instruments or funds may differ accordingly.

Accounts subject to investment firm security interest

90.      An investment firm shall inform the client -

(a)        about the existence and the terms of any security interest or lien which the firm has or may have over the client's financial instruments or funds,

(b)        about any right of set-off the firm holds in relation to the instruments or funds, and

(c)        if applicable, about the fact, if any, that a depository may have a security interest or lien over, or right of set-off in relation to those instruments or funds.

When investment firm enters into certain security financing transactions

91.      An investment firm, before entering into securities financing transactions in relation to financial instruments -

(a)        held by the firm on behalf of a retail client, or

(b)        otherwise to use the financial instruments for its own account or for the account of another client,

shall, in good time before the use of those instruments provide the retail client, in a durable medium, with clear, full and accurate information on -

(i)         the obligations and responsibilities of the investment firm with respect to the use of those financial instruments,

(ii)        the terms for their restitution, and

(iii)        the risks involved.

Information on costs and charges

92.      (1)        An investment firm shall provide its retail clients and potential retail clients with information on costs and associated charges that includes the following:

(a)        the total price to be paid by the client in connection with the financial instrument or the investment service or ancillary service, including all related fees, commissions, charges and expenses, and all taxes payable via the investment firm or, if an exact price cannot be indicated, the basis for the calculation of the total price so that the client can verify it;

(b)        where any part of the total price referred to in point (a) is to be paid in or represents an amount of foreign currency, an indication of the currency involved and the applicable currency conversion rates and costs;

(c)        notice of the possibility that other costs, including taxes, related to transactions in connection with the financial instrument or the investment service may arise for the client that are not paid via the investment firm or imposed by it;

(d)        the arrangements for payment or other performance.

(2)       For the purposes of subparagraph (a), the commissions charged by the firm shall be itemised separately in every case.

Collective investment undertakings

93.      In respect of units in a collective investment undertaking covered by Directive 85/611/EEC, a simplified prospectus complying with Article 28 of that Directive is regarded as appropriate information for the purposes of Regulation 76(2)(c)(ii) and (iv), with respect to the costs and associated charges related to the UCITS itself including the exit and entry commissions.

Assessment of suitability and appropriateness

94      (1)        Investment firms shall obtain from clients or potential clients such information as is necessary for the firm -

(a)        to understand the essential facts about the client, and

(b)        to have a reasonable basis for believing, giving due consideration to the nature and extent of the service provided, that the specific transaction to be recommended, or entered into in the course of providing a portfolio management service, satisfies the following criteria:

(i)         it meets the investment objectives of the client in question;

(ii)        it is such that the client is able financially to bear any related investment risks consistent with the client's investment objectives;

(iii)       it is such that the client has the necessary experience and knowledge in order to understand the risks involved in the transaction or in the management of the client's portfolio.

(2)       Where an investment firm provides an investment service to a professional client, the firm is entitled to assume that, in relation to the products, transactions and services for which the client is so classified, the client has the necessary level of experience and knowledge, for the purposes of paragraph (1)(b)(iii), and

(3)       Where the investment service consists of the provision of investment advice to a professional client as defined in Schedule 2, the investment firm is entitled to assume for the purposes of paragraph (1)(b)(ii) that the client is able financially to bear any related investment risks consistent with the investment objectives of that client.

(4)       The information regarding the financial situation of the client or potential client shall include, where relevant, information on the source and extent of the client's—

(a)        regular income,

(b)        assets, including liquid assets, investments and real property, and

(c)        regular financial commitments.

(5)       The information regarding the investment objectives of the client or potential client includes, where relevant, information on the length of time for which the client wishes to hold the investment, the client's preferences regarding risk taking, the client's risk profile and the purposes of the investment.

(6)       Where, an investment firm, when providing the investment service of investment advice or portfolio management, does not obtain the information required under Regulation 76(3) and (4), the firm shall not recommend investment services or financial instruments to the client or potential client.

(7)       An investment firm, when assessing whether an investment service as referred to in Regulation 76(5) and (6) is appropriate for a client, shall determine whether that client has the necessary experience and knowledge in order to understand the risks involved in relation to the product or investment service offered or demanded.

(8)       For those purposes, an investment firm shall be entitled to assume that a professional client has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the client is classified as a professional client.

(9)       The information regarding a client's or potential client's knowledge and experience in the investment field shall include, to the extent appropriate to the nature of the client, the nature and extent of the service to be provided and the type of product or transaction envisaged, including their complexity and the risks involved, the following:

(a)        the types of service, transaction and financial instrument with which the client is familiar;

(b)        the nature, volume, frequency of the client's transactions in financial instruments and the period over which they have been carried out;

(c)        the level of education, profession or relevant former profession of the client or potential client.

(10)     An investment firm shall not encourage a client or potential client not to provide information required for the purposes of Regulation 76(3) to (6).

(11)     An investment firm shall be entitled to rely on the information provided by its clients or potential clients unless it is aware or ought to be aware that the information is manifestly out of date, inaccurate or incomplete.

(12)     An investment firm that provides an investment service other than investment advice to a new retail client for the first time after the date these Regulations come into operation shall enter with the client into a written basic agreement, in paper or another durable medium, setting out the essential rights and obligations of the firm and the client which may be incorporated by reference to other documents or legal texts.

Non-complex instruments

95.      A financial instrument which is not specified in Regulation 99 shall be considered as non-complex if it satisfies the following criteria:

(a)        it does not fall within paragraph (c) of the definition of “transferable securities” in Regulation 3 or Part 3 of Schedule 1;

(b)        there are frequent opportunities to dispose of, redeem, or otherwise realise that instrument at prices that are -

(i)         publicly available to market participants, and

(ii)        either market prices or prices made available or validated, by valuation systems independent of the issuer;

(c)        it does not involve any actual or potential liability for the client that exceeds the cost of acquiring the instrument;

(d)        adequately comprehensive information on its characteristics is publicly available and is likely to be readily understood so as to enable the average retail client to make an informed judgment as to whether to enter into a transaction in that instrument.

Reporting to clients

96.      (1)        Where an investment firm has carried out an order, other than for portfolio management, on behalf of a client, the firm shall take the following action in respect of that order:

(a)        the firm must promptly provide the client, in a durable medium, with the essential information concerning the execution of that order;

(b)        in the case of a retail client, the firm must send the client a notice in a durable medium confirming execution of the order

(i)         as soon as possible and no later than the first business day following execution, or

(ii)        if the confirmation is received by the investment firm from a third party, no later than the first business day following receipt of the confirmation from the third party.

(2)       Paragraph (1)(b) does not apply if the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the retail client by another person.

(3)       Paragraphs (1)(a) and (b) do not apply if orders executed on behalf of clients relate to bonds funding mortgage loan agreements with the clients, in which case the report on the transaction shall be made together with the consolidated terms of the mortgage loan but no later than one month after the execution of the order.

(4)       In addition to the requirements under paragraph (1), an investment firm shall supply the client, on request, with information about the status of the client's order.

(5)       In the case of orders for a retail clients relating to units or shares in a collective investment undertaking which are executed periodically, an investment firm shall either -

(a)        take the action specified in paragraph (1)(b), or

(b)        provide the retail client, at least once every 6 months, with the information listed in paragraph (6) in respect of those transactions.

(6)       In the notice referred to in paragraph (1)(b) the investment firm shall include such of the following information as is applicable and, where relevant, in accordance with Table 1 of Annex I to Commission Regulation (EC) No 1287/2006 of 10 August 2006:

(a)        the reporting firm identification;

(b)        the name or other designation of the client;

(c)        the trading day;

(d)        the trading time;

(e)        the type of the order;

(f)        the venue identification;

(g)        the instrument identification;

(h)        the buy/sell indicator;

(i)         the nature of the order if other than buy/sell

(j)        the quantity;

(k)        the unit price;

(l)        the total consideration;

(m)       a total sum of the commissions and expenses charged and, where the retail client so requests, an itemised breakdown;

(n)        the client's responsibilities in relation to the settlement of the transaction, including the time limit for payment or delivery as well as the appropriate account details where these details and responsibilities have not previously been notified to the client;

(o)        if the client's counterparty was the investment firm itself or any person in the investment firm's group or another client of the investment firm the fact that this was the case unless the order was executed through a trading system that facilitates anonymous trading.

(7)       For the purposes of paragraph (6)(k), if an order is executed in tranches, the investment firm -

(a)        may supply the client with information about the price of each tranche or the average price, and

(b)        where the average price is provided, the firm shall supply the retail client with information about the price of each tranche upon request.

(8)       The investment firm may provide the client with the information referred to in paragraph (6) using standard codes if it also provides an explanation of the codes used.

(9)       An investment firm which provides the service of portfolio management to clients shall provide each of them with a periodic statement in a durable medium of the portfolio management activities carried out on behalf of that client, unless such a statement is provided by another person.

(10)     In the case of retail clients, the periodic statement shall include, where relevant, the following information:

(a)        the name of the investment firm;

(b)        the name or other designation of the retail client's account;

(c)        a statement of the contents and the valuation of the portfolio, including details of each financial instrument held, its market value, or fair value if market value is unavailable and the cash balance at the beginning and at the end of the reporting period, and the performance of the portfolio during the reporting period;

(d)        the total amount of fees and charges incurred during the reporting period, itemising at least total management fees and total costs associated with execution, and including, where relevant, a statement that a more detailed breakdown will be provided on request;

(e)        a comparison of performance during the period covered by the statement with the investment performance benchmark (if any) agreed between the investment firm and the client;

(f)        the total amount of dividends, interest and other payments received during the reporting period in relation to the client's portfolio;

(g)        information about other corporate actions giving rights in relation to financial instruments held in the portfolio;

(h)      for each transaction executed during the period, the information referred to in paragraph(6)(c) to (1) where relevant, unless the client elects to receive information about executed transactions on a transaction-by-transaction basis, in which case paragraph (14) applies.

(11)