Chapter 3: Accountability of regulators Bank of England regulatory powers Section 48: Exercise of FMI regulatory powers
This section inserts new sections 30D to 30I into the Bank of England Act 1998. They make new provision concerning the Bank’s exercise of its regulatory powers as follows.
	Section 30D sets out the statutory objectives for the Bank to follow in the exercise of its FMI functions (which are defined in section 30D(3)). FMI functions, as defined, will include the Bank’s role in implementing a new Senior Manager & Certification Regime for CCPs and CSDs as well its powers over critical third parties when relevant powers in that regime are exercised in relation to a critical third party who provides services to CCPs and CSDs. Subsection (1) maintains the Bank’s Financial Stability Objective as its primary objective, and further provides that when advancing this objective the Bank should have regard to:
The regulatory principles set out in section 30E;
The effect that the Bank’s regulation will or may have on the financial stability of other countries or territories in which CCPs and CSDs are established or provide services; and
The desirability of regulating CCPs and CSDs in a way that is not determined by whether the users of their services are located in the UK or elsewhere.
	Subsection (2) provides for a new secondary objective for the Bank when exercising its FMI functions, which is to be advanced as far as reasonably possible alongside the Financial Stability Objective. This is to facilitate innovation in the services provided by central counterparties and CSDs, with a view to improving the quality, efficiency and economy of those services.
	Section 30E of the Bank of England Act 1998 sets out the regulatory principles to which the Bank must have regard when exercising its FMI functions. These are based on the existing principles set out in section 3B of FSMA 2000 which apply to the FCA and the PRA. Section 30E includes a requirement for the Bank to have regard to the desirability of sustainable growth, including in a way which is consistent with the UK’s net zero emissions target and the targets made by the Secretary of State under the Climate Change Act 2008 and Environment Act 2021 when exercising its FMI functions. Where the Bank determines that the exercise of its functions is relevant to the need to contribute to the targets, the regulator must have regard to the regulatory principle in section 30E of the Bank of England Act 1998. The section also includes an additional principle requiring the Bank to have regard to the desirability of facilitating fair and reasonable access to services provided by CCPs and CSDs.
	Section 30F creates a committee of the Bank called the ‘Financial Market Infrastructure Committee’ (FMI Committee). It sets out the requirements regarding the membership of this Committee. The Committee must be chaired by either the Governor or a Deputy Governor of the Bank, and it must have at least three independent members.
	Section 30G provides for the functions of the FMI Committee. It will be responsible for exercising the Bank’s FMI functions (which are its regulatory functions in relation to CCPs and CSDs, including setting policy approaches and making rules, and are defined in section 30D). Subsection (1)(b) provides that the Bank’s Court of Directors can confer other functions on the Committee. Subsections (3) and (4) provide that the functions of the Committee can be delegated, for example to Bank officials, where it considers this appropriate, except for its function of making rules or technical standards. Subsection (2) provides that the Committee can provide for certain of its functions to be exercised by the Governor, instead of by the Committee, or that the Committee is only able to exercise a particular function after consulting with the Governor of the Bank.
	Section 30H requires the Bank to publish certain information on the new Committee, including roles and membership, meeting and decision-making procedures and arrangements for the exercise of any functions outside of the Committee.
	Section 30I provides that HM Treasury may make recommendations on aspects of the government’s economic policy which the Bank should have regard to when advancing its objectives and applying the regulatory principles in relation to its FMI functions. HM Treasury is required to do so at least once every Parliament, and to publish and lay before Parliament its recommendations. The FMI Committee must respond in writing within a year to note what action it has taken, or intends to take, in response to these recommendations (or, if it does not intend to take action in response, its reasons for this). The Committee must then provide an updated response every year unless HM Treasury has informed the Bank that no update is required.