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

PART 1 - PRELIMINARY AND GENERAL PROVISIONS

1.

Citation and commencement

PART 2 - DEFINITIONS AND SCOPE

2.

Object and scope of these Regulations

3.

Interpretation

4.

Competent Authority

5.

Exemptions

PART 3 - TRANSITIONAL

6.

Existing regulation

PART 4 - AUTHORISATION OF INVESTMENT FIRMS

7.

Requirement for authorisation

8.

When investment firm may be regarded as operating in the State

9.

Bank to establish and maintain register of investment firms

10.

Requirements of investment firm authorisations

11.

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

12.

Prerequisites relating to qualifying holdings in investment firms

13.

Prerequisites to granting authorisations for investment firms

14.

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

15.

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

16.

Investment firms - capital, management, structure, control

17.

Unincorporated investment firms - special provisions

18.

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

19.

Prohibition against false or misleading application for investment firm authorisation

20.

Scope of authorisation

21.

Withdrawal of authorisations for investment firms

22.

Court may revoke authorisation on application by Bank

23.

Bank to give notice of proposed withdrawal or revocation of authorisation

24.

Publication of withdrawal or revocation of authorisation

25.

Definitions for Regulations 25 to 28

26.

Continued responsibilities of former authorised investment firms

27.

Bank supervision of certain activities of former authorised investment firms

28.

Certain obligations of persons responsible during firm's termination process

PART 5 - REGULATION AND SUPERVISION OF INVESTMENT FIRMS

29.

Persons who effectively direct the business

30.

Shareholders and members with qualifying holdings

31.

Membership of authorised Investor Compensation Scheme

32.

Initial capital endowment

33.

Organisational requirements

34.

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

35.

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

36.

Risk management function

37.

Internal audit function, supervisory function and senior management

38.

Complaint procedures

39.

Personal transaction procedures

40.

Retention of records

41.

Trading process and finalisation of transactions in an MTF

42.

Relations with third countries

PART 6 - REGULATED MARKETS

43.

Authorisation and applicable law

44.

Trading under regulated markets subject to Irish law

45.

Market operator's responsibility for establishing regulated market

46.

Regular review by Bank of market operators and regulated markets

47.

Application to Bank for an authorisation to operate a regulated market

48.

Prerequisites to granting authorisations for regulated markets

49.

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

50.

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

51.

Regulated markets - management, structure, control

52.

Prohibition against false or misleading application to operate regulated market

53.

Withdrawal of authorisations for regulated markets

54.

Bank may apply to Court for order revoking authorisation

55.

Bank to give notice of proposed withdrawal or revocation of authorisation

56.

Publication of withdrawal or revocation of authorisation

57.

Definitions for Regulations 57 to 60

58.

Continued responsibilities of former market operators

59.

Bank supervision of certain activities of former market operators

60.

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

61.

Requirements for the management and operation of the regulated market

62.

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

63.

Organisational requirements

64.

Admission of financial instruments to trading

65.

Suspension and removal of instruments from trading

66.

Access to the regulated market

67.

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

68.

Pre-trade transparency requirements for regulated markets

69.

Post-trade transparency requirements for regulated markets

70.

Provisions regarding central counterparty and clearing and settlement arrangements

71.

List of regulated markets

PART 7 - OPERATING CONDITIONS FOR INVESTMENT FIRMS

72.

Review of conditions for initial authorisation

73.

General obligation in respect of on-going supervision

74.

Conflicts of interest

75.

Conflicts of interest continued

76.

Conduct of business obligations when providing investment services to clients

77.

Provision of certain types of information by investment firms to clients

78.

Certain conduct not regarded as in client's best interests

79.

Bank may impose additional requirements in exceptional cases

80.

Information for clients and potential clients

81.

Information for retail clients, professional clients and eligible counterparties

82.

Providing certain general information for clients

83.

Portfolio management

84.

Information about nature and risks of financial instruments

85.

Information about financial instrument subject to public offering

86.

Information about financial instrument subject to public offering

87.

Information about financial instrument with guarantee by third party

88.

Information abut financial instrument belonging to retail clients

89.

Accounts subject to another jurisdiction

90.

Accounts subject to investment firm security interest

91.

When investment firm enters into certain security financing transactions

92.

Information on costs and charges

93.

Collective investment undertakings

94.

Assessment of suitability and appropriateness

95.

Non-complex instruments

96.

Reporting to clients

97.

Best execution

98.

Investment firm to act in clients’ best interests

99.

Conduct of business obligations in more limited circumstances

100.

Duty of investment firm to record rights and obligations

101.

Duty of investment firm to report to clients about transactions, services and costs

102.

Regulations 76 to 101 inapplicable to specific financial products otherwise regulated

103.

Provision of services through the medium of another firm

104.

Critical and important operational functions

105.

Investment firm's responsibilities respecting outsourcing to service provider

106.

Obligation to execute orders on terms most favourable to client

107.

Client order handing by investment firms

108.

Client order handling rules

109.

Obligations of investment firms when appointing tied agents

110.

Public registry of tied agents to be maintained by Bank

111.

Transactions executed with eligible counterparties

PART 8 - MARKET TRANSPARENCY AND INTEGRITY

112.

Obligation to uphold integrity of markets, report transactions and maintain records

113.

Monitoring of compliance with the rules of the MTF and with other legal obligations

114.

Obligation for investment firms to make public firm quotes

115.

Bank to determine classes to which particular shares belong

116.

Further duties of systematic internalisers respecting their quotes

117.

Bank to monitor for compliance

118.

Business risk-reductions measures available to system internalisers

119.

Post-trade disclosure by investment firms

120.

Pre-trade transparency requirements for MTFs

121.

Post-trade transparency requirements for MTFs

PART 9 - CROSS BORDER ACTIVITIES

122.

Definition for this Part

123.

Freedom of investment firms from other Member States to provide services in State

124.

Investment firms and market operators providing services in other Member States

125.

Investment firms authorised in other Member States establishing branches in Ireland

126.

Application of this Part to investment firms with branches in the State

127.

Authorised investment firms establishing branches in other Member States

128.

Access to regulated markets

129.

Access to central counterparty, clearing and settlement facilities and right to designate settlement system

130.

Provisions regarding central counterparty, clearing and settlement arrangements in respect of MTFs

131.

Delegation by the Bank

132.

Obligation to assist and cooperate with other Member States

133.

Reciprocal duties of competent authorities respecting misconduct by regulated entities in other Member States

134.

Cooperation in supervisory activities, on-the-spot verifications or in investigations

135.

Exchange of information between competent authorities

136.

Refusal to cooperate

137.

Inter-authority consultation before authorisation

138.

Powers for host Member States

139.

Precautionary measures by Bank respecting misconduct by investment firms from other Member States

140.

Further precautionary measures: misconduct of investment firm with branch in State

141.

Further precautionary measures: misconduct of market operator of MTF in the State

142.

Sanctions and restrictions to be justified and communicated

143.

Exchange of information with third countries

PART 11 - AUDITORS

144.

Relations with auditors

PART 12 - REGULATION AND SUPERVISION

145.

Imposition of conditions or requirements

146.

Further to Regulation 145

147.

Directions by the Bank

148.

Further to Regulation 147

149.

Bank may apply to Court for orders confirming directions

150.

Winding-up on application to Court

151.

Definitions for Regulations 151 and 152

152.

Restrictions on advertising

153.

Consequences of advertising contrary to Regulations

154.

Miscellaneous requirements respecting advertising

155.

Requirements respecting investment research by investment firms

156.

Exemption from restrictions on advertising

157.

Liquidators, receivers, administrators, examiners, official assignees or creditors

158.

Application to the Court

159.

Prohibition against misappropriation

160.

Safeguarding clients’ rights relative to financial instruments

161.

Deposit of financial instruments and funds by investment firms

162.

Securities financing transactions of investment firms

163.

Warning notices

PART 13 - ENFORCEMENT

164.

Authorised Officers

165.

Powers of authorised officers

166.

Appointment of inspector by Court

167.

Power of inspector to extend investigation

168.

Direction to inspector by Court

169.

Powers of inspection

170.

Expenses of and fees relating to an investigation

171.

Inspectors’ reports and proceedings thereon

172.

Powers of Court following consideration of reports

173.

Appointment of inspector by the Bank

174.

Search and seizure

175.

Admissibility in evidence of reports of inspectors

176.

Privilege

177.

Consent to publication of information

PART 14 - ACQUIRING TRANSACTIONS

178.

Definitions for the purposes of this Part

179.

Notification of certain transactions

180.

Approval of acquiring transactions

181.

Period for implementing acquiring transactions

182.

Imposition of conditions or requirements in respect of proposed acquiring transactions

183.

Limitation on validity of certain acquiring transactions

184.

Refusal to approve acquiring transactions

185.

Inquiries into certain acquiring transactions

186.

Obligation to inform a supervisory authority of shareholdings

187.

Contravention of terms of approval of acquiring transactions

PART 15 - OFFENCES

188.

Summary conviction offences

189.

Offences by bodies corporate

190.

Summary proceedings may be brought by Bank

PART 16 - APPEALS AND MISCELLANEOUS

191.

Rights of appeals against Bank decisions

PART 17 - AMENDMENTS TO OTHER ACTS

192.

Amendment of section 33AK(10) of Central Bank Act 1942

193.

Amendment to Schedule 2 of Central Bank Act 1942

194.

Repeals

SCHEDULE 1

SCHEDULE 2

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)     In the case of retail clients, the periodic statement shall be provided once every 6 months, except in the following cases:

(a)        where the client so requests, the periodic statement must be provided every 3 months;

(b)        in cases where paragraph (6) applies, the periodic statement must be provided at least once every 12 months;

(c)        where the agreement between an investment firm and a retail client for a portfolio management service authorises a leveraged portfolio, the periodic statement must be provided at least once a month.

(12)     An investment firm shall inform the firm's retail clients that they have the right to make requests for the purposes of paragraph (11)(a).

(13)     However, the exception provided for in paragraph (11)(b) does not apply in the case of transactions in financial instruments covered by the definition of “transferable securities” in Regulation 3(1) or any of the points in Part 3 of Schedule 1.

(14)     An investment firm, in cases where the client elects to receive information about executed transactions on a transaction-by-transaction basis, shall provide promptly to the client, on the execution of a transaction by the portfolio manager, the essential information concerning that transaction in a durable medium.

(15)     Where the client concerned is a retail client, the investment firm must send the client a notice confirming the transaction and containing the information referred to in paragraph (6) no later than -

(a)        the first business day following that execution, or

(b)        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

(16)     Paragraph (15) does not apply where the confirmation would contain the same information as a confirmation that is to be promptly dispatched to the retail client by another person.

(17)     Where an investment firm -

(a)        provides portfolio management transactions for retail clients, or

(b)        operates retail client accounts that include an uncovered open position in a contingent liability transaction,

the firm shall report to the retail client any losses exceeding any predetermined threshold agreed between the firm and the client, no later than

(i)        the end of the business day in which the threshold is exceeded, or

(ii)        in a case where the threshold is exceeded on a non-business day, the close of the next business day.

(18)     An investment firm that holds client financial instruments or client funds shall at least once a year, send to each client for whom the firm holds financial instruments or funds, a statement in a durable medium of those financial instruments or funds unless such a statement has been provided in any other periodic statement.

(19)     Paragraph (18) does not apply to a credit institution authorised under Directive 2006/48/EC in respect of deposits within the meaning of that Directive held by that institution.

(20)     The statement referred to in paragraph (18) shall include the following information:

(a)        details of all the financial instruments or funds held by the investment firm for the client at the end of the period covered by the statement;

(b)        the extent to which any client financial instruments or client funds have been the subject of securities financing transactions;

(c)        the extent of any benefit that has accrued to the client by virtue of participation in any securities financing transactions, and the basis on which that benefit has accrued.

(21)     Where the portfolio of a client includes the proceeds of one or more unsettled transactions, the information referred to in paragraph (20)(a) may be based either on the trade date or the settlement date, provided that the same basis is applied consistently to all such information in the statement.

(22)     An investment firm which -

(a)        holds financial instruments or funds, and

(b)        carries out the service of portfolio management for a client,

may include the statement referred to in paragraph (18) in the periodic statement it provides to that client under paragraph (9).

Best execution

97      (1)        In this Regulation, “execution venue” means -

(a)        a regulated market,

(b)        an MTF,

(c)        a systematic internaliser,

(d)        a market maker or other liquidity provider, or

(e)        an entity that performs a similar function in a third country to the functions performed by any of the foregoing.

(2)       When executing client orders, an investment firm shall take into account the following criteria for determining the relative importance of the factors referred to in Regulation 106:

(a)        the characteristics of the client including the categorisation of the client as retail or professional;

(b)        the characteristics of the client order;

(c)        the characteristics of financial instruments that are the subject of that order;

(d)        the characteristics of the execution venues to which that order can be directed.

(3)       An investment firm satisfies its obligation under Regulation 106(1) to take all reasonable steps to obtain the best possible result for a client to the extent that it executes -

(a)        an order, or

(b)        a specific aspect of the order

following specific instructions from a client relating to the order or the specific aspect of the order.

(4)       Where an investment firm executes an order on behalf of a retail client, the best possible result shall be determined in terms of the total consideration, representing -

(a)        the price of the financial instrument, and

(b)        the costs related to execution, including -

(i)         all expenses incurred by the client which are directly related to the execution of the order,

(ii)        execution venue fees, clearing and settlement fees and any other fees paid to third parties involved in the execution of the order.

(5)       For the purposes of delivering best execution where there is more than one competing venue to execute an order for a financial instrument, in order to assess and compare the results for the client that would be achieved by executing the order on each of the execution venues listed in the firm's order execution policy that is capable of executing that order, the firm's own commissions and costs for executing the order on each of the eligible execution venues shall be taken into account in that assessment.

(6)       An investment firm shall not structure or charge the firm's commissions in any way that discriminates unfairly between execution venues.

Investment firm to act in clients’ best interests

98      (1)        An investment firm, when providing the service of portfolio management, to comply with Regulation 76 shall act in accordance with the best interests of the firm's clients when placing, with other entities, execution orders that result from decisions by the firm to deal in financial instruments on behalf of the firm's client.

(2)       An investment firm, when providing the service of reception and transmission of orders, to comply with Regulation 76 shall act in accordance with the best interests of the firm's clients, when transmitting client orders to other entities for execution.

(3)       In order to comply with paragraphs (1) or (2), an investment firm shall do as follows:

(a)        take all reasonable steps to obtain the best possible result for the firm's clients, taking into account the factors referred to in Regulation 106 (1);

(b)        determine the relative importance of those factors by reference -

(i)         to the criteria set out in Regulation 97(2), and

(ii)        for retail clients, to the requirement under Regulations 97(4 and (5),

except to the extent that the firm may follows specific instructions from the client when placing an order with, or transmitting an order to, another entity for execution;

(c)        establish and implement a policy to enable the firm to comply with the obligation in subparagraphs (a) and (b), which policy -

(i)         identifies for each class of instruments, the entities with which the orders are placed or to which the investment firm transmits orders for execution, and

(ii)        requires that the entities have execution arrangements that enable the firm to comply with the obligations under paragraphs (1) and (2) and this Regulation when the firm places or transmits orders to the entities for execution;

(d)        provide appropriate information to the firm's clients about the policy established in accordance with subparagraph (c);

(e)        monitor on a regular basis the effectiveness of the policy established in accordance with subparagraph (c), in particular, in relation to the execution quality of the entities referred to in subparagraph (c);

(f)        where appropriate, correct any deficiencies with regard to that policy;

(g)        review that policy both annually and whenever a material change occurs that affects the firm's ability to obtain the best possible result for the firm's clients.

(4)       Paragraphs (1) to (3) do not apply when the investment firm that provides the service of portfolio management, reception and transmission of orders or both also executes the orders received or the decisions to deal on behalf of its client's portfolio.

(5)       An investment firm shall review -

(a)        the execution policy established under this Regulation and Regulation 106, and

(b)        the firm's order execution arrangements,

both annually and whenever a material change occurs that affects the firm's ability to continue to obtain the best possible result for the execution of its client orders, on a consistent basis, using the venues included in its execution policy.

(6)       An investment firm shall provide the firm's retail clients with the following information about the firm's execution policy in good time prior to the provision of services:

(a)        an account of the relative importance the investment firm assigns, in accordance with the criteria specified in Regulation 97(2), to the following:

(i)         the factors referred to in Regulation 106(1);

(ii)        the process by which the firm determines the relative importance of those factors;

(b)        a list of the execution venues on which the firm places significant reliance in meeting its obligation to take all reasonable steps to obtain on a consistent basis the best possible result for the execution of client orders;

(c)        a clear and prominent warning that any specific instructions from a client may prevent the firm from taking the steps that it has designed and implemented in its execution policy to obtain the best possible result for the execution of those orders in respect of the elements covered by those instructions.

(7)       An investment firm required under this Regulation to provided information shall provide the information in a durable medium, or by means of a website (where that does not constitute a durable medium) provided that the conditions specified in Regulation 77(2 are satisfied.

Conduct of business obligations in more limited circumstances

99.      (1)        When an investment firm provides to its clients investment services that consist only of -

(a)        the execution of client orders,

(b)        the reception and transmission of client orders, or

(c)        both,

with or without ancillary services, the firm may do so without the need to obtain the information referred to in Regulation 76(3) or to make the assessment provided for in Regulation 76(4) if all of the following conditions are met:

(i)         those services relate to shares -

(I)        admitted to trading on a regulated market or on an equivalent third country market,

(II)         money market instruments, bonds or other forms of securitised debt (excluding those bonds or securitised debt that embed a derivative), or

(III)     units in a UCITS and other non-complex financial instruments;

(ii)        those services are provided at the initiative of the client or potential client;

(iii)        the investment firm warns the client or potential client that -

(I)        in the provision of those services, the investment firm is not required to assess the suitability of the instrument or service provided or offered, and

(II)      therefore the client or potential client does not benefit from the corresponding protection of the relevant conduct of business rules,

by means of a warning that may, but need not, be provided in a standardised format;

(iv)       the investment firm complies with its obligations under Regulation 74 and 75.

(2)       For the purposes of paragraph (1)(i)(I),

(a)        a third country market shall be considered as equivalent to a regulated market if it complies with requirements equivalent to those established under Part 6, and

(b)        in a determination under subparagraph (a) reference may be had to a list of those markets that are to be considered as equivalent, as published by the European Commission from time to time.

Duty of investment firm to record rights and obligations

100.     (1)        An investment firm shall establish and maintain a record that includes the document or documents agreed between the firm and its clients that set out -

(a)        the rights and obligations of the firm and the firm's clients, and

(b)        the other terms on which the firm will provide services to its clients.

(2)       The rights and obligations referred to in paragraph (1) may be incorporated in the record referred to in that paragraph by reference to other documents.

Duty of investment firm to report to clients about transactions, services and costs

101.     An investment firm shall -

(a)        provide to its clients adequate reports on the transactions and services provided to them, and

(b)        include in the reports, where applicable, the costs associated with the transactions and services.

Regulations 76 to 101 inapplicable to specific financial products otherwise regulated

102    Where an investment service is offered by an investment firm as part of a financial product which is already subject to -

(a)        other provisions of Community legislation, or

(b)        common European standards,

related to credit institutions and consumer credits with respect to risk assessment of clients information requirements or both, the investment service offered shall not be additionally subject to the obligations set out in Regulations 76 to 101.

Provision of services though the medium of another firm

103.    (1)        An investment firm which receives an instruction to perform investment or ancillary services on behalf of a client through the medium of another investment firm may rely on client information transmitted by the other firm.

(2)       The other investment firm remains responsible for the completeness and accuracy of the information transmitted.

(3)       An investment firm which receives an instruction on behalf of a client to perform investment or ancillary services, through the medium of another investment firm may rely on any recommendations in respect of the services or transaction that have been provided to the client by that other investment firm.

(4)       The investment firm which mediates the instructions remains responsible for the appropriateness for the client of the recommendations or advice provided.

(5)       An investment firm that receives client instructions or orders through the medium of another investment firm remains responsible for concluding the service or transaction in accordance with these Regulations.

Critical and important operational functions

104.    (1)        For the purposes of Regulation 105, an operational function shall be regarded as critical or important if a defect or failure in its performance would materially impair the continuing compliance of an investment firm with -

(a)        the conditions and obligations of the firm's authorisation,

(b)        the firm's other obligations under these Regulations,

(c)        the firm's financial performance, or

(d)        the soundness or the continuity of the firm's investment services and activities.

(2)       Without prejudice to the status of any other function, the following functions shall not be considered as critical or important for the purposes of paragraph (1):

(a)        the provision to the firm of advisory services, and other services which do not form part of the investment business of the firm, including the provision of legal advice to the firm, the training of personnel of the firm, billing services and the security of the firm's premises and personnel;

(b)        the purchase of standardised services, including market information services and the provision of price feeds.

Investment firm's responsibilities respecting outsourcing to service provider

105.    (1)        Where an investment firm outsources critical or important operational functions or any investment services or activities, the firm remains fully responsible for discharging all of the firm's obligations under these Regulations and for complying, in particular, with the following conditions:

(a)        the outsourcing must not result in the delegation by senior management of its responsibility;

(b)        the relationship and obligations of the investment firm towards its clients under the terms of these Regulations must not be altered;

(c)        the conditions with which the investment firm must comply in order to be authorised in accordance with Part 4, and to remain so, must not be undermined;

(d)        none of the other conditions subject to which the firm's authorisation was granted must be removed or modified.

(2)       An investment firm shall exercise due skill and care and diligence when entering into, managing or terminating any arrangement for the outsourcing to a service provider of -

(a)        critical or important operational functions, or

(b)        any investment services or activities.

(3)       Without prejudice to the generality of paragraph (1), an investment firm shall take the necessary steps to ensure that the following conditions are satisfied:

(a)        the service provider must have the ability, capacity, and any authorisation required by law to perform the outsourced functions services or activities reliably and professionally;

(b)        the service provider must carry out the outsourced services effectively and to this end the firm must establish methods for assessing the standard of performance of the service provider;

(c)        the service provider must properly supervise the carrying out of the outsourced functions, and adequately manage the risks associated with the outsourcing;

(d)        appropriate action must be taken if it appears that the service provider may not be carrying out the functions effectively and in compliance with applicable laws and regulatory requirements;

(e)        the investment firm must retain the necessary expertise to supervise the outsourced functions effectively and manage the risks associated with the outsourcing and must supervise those functions and manage those risks;

(f)        the service provider must disclose to the investment firm any development that may have a material impact on its ability to carry out the outsourced functions effectively and in compliance with applicable laws and regulatory requirements;

(g)        the investment firm must be able to terminate the arrangement for outsourcing where necessary without detriment to the continuity and quality of its provision of services to clients;

(h)        the service provider must, when required, cooperate with the Bank in connection with the outsourced activities;

(i)        the investment firm, its auditors and the Bank must have effective access to data related to the outsourced activities, as well as to the business premises of the service provider; and the Bank must be able to exercise those rights of access;

(j)        the service provider must protect any confidential information relating to the investment firm or its clients;

(k)        the investment firm and the service provider must establish, implement and maintain a contingency plan for disaster recovery and periodic testing of backup facilities, where that is necessary having regard to the function, service or activity that has been outsourced.

(4)       The respective rights and obligations of the investment firm and of the service provider shall be clearly allocated and set out in a written agreement.

(5)       Where the investment firm and the service provider are members of the same group, the investment firm, for the purposes of complying with this Regulation may take into account the extent to which the firm controls the service provider or has the ability to influence its actions.

(6)       An investment firm shall make available on request to the Bank all information necessary to enable the Bank to supervise the compliance of the performance of the outsourced activities with the requirements of these Regulations.

(7)       In addition to the requirements set out in paragraphs (1) to (6), in situations where an investment firm outsources the investment service of portfolio management provided to retail clients to a service provider located in a third country, that investment firm shall ensure that the following conditions are satisfied:

(a)        the service provider must be authorised or registered in its home country to provide that service and must be subject to prudential supervision;

(b)        there must be an appropriate cooperation agreement between the competent authority of the investment firm and the supervisory authority of the service provider.

(8)       Where one or both of those conditions mentioned in paragraph (7) are not satisfied, an investment firm may outsource investment services to a service provider located in a third country only if -

(a)        the firm gives prior notification to the Bank about the outsourcing arrangement, and

(b)        the Bank does not object to that arrangement within a reasonable time following receipt of that notification.

(9)       Without prejudice to paragraph (8), the Bank shall publish a statement of policy in relation to outsourcing covered by paragraph (8),

(a)        setting out examples of cases where the Bank would not, or would be likely not to, object to an outsourcing under paragraph (8).

(b)        explaining why the Bank considers that in such cases outsourcing would not impair the ability of an investment firm to fulfill the firm's obligations under this Regulation.

(10)       The Bank shall publish a list of the supervisory authorities in third countries with which the Bank has cooperation agreements that are appropriate for the purposes of paragraph (7)(b).

Obligation to execute orders on terms most favourable to the client

106.    (1)        When executing orders, an investment firm shall -

(a)        take all reasonable steps to obtain the best possible result for their clients taking into account price, costs, speed, likelihood of execution and settlement, size, nature and any other consideration relevant to the execution of the order, and

(b)        notwithstanding subparagraph (a), whenever there is a specific instruction from the client the investment firm shall execute the order in line with the specific instruction.

(2)       Every investment firm shall establish and implement effective arrangements for complying with paragraph (1) including but not limited to establishing and implementing an order execution policy that conforms to paragraphs (3) to (6) in order to facilitate obtaining, for its client orders, the best possible results.

(3)       An investment firm shall -

(a)        ensure that its order execution policy includes, for each class of financial instruments, information about -

(i)         the venues where the investment firm executes its client orders and

(ii)        the factors affecting the choice of each of the venues,

including but not limited to information explaining how, in its opinion the use of those venues contributes to enabling the investment firm to consistently obtain the best possible result for the execution of client orders,

(b)        provide other appropriate information to its clients on the firm's order execution policy, and

(c)        obtain the prior consent of the firm's clients to the execution policy.

(4)       Where an order execution policy provides for the possibility that client orders may be executed outside a regulated market or an MTF, the investment firm shall -

(a)        inform its clients of that fact, and

(b)        obtain the prior consent of its clients, either in the form of a general agreement or for individual transactions, before proceeding to execute the client's orders outside a regulated market or an MTF.

(5)       An investment firm shall -

(a)        regularly monitor the effectiveness of its order execution arrangements and execution policy,

(b)        assess whether the execution venues included in the order execution policy provide for the best possible result for their clients,

(c)        make any changes necessary to comply with paragraphs (1) and (2) and

(d)        notify the firm's clients of any material changes to the firm's order execution arrangements or its execution policy.

(6)       An investment firm shall demonstrate to the Bank and shall demonstrate to the firm's clients, at the clients’ request, that the firm has executed their orders in accordance with the firm's execution policy.

Client order handling by investment firms

107.    (1)        An investment firm shall satisfy the following conditions when carrying out client orders:

(a)        the firm must ensure that orders executed on behalf of clients are promptly and accurately recorded and allocated;

(b)        the firm must carry out otherwise comparable client orders sequentially and promptly unless the characteristics of the order or prevailing market conditions make this impracticable, or the interests of the client require otherwise;

(c)        the firm must inform a retail client in advance about any material difficulty relevant to the proper carrying out of orders.

(2)       Where an investment firm is responsible for overseeing or arranging the settlement of an executed order, it shall take all reasonable steps to ensure that any client financial instruments or client funds received in settlement of that executed order are promptly and correctly delivered to the account of the appropriate client.

(3)       An investment firm shall not misuse information relating to pending client orders.

(4)       An investment firm shall take all reasonable steps to prevent the misuse by any of the firm's relevant persons of information relating to pending client orders.

(5)       An investment firm shall not perform a client order in aggregation with another client order unless the following conditions are met:

(a)        it must be unlikely that the aggregation of orders will work overall to the disadvantage of any client whose order is to be aggregated;

(b)        it must be disclosed to each client whose order is to be aggregated that the effect of aggregation may work to its disadvantage in relation to a particular order;

(c)        an order allocation policy must be established and effectively implemented, providing in sufficiently precise terms for the fair allocation of aggregated orders and transactions, and in particular in terms of how the volume and price of orders relates to how they will be allocated in each case.

(6)       In situations where an investment firm aggregates an order with one or more other client orders and the aggregated order is partially executed, the firm shall allocate the related trades in accordance with the firm's order allocation policy.

(7)       An investment firm which have aggregated transactions for own account with one or more client orders shall not allocate the related trades in a way that is detrimental to a client.

(8)       In situations where an investment firm aggregates a client order with a transaction for own account and the aggregated order is partially executed, the firm shall allocate the related trades to the client in priority to the firm.

(9)       However, if the investment firm is able to demonstrate on reasonable grounds that without the aggregation of the order with the transaction for own use, the firm would not have been able to carry out the order on such advantageous terms, or at all, the firm may allocate the transaction for own account proportionally, in accordance with its order allocation policy referred to in paragraph (5)(c).

(10)       An investment firm shall put in place procedures to prevent the reallocation, in a way that is detrimental to the client, of transactions for own account which are executed in combination with client orders.

Client order handling rules

108.    (1)        An investment firm authorised to execute orders on behalf of clients shall implement procedures and arrangements which -

(a)        which provide for the prompt, fair and expeditious execution of client orders by that investment firm,

(i)         relative to other client orders, or

(ii)        the trading interests

of that investment firm, and

(b)        provide for the execution of comparable client orders in accordance with the time of their receipt by the investment firm.

(2)       In the case of a client limit order that -

(a)        is for shares admitted to trading on a regulated market, and

(b)        is not immediately executed under prevailing market conditions,

unless the client otherwise expressly instructs the investment firm concerned, the firm shall take measures to facilitate the earliest possible execution of the order by making the order public without delay, in a manner easily accessible to other market participants.

(3)       An investment firm is deemed to comply with paragraph (2) if the firm transmits the client limit order to a regulated market or an MTF.

(4)       The Bank may waive an obligation under this Regulation to make public a limit order that is large in scale compared with normal market size, as determined under Commission Regulation (EC) No. 1287/2006.

Obligations of investment firms when appointing tied agents

109.    (1)        An investment firm may appoint persons as tied agents for the purposes of -

(a)        promoting the services of the firm,

(b)        soliciting business or receiving orders from clients or potential clients and transmitting them,

(c)        placing financial instruments, and

(d)        providing advice to clients in respect of -

(i)         those financial instruments, and

(ii)        services offered by the investment firm.

(2)       An investment firm that appoints a tied agent -

(a)        remains fully and unconditionally responsible for any act or omission on the part of the tied agent when acting on behalf of the firm, and

(b)        shall ensure that the tied agent in dealings with any client or potential client discloses at the outset -

(i)         the capacity in which the tied agent is acting, and

(ii)        the firm which the tied agent is representing.

(3)       An investment firm shall monitor the activities of the firm's tied agents to ensure the firm's compliance with these Regulations when the tied agents are acting on behalf of the firm.

(4)       An investment firm shall report proposed tied agency arrangements to the Bank at least 6 months before entering into the arrangements.

(5)       If an investment firm appoints a tied agent which provides -

(a)        services and activities not covered under these Regulations, and

(b)        services and activities to which these Regulations apply,

the firm shall take adequate measures to avoid any negative impact the services and activities described in paragraph (a) could have on the services that are described in paragraph (b) and that are provided by the tied agent on behalf of the firm.

(6)       An investment firm shall appoint only tied agents entered in the public register established and maintained under Regulation 110.

(7)       A tied agent may act on behalf of one investment firm only.

Public registry of tied agents to be maintained by Bank

110.    (1)        The Bank shall establish, update on a regular basis, and in such manner as it sees fit make publicly available, a public register of tied agents and include on the public register -

(a)        all tied agents established within the State, and

(b)        all other tied agents appointed by investment firms other than have been notified to the Bank by a competent authority of another Member State.

(2)       The Bank may include a tied agent on the public register only if satisfied that the tied agent -

(a)        is of sufficiently good repute, and

(b)        possesses the appropriate general, commercial and professional knowledge so to enable the tied agent to communicate accurately all relevant information about any proposed services to the client or potential client of the investment firm for whom the tied agent acts.

(3)       The Bank may enter into arrangements with investment firms or other entities for the registration and supervision of tied agents by the investment firms or other entities under the supervision of the Bank.

Transactions executed with eligible counterparties

111.    (1)        In this Regulation, “eligible counterparties” means -

(a)        investment firms,

(b)        credit institutions,

(c)        insurance companies,

(d)        undertakings for the collective investment in transferable securities authorised pursuant to EU Council Directive 85/611/EEC of 20 December 1985 and the management companies of the undertakings,

(e)        pension funds and their management companies,

(f)        undertakings exempted under Regulation 5(1)(j) and (k) from the application of these Regulations,

(g)        national governments and their corresponding offices including public bodies that deal with public debt, central banks and supranational organisations, and

(h)        EU entities recognised as eligible counterparties by the law of their home State.

(2)       An investment firm authorised to -

(a)        execute orders on behalf of clients,

(b)        deal on own account, or

(c)        receive and transmit orders,

may bring about or enter into transactions with eligible counterparties without being obliged to comply with Regulations 76 to 101, 106 and 108(1).

(3)       Notwithstanding the definition of “eligible counterparties” in paragraph (1), an entity that is an eligible counterparty under that definition -

(a)        may request the Bank, either on a general form or on a trade-by-trade basis, to allow the entity to be treated under these Regulations as a client of an investment firm whose business with the investment firm is subject to Regulations 76 to 101, 106 and 108(1), and

(b)        if the Bank grants the request, the entity shall be treated under these Regulations as set out in subparagraph (a).

(4)       An investment firm which enters into a transaction with an eligible counterparty in accordance with paragraph (2) must obtain the express confirmation from the prospective counterparty, either in the form of a general agreement or on a transaction by transaction basis, that it agrees to be treated as an eligible counterparty.

(5)       An undertaking may be considered as an eligible counterparty if it is in a category of clients who are to be considered professional clients in accordance with Schedule 2, excluding any category which is explicitly mentioned in Regulation 111.

(6)       Undertakings in a category of clients who are to be considered professional clients in accordance with Schedule 2, on request, may also be considered as eligible counterparties, but only in respect of the services or transactions for which it could be treated as a professional client.

(7)       Where, pursuant to this Regulation an eligible counterparty -

(a)        requests treatment as a client whose business with an investment firm is subject to Regulations 76 to 101, 106 and 108(1), and

(b)        does not expressly request treatment as a retail client,

and the investment firm agrees to the request, the firm shall treat that eligible counterparty as a professional client.

(8)       However, where an eligible counterparty expressly requests treatment as a retail client, the provisions in respect of requests of non-professional treatment specified in Schedule 2 apply.

Part 8 — Market Transparency and Integrity

Obligation to uphold integrity of markets, report transactions and maintain records

112.    (1)        An investment firm shall -

(a)        keep for at least 5 years a record of all relevant data relating to each transaction in financial instruments that is executed by the firm whether on own account or on behalf of a client,

(b)        make the data available to the Bank for inspection at any time, and

(c)        include in the record if the transaction is executed on behalf of a client -

(i)         all the information and details of the identity of the client, and

(ii)        the information required under Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering.

(2)       Unless exempted by the Bank under paragraph (5), an investment firm that executes any transaction in any financial instruments admitted to trading on a regulated market shall report details of any such transaction to the Bank or any person that the Bank nominates for that purpose as quickly as possible, but no later than the close of the following working day.

(3)       Unless exempted by the Bank under paragraph (5), an investment firm that executes a transaction in financial instruments -

(a)        that are admitted to trading on an MTF operated by a market operator;

(b)        the value of which are derived from, or which are otherwise dependant upon, debt or equity instruments admitted to trading on a regulated market or an MTF operated by a market operator;

(c)        the value of which are derived from, or which are otherwise dependant upon, indices of financial instruments admitted to trading on a regulated market or an MTF operated by a market operator; and

(d)        other than as described in subparagraphs (a) to (c) as the Bank may determine from time to time;

shall report details of the transaction, whether or not executed on a regulated market or an MTF operated by a market operator, to

(i)         the Bank, or

(ii)        any person that the Bank nominates for that purpose,

as quickly as possible, but no later than the close of the following working day.

(4)       The Bank shall establish the necessary arrangements in order to ensure that upon receipt by the Bank of any report under paragraph (2), the Bank transmits the reported information to the competent authority of the most relevant market in terms of liquidity for those financial instruments.

(5)       Where reports under paragraphs (2) and (3) are made to the Bank or its nominee by the market operator of a regulated market, an MTF or the operator of a trade matching or reporting system, the Bank may exempt the investment firm concerned from the obligation under paragraph (2) or (3) to report any such transactions.

(6)       A report made under paragraph (2) shall include details of -

(a)        the names and numbers of the instruments bought or sold,

(b)        the quantity of the instruments bought and sold,

(c)        the dates and times of execution,

(d)        the transaction prices, and

(e)        a means of identifying the investment firms concerned.

(7)       The Bank may prescribe the manner in which reports under this Regulation are to be made to the Bank.

(8)       The Bank shall transmit reports provided to it or to its nominee under paragraph (2) by a branch of an investment firm authorised by the competent authority of another Member State, to that other competent authority unless the other authority has indicated that it does not wish to receive the reports.

(9)       The Bank may transmit reports provided to it or to its nominee under paragraph (3) by a branch of an investment firm authorised by the competent authority of another Member State, to that other competent authority where that other authority has indicated that it wishes to receive the reports.

(10)       The Bank may require reports made in accordance with paragraph (2) or (3) to contain information related to the transactions in question which is additional to that specified in Table 1 of Annex I of Commission Regulation (EC) No. 1287/2006 subject to the provisions of Article 13(3) of Commission Regulation (EC) No. 1287/2006.

(11)       The Bank may require a report of a transaction made under paragraph (2) or (3) to provide such information as the Bank considers appropriate to identify the clients on whose behalf the investment firm has executed that transaction.

Monitoring of compliance with the rules of the MTF and with other legal obligations

113.    Investment firms and market operators operating an MTF shall -

(a)        establish and maintain effective arrangements and procedures, relevant to the MTF, for the regular monitoring of the compliance by its users with its rules,

(b)        monitor the transactions undertaken by their users under their systems in order to identify -

(i)         breaches of their rules,

(ii)        disorderly trading conditions, and

(iii)       conduct that may involve market abuse,

(c)        report to the Bank without delay -

(i)         significant breaches of their rules,

(ii)        disorderly trading conditions, and

(iii)       conduct that may involve market abuse, and

(d)        provide full assistance to the Bank in investigating and prosecuting market abuse occurring on or through the systems of the investment firms, market operators or the MTF.

Obligation for investment firms to make public firm quotes

114.    (1)        A systematic internaliser in shares admitted to trading on a regulated market -

(a)        shall publish a firm quote for any of the shares for which -

(i)         there is a liquid market, and

(ii)        it is a systematic internaliser,

(b)        shall disclose quotes to the systematic internaliser's clients on request for any of the shares for which there is no liquid market.

(2)       This Regulation -

(a)        applies to systematic internalisers when dealing in shares for sizes up to and including standard market size, and

(b)        does not apply to systematic internalisers that only deal in shares for sizes above standard market size.

(3)       A systematic internaliser -

(a)        may decide the size of a share or the sizes of shares at which the systematic internaliser will quote,

(b)        in quoting for a particular share, shall—

(i)         include a firm bid, an offer price or offer prices for any size or sizes up to and including the standard market size for the class of shares to which the share belongs, and

(ii)        ensure that the offer price or offer prices shall also reflect the prevailing market conditions for that share.

(4)       For the purposes of paragraph (3), a systematic internaliser shall ensure that -

(a)        shares are grouped in classes on the basis of the arithmetic average value of the orders executed in the market for the particular share referred to in that paragraph, and

(b)        the standard market size for each class of shares is representative of the arithmetic average value of the orders executed in the market for the shares included in each class of shares.

(5)       The market for each share shall be comprised of all orders executed in the European Union in respect of that share, excluding those orders that are above standard market size for that share.

Bank to determine classes to which particular shares belong

115    Where the Bank is the competent authority of the most relevant market in terms of liquidity for a particular share, the Bank shall -

(a)        determine at least annually, on the basis of the arithmetic average value of the orders executed in the market in respect of that share, the class of shares to which that share belongs, and

(b)        make public to all market participants the information determined under subparagraph (a).

Further duties of systematic internalisers respecting their quotes

116    (1)        A systematic internaliser shall make public its quotes -

(a)        on a regular and continuous basis during normal trading hours, and

(b)        in a manner which is easily accessible to other market participants on a reasonable commercial basis.

(2)       A systematic internaliser may -

(a)        update its quotes at any time, and

(b)        withdraw its quotes with the permission of the Bank and under exceptional market conditions.

(3)       Without limiting the application of Regulation 106 to systematic internalisers a systematic internaliser acting as such in relation to shares shall execute each order it receives from its clients at the quoted price at the time of reception of the order.

(4)       However, a systematic internaliser may execute an order from a professional client at a better price in justified cases if that price -

(a)        falls within a public range close to market conditions, and

(b)        the order is larger than an order customarily undertaken by a retail investor.

(5)       Notwithstanding paragraphs (3) and (4), a systematic internaliser may execute orders from professional clients at prices different than the quoted prices if the orders -

(a)        involve execution in several securities as part of one transaction, or

(b)        are subject to conditions other than the current market price.

(6)       Where a systematic internaliser -

(a)        who quotes only one quote, or

(b)        whose highest quote is lower than the standard market size,

receives an order from a client of a size larger than the system internaliser's quotation size, but lower than the standard market size, then the systematic internaliser may execute that part of the order which exceeds the quotation size, if the order is executed at the quoted price, except where otherwise permitted under paragraphs (3) or (5).

(7)       Where a systematic internaliser -

(a)        quotes in different sizes,

(b)        receives an order between those sizes, or

(c)        chooses to execute the order,

the systematic internaliser shall execute the order at one of the quoted prices in compliance with Regulation 106.

Bank to monitor for compliance

117    The Bank shall monitor whether investment firms:

(a)        regularly update any bid and offer prices published in accordance with Regulation 114 and maintain prices which reflect the prevailing market conditions, and

(b)        comply with the conditions and requirements of this Part respecting price.

Business risk-reductions measures available to system internalisers

118    (1)        A systematic internaliser -

(a)        may select, on the basis of its commercial policy and in an objective non-discriminatory way, the investors to whom it gives access to its quotes,

(b)        must have, and must make available to clients, clear standards for governing access to its quotes, and

(c)        may refuse to enter into, or may discontinue, business relationships with clients on the basis of commercial considerations such as credit status, counterparty risk or the final settlement of a transaction.

(2)       In order to limit the risk of being exposed to multiple transactions from the same client, a systematic internaliser may limit, in a non-discriminatory way and in accordance with Regulation 106,

(a)        the number of transactions from the same client which the system internaliser undertakes to enter into on published conditions, or

(b)        the total number of transactions from different clients at the same time if the number or volume of orders sought by one or more of the clients considerably exceeds the normal market practice.

Post-trade disclosure by investment firms

119.    (1)        An investment firm that, on its own account or on behalf of clients, concludes transactions in shares admitted to trading on a regulated market -

(a)        outside a regulated market, or

(b)        on an MTF,

shall make public -

(i)         the volume and price in those transactions, and

(ii)        the time at which the transactions were concluded,

without delay, on reasonable commercial terms and in a manner easily accessible to other market participants.

(2)       An investment firm must ensure that information the firm makes public in accordance with paragraph (1) of this Regulation and the time-limits within which the information is published are in compliance with Regulation 69.

(3)       Where the measures adopted pursuant to Regulation 69 provide for deferred reporting for certain categories of transaction in shares, the deferral applies to those transactions when undertaken outside regulated markets or MTFs.

Pre-trade transparency requirements for MTFs

120.    (1)        If operating an MTF, an investment firm or market operator shall make public -

(a)        any current bid and offer prices that are advertised through the systems of the investment firm or market operator, as the case may be, in respect of shares admitted to trading on a regulated market, and

(b)        the depth of the trading interests at those prices,

on reasonable commercial terms and on a continuous basis during normal trading hours.

(2)       On application by an investment firm or market operator, the Bank may waive the investment firm's or market operator's obligation to comply with subsection (1) if, in the cases defined in accordance with Commission Regulation EC 1287/2006,, the Bank considers the waiver appropriate based on the market model or the type and size of orders.

(3)       Without limiting the generality of paragraph (2), the Bank may grant an application for a waiver under that paragraph for transactions that are large in scale compared with transactions of normal market size for the shares or class of shares in question.

Post-trade transparency requirements for MTFs

121.    (1)        If operating an MTF, an investment firm or market operator, for shares admitted to trading on a regulated market, shall make public the price, volume and time of the transactions carried out under its systems, as soon as possible, on reasonable commercial terms and in a manner easily accessible to other market participants.

(2)       Paragraph (1) does not apply in respect of transactions referred to in that subsection that are made public under the systems of a regulated market.

(3)       On application by an investment firm or market operator, the Bank may permit the investment firm or market operator to defer making public the price, volume and time of the transactions referred to in paragraph (1), if the Bank considers the deferment appropriate based on the type and size of the transactions.

(4)       Without limiting the generality of paragraph (3), the Bank may grant an application for deferment under that paragraph for transactions that are large in scale compared with transactions of normal market size for the shares or class of shares in question.

(5)       The investment firm or market operator whose application for a deferment is granted under paragraph (3) must ensure that the deferment arrangement approved by the Bank in respect of that application is clearly disclosed to market participants and the public.

PART 9 — CROSS BORDER ACTIVITIES

Definition for this Part

122.    In this Part, “Member State investment firm” means an investment firm authorised and supervised by the competent authority of another Member State in accordance with the Directive or a credit institution authorised in accordance with Directive 2006/48/EC.

Freedom of investment firms from other Member States to provide services in State

123    (1)        A Member State investment firm may provide within the State investment services and any ancillary services, if the services are permitted under the firm's authorisation in its home Member State.

(2)       A Member State investment firm intending to -

(a)        provide investment services or investment services together with ancillary services in the State for the first time, or

(b)        change the range of services the firm provides within the State,

shall communicate to the competent authority of the firm's home Member State the following information:

(i)         the firm's intention to operate in the State;

(ii)        the firm's proposed programme of operations in the State, stating in particular the investment services and ancillary services that the investment firm intends to provide and whether it intends to use tied agents in the State, and if that is its intent, the identity of the tied agents.

(3)       Where -

(a)        the Bank receives the information referred to in paragraph (2), from the competent authority of the home Member State of a Member State investment firm, and

(b)        the information includes the identity of tied agents that the firm intends to use in the State,

the Bank may make public the identity of the tied agents.

(4)       A Member State investment firm may commence to provide the services communicated by it under paragraph (2) to the competent authority of the firm's home Member State, after the Bank has received, from that competent authority, the information referred to in paragraph (2)(i) and (ii).

(5)       The Member State investment firm referred to in paragraph (4) may not provide in the State the services referred to in that paragraph until one month after the Bank has been informed of the firm's intention to operate in the State by the competent authority of the firm's home Member State.

(6)       In the event of a change in any of the particulars of the information communicated under paragraph (2), the Member State investment firm concerned shall give written notice of the change to the competent authority of its home Member State at least one month before implementing the change.

(7)       Where -

(a)        a Member State investment firm, or

(b)        a market operator,

that operates an MTF authorised in its home Member State, intends to provide in the State the facilities that MTF provides in the home Member State, the firm or operator, as the case may be, shall communicate that intention to the competent authority of the home Member State.

(8)       The Member State investment firm or market operator referred to in paragraph (7) may not provide in the State the facilities referred to in that paragraph until one month after the Bank has been informed of the firm's or operator's intention to operate in the State by the competent authority of the firm's or operator's home Member State.

Investment firms and market operators providing services in other Member States

124.    (1)        An investment firm intending to -

(a)        provide investment services or ancillary service in another Member State for the first time, or

(b)        change the range of services the firm provides within the other Member State,

shall communicate to the Bank the following information:

(i)         the firm's intention to operate in the other Member State;

(ii)        the firm's proposed programme of operations, stating in particular the investment services and ancillary services that the investment firm intends to provide and whether it intends to use tied agents in the State and if that is its intent, the identity of the tied agents.

(2)       Where an investment firm, under paragraph (1), communicates to the Bank the intention to use tied agents in the other Member State referred to in that paragraph, the Bank at the request of the competent authority of the other Member Stat and within a reasonable period, shall communicate to the other Member State the identity of the tied agents.

(3)       The Bank, within one month after receiving the information communicated to it under subsection (1), shall forward the information to the competent authority of the other Member State referred to in paragraph (1).

(4)       An investment firm may commence to provide the services communicated by it under paragraph (1) to the Bank after the competent authority of the other Member State confirms to the firm that the competent authority has received, from the Bank, the information referred to in paragraph (1)(i) and (ii).

(5)       In the event of a change in any of the particulars of the information communicated under paragraph (1), the investment firm concerned shall give written notice of the change to the Bank at least one month before implementing the change.

(6)       The Bank shall inform the competent authority of the other Member State of those changes.

(7)       Where -

(a)        an investment firm, or

(b)        a market operator,

that operates an MTF authorised in the State, intends to provide in another Member State the facilities that the MTF provides in the State,

(i)         the firm or operator, as the case may be, shall communicate that intention to the Bank, and

(ii)        the Bank shall communicate, within one month, that intention and the particulars of it to the competent authority in that other Member State.

(8)       The Bank, on the request of the competent authority of that other Member State, and within a reasonable period, shall communicate the identity of the members of or participants in the MTF referred to in subsection (7).

Investment firms authorised in other Member States establishing branches in Ireland

125.    (1)        A Member State investment firm may provide within the State investment services, and ancillary services provided together with them, through the establishment of a branch, if the services are permitted under the firm's authorisation in its home Member State.

(2)       A Member State investment firm intending to establish a branch in the State shall communicate to the competent authority of the firm's home Member State the following information:

(a)        the firm's intention to establish a branch in the State;

(b)        the firms proposed programme of operations in the State, stating in particular -

(i)         the investment services and ancillary services that the firm intends to provide,

(ii)        the organisational structure of the branch, and

(iii)       whether the branch intends to use tied agents in the State, and if that is the intent, the identity of the tied agents;

(c)        the address in the State from which documents may be obtained;

(d)        the names of those responsible for the management of the branch.

(3)       Where a Member State investment firm uses a tied agent established in a Member State outside its home Member State, the tied agent -

(a)        shall be assimilated to the branch, and

(b)        is subject to the provisions of the Directive relating to branches.

(4)       After a Member State investment firm has communicated the information referred to in subsection (1) to its home member state in accordance with that subsection, the Member State investment firm may both establish the firm's intended branch in the State, and commence to provide the services referred to in that subsection, upon the earlier of -

(a)        the date the Bank confirms to the firm the receipt by the Bank from the firm's home member state of

(i)         the information referred to in subsection (2), and

(ii)        details of the accredited compensation scheme of which the firm is a member in accordance with Directive 97/9/EC., and

(b)        2 months after the date on which the competent authority of the firm's home Member State communicates to the Bank the information and details mentioned in paragraph (a).

(5)       In the event of a change in any of the information communicated in accordance with paragraph (2) by an investment firm,

(a)        the firm shall give written notice of that change to the competent authority of the home Member State at least one month before implementing the change, and

(b)        the Bank expects to be informed of that change by the competent authority of the home Member State.

Application of this Part to investment firms with branches in the State

126.    (1)        Regulations 76 to 101, 106, 108, 112, 114 and 119 apply to and in respect of an investment firm that has established a branch in the State.

(2)       In monitoring and enforcing compliance with Regulations 76 to 101, 106, 108 112, 114 and 119 by an investment firm that has a branch in the State, the Bank -

(a)        has the same powers, duties and responsibilities under this Part as it has in relation to an investment firm, and

(b)        without limiting the generality of paragraph (a), has the right -

(i)         to examine branch arrangements, and

(ii)        to request any changes as are strictly needed to enable the Bank to enforce Regulations 76 to 101, 106, 108, 112, 114 and 119 with respect to the services the investment firm provides in the State through the branch.

(3)       Where a Member State investment firm has a branch in the State, the competent authority of the other Member State, in the exercise of its responsibilities and after informing the Bank, may carry out on-site inspections in that branch.

Authorised investment firms establishing branches in other Member States.

127.    (1)        An investment firm intending to establish a branch in another Member State (the host Member State) shall communicate to the Bank the following information:

(a)        the firm's intention to establish a Branch in the host Member State;

(b)        the firms proposed programme of operations in the host Member State stating in particular -

(i)         the investment services and ancillary services that the firm intends to provide,

(ii)        the organisational structure of the branch, and

(iii)     whether the branch intends to use tied agents in the other Member State and, if that is the intent, the identity of the agents;

(c)        the address in the host Member State from which documents may be obtained;

(d)        the names of those responsible for the management of the branch.

(2)       Where an investment firm uses a tied agent established in a Member State outside the State, the tied agent -

(a)        shall be assimilated to the branch, and

(b)        is subject to the provisions of these Regulations relating to branches.

(3)       Unless the Bank has reason to doubt the adequacy of the administrative structure or the financial situation of an investment firm that communicates information to the bank under subsection (1), taking into account the services that the firm intends to provide, the Bank, within 3 months after receiving the information, shall -

(a)        communicate to the competent authority of the host Member State -

(i)         that information, and

(ii)        details of the accredited compensation scheme of which the investment firm is a member in accordance with Directive 97/9/EC, and

(b)        inform the investment firm in that regard.

(4)       In the event of a change in any of the information communicated in accordance with subsection (1), by an investment firm -

(a)      the firm shall give written notice of that change to the Bank at least one month before implementing the change, and

(b)        the Bank shall inform the competent authority of the host Member State of that change.

(5)       If, for the reason referred to in subsection (3), the Bank decides not to communicate the information referred to in that subsection to the competent authority of the host Member State, the Bank shall give the reasons for that decision to the investment firm concerned within 3 months after the Bank's receipt of the information.

(6)       An investment firm that, under subsection (1), has communicated its intent to establish a branch in a home Member State may establish the intended branch in the home Member State and commence to provide the services referred to in that subsection upon the earlier of -

(a)        the date the competent authority of the host Member State confirms to the firm the receipt by the competent authority from the Bank -

(i)         the information, and

(ii)        details of the accredited compensation scheme of which the authorised investment firm is a member in accordance with Directive 97/9/EC, and

(b)        2 months after the date on which the Bank communicates to the host Member State the information and details referred to in paragraph (a).

(6)       In respect of branches established in the State of investment firms authorised in another Member State, the Bank may -

(a)        examine branch arrangements, and

(b)      request changes that are strictly needed to enable the Bank to enforce with respect to the services provided by the branch the in the State, the obligations under Regulations 76 to 101, 106, 108, 112, 114 and 119.

(7)       Where an authorised investment firm has established a branch within another Member State, the Bank, in the exercise of its responsibilities and after informing the competent authority of the host Member State, may carry out on-site inspections in that branch.

(8)       In the event of a change in any of the information communicated by an authorised investment firm in accordance with paragraph (1),

(a)        the authorised investment firm shall give written notice of that change to the Bank at least one month before implementing the change, and

(b)        the Bank shall also inform the competent authority of the host Member State of that change.

Access to regulated markets

128.    (1)        Investment firms authorised in other Member States which are to execute client orders or to deal on own account have the right of membership or have access to regulated markets established in Ireland by means of any of the following arrangements:

(a)        directly, by setting up branches in the State;

(b)        by becoming remote members of or having remote access to regulated markets without having to be established in the State, where the trading procedures and systems of the regulated market in question do not require a physical presence for conclusion of transactions on the market.

(2)       No additional regulatory or administrative requirements shall be imposed on investment firms exercising the right conferred by paragraph (1), in respect of matters covered by these Regulations.

Access to central counterparty, clearing and settlement facilities and right to designate settlement system

129.    (1)        Investment firms authorised in other Member States have the right of access to central counterparty, clearing and settlement systems in the State for the purposes of finalising or arranging the finalisation of transactions in financial instruments.

(2)       The right of access under paragraph (1) to central counterparty, clearing and settlement systems -

(a)        is subject to the same non-discriminatory, transparent and objective criteria as apply to local participants, and

(b)        is not and must not be restricted to the clearing and settlement of transactions in financial instruments undertaken on a regulated market or an MTF in the State.

(3)       The market operator of a regulated market shall offer to all of the members of or participants in, the regulated market the right to designate the system for the settlement of transactions in financial instruments undertaken on that regulated market, subject to -

(a)        the links and arrangements between the designated settlement system and any other system or facility that are necessary to ensure the efficient and economic settlement of the transaction in question, and

(b)        agreement by the Bank that technical conditions for settlement of transactions concluded on the regulated market through a settlement system other than that designated by the regulated market are sufficient to allow the smooth and orderly functioning of financial markets.

(4)       The rights of investment firms under this Regulation are without prejudice to the right of operators of central counterparty, clearing or securities settlement systems to refuse on legitimate commercial grounds to make the requested services available.

Provisions regarding central counterparty, clearing and settlement arrangements in respect of MTFs

130.    (1)        Investment firms and market operators operating an MTF in the State may enter into arrangements with a central counterparty or clearing house and a settlement system of another Member State with a view to providing for the clearing or settlement of some or all trades concluded by market participants under the systems of the MTF.

(2)       The Bank may prohibit the use of central counterparty, clearing houses or settlement systems in another Member State by investment firms and market operators operating an MTF in the State where it is demonstrably necessary in order to maintain the orderly functioning of that MTF, taking into account the conditions for settlement systems established under these Regulations.

Delegation by the Bank

131.    The Bank may delegate the performance of its functions under Regulations 72(4) 73(3) and 112(2) to other entities.

Obligation to assist and cooperate with other Member States

132.    (1)        The Bank shall cooperate with the competent authorities of other Member States whenever necessary for the purpose of -

(a)        carrying out the duties under these Regulations of those competent authorities, or

(b)        making use of the powers of the those competent authorities, whether set out in these Regulation or in national law.

(2)       The Bank shall render assistance to competent authorities of the other Member States, in particular by exchanging information and cooperating in any investigation or in any supervisory activities.

(3)       The Bank shall ensure that it has the necessary administrative and organisational measures in place to facilitate cooperation and assistance under this Regulation.

(4)       The Bank may use its powers under these Regulations or under national law for the purpose of cooperation with the competent authorities of other Member States even if the matters in which the competent authorities seek the Bank's cooperation do not involve an infringement of any law in force in the State.

Reciprocal duties of competent authorities respecting misconduct by regulated entities in other Member States

133    (1)        If the Bank has good reason to suspect that acts contrary to these Regulations or to the Directive, are or have been carried out by entities not subject to the Bank's supervision in the territory of another Member State, the Bank shall notify the competent authority of the other Member State.

(2)       Paragraph (1) is without prejudice to the competencies of the Bank under these Regulations or the Directive.

(3)       Where the Bank receives information pursuant to Article 56(4) of the Directive from the competent authority of another Member State the Bank shall -

(a)        take appropriate action, and

(b)        inform the notifying competent authority of -

(i)         the outcome of the action, and,

(ii)        to the extent possible, of significant interim developments.

(4)       Paragraph (3) is without prejudice to the competencies of the notifying competent authority.

Cooperation in supervisory activities, on-the-spot verifications or in investigations

134.    (1)        A competent authority of another Member State may request the cooperation of the Bank in a supervisory activity, for an on-the-spot verification or in an investigation.

(2)       If the activity, verification or investigation relates to investment firms that are remote members of a regulated market authorised by the Bank, the Bank—

(a)        may choose to address the members directly, and

(b)        if the Bank so chooses, it shall inform the competent authority of the home Member State of the investment firm accordingly.

(3)       Where the Bank receives a request with respect to an on-the-spot verification or an investigation, the Bank, within the framework of its powers under these Regulations and national law shall -

(a)        carry out the verifications or investigations itself,

(b)        allow the requesting authority to carry out the verification or investigation, or

(c)        allow auditors or experts to carry out the verification or investigation on the Bank's behalf.

Exchange of information between competent authorities

135    (1)        The Bank shall supply the competent authorities of other Member States for the purposes of the Directive with information on the identities of the entities carrying out the duties of the Bank under these Regulations and, in doing so, may indicate that the information supplied must not be disclosed without the express agreement of the Bank.

(2)       The Bank may transmit information received by it for the purposes of the Directive from the competent authorities of other Member States to the entities notified to the Bank under Article 49 of the Directive.

(3)       The Bank shall not transmit any such information to any entities or persons other than the entities notified to the Bank under Article 49 of the Directive -

(a)        without the express agreement of the competent authorities which disclosed the information, and

(b)        solely for the purposes for which the competent authorities gave their agreement,

except in duly justified circumstances.

(4)       When the Bank, in duly justified circumstances as permitted under paragraph (3), transmits information to any entity or person other than the entities notified to the Bank under Article 49 of the Directive, the Bank immediately afterwards shall inform the competent authority that sent the information in question.

(5)       If the Bank or an entity acting on the Bank's behalf receives confidential information under this Regulation, the Bank or entity may use the information only in the course of its duties, in particular,

(a)        having regard to the capital adequacy requirements imposed by EU Directive 2006/49/EC, by administrative and accounting procedures and by internal-control mechanisms,

(i)         to check that the conditions governing the taking-up of the business of investment firms are met, and

(ii)        to facilitate the monitoring, on a non-consolidated or consolidated basis, of the conduct of that business,

(b)        to monitor the proper functioning of trading venues,

(c)        to impose sanctions,

(d)        in administrative appeals against decisions by the Bank, or

(e)        in court proceedings.

(6)       This Regulation and Regulation 143 do not prevent the Bank from transmitting confidential information -

(a)        to central banks in the European System of Central Banks and the European Central Bank, each in its capacity as a monetary authority and,

(b)        in circumstances the Bank considers to be appropriate, to other public authorities responsible for overseeing payment and settlement systems,

if the transmission is intended for the performance of the functions of the central banks or other public authorities or is required or permitted by law.

Refusal to cooperate

136.    (1)        The Bank may refuse to act on a request for cooperation in carrying out an investigation, on-the-spot verification or supervisory activity as provided for in Regulation 134 or to exchange information as provided for in Regulation 135 only in one or more of the following circumstances:

(a)        such an investigation, on-the-spot verification, supervisory activity or exchange of information might adversely affect the sovereignty security or public policy of the State;

(b)        judicial proceedings have already been initiated in respect of the same actions and the same persons before the authorities of the State;

(c)        final judgment has already been delivered in the State in respect of the same persons and the same actions.

(2)       In the case of such a refusal, the Bank shall notify the requesting competent authority accordingly, providing as detailed information as possible.

Inter-authority consultation before authorisation

137.    (1)        For the purposes of the Directive, the Bank shall consult the responsible competent authority of any other relevant Member State before granting an authorisation to an investment firm which is -

(a)        a subsidiary of any entity authorised in that Member state that is an investment firm, credit institution or insurance undertaking,

(b)        a subsidiary of the parent undertaking of an entity described in subparagraph (a), or

(c)        controlled by the same persons who control an entity described in subparagraph (a).

(2)       Without limiting the generality of paragraph (1), the Bank shall consult the responsible competent authority referred to in that paragraph when assessing -

(a)        the suitability of the shareholders or members of persons who -

(i)         effectively direct the business, or

(ii)        are involved in the management,

of another entity of the same group as that to which the investment firm referred to in paragraph (1) belongs, or

(b)        the reputation and experience of persons involved in the management of another entity in the same group as that to which the investment firm referred to in paragraph (1) belongs.

(3)       The Bank shall exchange the pertinent information regarding the suitability reputation and experience of the persons referred to in paragraph (2)(a) or (b) with the responsible competent authority or competent authorities, for the purposes of -

(a)        deciding whether to grant an authorisation under these Regulations to an investment firm, and

(b)        the ongoing assessment of compliance by an authorised investment firm with these Regulations.

Powers for host Member States

138.    (1)        For statistical purposes, the Bank may require investment firms with established branches in the State to report to the Bank periodically on the activities of those branches.

(2)       The Bank may require investment firms that have established branches in the State to provide the Bank with all information necessary for the monitoring by the Bank of their compliance with the standards set by these Regulations.

(3)       The requirements imposed by the Bank under paragraph (2) for the provision of information are not to be more stringent than those imposed on authorised investment firms for the monitoring of their compliance with the same standards.

Precautionary measures by Bank respecting misconduct by investment firms from other Member States

139.    (1)        Where the Bank is of the opinion that an investment firm that -

(a)        acts within the State under the freedom to provide services, or

(b)        has a branch within the State

is in breach of the obligations arising from, or adopted under, provisions of these Regulations for which the Bank does not have enforcement powers, the Bank shall refer its findings in support of that opinion to the competent authority of the investment firm's home Member State.

(2)       If, following a referral of the Bank's findings under paragraph (1) about an investment firm, that firm persists in acting in a manner that, in the opinion of the Bank, is prejudicial to -

(a)        the interests of Irish investors, or

(b)        the orderly functioning of Irish markets,

the Bank, after informing the competent authority of the home Member State, may take all the appropriate measures under these Regulations that are needed in order to protect investors and the proper functioning of the markets.

(3)       Those measures include but are not limited to preventing the investment firm concerned from initiating any further transactions within the State.

(4)       The Bank shall inform the European Commission without delay of any measures taken by the Bank under this Regulation.

Further precautionary measures: misconduct of investment firm with branch in State

140.    (1)        Where the Bank is of the opinion that an investment firm that has a branch within the State is in breach of the obligations arising from, or adopted under, provisions of these Regulations the Bank shall require the investment firm concerned to discontinue the breach of those obligations as soon as possible.

(2)       If the investment firm referred to in paragraph (1) does not discontinue the breach of those obligations, the Bank shall take all appropriate measures under these Regulations to ensure that the investment firm concerned rectifies the situation as soon as possible.

(3)       The Bank shall communicate the nature of the measures taken to the competent authorities of the investment firm's home Member State.

(4)       If, despite the measures taken by the Bank under subsection (1), the investment firm continues in breach of the obligations, the Bank, after informing the competent authorities of the investment firm's home Member State, may take appropriate measures under these regulations -

(a)        to prevent the investment firm from continuing in breach of the obligations,

(b)        to penalise the investment firm for its breach of the obligations, and,

(c)        in so far as necessary, to prevent that investment firm from initiating any further transactions within the State.

(5)       The Bank shall inform the European Commission without delay of any measures taken under paragraph (4).

Further precautionary measures: misconduct of market operator or MTF in the State

141    (1)        Where the Bank is of the opinion that -

(a)        the market operator of a regulated market, or

(b)        an MTF

established in another Member State and operating in the State is in breach of the obligations arising from or adopted under these Regulations, the Bank shall refer those findings to the competent authority of the home Member State of the regulated market or the MTF.

(2)       If, following a referral of the Bank's findings under paragraph (1), the operator of the regulated market or the MTF persists in acting in a manner that, in the opinion of the Bank, is prejudicial to -

(a)        the interests of Irish investors, or

(b)        the orderly functioning of Irish markets,

the Bank, after informing the competent authority of the home Member State, may take all the appropriate measures under these Regulations that are needed in order to protect investors and the proper functioning of the markets.

(3)       Those measures include but are not limited to preventing the market operator of the regulated market or the MTF from making the arrangements of the regulated market or of the MTF available to remote members or participants established in the State.

(4)       The Bank shall inform the European Commission without delay of any measures taken by the Bank under this Regulation.

Sanctions and restrictions to be justified and communicated

142    Any measure adopted by the Bank under Regulations 139, 140 or 141 involving sanctions or restrictions on the activities of an investment firm, or of the market operator of a regulated market or MTF shall be justified and communicated to the investment firm or to the market operator of the regulated market or the MTF.

Exchange of information with third countries

143.    (1)        In this section “exchange of information” means an exchange of information that is -

(a)        subject to guarantees of professional secrecy at least equivalent to those required under the Directive, and

(b)        intended for the performance of the tasks of those authorities, bodies and persons.

(2)       The Bank may enter into cooperation agreements providing for the exchange of information between the competent authorities of third countries only if the exchange of information is -

(a)        subject to guarantees of professional secrecy at least equivalent to those required under the Directive, and

(b)        intended for the performance of the tasks of those competent authorities.

(3)       The Bank may enter into cooperation agreements providing for the exchange of information with third country authorities, bodies and persons responsible for -

(a)        the supervision of credit institutions, other financial organisations insurance undertakings and financial markets,

(b)        the liquidation and bankruptcy of investment firms and other similar procedures,

(c)        carrying out statutory audits of the accounts of investment firms and other financial institutions, credit institutions and insurance undertakings, in -

(i)         the performance of their supervisory functions, or

(ii)        the administration of compensation schemes,

(d)        overseeing the bodies involved in the liquidation and bankruptcy of investment firms and other similar procedures,

(e)        overseeing persons charged with carrying out statutory audits of the accounts of insurance undertakings, credit institutions, investment firms and other financial institutions,

(4)       Information that originates in another Member State may not be disclosed by the Bank -

(a)        under agreements referred to in paragraph (2), without the express agreement of the competent authorities from which the Bank received the information and, where appropriate, solely for the purposes for which those authorities gave their agreement, and

(b)        under agreements referred to in paragraph (3), without the express agreement of the authorities, bodies and persons from which the Bank received the information and, where appropriate, solely for the purposes for which those authorities, bodies and persons gave their agreement.

Part 11 — Auditors

Relations with auditors

144.    (1)        Investment firms and market operators of regulated markets shall ensure that their external auditors report at least annually to the Bank on the adequacy of the firm's arrangements under Regulation 85 and this Regulation.

(2)       The auditor of an investment firm or of the market operator of a regulated market shall report promptly to the Bank any fact or decision concerning the firm or market operator of which the auditor has become aware while carrying out an audit of the investment firm, of the market operator or of an undertaking having close links with the firm or market operator, which fact or decision -

(a)        constitutes or indicates a material breach of these Regulations or of any condition, requirement, code, guideline, notice or direction under these Regulations,

(b)        affects or may affect the continuous functioning of the firm, market operator or undertaking, or

(c)        leads to the auditor's refusal to certify the accounts or to the expression of reservations.

(3)       A disclosure in good faith pursuant to paragraph (1) does not constitute a breach of any contractual or legal restriction on disclosure of information and the person or persons making the disclosure are not, because of the disclosure in good faith, liable in any way or to any person.

Part 12 — Regulation and Supervision

Imposition of conditions or requirements

145.    (1)        The Bank, in respect of an investment firm or of the market operator of a regulated market may do all or any of the following:

(a)        impose conditions or requirements which relate to matters in

(i)         an associated undertaking, or

(ii)        a related undertaking

of the firm or market operator;

(b)        at any time impose conditions or requirements and amend or revoke any condition or requirement imposed under this paragraph;

(c)        at any time after authorisation, impose a condition or requirement that the market operator of the regulated market must -

(i)         add, amend or revoke rules of the regulated market, or

(ii)        add to or amend the market operator's memorandum of association or articles of association.

(2)       Any condition or requirement referred to in paragraph (1) may be imposed in relation to any or all of the following:

(a)        an investment firm, the market operator of a regulated market or a regulated market;

(b)        a proposed investment firm, the proposed market operator of a regulated market or a proposed regulated market;

(c)        a class of investment firm, of market operator of a regulated market or of a regulated market;

(d)        a specified period of time or times;

(e)        an associated undertaking or related undertaking of an investment firm or of the market operator of regulated market;

(f)        any matter, as the Bank may consider appropriate, in the interests of the proper and orderly regulation and supervision of investment firms the market operators of regulated markets, regulated markets and the protection of investors.

Further to Regulation 145

146.    Without prejudice to the generality of Regulation 145, the Bank may impose conditions or requirements on an investment firm or the market operator of a regulated market concerning -

(a)        the level of training, qualifications or professional competence of managers, officers or employees, or

(b)        the provision of information to the Bank or such other person as may be specified by the Bank.

Directions by the Bank

147.    (1)        Without prejudice to the power of the Bank to impose conditions or requirements or both under these Regulations, where the Bank considers it necessary for the proper and orderly regulation and supervision of investment firms or market operators of regulated markets or for the protection of investors, the Bank may give directions to all or any of the following:

(a)        investment firms or market operators of regulated markets;

(b)        proposed investment firms or proposed market operators of regulated markets;

(c)        investment firms or market operators of regulated markets;

(d)        former investment firms or former market operators of regulated markets;

(e)        directors and those responsible for the management of investment firms or market operators of regulated markets, former investment firms or market operators of regulated markets, proposed investment firms or market operators of regulated markets or investment firms or market operators of regulated markets;

(f)        persons purporting to act or whom the Bank reasonably believes are acting as or on behalf of any investment firms or any market operator of a regulated market;

(g)        persons who are -

(i)         directors of an investment firm or of the market operator of a regulated market, or

(ii)        responsible for the management of an investment firm or of the market operator of a regulated market,

who have failed to co-operate with an authorised officer appointed under Regulation 164 or an inspector appointed under Regulation 166 in relation to any matter related to -

(I)         the operation of the firm or operator,

(II)       an acquiring transaction within the meaning of Part 14, or

(III)     directing the cessation by any person of any practice that, in the opinion of the Bank, is contrary to Irish investment services law.

(2)       A direction given by the Bank under this Regulation has effect from the date specified by the Bank.

Further to Regulation 147

148.    (1)        Without prejudice to the Bank's powers referred to in Regulation 147, where the Bank is of the opinion that it is necessary -

(a)        in the interests of the proper and orderly regulation and supervision of investment firms or market operators of regulated markets,

(b)        for the protection of investors or both, or

(c)        in the circumstances set out in subparagraph (2),

the Bank may give a direction in writing to the investment firm or regulated market concerned to suspend for such period not exceeding 12 months, as shall be specified in the direction, any or all of the following:

(i)         the provision of any investment service;

(ii)        the making of payments to which subparagraph (i) of this paragraph does not relate;

(iii)       the acquisition or disposal of any assets or liabilities;

(iv)       entering into transactions or agreements of any specified kind or entering into them except in specified circumstances or to a specified extent;

(v)       soliciting business from persons of a specified kind or otherwise than from such persons or in a specified country;

(vi)       carrying on business in a specified manner or otherwise than in a specified manner;

(vii)      if unauthorised by the Bank, trading in any financial instrument;

(viii)      if unauthorised by the Bank, the admission to trading, listing marketing or otherwise facilitating the trading of a financial instrument on or in any market.

(2)       The circumstances referred to in paragraph (1)(c) are that the investment firm or the market operator -

(a)        has become or is, in the opinion of the Bank, likely to become unable to meet its obligations to its creditors or its clients or both,

(b)        is not maintaining or is, in the opinion of the Bank, unlikely to be in a position to maintain adequate capital resources having regard to the volume and nature of its business, or no longer complies with capital or other financial requirements specified by the Bank from time to time, or both,

(c)        has failed to comply with any condition or requirement imposed under these Regulations, and the circumstances are such that the Bank is of the opinion that the stability or soundness of an investment firm or regulated market is materially affected by this failure,

(d)        is conducting business in such a manner as to jeopardise or prejudice monies or investment instruments held by or controlled by it on behalf of clients, or the rights and interests of those clients, or

(e)        has failed to provide to the Bank within such reasonable period as may be specified by the Bank such information as the Bank may reasonably request for the purpose of the Bank's functions under these Regulations.

(3)       A direction under Regulation 147 or paragraph (1) of this Regulation may be given -

(a)        to a particular person,

(b)        generally to all persons to whom those paragraphs apply,

(c)        to a particular class of person,

(d)        during a specified period of time or times, or

(e)        by reference to any other matter which the Bank considers appropriate.

(4)       A direction given by the Bank under this Regulation has effect from the date specified by the Bank.

Bank may apply to Court for orders confirming directions

149    (1)        In this Regulation:

“termination process”, in relation to an authorised investment firm (including a natural person where appropriate) or to the market operator of a regulated market, or to an associated or related undertaking of such a firm or operator, means any -

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

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

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

(2)       The Bank may apply to the Court in a summary manner for an order confirming a direction given by the Bank under Regulation 147 or 148.

(3)       Notwithstanding paragraph (2), if the Bank is of the opinion that a direction given by the Bank under Regulation 147 or 148 is not being complied with, the Bank shall apply to the Court in a summary manner for an order confirming the direction.

(4)       On an application made under paragraph (2) or (3), the Court may -

(a)        hear evidence from creditors, and

(b)        may make any interim or interlocutory order as the Court considers appropriate.

(5)       While a direction under this Regulation is in force in respect of an investment firm, market operator of an organised market or an associated or related undertaking of such a firm or operator, no termination process may be commenced or continued and no assets of the firm, operator or undertaking shall be attached, sequestered or otherwise distrained except with the prior sanction of the Court.

(6)       The Court may hear proceedings or part of proceedings under this Regulation otherwise than in public.

(7)       A creditor who is affected by a direction under Regulation 147 or 148 may apply to the Court to vary or set aside the direction if the direction affects the interests of the creditor to a material degree.

Winding-up on application to Court

150.    (1)        In this Regulation:

“committee of inspection” means a committee of inspection appointed under section 23 of the Companies Act 1963;

“investment firm” includes a former investment firm;

“market operator” includes a former market operator.

(2)       Notwithstanding Regulation 215 of the Companies Act, 1963, the Bank, by presenting a petition, may apply to the Court to have an investment firm or the market operator of a regulated market wound up on any of the following grounds:

(a)        the investment firm or market operator is unable or, in the opinion of the Bank, may be unable to meet its obligations to its clients or creditors;

(b)        the authorisation of the investment firm or market operator has been withdrawn or revoked and the firm or operator has ceased to carry on business as an investment firm or to operate a regulated market;

(c)        the Bank considers that it is in the interest of the proper and orderly regulation and supervision of investment firms or regulated markets or is necessary for the protection of investors that the investment firm or the market operator of the regulated market be wound up;

(d)        the investment firm or market operator has failed to comply with any direction given by the Bank under these Regulations.

(3)       Where the petition for the winding-up of an investment firm or the operator of a regulated market is presented by a person other than the Bank, a copy of the petition shall be served on the Bank and the Bank is entitled to be heard on the petition.

(4)       Where an investment firm or the operator of a regulated market is being wound up voluntarily and the Bank has reason to believe that any of the grounds set out in paragraph (1) are applicable, then, the Bank may apply to the Court to have that investment firm or market operator wound up by the Court.

(5)       Where -

(a)        an investment firm or the market operator of a regulated market or a former investment firm or the former market operator of a regulated market is being wound up, and

(b)        the Bank is not a creditor,

any notice or document, by whatever name called, which is required to be sent to a creditor of the firm or operator shall be sent also to the Bank.

(6)       The Bank, in writing, may authorise an officer or employee of the Bank or some other suitably qualified person to attend a meeting of creditors of an investment firm the market operator of a regulated market or a former investment firm or former market operator of a regulated market.

(7)       The Bank, in writing, may appoint an officer or employee of the Bank or some other suitably qualified person to be a member of a committee of inspection appointed in relation to an authorised investment firm, the market operator of a regulated market or a former authorised investment firm or market operator of a regulated market.

(8)       A person appointed under paragraph (6) -

(a)        is not to be counted in computing the maximum or minimum number of members of a committee of inspection prescribed by the Companies Acts, and

(b)        may not be removed from membership of the committee without the consent of the Bank.

(9)       The rules of Court relating to the winding-up of companies shall, pending the making of rules of Court for the purposes of this Regulation, apply for such purposes with such adaptations as may be necessary.

(10)       In the case of an unincorporated body of persons that is an authorised investment firm or is the market operator of a regulated market, the Bank may apply by petition to the Court for a decree of dissolution and, for that purpose, section 35 of the Partnership Act, 1890, shall extend to the Bank and shall apply as if the grounds specified in paragraph (2) (a) to (d) were incorporated in that section.

(11)       In the case of an individual that is an authorised investment firm or is the market operator of a regulated market, the Bank may apply by petition to the Court for an adjudication of bankruptcy within the meaning of the Bankruptcy Act, 1988, and the Bankruptcy Act, 1988 shall apply as if the grounds specified in paragraph (2) (a) to (d) were acts of bankruptcy (within the meaning of the Bankruptcy Act, 1988).

Definitions for Regulations 151 and 152

151    In this Regulation and Regulation 152:

“investment research” means research or other information recommending or suggesting an investment strategy, explicitly or implicitly, concerning one or several financial instruments or the issuers of financial instruments, including any opinion as to the present or future value or price of such instruments, intended for distribution channels or for the public, and in relation to which the following conditions are met:

(a)        it is labelled or described as investment research or in similar terms, or is otherwise presented as an objective or independent explanation of the matters contained in the recommendation;

(b)        if the recommendation in question were made by an investment firm to a client, it would not constitute the provision of investment advice for the purposes of Directive 2004/39/EC;

“related financial instrument” means a financial instrument the price of which is closely affected by price movements in another financial instrument which is the subject of investment research, and includes a derivative on that other financial instrument;

“specified” means specified in a direction under Regulation 152.

Restrictions on advertising

152.    (1)        A person shall not -

(a)        cause to be advertised, supply, or offer to supply, investment or ancillary services,

(b)        make any other solicitation in respect of investment or ancillary services, or

(c)        represent that the person is a provider of such services,

if the provision of the services would be in breach of Regulation 7.

(2)       Without prejudice to the generality of any provision of these Regulations empowering the Bank to impose conditions, requirements or both, the Bank may impose such conditions, requirements or both, on an investment firm or the operator of a regulated market in respect of advertising by that firm or operator as the Bank considers necessary, in the interests of -

(a)        the orderly and proper regulation and supervision of investment firm or regulated markets, or

(b)        the protection of investors.

(3)       The Bank may impose a requirement on—

(a)        a specified authorised investment firm or market operator of a regulated market, or

(b)        all authorised investment firms or market operators of regulated markets,

to display specified information at their premises or to publish specified information.

(4)       If, with respect to an investment firm or the market operator of a regulated market, the Bank considers it expedient, in the interest of—

(a)        the proper and orderly regulation and supervision of investment firms or the market operators of regulated markets, or

(b)        the protection of investors,

the Bank may give the investment firm or market operator a direction -

(i)         as to the content and form of any advertisement or other means of soliciting money, financial instruments or business from potential or existing clients,

(ii)      as to the content and form of any advertisement relating to any service provided or business being undertaken by the firm or operator, or

(iii)        requiring the firm or operator to withdraw an advertisement or to cease advertising.

(5)       Without prejudice to the generality of paragraph (4), a direction under this Regulation may do all or any of the following:

(a)        prohibit the issue by the investment firm or regulated market of advertisements of all descriptions or any specified description;

(b)        require the investment firm or regulated market to modify advertisements of a specified description in a specified manner;

(c)        prohibit the issue by the investment firm or regulated market of any advertisements which are, or are substantially, repetitions of a specified advertisement;

(d)        require the investment firm or regulated market to withdraw any specified advertisement or any advertisement of a specified description;

(e)        require the investment firm or regulated market to include specified information in any advertisement to be published by it or on its behalf or in any statement to the public to be made by it or on its behalf.

Consequences of advertising contrary to Regulations

153    (1)        If, in contravention of Regulation 152(1) or of a direction under Regulation 152, a person (in this paragraph called the “first person”) issues, or causes to be issued, an advertisement -

(a)      inviting other persons to enter or offer to enter into an investment agreement, or

(b)        containing information calculated to lead directly or indirectly to other persons entering into or offering to enter into an investment agreement,

then, subject to paragraph (4),

(i)         the first person is not entitled to enforce any agreement to which the advertisement related and which was entered into after the issue of the advertisement, and

(ii)        the other persons are entitled to recover any money, other property or financial instruments paid or transferred by them under the agreement together with compensation for any loss sustained by them as a result of having paid money or transferred property or financial instruments under the agreement.

(2)       If, in contravention of Regulation 152(1) or of a direction under Regulation 152, a person (in this paragraph called the “first person” issues, or causes to be issued, an advertisement -

(a)        inviting other persons to exercise any rights conferred by a financial instrument, or

(b)        containing information calculated to lead directly or indirectly to other persons exercising any rights conferred by a financial instrument,

then, subject to paragraph (3),

(i)         the first person is not entitled to enforce any obligation to which the other persons are subject as a result of any exercise by the first person after the issue of the advertisement of any rights to which the advertisement related, and

(ii)      the other persons are entitled to recover any money or other property or financial instruments paid or transferred by them under any such obligation, together with compensation for any loss sustained by them.

(3)       The compensation recoverable under paragraph (1) or (2) of this Regulation shall be such as the parties may agree or as the Court, on the application of either party, may determine.

(4)       The Court may allow any such agreement or obligation as is mentioned in paragraph (1) or (2) of this Regulation to be enforced or money, other property or financial instruments paid or transferred under it to be retained, if the Court is satisfied that -

(a)        the person against whom enforcement is sought or who is seeking to recover the money, property or financial instruments was not influenced, or not influenced to any material extent, by the advertisements in making the decision to enter into the agreement or as to the exercise of the rights in question, or

(b)        the advertisement was not misleading as to the nature of the investment, the terms of the agreement or, as the case may be, the consequences of exercising the rights in question and fairly stated any risks involved in those matters.

(5)       Where a person elects not to perform an agreement or an obligation which by virtue of paragraph (1) or (2) of this Regulation is unenforceable against the person or by virtue of either of those paragraphs recovers money paid or other property or financial instruments transferred by the person under an agreement or obligation, he shall repay any money and return any other property or financial instruments received by the person under the agreement or, as the case may be, as a result of exercising the rights in question.

(6)       Where any property or financial instruments transferred under an agreement or obligation to which paragraph (1) or (2) of this Regulation applies has passed to a third party the references to that property or financial instruments in this Regulation shall be construed as references to its value at the time of its transfer under the agreement or obligation.

(7)       If an advertisement or other solicitation to which this Regulation relates is published and it does not include the name and address of the person who arranged with the publisher for the advertisement or solicitation,

(a)        the Bank, at any time within 12 months after any publication of the advertisement or solicitation, may request the publisher to supply the name and address of that person to the Bank, and

(b)        the publisher shall without delay comply with that request.

Miscellaneous requirements respecting advertising

154.    (1)        The Bank may -

(a)        direct a person to arrange the publication of a correction of a misleading advertisement concerning services of investment firms or regulated markets,

(b)        direct a person to arrange the publication of a correction of an advertisement which contravenes the provisions of this Regulation,

(c)        direct a person to arrange the publication of the fact that an offence under this Regulation has taken place and that a fine or administrative sanction, if any, has been imposed, or

(d)        arrange the publication of an advertisement correcting any misleading aspects of advertisements, published by an investment firm or regulated market,

in a manner specified by the Bank.

(2)       A recommendation of the type covered by Article 1(3) of Directive 2003/125/EC, but relating to financial instruments as defined in these Regulations, that does not meet the conditions set out in the definition of “investment research” in Regulation 151 shall be treated as a marketing communication for the purposes of these Regulations and any investment firm that produces or disseminates the recommendation shall ensure that the recommendation is clearly identified as a marketing communication.

(3)       Additionally, an investment firm shall ensure that a recommendation referred to in paragraph (2) contains a clear and prominent statement that (or, in the case of an oral recommendation, to the effect that) it -

(a)        has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and

(b)        is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Requirements respecting investment research by investment firms

155.    (1)        Investment firms which produce, or arrange for the production of, investment research that is intended or likely to be subsequently disseminated to clients of the firm or to the public, under their own responsibility or that of a member of their group, shall ensure the implementation of all the measures set out in paragraph (2) in relation to the financial analysts involved in the production of the investment research and other relevant persons whose responsibilities or business interests may conflict with the interests of the persons to whom the investment research is disseminated.

(2)       Investment firms referred to in paragraph (1) shall have in place arrangements designed to ensure that the following conditions are satisfied:

(a)        financial analysts and other relevant persons must not -

(i)        undertake personal transactions, or

(ii)        trade, other than as market makers acting in good faith and in the ordinary course of market making or in the execution of an unsolicited client order, on behalf of any other person including the investment firm,

in financial instruments to which investment research relates, or in any related financial instruments, with knowledge of the likely timing or content of that investment research which is not -

(I)         publicly available, or

(II)       available to clients

and cannot readily be inferred from information that is so available until the recipients of the investment research have had a reasonable opportunity to act on it;

(b)        in circumstances not covered by subparagraph (a), financial analysts and any other relevant persons involved in the production of investment research must not undertake personal transactions -

(i)         in financial instruments to which the investment research relates, or

(ii)        in any related financial instruments,

contrary to current recommendations, except in exceptional circumstances and with the prior approval of a member of the firm's legal or compliance function;

(c)        the investment firms themselves, financial analysts, and other relevant persons involved in the production of the investment research must not accept inducements from those with a material interest in the subject-matter of the investment research;

(d)        the investment firms themselves, financial analysts, and other relevant persons involved in the production of the investment research must not promise issuers favourable research coverage;

(e)        issuers, relevant persons other than financial analysts, and any other persons must not before the dissemination of investment research be permitted to review a draft of the investment research -

(i)         for the purpose of verifying the accuracy of factual statements made in that research, or

(ii)        for any other purpose other than verifying compliance with the firm's legal obligations, if the draft includes a recommendation or a target price.

(3)       Investment firms which disseminate investment research produced by another person to the public or to clients are exempt from complying with Regulation 152(1) if the following criteria are met:

(a)        the person that produces the investment research is not a member of the group to which the investment firm belongs;

(b)        the investment firm does not substantially alter the recommendations within the investment research;

(c)        the investment firm does not present the investment research as having been produced by it;

(d)        the investment firm verifies that the producer of the research is subject to requirements equivalent to the requirements under these Regulations in relation to the production of that research, or has established a policy setting such requirements.

Exemption from restrictions on advertising

156.    (1)        Regulation 152 does not apply to a class of advertisement specified from time to time by the Bank for the purpose of exempting from that Regulation -

(a)        advertisements appearing to the Bank to have a private character whether by reason of a connection between the person issuing them and those to whom they are issued or otherwise,

(b)        advertisements appearing to the Bank to deal with investment or ancillary services only incidentally, or

(c)        advertisements issued to persons appearing to the Bank to be sufficiently expert to understand any risks involved.

(2)       An exemption under paragraph (1) of this Regulation is subject to such conditions as may be specified by the Bank when granting the exemption.

Liquidators receivers, administrators, examiners, official assignees or creditors

157.    (1)        No liquidator, receiver, administrator, examiner, official assignee or creditor of an investment firm shall have or obtain any recourse or right against client money or client financial instruments or documents of title relating to such financial instruments received held or paid on behalf of a client by an investment firm, until all proper claims of clients or of their heirs, successors or assigns against client money and client financial instruments or documents of title relating to such financial instruments have been satisfied in full.

(2)       Notwithstanding paragraph (1), a liquidator, receiver, administrator, examiner or official assignee may have recourse or right against client money or client financial instruments or documents of title relating to such financial instruments received, held or paid on behalf of a client by an investment firm in respect of such reasonable expenses as are incurred -

(a)        in the carrying out of their functions under these Regulations or under the Investor Compensation Act 1998, or

(b)        in the distribution of client money and financial instruments to clients of the investment firm where the assets of the investment firm have been exhausted.

Application to the Court

158.    (1)        A liquidator, receiver, administrator, examiner or official assignee shall apply to the Court before seeking recourse or right against client money or client financial instruments or documents of title relating to such financial instruments received, held or paid on behalf of a client by an investment firm under Regulation 157(2) and the Court shall determine the matter and make such order as the Court sees fit.

(2)       A person with whom an account is kept in pursuance of client money requirements or rules under Regulation 157 and this Regulation does not incur any liability as constructive trustee where money is wrongfully paid from the account, unless -

(a)        the person permits the payment with knowledge that the payment is wrongful, or

(b)        having deliberately failed to make inquiries in circumstances in which a reasonable and honest person would have done so.

Prohibition against misappropriation

159.    (1)        A person who is a director, officer or employee of an investment firm shall not misappropriate fraudulently any money or financial instruments held, controlled or paid on behalf of a client by that investment firm.

Safeguarding clients’ rights relative to financial instruments

160    (1)        In this Regulation, “qualifying money market fund” means a collective investment undertaking -

(a)        authorised under Directive 85/611/EEC [UCITS], or

(b)        which is subject to supervision

and, if applicable, authorised by an authority under the national law of a Member State, and which satisfies the following conditions:

(i)         its primary investment objective must be to maintain the net asset value of the undertaking either constant at par (net of earnings), or at the value of the investors’ initial capital plus earnings;

(ii)        it must, with a view to achieving that primary investment objective invest exclusively in either of the following, whether alone or in combination with the other:

(I)         cash;

(II)       high quality money market instruments with a maturity or residual maturity that is no greater than one year, or with yield adjustments which are made regularly, and at least annually;

(iii)        it must provide liquidity through same day or next day settlement.

(2)       For the purposes of safeguarding clients’ rights in relation to financial instruments and funds belonging to them, investment firms shall comply with the following requirements:

(a)        they must keep such records and accounts as are necessary to enable them at any time and without delay to distinguish assets held for one client from assets held for any other client, and from their own assets;

(b)        they must maintain their records and accounts in a way that ensures their accuracy, and in particular their correspondence to the financial instruments and funds held for clients;

(c)        they must conduct, on a regular basis, reconciliations between their internal accounts and records and those of any third parties by whom those assets are held;

(d)        they must take the necessary steps to ensure that any client financial instruments deposited with a third party, in accordance with Regulation 161 (1) to (3), are identifiable separately from the financial instruments belonging to the investment firm, by means of -

(i)         differently titled accounts on the books of the third party, or

(ii)        other equivalent measures that achieve the same level of protection;

(e)        they must take the necessary steps to ensure that client funds deposited in accordance with Regulation 161, in a central bank, a credit institution or a bank authorised in a third country or a qualifying money market fund are held in an account or accounts identified separately from any accounts used to hold funds belonging to the investment firm;

(f)        they must introduce adequate organisational arrangements to minimise the risk of the loss or diminution of client assets, or of rights in connection with those assets, as a result of misuse of the assets, fraud poor administration, inadequate record-keeping or negligence.

(3)       If, for reasons of the applicable law, including in particular the law relating to property or insolvency, the arrangements made by investment firms in compliance with paragraph (1) to safeguard clients’ rights are not sufficient to satisfy the requirements of Regulations 33(1)(h) and (i), the Bank shall prescribe the measures that investment firms must take in order to comply with those requirements.

Deposit of financial instruments and funds by investment firms

161    (1)        Investment firms may deposit financial instruments held by them on behalf of their clients into an account or accounts opened with a third party provided that the firms -

(a)        exercise all due skill, care and diligence in the selection, appointment and periodic review of the third party and of the arrangements for the holding and safekeeping of those financial instruments, and

(b)        take into account the expertise and market reputation of the third party as well as any legal requirements or market practices related to the holding of those financial instruments that could adversely affect clients’ rights.

(2)       If the safekeeping of financial instruments for the account of another person is subject to specific regulation and supervision in a jurisdiction where an investment firm proposes to deposit client financial instruments with a third party, the firm shall not deposit those financial instruments in that jurisdiction with a third party which is not subject to such regulation and supervision.

(3).      An investment firms shall not deposit financial instruments held on behalf of clients with a third party in a third country that does not regulate the holding and safekeeping of financial instruments for the account of another person unless one of the following conditions is met:

(a)        the nature of the financial instruments or of the investment services connected with those instruments requires them to be deposited with a third party in that third country;

(b)        where the financial instruments are held on behalf of a professional client, that client requests the firm in writing to deposit them with a third party in that third country.

(4)       An investment firms, on receiving any client funds, shall without delay deposit those funds into one or more accounts opened with any of the following:

(a)        a central bank;

(b)        a credit institution authorised in accordance with Directive 2006/48/EC;

(c)        a bank authorised in a third country;

(d)        a qualifying money market fund.

(5)       Paragraph (1) does not apply to a credit institution authorised under Directive 2006/48/EC in relation to deposits within the meaning of that Directive held by that institution.

(6)       Where investment firms do not deposit client funds with a central bank, the firms shall exercise all due skill, care and diligence in the -

(a)        selection, appointment and periodic review of the credit institution bank or money market fund in which the funds are deposited, and

(b)        the arrangements for the holding of those funds,

taking into account the expertise and market reputation of the credit institution, bank or money market fund, with a view to ensuring the protection of clients’ rights, as well as any

(i)         legal or regulatory requirements, or

(ii)        market practices

related to the holding of client funds that could adversely affect clients’ rights.

Securities financing transactions of investment firms

162.    (1)        An investment firm shall not enter into arrangements for securities financing transactions in respect of financial instruments held by the firm on behalf of a client, or otherwise use such financial instruments for their own account or the account of another client of the firm, unless the following conditions are met:

(a)        the client must have given prior express consent to the use of the instruments on specified terms, as evidenced, in the case of a retail client, by the client's signature;

(b)        the use of the client's financial instruments must be restricted to the specified terms to which the client consents.

(2)       Investment firms shall not -

(a)        enter into arrangements for securities financing transactions in respect of financial instruments which are held on behalf of a client in an omnibus account, or

(b)        otherwise use financial instruments held in such an account for their own account or for the account of another client,

unless, in addition to the conditions set out in paragraph (1), at least one of the following conditions is met:

(i)         each client whose financial instruments are held together in an omnibus account must have given prior express consent in accordance with paragraph(1)(a);

(ii)        the investment firm must have in place systems and controls which ensure that only financial instruments belonging to clients who have given prior express consent in accordance with paragraph (1)(a) are so used.

(3)       The investment firm shall ensure that the records of the firm include -

(a)        details of the client on whose instructions the use of the financial instruments has been effected, and

(b)        the number of financial instruments used belonging to each client who has given consent, so as to enable the correct allocation of any loss.

Warning notices

163.    (1)        The Bank may arrange for the publication of warning notices in any of the newspapers circulating in the State or elsewhere or in the Iris Oifigiúil where the Bank reasonably believes that a company registered in the State or any other person operating in the State, without an authorisation as required by these Regulations, is -

(a)        providing investment services,

(b)        operating a regulated market, or

(c)        claiming, or holding itself, himself or herself out, to be—

(i)         providing investment services, or

(ii)        operating a regulated market.

(2)       The Bank shall endeavour to provide the company or person referred to in paragraph (1) with 7 days notice of the Bank's intention to publish a warning notice.

PART 13 — ENFORCEMENT

Authorised Officers

164.    (1)        The Bank, in writing, may appoint persons to be authorised officers for the purposes of these Regulations.

(2)       The Bank shall provide any authorised officer with a certificate of authority.

(3)       Whenever an authorised officer is requested to do so by a person in relation to whom the officer is exercising a power under these Regulations, the officer shall produce the officer's certificate of authority together with some form of personal identification.

Powers of authorised officers

165.    (1)        In this Regulation:

“agent”, in relation to a person to whom this Regulation applies or to any associated or related undertaking, includes past as well as present agents, as the case may be, and includes its bankers, accountants, solicitors, auditors and its financial and other advisors, whether or not those persons are officers or persons to whom this Regulation applies;

“persons to whom this Regulation applies” means the persons described in paragraph (2);

“specified” means specified under this Regulation.

(2)       The powers conferred by this Regulation may be exercised in respect of all or any of the following persons:

(a)        an investment firm, a regulated market or the market operator of a regulated market;

(b)        a proposed investment firm, regulated market or market operator of a regulated market;

(c)        a person whom the Bank has reasonable grounds to believe has provided or is providing investment or ancillary services;

(d)        an associated or related undertaking of any of them.

(3)       An authorised officer, for the purpose of obtaining any information which the Bank may require to enable the Bank to exercise any of its functions under these Regulations may do any one or more of the following:

(a)        at all reasonable times enter any premises if there are reasonable grounds to believe that, in those premises -

(i)         there are being carried on, or have been carried on, any investment services, ancillary services or activities, in connection with an investment firm or the market operator of a regulated market, or

(ii)        there are kept any books, records or other documents, relating to such services or activities,

and search and inspect the premises and any books, records or other documents on the premises;

(b)        secure for later inspection any premises or any part of a premises in which books, records or other documents are kept or there are reasonable grounds for believing that such books, records or other documents are kept;

(c)        inspect and take copies of or extracts from, or, subject to a warrant being issued for that purpose by a judge of the District Court, remove for a reasonable period for further examination, any books, records or other documents which the officer finds in the course of inspection;

(d)        require any person who -

(i)         carries on such investment or ancillary services or any activity in connection with an investment firm or with the market operator of a regulated market, and

(ii)        who is employed in connection therewith to give to the authorised officer such information as the officer may reasonably require in relation to any entries in the books records or other documents referred to in subparagraph (c);

(e)        require any such person to give to the officer any information which the authorised officer may require in regard to the investment or ancillary services or any activity in connection with an investment firm or regulated market or in regard to the persons carrying on services or activities or employed in connection therewith;

(f)        require any such person to give to the authorised officer any other information which the authorised officer may reasonably require in regard to such investment or ancillary services or any activity in connection with an investment firm or regulated market;

(g)        require any person by whom or on whose behalf data equipment is or has been used or any person having charge of, or otherwise concerned with the operation of, the data equipment or any associated apparatus or material, to afford the authorised officer reasonable assistance in relation thereto;

(h)        summon, at any reasonable time, any other person employed in connection with the investment or ancillary services or the activity in connection with an investment firm or regulated market -

(i)         to give to the authorised officer any information which the officer may reasonably require in regard to such activity, and

(ii)        to produce to the authorised officer any books, records or other documents which are in that person's power or control;

(i)         require any person employed in the premises -

(I)         to prepare a report on specified aspects of the business of the persons to whom this Regulation applies, or

(II)       to explain entries in any documents or other materials furnished;

(j)        communicate with any client of an investment firm or the market operator of a regulated market, for the purpose of confirming the investment or ancillary services which were provided to the client or the activity that was carried on.

(4)       A person who has in the person's power, possession or procurement any books, records or other documents aforesaid shall -

(a)        produce them at the request of an authorised officer and permit him or her to inspect and take copies of, or extracts from, them,

(b)        at the request of an authorised officer, give any information which may be reasonably required with regard to them, and

(c)        give such other assistance and information to an authorised officer as is reasonable in the circumstances.

(5)       Where any person from whom production of a book, record or other document is required under this Regulation claims a lien thereon, the production of the book, record or document shall be without prejudice to the lien.

(6)       Nothing in this Regulation shall compel the production by a barrister or solicitor of a book, record or other document containing a privileged communication made by or to the solicitor or barrister in that capacity or the furnishing of information contained in a privileged communication so made.

(7)       At such times as the Bank may specify from time to time an investment firm or the market operator of a regulated market and any person carrying on the business of an associated or related undertaking to which this Regulation relates shall each furnish to the Bank such information and returns -

(a)        that relate to the business of the associated undertaking or related undertaking, and

(b)        that Bank considers it necessary to have for the due performance of the Bank's functions under these Regulations,

as the Bank may specify from time to time.

(8)       This Regulation applies to the business of an associated undertaking or related undertaking to the extent only that the information and returns sought by the Bank are, in the opinion of the Bank, materially relevant to the proper appraisal of the business of the investment firm or regulated market to which the associated or related undertaking relates.

(9)       A requirement under this Regulation may be imposed on a person outside the State to whom this Regulation applies.

(10)       The duty to produce or provide any information, document, material or explanation extends to a person -

(a)        who is an examiner, liquidator, receiver, official assignee or who is or has been an officer or employee or agent of the persons to whom this Regulation applies, or

(b)        who appears to the Bank or to the authorised officer to have the information, document, material or explanation in the person's possession or under the person's control.

(11)       An authorised officer appointed under these Regulations, where he or she considers it necessary, may be accompanied by a member of the Gardaí Síochána when performing any powers conferred on an authorised officer by these Regulations.

(12)       If any officer, employee, shareholder or agent of a person to whom this Regulation applies refuses -

(a)        to produce to an authorised officer when requested to do so any book or document which it is the person's duty under this Regulation to produce,

(b)        to co-operate with an authorised officer when required to do so, or

(c)        to answer any question put to the person by an authorised officer with respect to the affairs of the person to whom this Regulation applies,

the authorised officer may certify the refusal under his or her hand to the Court.

(13)       When an authorised officer certifies a refusal referred to in paragraph (12) to the Court, the Court may inquire into the case and may make such order or direction as the Court thinks fit, after hearing -

(a)        any witnesses who may be produced against or on behalf of the officer employee, shareholder or agent of the person to whom this Regulation applies, and

(b)        any statement which may be offered in defence.

(14)       Without limiting the generality paragraph (13), an order or direction made by the Court under that paragraph may include an order or direction to the person concerned -

(a)        to attend or re-attend before the authorised officer,

(b)        to produce particular books or documents,

(c)        to answer a particular question put to the person by the authorised officer, or

(d)        that the person need not produce a particular book or document or answer a particular question put to the person by the authorised officer.

(15)       A person shall not obstruct or interfere with an authorised officer in the exercise of the officer's powers under these Regulations.

(16)       A person shall not, without reasonable excuse, refuse or fail to comply with any request or requirement of an authorised officer made in accordance with these Regulations.

(17)       A person shall not give an authorised officer information that the person knows or ought reasonably to know is false or misleading in a material particular.

Appointment of inspector by Court

166.    (1)        Without prejudice to the powers of the Bank under these Regulations, where the Bank is of the opinion that it is in the interest of -

(a)        the proper and orderly regulation and supervision of investment firms or regulated markets, or

(b)        the protection of investors,

that an investigation should be held into the affairs of an investment firm or the market operator of a regulated market, the Bank may apply to the Court for an order authorising such an investigation.

(2)       On application by the Bank under paragraph (1), the Court, as it thinks proper may appoint one or more inspectors to -

(a)        investigate the affairs of -

(i)         the investment firm or market operator that is the subject of the application, and

(ii)        where necessary, any subsidiary or other associated or related undertaking of the investment firm or market operator, and

(b)        to report the results of the investigation in such manner as the Court directs.

(3)       Before applying to the Court to appoint an inspector under this Regulation, the Bank, if it is of the opinion that it would not be prejudicial to the interests of shareholders or creditors or investors, may notify the investment firm or the market operator concerned in writing of -

(a)        the application, and

(b)        reasons for the application,

and, in that case, the investment firm or the market operator, within such period as the Bank may set out in the notification, shall be entitled to give to the Bank a statement in writing explaining the relevant activities of the investment firm or market operator, as the case may be.

Power of inspector to extend investigation

167.    Where an inspector appointed under Regulation 166 to investigate the affairs of an investment firm or the market operator of a regulated market or any subsidiary or other associated or related undertaking thinks it necessary for the purposes of the investigation to investigate the affairs of -

(a)        any other investment firm or market operator of a regulated market or

(b)        any body corporate or any undertaking which body or undertaking is or was at any relevant time a subsidiary, an associated undertaking or a related undertaking of the investment firm or the market operator of the regulated market,

the inspector, with the approval of the Court, shall have power to do so, and shall report on the affairs of -

(i)         the other investment firm or regulated market or

(ii)        the body corporate, undertaking, associated undertaking or related undertaking,

so far as the inspector thinks the results of the investigation are relevant to the investigation of the affairs of the first-mentioned investment firm or market operator.

Direction to inspector by Court

168.    Where the Court appoints an inspector under Regulation 166, the Court may from time to time give such directions as it thinks fit, whether to the inspector or otherwise, with a view to ensuring that the investigation is carried out as efficiently and as effectively as is practicable in the circumstances.

Powers of inspection

169.    (1)        It is the duty -

(a)        of all officers, shareholders, employees and agents of an investment firm or regulated market or other body the affairs of which are being investigated as provided by Regulation 166 or 173, including officers shareholders and agents outside the State, and

(b)        of any other person, including those being investigated under Regulation 167, and including any person outside the State, who the inspector considers is, or may be, in possession of any information concerning the affairs of an investment firm or regulated market,

to do each of the following:

(i)         produce to an inspector appointed under Regulation 166 or 173 all books, accounts, deeds, records or other documents of, or relating to the business of the investment firm, the market operator of the regulated market or the person being investigated under Regulation 167, which are in their control, possession or procurement;

(ii)        attend before the inspector, when required to do so;

(iii)       give to the inspector all assistance in connection with the investigation which they are reasonably able to give.

(2)       The inspector may examine on oath or by written interrogatories on oath the officers, employees, shareholders and agents of the investment firm or the market operator of a regulated market being investigated or other person being investigated by the inspector and any such person as is mentioned in paragraph (1) of this Regulation in relation to its affairs and may -

(a)        administer an oath accordingly, and

(b)        take or cause to be taken the answers of such person in writing and require that person to sign them.

(3)       If an inspector has reasonable grounds for believing that a director or past director or employee or past employee or agent or past agent or shareholder or past shareholder of the investment firm or regulated market or of any other person mentioned in paragraph (1) of this Regulation whose affairs the inspector is investigating, maintains or has maintained, either at that time or at any time in the past, an account of any description in a credit institution or an account with any other financial institution, including holdings of investment instruments, whether alone or jointly with another person and whether in the State or elsewhere, into or out of which there has been paid -

(a)        any money which has resulted from or been used in the financing of any transaction, arrangement or agreement relating to the business of the investment firm or market operator or relating to client money or investment instruments, or

(b)        any money which has been in any way connected with any act or omission, or series of acts or omissions, which on the part of that director or employee or agent constituted misconduct (whether fraudulent or not) towards the investment firm or market operator or the firm's or market operator's shareholders or any client or creditor of the firm or market operator,

the inspector may require the director or past director or officer or past officer or employee or past employee or agent or past agent or shareholder or past shareholder or other person mentioned in paragraph (1) of this Regulation to produce to the inspector all documents in the director's employee's or agent's possession, or under the director's, employee's or agent's control, relating to that account and in this paragraph “credit institution account” includes an account with any person exempt by virtue of section 7(4) of the Central Bank Act, 1971, from the requirement of holding a licence granted under section 9 of that Act.

(4)       If any officer, shareholder or agent of the investment firm or the operator of a regulated market or any such person as is mentioned in paragraph (1) refuses -

(a)        to produce to the inspector any book or document which it is the director's, employee's, agent's or person's duty under this Regulation to produce,

(b)        to attend before the inspector when required to do so, or

(c)        to answer any question put to the person by the inspector with respect to the affairs of the investment firm, the market operator or another person mentioned in paragraph (1), as the case may be,

the inspector may certify the refusal under his or her hand to the Court.

(5)       When the inspector certifies a refusal referred to in paragraph (4) to the Court and the Court may inquire into the case may make such order or direction as the Court thinks fit, after hearing -

(a)        any witnesses who may be produced against or on behalf of the officer shareholder or agent of the investment firm, market operator of a regulated market, associated or related undertaking another person mentioned in paragraph (1) as the case may be, and

(b)        any statement which may be offered in defence.

(6)       Without limiting the generality of paragraph (5), an order or direction under that paragraph may include a direction or order to the person concerned -

(a)        to attend or re-attend before the inspector,

(b)        to produce particular books or documents,

(c)        to answer a particular question put to the person by the inspector, or

(d)        that the person need not produce a particular book or document or answer a particular question put to the person by the inspector.

(7)       In this Regulation any reference to officers or agents includes past as well as present officers and agents, as the case may be, and “agents”, in relation to an investment firm or the market operator of a regulated market or other person mentioned in paragraph (1 includes the bankers, accountants, solicitors, auditors and the financial and other advisors of the investment firm, market operator or other person mentioned in paragraph (1), whether those persons are or are not officers of the investment firm or market operator or other body or undertaking.

Expenses of and fees relating to an investigation

170.    (1)        The expenses of and incidental to an investigation and the fees incurred by an inspector appointed by the Court under Regulation 166 or by the Bank under Regulation 173 shall be defrayed by the Bank, but the Court may direct that any person dealt with in the report shall be liable, to such extent as the Court may direct, on the application of the Bank to repay the Bank any expenses or fees incurred.

(2)       Without prejudice to paragraph (1) of this Regulation, any person who is -

(a)        convicted on indictment of an offence on a prosecution instituted as a result of an investigation,

(b)        ordered to pay damages or restore any property in proceedings brought as a result of an investigation, or

(c)        awarded damages or to whom property is restored in proceedings brought as a result of an investigation,

may be ordered, in the same proceedings, to repay all or part of the expenses and fees referred to in paragraph (1) of this Regulation and interest as appropriate, to the Bank or to any person on whom liability has been imposed by the Court under that paragraph.

(3)       However, in the case of a person to whom paragraph (2)(c) relates, the Court shall not order payment in excess of -

(a)        one-tenth of the amount of the damages awarded, or

(b)        one tenth of the value of the property restored,

and interest as appropriate and any such order shall not be executed until the person concerned has received the person's damages or the property has been restored.

(4)       The report of an inspector may, if he or she thinks fit, and shall, if the Court so directs, include a recommendation as to the directions, if any, which the inspector thinks appropriate, in the light of the inspector's investigation, to be given under paragraph (1) of this Regulation.

Inspectors’ reports and proceedings thereon

171.    (1)        An inspector appointed under Regulation 166 may, and shall if the Court so requires, make an interim report to the Court and, on conclusion of the investigation, shall make a final report to the Court but may at any time in the course of the investigation without making an interim report, inform the Court of matters coming to the inspector's knowledge as a result of the investigation tending to show that an offence has been committed.

(2)       On a report being presented to it under this Regulation, the Court shall -

(a)        forward a copy of any such report to the Bank,

(b)        if the Court thinks fit, furnish a copy thereof to the investment firm or regulated market concerned and its auditors, and

(c)        if the Court thinks fit -

(i)         furnish a copy thereof, on request and on payment of such fee as it may fix, to any other person who is a shareholder of the investment firm or regulated market concerned or a shareholder of any other body dealt with in the report by virtue of Regulation 166 or whose interests as a creditor or client of the investment firm or regulated market concerned or of any other such body appear to the Court to be affected, and

(ii)        cause any such report to be printed and published.

(3)       Where the Court thinks it to be proper the Court may direct that a particular part of a report made by virtue of this Regulation be omitted from a copy forwarded or furnished under paragraph (2)(b) or (2)(c) (i) or from the report as printed and published under paragraph (2) (c) (ii).

Powers of Court following consideration of reports

172.    (1)        Having considered a report made under Regulation 171, the Court may make such order as it thinks fit in relation to matters arising from that report including—

(a)        an order of its own motion for the winding-up or dissolution or bankruptcy of an investment firm or the market operator of a regulated market,

(b)        an order for the purpose of remedying any disability suffered by any person whose interests were adversely affected by the conduct of the affairs of the investment firm or market operator provided that, in making any such order, the Court shall have regard to the interests of any other person who may be adversely affected by the order.

(2)       If, in the case of any investment firm or market operator of a regulated market which firm or operator is liable to be wound up or dissolved under these Regulations or is subject to an adjudication of bankruptcy, it appears to the Bank from -

(a)        any report made under Regulation 171 as a result of an application by the Bank under Regulation 166, or

(b)        any report made by inspectors appointed by the Bank under Regulation 173, or

(c)        any information or document obtained by the Bank under these Regulations,

that a petition should be presented for the winding-up or dissolution or bankruptcy of an investment firm or the market operator of a regulated market, the Bank, unless the investment firm or market operator is already being wound up or dissolved or is already subject to an adjudication of bankruptcy, may present a petition for it to be so wound up or dissolved or to be the subject of an adjudication of bankruptcy if the Court thinks it just and equitable for it to be so wound up or dissolved or subject to an adjudication of bankruptcy.

Appointment of inspector by the Bank

173.    (1)        Without prejudice to its powers under these Regulations, the Bank may subject to paragraph (2), appoint one or more inspectors to investigate and report on any or all of the following:

(a)        the affairs and conduct of the business of an authorised investment firm or regulated market or other undertaking which is, or was at the relevant time, an associated or related undertaking of an authorised investment firm or the market operator of a regulated market, or any particular aspect of such business;

(b)        compliance of the authorised investment firm or regulated market with all or any of the following:

(i)         conditions or requirements or both imposed by the Bank under these Regulations;

(ii)        rules or codes of conduct set out or approved by the Bank under these Regulations;

(iii)       any condition or requirement of these Regulations;

(iv)       rules or requirements set out or approved by the Bank, with respect to clients’ money and investment instruments;

(v)       any other enactment;

(c)        any other matter as the Bank may consider appropriate.

(2)       An appointment under paragraph (1) of this Regulation may be made by the Bank if it is of the opinion that there are circumstances suggesting that it is necessary -

(a)        for the effective administration of the law relating to investment firms or regulated markets, or

(b)        for the effective discharge by the Bank of its statutory functions under these Regulations.

(3)       The terms of appointment of an inspector under this Regulation may define the scope of the inspector's investigation, whether as respects the matters or the period to which it is to extend or otherwise, and in particular may limit the investigation to matters connected with particular circumstances.

(4)       Subject to the terms of appointment of an inspector, the powers conferred on the inspector by this Regulation shall extend to the investigation of any circumstances suggesting the existence of an arrangement or understanding which, though not legally binding, is or was observed or likely to be observed in practice and which is relevant to the purposes of the investigation.

(5)       For the purposes of any investigation under this Regulation, Regulations 167 to 171, except Regulations 168, 169(3) and 170(3), shall apply with the necessary modifications or references to the affairs of the authorised investment firm or the market operator of a regulated market or to the affairs of any other person or any associated or related undertaking, so, however, that -

(a)        the Regulations shall apply in relation to all persons who are or have been officers or employees or agents of the authorised investment firm or market operator or other persons who appear to the inspector to have the information, document, material or explanation in their possession or under their control, and

(b)        for references to the Court except in Regulations 167, 169(4), 170(1 and (2), there shall be substituted references to the Bank.

Search and seizure

174.    (1)        If a Judge of the District Court is satisfied on the sworn information of an authorised officer or an inspector appointed under Regulation 173 that there are reasonable grounds for suspecting that there are on any premises any books, records or other documents -

(a)        of which production has been required under these Regulations, and

(b)        which have not been produced in compliance with that requirement,

the Judge may issue a warrant authorising any member of the Gardaí Síochána, together with any other persons named in the warrant and any other members of the Gardaí Síochána, at any time or times within one month from the date of the warrant, on production if so requested of the warrant, to enter the premises specified in the information (using such force as is reasonably necessary for the purpose) and to search the premises or other place specified in the warrant and -

(i)         take possession of any books or documents appearing to be such books or documents as aforesaid, or

(ii)        to take, in relation to any books or documents so appearing, any other steps which may appear necessary for preserving them and preventing interference with them.

(2)       Any books or documents of which possession is taken under this Regulation may be retained for a period of 6 months or -

(a)        if within that period there are commenced any such criminal proceedings (being proceedings to which the books or documents are relevant), until the conclusion of those proceedings, or

(b)        if within that period there is commenced an investigation by An Gardaí Síochána into matters relating to Regulation 177(1)(a) (and the books or documents are relevant to the investigation), until the conclusion of the investigation.

(3)       A person shall not -

(a)        obstruct or interfere with a member of the Gardaí Síochána acting under the authority of a warrant issued under this Regulation,

(b)        be present on the premises or at the place specified in the warrant by a member of the Gardaí Síochána acting under the authority of a warrant issued under this Regulation and -

(i)         fail or refuse to give the member the person's name and address when required to do so, or

(ii)        give a name and address that is false or misleading, or

(c)        obstruct the exercise of an authority conferred by a warrant under this Regulation to take possession of any books or documents.

(4)       In this Regulation “premises” includes any building or other land and includes a vessel, aircraft or motor vehicle.

Admissibility in evidence of reports of inspectors

175.    A document purporting to be a copy of a report of an inspector appointed under these Regulations shall be admissible in any civil proceedings as evidence -

(a)        of the facts set out the document without further proof, unless the contrary is shown, and

(b)        of the opinion of the inspector in relation to any matter contained in the report.

Privilege

176.    (1)        Nothing in these Regulations

(a)        compels the disclosure by any person of any information which the person would, in the opinion of the Court, be entitled to refuse to produce on the grounds of legal professional privilege, or

(b)        authorises the taking possession of any document containing such information which is in the person's possession.

(2)       The publication, in pursuance of any provision of this Part, of any report information, book or document relating to inspectors appointed under this Part is privileged.

Consent to publication of information

177.    (1)        In this Regulation “appropriate authority” includes any or all of the following:

(a)        the Bank;

(b)        a person authorised by the Governor of the Bank;

(c)        an inspector appointed under these Regulations;

(e)        the Minister;

(f)        any court of competent jurisdiction;

(g)        any other competent authority for the purposes of the Directive or of Directive 2006/48/EC relating to the taking up and pursuit of the business of credit institutions

(2)       No information, book or document, relating to a person, which has been obtained under Regulation 174 shall, without the previous consent in writing of that person be published or disclosed, except to an appropriate authority, unless the publication or disclosure is required for all or any of the following:

(a)        with a view to the institution of, or otherwise for the purposes of, any criminal proceedings pursuant to, or arising out of, any enactments under which the relevant Bank exercises statutory functions or any criminal proceedings for an offence entailing misconduct in connection with the management of the affairs of a person or misapplication or wrongful retainer of its property;

(b)        for the purpose of complying with any requirement, or exercising any power, imposed or conferred by these Regulations with respect to reports made by inspectors appointed thereunder by the Court or the Bank;

(c)        with a view to the institution by the Bank of proceedings for the winding-up, dissolution or bankruptcy under these Regulations of the person or otherwise for the purposes of proceedings instituted by the Bank for that purpose;

(d)        for the purposes of proceedings under Regulation 174.

PART 14 — ACQUIRING TRANSACTIONS

Definitions for the purposes of this Part

178.    In this Part:

“acquiring transaction” means any direct or indirect acquisition by a person or more than one person acting in concert of shares or other interest in an authorised investment firm or the market operator of a regulated market if, after the proposed acquisition,

(a)        the proportion of voting rights or capital held by the person or persons making the acquiring transaction would reach or exceed a qualifying holding, or

(b)        the proportion of voting rights or capital held by the person or persons making the acquiring transaction would reach or exceed 20 per cent, 33 per cent or 50 per cent, or

(c)        an authorised investment firm or the market operator of a regulated market would become a subsidiary of the acquirer;

“disposal” means any direct or indirect disposal by a person or more than one person acting in concert of a qualifying holding or a disposal which would reduce such a qualifying holding so that the proportion of the voting rights or of the capital held by the person or persons would fall below 20 per cent., 33 per cent or 50 per cent or so that an authorised investment firm or the market operator of a regulated market would cease to be its subsidiary.

Notification of certain transactions

179.    (1)        Any person who proposes to make an acquiring transaction shall notify the Bank in writing of the proposal as soon as may be and shall include with the notification such information concerning the proposed acquiring transaction as may be specified by the Bank from time to time.

(2)       Any person who proposes to make a disposal shall notify the Bank in writing of the proposal as soon as may be and such notification shall include such information concerning the proposed disposal as may be specified by a supervisory authority from time to time.

(3)       On becoming aware of any proposals of the type referred to in paragraphs (1 or (2) of this Regulation, the investment firm or the market operator of a regulated market concerned shall inform the Bank of the proposed acquiring transactions or disposals that cause holdings to exceed or fall below a qualifying holding or 20 per cent., 33 per cent. or 50 per cent. of the capital held or voting rights, or that cause the firm or market operator to become, or cease to be, a subsidiary.

(4)       Where, having received a notification under this Regulation, the Bank is of the opinion that in order to consider, for the purposes of this Regulation, a proposed acquiring transaction it requires further information it may, within one month of the date of receipt by it of a notification, request such further information in writing from any one or more of the persons concerned with the transaction.

(5)       The Bank may approve of, or approve of subject to conditions or requirements or both, or may refuse to approve of an acquiring transaction.

(6)       If the acquirer of any holding in an investment firm or the market operator of a regulated market referred is itself -

(a)        an investment firm, a credit institution, or an insurance undertaking,

(b)        a UCITS management company authorised in another Member State,

(c)        the parent undertaking of an investment firm, a credit institution or an insurance undertaking,

(d)        the parent company of a UCITS management company authorised in another Member State,

(e)        a person controlling an investment firm, a credit institution or an insurance undertaking, or

(f)        a person controlling an 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 by the Bank is subject to the prior consultation provided for in Regulation 137.

Approval of acquiring transactions

180.    An acquiring transaction shall not proceed until the Bank -

(a)        has informed the investment firm or the market operator of a regulated market and the party making the acquiring transaction in writing that the Bank approves of the acquiring transaction, or

(b)        until 3 months have elapsed during which the Bank has not refused to approve of the acquiring transaction,

whichever first occurs, the period beginning on the date on which the Bank first receives a notification under Regulation 179 or, where the Bank requests further information from the person or persons concerned under Regulation 179(4), the date of receipt by the Bank of the information.

Period for implementing acquiring transactions

181.    Where the Bank approves of an acquiring transaction, it may specify in writing a period for the implementation of that transaction.

Imposition of conditions or requirements in respect if proposed acquiring transactions

182.    (1)        An approval given by the Bank to a proposed acquiring transaction shall be subject to such conditions or requirements or both as the Bank may impose (being conditions or requirements which in the opinion of the Bank are necessary for the proper and orderly regulation and supervision of investment firms and the market operators of regulated markets).

(2)       The Bank, at any time, may amend or revoke conditions or requirements or both referred to in paragraph (1).

Limitation on validity of certain acquiring transactions

183.    Subject to Regulation 181, an acquiring transaction shall only be valid if it is entered into within -

(a)        12 months after the Bank giving its approval in writing to the transaction, or

(b)        12 months after the end of the 3 month period referred to in Regulation,

and, accordingly, any purported acquiring transaction which does not comply with either paragraph (a) or (b) shall be invalid and -

(i)         titles to any shares or other interest shall not pass, and

(ii)        any consequential purported exercise of powers relating to such shares or other interest shall be invalid.

Refusal to approve acquiring transactions

184.    (1)        The Bank shall refuse to approve an acquiring transaction where the Bank -

(a)        is not satisfied as to the suitability of the person proposing to make the acquiring transaction, or

(b)        considers that the acquiring transaction is likely to be prejudicial to

(i)         the sound and prudent management, or

(ii)        the proper and orderly regulation and supervision of an authorised investment firm or of the market operator of a regulated market.

(2)       Where the Bank -

(a)        refuses to approve an acquiring transaction, or

(b)        becomes aware of a proposed acquiring transaction of which it has not been notified under Regulation 179,

the Bank may issue a direction under Regulation 147 or 148 to the directors and those responsible for the management of the authorised investment firm or the market operator of the regulated market concerned.

Inquiries into certain acquiring transactions

185.    (1)        The Bank may carry out such inquiries and obtain such information as it considers necessary to enable it to consider a proposed acquiring transaction.

(2)       No person shall -

(a)        wilfully or knowingly obstruct or prevent inquiries by the Bank under this Regulation, or

(b)        knowingly or recklessly provide false or misleading information.

Obligation to inform a supervisory authority of shareholdings

186.    (1)        At least once in each year, authorised investment firms and the market operators of regulated markets shall inform the Bank of -

(a)        the names of direct shareholders and persons possessing qualifying holdings, and

(b)        the sizes of the holdings.

(2)       At least once in each year, authorised investment firms and the market operators of regulated markets, having made best efforts to ascertain the identity of all indirect shareholders and persons possessing qualifying holdings, shall inform the Bank of the names of those persons.

Contravention of terms of approval of acquiring transactions

187.    (1)        Nothing in any enactment shall be construed as relieving an authorised investment firm, the market operator of a regulated market or another person of any of the obligations to comply with Regulation 179(1), (2) or (3).

(2)       An order under section 201 of the Companies Act, 1963, in respect of a proposed amalgamation (being an acquiring transaction) shall not be made until -

(a)        the Bank has given its approval to the acquiring transaction, or

(b)        the period (within which an acquiring transaction may not proceed referred to in Regulation 180 has elapsed without the Bank having given or refused to give approval.

(3)       Having regard to -

(a)        the proper and orderly regulation and supervision of investment firms and regulated markets, and

(b)        the protection of investors and the requirements of the Directive,

the Bank, following consultation with the Minister, may specify a class or classes of authorised investment firms or market operators of regulated markets who need not comply with Part 14.

Part 15 — Offences

Summary conviction offences

188.    (1)        A person is guilty of an offence and is liable on summary conviction to a fine not exceeding €5,000 or imprisonment for a term not exceeding 12 months or both if the person -

(a)        being an authorised investment firm, fails to comply with a condition or requirement of the firm's authorisation under these Regulations to operate as an investment firm,

(b)        being the market operator of a regulated market, fails to comply with a condition or requirement of the operator's authorisation under these Regulations to operate a regulated market,

(c)        contravenes a provision of these Regulations,

(d)        fails to discharge a duty to which the person is subject under these Regulations.

(2)       Paragraph (1) is without prejudice to any provision of an Act that makes provision, in relation to an act or omission of which the summary conviction offence under that paragraph consists, for that act or omission to be prosecuted on indictment, subject to any maximum fine or any maximum term of imprisonment as may be imposed under that Act.

(3)       Where the contravention, failure to comply or failure to discharge a duty in respect of which a person is convicted of an offence under these Regulations is continued after the conviction, the person -

(a)      is guilty of a further offence on every day on which the contravention or failure continues, and

(b)        for each such further offence, is liable on summary conviction to a fine not exceeding €5,000 or imprisonment for a term not exceeding 12 months or both.

Offences by bodies corporate

189.    (1)        Where an offence is committed under these Regulations by a body corporate and is proved to have been committed with the consent, connivance or approval of or to have been attributable to the willful neglect on the part of any person, being -

(a)        a director, manager, secretary or other officer of the body corporate, or

(b)        a person who was purporting to act in any such capacity,

that person as well as the body corporate is guilty of an offence and is liable to be proceeded against and punished as if that person were guilty of the first-mentioned offence.

(2)       A person may be charged with having committed an offence under these Regulations even if the body corporate concerned is not charged with having committed an offence under these Regulations in relation to the same matter.

Summary proceedings may be brought by Bank

190.    (1)        Summary proceedings for an offence under these Regulations may be brought and prosecuted by the Bank.

(2)       Summary proceedings for an offence under these Regulations may be instituted within 12 months after the date of the offence.

PART 16 — APPEALS AND MISCELLANEOUS

Rights of appeal against Bank decisions

191.    The following decisions of the Bank are appealable decisions for the purposes of Part VIIA of the Central Bank Act 1942:

(a)        a decision of the Bank under Regulation 11 -

(i)         refusing to grant an authorisation to operate as an investment firm, or

(ii)        granting such an authorisation subject to conditions or requirements;

(b)        a decision of the Bank under Regulation 47 -

(i)         refusing to grant an authorisation to operate a regulated market or

(ii)        granting such an authorisation subject to conditions or requirements;

(c)        a decision of the Bank under Regulation 21 to withdraw an authorisation granted under Regulation 11 to operate as an investment firm;

(d)        a decision of the Bank under Regulation 53 to withdraw an authorisation granted under Regulation 47 to operate a regulated market;

(e)      a direction given under Regulation 148;

(f)        a decision of the Bank to impose a condition or requirement under Regulation 145;

(g)        a decision of the Bank under Regulation 179 -

(i)         refusing to give its approval to an acquiring transaction, or

(ii)        giving its approval to an acquiring transaction, subject to conditions or requirements.

Part 17 — Consequential Amendments (Central Bank Act, Investment Intermediaries Act, Stock Exchange Act)

Amendment of section 33AK(10) of Central Bank Act 1942

192.    Section 33AK(10) of the Central Bank Act 1942 (inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003 and amended by section 36 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005) is amended by deleting the definition of “Supervisory Directives” and substituting the following definition:

“ ‘Supervisory Directives’ means -

(a)        Directive 2000/12/EEC of the European Parliament and of the Council of 20 March 2000,

(b)        Council Directive 93/22/EEC of 10 May 1993,

(c)        Council Directive 85/611/EEC of 20 December 1985,

(d)        Council Directive 92/49/EEC of 18 June 1992,

(e)        Council Directive 92/96/EEC of 10 November 1992,

(f)        the 2003 Market Abuse Directive (within the meaning of Part 4 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005),

(g)        the supplemental Directives (within the meaning of that Part 4),

(h)        the 2003 Prospectus Directive (within the meaning of Part 5 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005),

(i)        Directive 2005/68/EC of 16 November 2005,

(j)        Directive 2004/39/EC of 21 April 2004 together with the associated implementing measures provided for in Directive 2005/73/EC of 10 August 2006 and in Commission Regulation (EC) No. 1287/2006 of 10 August 2006,”.

Amendment to Schedule 2 of Central Bank Act 1942

193.    Schedule 2 to the Central Bank Act 1942 (inserted by section 31 of the Central Bank and Financial Services Authority of Ireland Act 2003 and amended by section 87 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005) is amended -

(a)        by inserting in Part 2 the following item after the item relating to the Investment Funds Companies and Miscellaneous Provisions Act 2005:

 

S.I. No. 60 of 2007

European Communities (Markets in Financial Instruments) Regulations 2007

The whole instrument

 

Repeals

194.    Section 12 of the Investment Intermediaries Act 1995 is repealed.

Schedule 1

Part 1

Investment Services

1.         Tthe reception and transmission of orders in relation to one or more financial instruments.

2.         Execution of orders on behalf of clients.

3.         Dealing on own account, meaning the activity of trading against proprietary capital resulting in the conclusion of transactions in one or more financial instruments.

4.         Portfolio management.

5.         Investment advice.

6.         Underwriting of financial instruments or placing of financial instruments on a firm commitment basis.

7.         Placing of financial instruments without a firm commitment basis.

8.         Operation of multilateral trading facilities.

Part 2

Ancillary Services

1.         Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management.

2.        Granting credits or loans to an investor to allow the investor to execute a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction.

3.         Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings.

4.         Foreign exchange services where these are connected to the provision of investment services.

5.         Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments.

6.         Services relating to underwriting.

7.         Investment services and ancillary services related to the underlying reference of the instruments listed at paragraphs (e), (f), (g) and (j) of the definition of “financial instruments” where -

(a)        these are connected to the provision of investment or ancillary services, and

(b)        the underlying reference is not itself a financial instrument.

Part 3

Financial Instruments

1.         Transferable securities.

2.         Money market instruments.

3.         Units or shares in undertakings for collective investments in transferable securities within the meaning of the European Communities (Undertakings for Collective Investments in Transferable Securities) Regulations, 1989 (S.I. No. 78 of 1989).

4.         Units in a unit trust.

5.         Shares in an investment company.

6.         Capital contributions to an investment limited partnership.

7.         Units in a common contractual fund.

8.         Options, futures, swaps, forward rate agreements and any other derivative contracts relating to any of the following:

(a)        securities, currencies, interest rates or yields, or other derivative instruments, financial indices or financial measures which may be settled physically or in cash;

(b)        commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default of other termination event);

(c)        commodities that can be physically settled, provided that they are traded on a regulated market or on an MTF;

(d)        commodities, other than as described in clause (iii), and not being for commercial purposes, if the commodities can be physically settled and have the characteristics of other derivative financial instruments having regard to whether, inter alia, they are cleared and settled through recognized clearing houses or are subject to regular margin calls;

(e)        climatic variables, freight rates, emission allowances or inflation rates or other official economic statistics if the options, futures, swaps forward rate agreements or other derivative contracts, as the case may be, must be settled in cash or may be settled in cash at the option of one of the parties (otherwise that by reason of a default or other termination event).

9.         Derivative instruments for the transfer of credit risk.

10.       Financial contracts for differences.

11.       Other derivative instruments relating to assets, rights, obligations, indices and measures not otherwise mentioned in this definition if the derivative instruments have the characteristics of other derivative financial instruments, having regard to whether inter alia, they are -

(a)        traded on a regulated market or an MTF,

(b)        cleared and settled through recognised clearing houses, or

(c)        subject to regular margin calls.

SCHEDULE 2

Definition of professional client

1.         A professional client is a client who possesses the experience, knowledge and expertise to make its own investment decisions and properly assess the risks that it incurs. In order to be considered a professional client, the client is required to be a client to whom paragraph 2 or 3 realtes.

Categories of client who are considered to be professionals

2.         The following should all be regarded as professionals in all investment services and financial instruments for the purposes of these Regulations.

(1)       Entities which are required to be authorised or regulated to operate in the financial markets. The list below should be understood as including all authorised entities carrying out the characteristic activities of the entities mentioned: entities authorised by a Member State under a directive, entities authorised or regulated by a Member State without reference to a directive and entities authorised or regulated by a non-Member State:

(a)        credit institutions;

(b)        investment firms;

(c)        other authorised or regulated financial institutions;

(d)        insurance companies;

(e)        collective investment schemes and management companies of such schemes;

(f)        pension funds and management companies of such funds;

(g)        commodity and commodity derivatives dealers;

(h)        locals;

(i)        other institutional investors

(2)       Large undertakings meeting two of the following size requirements on a company basis:

balance sheet total:

net turnover;

own funds;

€20,000,000

€40,000,000

€2,000,000

(3)       National and regional governments, public bodies that manage public debt Central Banks, international and supranational institutions such as the World Bank, the IMF, the ECB, the EIB and other similar international organisations.

(4)        (a)      Other institutional investors whose main activity is to invest in financial instruments, including entities dedicated to the securitisation of assets or other financing transactions.

(b)        The entities mentioned above are considered to be professionals. They must however be allowed to request non-professional treatment and investment firms may agree to provide a higher level of protection. Where the client of an investment firm is an undertaking referred to above, the investment firm must inform it before any provision of services that, on the basis of the information available to the firm, the client is deemed to be a professional client, and will be treated as such unless the firm and the client agree otherwise. The firm must also inform the customer that he can request a variation of the terms of the agreement in order to secure a higher degree of protection. It is the responsibility of the client, considered to be a professional client, to ask for a higher level of protection when it deems it is unable to properly assess or manage the risks involved.

(c)        This higher level of protection will be provided when a client who is considered to be a professional enters into a written agreement with the investment firm to the effect that it shall not be treated as a professional for the purposes of the applicable conduct of business regime. Such agreement should specify whether this applies to one or more particular services or transactions, or to one or more types of product or transaction.

Clients who may be treated as professionals on request

3.         (1)       Clients who may be treated as professionals on request are clients other than those mentioned in subparagraphs (1) to (4) of paragraph 2 of this Schedule including public sector bodies and private individual investors, and may also be allowed to waive some of the protections afforded by the conduct of business rules.

(2)       Investment firms should therefore be allowed to treat any of the above clients as professionals provided the relevant criteria and procedure mentioned below are fulfilled. These clients should not, however, be presumed to possess market knowledge and experience comparable to that of the categories listed in subparagraphs (1) to (4) of paragraph 2 of this Schedule.

(3)       Any such waiver of the protection afforded by the standard conduct of business regime shall be considered valid only if an adequate assessment of the expertise, experience and knowledge of the client, undertaken by the investment firm, gives reasonable assurance, in light of the nature of the transactions or services envisaged, that the client is capable of making the client's own investment decisions and understanding the risks involved.

(4)       In the case of small entities, the person subject to the assessment under subparagraph (3) of paragraph 3 of this Schedule should be the person authorised to execute transactions on behalf of the entity.

(5)       A client who is to be treated as a professional client for the purpose of these Regulations must satisfy at least two of the following criteria:

(a)        the client has carried out transactions, in significant size, on the relevant market at an average frequency of 10 per quarter over the previous four quarters;

(b)      the size of the client's financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds €500,000;

(c)        the client works or has worked in the financial sector for at least one year in a professional position, which requires knowledge of the transactions or services envisaged.

(6)       The clients referred to in this Schedule may waive the benefit of the detailed rules of conduct only where the following procedure is followed:

(a)        they must state in writing to the investment firm that they wish to be treated as a professional client, either generally or in respect of a particular investment service or transaction, or type of transaction or product;

(b)        the investment firm must give them a clear written warning of the protections and investor compensation rights they may lose;

(c)        they must state in writing, in a separate document from the contract that they are aware of the consequences of losing such protections.

(7)       Before deciding to accept any request for waiver, investment firms must be required to take all reasonable steps to ensure that the client requesting to be treated as a professional client meets the relevant requirements stated in subparagraph (5) of pagagraph 3 of this Schedule.

(8)       If, before 1 November 2007, clients have already been categorised as professionals under parameters and procedures similar to those set out in subparagraphs (5) and (6) of paragraph 3 of this Schedule, that categorisation may satisfy the requirements of this Schedule.

(9)       Investment firms must implement appropriate written internal policies and procedures to categorise clients. Professional clients are responsible for keeping the firm informed about any change, which could affect their current categorisation. Should the investment firm become aware however that the client no longer fulfils the initial conditions, which made the client eligible for a professional treatment, the investment firm must take appropriate action.

 

GIVEN under my Official Seal,

15 February 2007.

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BRIAN COWEN

Minister for Finance.