New regulatory powers Financial Market Infrastructure: general rules and requirements Regulation of FMIs by the Financial Conduct Authority Recognised Investment Exchanges
The legislation and rules which currently regulate Recognised Investment Exchanges (RIEs) include:
Part 18 of FSMA 2000 (Recognised Investment Exchanges, Clearing Houses and Central Securities Depositories) Regulation;
secondary legislation, including FSMA 2000 (Recognition Requirements for Investment Exchanges, Clearing Houses and Central Securities Depositories) Regulations 2001 (SI 2001/995) (the recognition requirements regulations);
Part 7 of the the Companies Act 1989 (Financial Markets and Insolvency);
UK MiFIR;
the FCA’s specialist sourcebook relating to RIEs (REC); and
technical standards, such as Commission Delegated Regulation 2017/587, Commission Delegated Regulation 2017/583. Commission Delegated Regulation 2017/584, Commission Delegated Regulation 2017/588.
	Section 285(2) of FSMA 2000 provides that an RIE is exempt from the general prohibition in respect of any regulated activity carried on as part of the exchange's business as an investment exchange, or which is carried on for the purposes of, or in connection with, the provision by the exchange of services designed to facilitate the provision of clearing services by another person. RIEs are outside of the FCA's "authorisation regime" and therefore not within scope of the FCA's general rule-making power under section 137A of FSMA 2000.
	The FCA has the power to grant a 'recognition order' under section 290 of FSMA 2000 only where the applicant satisfies the recognition requirements. These recognition requirements include requirements contained in any retained direct EU legislation stemming from any EU regulation originally made under MiFID, from any EU regulation originally made under MiFIR, and any subordinate legislation made under MiFIR. The FCA's position on what is accepted in satisfaction of these requirements is set out at REC2 of the FCA Handbook. Regulation 11 of the recognition requirements regulations confers power on the FCA to make rules for the purpose of these regulations, although to date this has not been used.
	Sections 293 to 300 of FSMA 2000 include provisions regarding the supervision of RIEs and other recognised bodies. These include notification and information requirements. Under section 296, the FCA has limited powers to direct an RIE which has failed, or is likely to fail, to satisfy the recognition requirements, or has failed any other obligation imposed on it under FSMA 2000. In doing so, the FCA must comply with the procedure under section 298. The FCA has limited powers under s. 294 to waive or modify certain rules regarding notification under FSMA 2000.
	UK MiFIR provides the framework for exchanges and markets in the UK, and imposes a number of information requirements on market operators and investment firms that operate trading venues. Almost all of the relevant Articles of MiFID II and UK MiFIR are subject to further specification under level 2 measures (regulatory technical standards (RTS); Implementing Technical Standards (ITS); and delegated acts).