CÓMPUTOS MÉTRICOS

and confidentiality when exercising powers and delegated responsibilities.

Description _{As set out above, the use of self-regulation is limited in the United Kingdom. Where the entities} do have a role in setting rules of the use by participants of their services or have a role in monitoring and detecting market misconduct, their obligations are set out in the relevant authorization or recognition requirements of the FSA or relevant recognition regulations. The FSA also has an oversight role for these entities. The requirements relevant to this principle are set out below.

Authorization or delegation subject to oversight

An RB must be a fit-and-proper-person and have in place the necessary arrangements, policies, and resources to meet its obligations. An RB’s rules must be transparent and nondiscriminatory and be based on objective criteria. The rules must govern access to, or membership of, and its facilities; provide for fair and orderly trading; and establish objective criteria for the efficient execution of orders.

An RB must consult with users when making or amending rules and have provisions in place that ensure fair, independent and impartial resolution of appeals against its disciplinary decisions.

While an RIE is required to have rules that ensure that trading by its members on its facilities takes place in an orderly manner and affords proper protection to investors, an RIE is not responsible for the general ‘client-side’ conduct of investment firms. That is the responsibility of the FSA (recognizing that in today’s market an investment firm may act for clients, and trade on own account on many different, and competing, trading venues).

The RIEs must notify the FSA of any changes to its constitution and regulatory rules. In practice, the RIEs normally consult informally with the FSA at an early stage when considering any significant rule change. Public consultation on rule changes is initiated by the RIE itself. The RIEs are required to have appropriate procedures for making rules, keeping them under review and amending them. The FSA must formally approve any changes to an RIE’s default rules (Companies Act 1989, section 157).

An RIE must be able and willing to share information with the FSA or any other authority, body, or person having authority in the United Kingdom for the supervision of any regulated activity or other financial service, or with an overseas regulator within the meaning of s.195 of the FSMA. An RIE must have effective arrangements for monitoring and enforcing compliance with its rules, including powers to take disciplinary action, suspend a member and refer a member conduct to the FSA or other authority for investigation. An RIE is required to retain authority over a member for at least one year after the member has ceased to be a member for disciplinary purposes.

Oversight

The FSA is responsible for ensuring, on an ongoing basis, that recognized bodies remain in compliance with the Recognition Requirement Regulations. It discharges this responsibility through a structured approach to oversight. This involves the use of dedicated teams who are responsible for ‘close and continuous’ supervision and for periodic (invariably annual) assessment of the overall risks posed by the RB to the FSA’s statutory objectives and the determination of how these risks are being addressed by the RB. The periodic risk assessment involves meetings with senior management, the board of the entity and in some cases on-site examinations. The assessment is subject to review by an FSA panel and is delivered to the board of the RB.

Professional standards similar to those expected of a regulator

In relation to confidentiality, the FSA requires the systems and controls are intended to ensure that confidential information is used only for proper purposes. An RB is required to make provision in its disciplinary processes for the fair, independent, and impartial resolution of appeals against its decisions and to have effective arrangements for the investigation and resolution of complaints, including arrangements for a complaint to be fairly and impartially investigated by a person independent of the RB and for that person to report the result of the investigation to the complainant, and to have the power to recommend a compensatory payment or remedial action, or both.

Where relevant, RBs will have to comply with FSMA s.348 (restrictions on disclosure of confidential information by the FSA etc.) and regulations made under s.349 (exemptions from s. 348) of the FSMA.

Conflicts of interest

The recognition requirements state that RB must ensure that appropriate arrangements are made to identify conflicts between the RB, its owners and operators, and the interests of the persons who make use of its facilities or the interests of the financial markets operated by it, and to manage such conflicts so as to avoid adverse consequences for the operation of the financial markets operated by the RIE/RCH and for the persons who make use of its facilities. Assessment Fully implemented

Comments _{The U.K. system does not formally delegate regulatory powers to self-regulatory entities. Those} entities such as RIEs and MTFs that make rules for participants and have obligations for monitoring the conduct of trading on their markets are subject to detailed requirements for

recognition or authorization, making transparent and nondiscriminatory rules, provision of information to the regulator and effective arrangements for monitoring and enforcing compliance with its rules. They must also be able and willing to cooperate by sharing information, ensure relevant confidentiality, and have processes for managing conflicts of interests. The FSA is responsible for ensuring on an ongoing basis that RBs remain in compliance with the

Recognition Requirement Regulations. They have an active supervisory oversight program for these entities.