The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2012

EXPLANATORY NOTE

(This note is not part of the Order)

This Order implements the requirement in Article 18 of Commission Regulation (EU) 1031/2010 of 12 November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas allowances (OJ L 302, 18.11.2010, p.1) (“the emission allowance auctioning regulation”) for the United Kingdom to have enacted legislation enabling the Financial Services Authority (“the FSA”) to authorise certain categories of people to make them eligible to bid in auctions of emissions allowances on their own account or on behalf of clients, and implements related provisions in Articles 6(5) and 59 of that Regulation.

Article 2 amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) to make bidding in auctions of emissions allowances a regulated activity, and to provide for exclusions from that activity. It also makes related amendments to that Order.

Article 3 amends the Financial Services and Markets Act 2000 (c.8) (“FSMA”) to allow the FSA to exercise its powers under FSMA in relation to a person who is authorised to provide bidding services and makes related amendments.

Article 4 amends Schedule 3 to FSMA to provide for passporting rights under the emission allowance auctioning regulation in relation to bidding services.

Article 5 amends the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001 (S.I. 2001/1217) to provide for appointed representatives to be exempt from the general prohibition under FSMA when receiving or transmitting bids for emission allowances.

Article 6 amends the Financial Services and Markets Act 2000 (Professions) (Non-exempt Activities) Order 2001 (S.I. 2001/1227).

Article 7 amends the Money Laundering Regulations 2007 (S.I. 2007/2157) so that credit institutions, investment firms authorised under Directive 2004/39/EC of the European Parliament and of the Council on markets in financial instruments of 20 April 2004 (OJ L 145, 20.4.2004, p1) and persons falling within Article 2(1)(i) of that Directive must comply with the requirements of those Regulations when bidding directly, on behalf of clients, in auctions of emissions allowances.

Article 8 amends the Recognised Auction Platforms Regulations 2011 (S.I. 2011/2699) (“the Regulations”) to clarify what notice the Authority must give once it has taken a decision in relation to a recognition order, direction or revocation order, and to ensure that the Authority has power to impose civil penalties for contraventions of requirements in Articles 19, 20(7), 21(1) or (2), or 54 of the emission allowance auctioning regulation similar to that which it would have under regulation 42 of the Money Laundering Regulations 2007. It also amends the Regulations to provide for the procedure when this power is exercised.

Article 9 requires the Treasury to review the operation and effect of this Order within five years after it comes into force and within every five years after that. Following a review it will fall to the Treasury to consider whether the Order should remain as it is, or be revoked or be amended. A further instrument would be needed to revoke the Order or to amend it.

An Impact Assessment of the effect that this Order will have on the costs of business and the voluntary sector is available on HM Treasury’s website (hm-treasury.gov.uk) and is published with the Explanatory Memorandum alongside this Order on the legislation.gov.uk website (Legislation.gov.uk).