Key Regulatory Topics: Weekly Update 1 March to 7 March 2024
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Capital Markets
Updated draft UK Listing Rules Instrument 2024
On 7 March, the FCA published an updated version of the draft UK Listing Rules Instrument 2024. The FCA launched a consultation on listing regime reforms on 20 December 2023, which included a version of the instrument with the first tranche of new draft UK Listings Rules (UKLRs). This updated draft instrument contains tranche 2 alongside the original tranche 1 drafting to form a complete draft instrument for the new UKLRs. The new draft instrument includes: (i) updated commercial company draft rules published in tranche 1; (ii) the remaining proposed rules for listing categories (UKLRs 11 to 19, and UKLRs 22 to 23) other than the commercial companies category, including for closed-ended investment funds and shell companies; (iii) the remaining cross-cutting chapters for all listed securities (UKLR 1, UKLR 2, UKLRs 20 to 21); and (iv) transitional provisions. In a separate instrument, the draft UK Listing Rules (Consequential Amendments) Instrument 2024, the FCA has also published proposed consequential changes to other FCA Handbook sourcebooks. While the consultation deadline of 22 March remains the same, the FCA will accept submissions relating to these additional tranche 2 rules and the consequential changes instrument until 2 April. The FCA is also in the process of reviewing and updating Technical and Procedural Notes, and it expects to consult on these in two Primary Markets Bulletins, during April and June. The FCA will also publish certain draft forms during that same period.
Consequential Amendments Instrument
Conduct
Please see the Other Developments section for the FCA’s quarterly consultation No.43 in which it consults, among other things, on amendments to the Training and Competence sourcebook.
Consumer/retail
Please see the Other Developments section for the FCA’s response to a super-complaint received from the Federation of Small Businesses on the requirement for personal guarantees to support lending to SMEs.
FOS quarterly complaints data: Q3 2023/24
On 1 March, the FOS published its quarterly complaints data on financial products and services for the period October to December 2023. Points of interest include: (i) the FOS received the highest ever level of complaints about credit cards for a three-month period. Over half of these were related to perceived unaffordable or irresponsible lending by financial firms; (ii) current accounts continue to be the most complained about product, with complaints up by over a quarter compared to the same period in 2022/23. This is partly due to a rise in fraud and scam complaints; and (iii) all five most complained about products have seen year-on-year increases.
Fees/levies
Please see the Other Developments section for the FCA’s quarterly consultation No.43 in which it consults, among other things, on amendments to special project fees under FEES 3 Annex 9R.
Financial crime
FCA Dear CEO letter on common AML control failings by Annex I financial institutions
On 5 March, the FCA published a Dear CEO letter sent to Annex I financial institutions in relation to action needed in response to common control failings identified in AML frameworks. The FCA observed common weaknesses in critical areas including: (i) business model – discrepancies between firms’ registered and actual activities, and lack of financial crime controls to keep pace with business growth; (ii) risk assessment – weaknesses in business wide risk assessments and customer risk assessments; (iii) due diligence, ongoing monitoring and policies and procedures – lack of detail in policies creating ambiguity around actions staff should take to comply with their obligations under the MLRs; and (iv) governance, management information and training – lack of resources for financial crime, inadequate financial crime training and absence of a clear audit trail for financial crime related decision-making. The FCA expects, among other things, that: (a) senior management should consider the letter and take the necessary steps to gain assurance that their firm’s financial crime policies, controls and procedures are commensurate with their firm’s risk profile and meet the requirement of the MLRs; and (b) firms should complete a gap analysis against each of the common weaknesses within six months of receipt of the letter. Firms should take prompt and reasonable steps to close any gaps identified. In future engagements, the FCA is likely to ask firms to provide it with the findings from the gap analysis, evidence of the actions taken to address the gaps identified and the progress of any remedial work and testing to show that the policies, controls and procedures are effective and working as intended.
FCDO publishes SAMLA post-legislative scrutiny memorandum
On 4 March, the Foreign, Commonwealth and Development Office (FCDO) published a post-legislative scrutiny memorandum on the Sanctions and Anti-Money Laundering Act 2018 (SAMLA). The memorandum provides a summary and a preliminary assessment of the provisions and implementation of the SAMLA. With regards to the SAMLA’s AML aspects, the FCDO’s findings include that the powers provided by section 49 of SAMLA have functioned satisfactorily in allowing for the amendment and improvement of the MLRs, and the UK government is confident that most of the requirements and provisions currently in the MLRs are generally sufficient. The requirement for the majority of AML regulations to be made using draft affirmative procedures under the SAMLA has increased Parliament’s ability to scrutinise these regulations. Regular updates to the regulations will continue to be needed in future as trends in ML/TF evolve and as potential improvements to the supervisory system are identified. The UK government is committed to continuing to align with and champion the FATF's recommendations and to adopting the recommendations from the 2022 Review of the UK's AML/CFT regulatory and supervisory regime and has committed to bring forward further changes to the MLRs in 2024 to reflect the findings of the 2022 Review.
Economic Crime and Corporate Transparency Act 2023 (Commencement No. 2 and Transitional Provision) Regulations 2024
On 1 March, the Economic Crime and Corporate Transparency Act 2023 (Commencement No. 2 and Transitional Provision) Regulations 2024 were published. The Regulations were made on 29 February and are the second commencement regulations made under the Economic Crime and Corporate Transparency Act 2023 (ECCTA). The Regulations brought into force a large number of the provisions in the ECCTA on 4 March. The provisions relating to the delivery of documents by electronic means came into force on 5 March and some of the provisions of the ECCTA regarding cryptoassets and money laundering will come into force on 26 April.
Fund regulation
Official translations of ESMA guidelines on stress test scenarios under MMF Regulation
On 6 March, ESMA published the official translations of its guidelines on stress test scenarios under the MMF Regulation. The purpose of the guidelines is to ensure common, uniform and consistent application of the provisions in Article 28 of the MMF Regulation. In particular, they establish common reference parameters of the stress test scenarios to be included in the stress tests. The sections of the guidelines in red text will apply from 6 May, that is two months after the publication of the official translations. The other parts of the guidelines already apply from the dates specified in Articles 44 and 47 of the MMF Regulation. The guidelines need to be updated at least every year to take into account the latest market developments.
Markets and markets infrastructure
Please see the Financial Crime section for the FCA Dear CEO letter sent to Annex I financial institutions in relation to action needed in response to common control failings identified in AML frameworks.
Please see the Other Developments section for the FCA’s quarterly consultation No.43 in which it consults, among other things, on a statement of policy setting out its approach to use its enforcement powers under the new regime for oversight of critical third parties.
HMT consults on Private Intermittent Securities and Capital Exchange System
On 6 March, HMT launched a consultation on the regulatory framework for the proposed new Private Intermittent Securities and Capital Exchange System (PISCES), as part of the Spring Budget 2024. PISCES provides a regulatory framework for the intermittent trading of private company shares on a multilateral system, with an accompanying bespoke disclosure regime that reflects the periodic nature of trading. Under this framework, PISCES would accommodate ‘trading windows’ at defined intervals, such as monthly or quarterly, providing investors with opportunities to trade their shares. The tailored regulatory regime would provide investors protections that unregulated off-venue bilateral trading would otherwise not afford, such as a clearer price formation process, a clear legal framework and regulatory oversight, and robust investor protection. HMT proposals for PISCES include that: (i) it is developed using an FMI sandbox, as established under FSMA 2023; (ii) it operates as a secondary market, facilitating the trading of existing shares; (iii) only shares in companies whose shares are not admitted to trading on a public market in the UK or abroad can be traded on PISCES; (iv) there will be restrictions on the categories of investors that can trade on PISCES. Most retail investors will be prohibited from trading at least during the trial phase; and (v) it will operate intermittent trading windows (e.g. monthly, quarterly, biannually, etc). Disclosure requirements specific to PISCES will only apply shortly before and after each trading window, and there will be no requirement for information to be disclosed to the public. There will be a market abuse regime for PISCES, which will be tailored to the intermittent nature of trading and the specific risks posed by the model. HMT intends to lay secondary legislation before Parliament later this year, which will provide the legal framework for the PISCES Sandbox. The deadline for comments is 17 April. The FCA also intends to consult on the processes for taking part in the sandbox (applications, approval) and the FCA rules that will apply to firms within the sandbox before the sandbox is established at the end of 2024.
EMMI feedback to consultation on enhancements to Euribor benchmark methodology
On 6 March, the European Money Markets Institute (EMMI) published feedback to its consultation on proposed enhancements to the Euribor benchmark’s methodology. The EMMI states that it received broad support to the proposals set out in the consultation. The EMMI also highlights that while the enhancements will result in a material change to the Euribor’s hybrid methodology this should not be interpreted as a change in Euribor’s underlying interest. These enhancements should not be considered as an automatic trigger event for the activation of fallback provisions in contracts referencing Euribor. The implementation of the enhancements will take place in the course of 2024. The EMMI has opted for a gradual approach in migrating the Euribor Panel Banks from the current methodology to the one incorporating the enhancements. The phase-in process is expected to begin in May and is expected to finalise after approximately six months.
Delegated Regulation on temporary emergency measures on collateral requirements under EMIR published in OJ
On 6 March, Commission Delegated Regulation (EU) 2024/818 amending the RTS laid down in Delegated Regulation (EU) 153/2013 as regards the extension of temporary emergency measures on CCP collateral requirements under EMIR was published in the OJ. The Delegated Regulation was previously amended on 28 November 2022 to temporarily expand the pool of eligible collateral by CCPs to uncollateralised bank guarantees for non-financial counterparties acting as clearing members, and to public guarantees for all types of counterparties. These measures expired on 29 November 2023. The amending Delegated Regulation extends these measures for a further six months. This bridges the gap between the date the temporary measures are currently set to expire and the date the co-legislators are expected to finalise the review of EMIR. The Delegated Regulation entered into force on 7 March, that is the day after its publication in the OJ. It will be directly applicable in all Member States.
EBA final guidelines on national lists or registers of credit servicers
On 5 March, the EBA finalised its guidelines on national lists or registers of credit servicers. The guidelines are addressed to competent authorities managing the lists or registers and specify: (i) the content of the lists or registers; (ii) how they should be made accessible; and (iii) the deadlines for updating them. It is hoped that the lists or registers will facilitate borrowers’ access to information on complaint handling procedures offered by competent authorities. In particular, the guidelines specify that: (a) the lists or registers should be accessible 24 hours a day, 7 days a week, on the website of the competent authority or another electronic tool; (b) they should not require the user’s prior registration as a precondition for access; and (c) they should be free of charge. The guidelines also set the deadlines by which competent authorities have to update the lists or registers, i.e. one week for regular updates and two working days for critical updates on the withdrawal of authorisation or the banning to receive and hold funds from borrowers.
ECON adopts draft report on proposed Regulation amending the BMR
On 4 March, ECON announced that it has adopted a draft report on the proposal for a Regulation amending the BMR as regards the scope of the rules for benchmarks, the use in the Union of benchmarks provided by an administrator located in a third country and certain reporting requirements. ECON highlights the following points: (i) the new rules should apply to critical benchmarks, significant benchmarks, EU Climate Transition Benchmarks (EU CTBs), EU Paris-aligned Benchmarks (EU PABs) and certain commodity benchmarks, in order to prevent greenwashing and assure adequate supervision. The current threshold of a total average value of at least 50 billion euro to define a significant benchmark should be retained. Other benchmarks would be subject to a voluntary supervision regime; (ii) ESMA should develop technical standards specifying the calculation method including potential data sources to classify a benchmark as significant; (iii) administrators of benchmarks used in the EU should attempt to obtain a globally agreed identifier code to identify their benchmarks; (iv) ESMA should have a supervisory role in case of critical, significant, cross-border, third country, as well as EU CTB and EU PAB benchmarks; and (v) previously supervised benchmark administrators would keep their existing registration, authorisation, recognition or endorsement for nine months after entry into force of the new rules and should not be obliged to re-apply if they voluntarily opt-in to this amending Regulation within nine months. Administrators of significant benchmarks should not be obliged to re-apply and should retain their previous status. The EP is expected to vote on the report in the plenary session to be held between 22 and 25 April. Trialogue negotiations with the Council of the EU are expected to begin after the EP elections in June.
FCA and BoE consult on draft Q&As on changes to UK EMIR reporting requirements
On 1 March, the FCA and the BoE began consulting on a set of draft Q&As relating to the changes to the derivative reporting requirements under UK EMIR. The majority of these new requirements apply from 30 September, with a transition period for some aspects. The consultation covers the first five topics of the Q&As: transitional arrangements, reconciliations, errors and omissions, derivative identifiers, and action and events. The FCA will consult on the remaining seven topics later in the spring. The FCA is also consulting on changes to the UK EMIR Validation Rules, which are applicable from 30 September, to reflect the draft Q&As, in order to address industry feedback and correct identified errors. The deadline for comments is 28 March.
Payment services and payment systems
Please see the Financial Crime section for the FCA Dear CEO letter sent to Annex I financial institutions in relation to action needed in response to common control failings identified in AML frameworks.
ECON reports on PSD3 and PSR
On 5 March, ECON published two reports which include the adopted texts of the proposed PSD3 and PSR. ECON adopted the reports in February. The EP is expected to vote on both texts during the first plenary session in April, to be held on 10 and 11 April. Negotiations between the EP and the Council of the EU are then expected to start after the EP elections.
Prudential regulation
BCBS consults on revisions to G-SIB assessment framework
On 7 March, the BCBS began consulting on revisions to the G-SIB assessment framework aimed at mitigating “window-dressing” behaviour by some banks in the context of the G-SIB framework. The BCBS has found that the G-SIB framework is sensitive to the year-end values of the indicators reported by banks that participate in the annual exercise. These indicators are used to determine the scores for banks that in turn determine the list of G-SIBs and the applicable higher loss absorbency requirements. The BCBS has also found evidence that some banks take steps to temporarily lower the values of certain indicators at year-end, leading to an underestimate of the systemic importance of these banks. The proposed revisions aim at constraining banks' ability to lower their G-SIB scores through window-dressing. This will be achieved by requiring banks participating in the G-SIB assessment exercise to report and disclose most G-SIB indicators based on an average of values over the reporting year, rather than year-end values. The BCBS is also giving consideration to the scope of banks to which the revisions would apply. The BCBS sees the benefits of a wide application of the revisions to all banks participating in the G-SIB assessment exercise. The deadline for comments is 7 June. Two working papers have also been published: (i) setting out the analysis supporting the consultation; and (ii) assessing G-SIB score dynamics over the past decade.
Working paper – consultation analysis
Working paper – 10 year G-SIB score dynamics
EC adopts amendments to ITS on supervisory disclosure under CRD IV
On 4 March, the EC adopted a draft Implementing Regulation amending the ITS laid down in Implementing Regulation (EU) No 650/2014 as regards the information to be disclosed by competent authorities in accordance with CRD IV. The ITS specify the format, structure, contents list, and annual publication date of the information to be published by competent authorities. The amendments reflect the changes made by CRD V and CRR II. They remove information related to investment firms that are not subject to the CRR following the adoption of the equivalent ITS for investment firms under the IFD.
Draft Implementing Regulation and Annexes
EBA consults on draft RTS on off-balance sheet items under the standardised approach of credit risk
On 4 March, the EBA began consulting on draft RTS under the CRR3 regarding off-balance sheet items under the standardised approach of credit risk. Under the standardised approach of credit risk, the exposure values of off-balance exposure depend on the application of certain percentages, which in turn depend on a bucket classification. The CRR3 is set to introduce amendments to update the calibration of applicable percentages, which results in the introduction of an adjusted weighting scheme and an additional bucket, increasing the number of risk buckets from four to five, and the conversion factor possibilities to 10%, 20%, 40%, 50% or 100%. These RTS specify the criteria that institutions shall use to classify off-balance sheet items, unless explicitly specified in the Level 1 text. They also specify factors that may constrain the institutions’ ability to cancel the unconditionally cancellable commitments. The deadline for comments is 4 June. The public hearing on these draft RTS will take place on 22 April.
Recovery and resolution
FCA guidance on preparing wind-down plans
On 1 March, the FCA published a new webpage to assist firms in preparing their wind-down plans. The FCA sets out how to prepare a wind-down plan, noting that a typical plan should: (i) identify all the scenarios that could lead to the firm no longer being viable; (ii) steer the firm to wind down its business in an orderly manner once it has either voluntarily decided to stop the business or the decision is unavoidable due to external circumstances; (iii) include a resources assessment of both the financial and non-financial resources that are needed to support an orderly wind-down; and (iv) have processes to identify and mitigate any material risks or obstacles to winding down in an orderly manner. The FCA notes that for payment and electronic money firms, its Approach Document is also relevant.
Sustainable finance
EC adopts Delegated Regulation on sustainability impact disclosures for STS securitisations
On 5 March, the EC adopted a Delegated Regulation supplementing the Securitisation Regulation with regard to RTS specifying, for simple, transparent and standardised (STS) non-ABCP traditional securitisation, and for STS on-balance-sheet securitisation, the content, methodologies and presentation of information related to the principal adverse impacts of the assets financed by the underlying exposures on sustainability factors. The Capital Markets Recovery Package amended the Securitisation Regulation to provide originators of STS securitisations with the option to disclose available information related to the principal adverse impacts on sustainability factors of the assets financed by residential loans, auto loans or leases. The Delegated Regulation aims to standardise the type and presentation of information an originator may opt to disclose about the adverse impacts of assets financed by underlying exposures, on the environment and other sustainability factors. The Delegated Regulation also seeks to ensure as much consistency as possible with the ESAs’ work in respect of sustainability-related disclosures in financial services under the SFDR.
Delegated Regulation and Annex
Other developments
Financial Services and Markets Act 2000 (Financial Promotion) (Amendment and Transitional Provision) Order 2024
On 6 March, the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment and Transitional Provision) Order 2024 was published, together with an explanatory memorandum. The FPO provides exemptions for promotions to high net worth individuals and self-certified sophisticated investors. These exemptions can only be used to market investments related to unlisted companies. In light of the changing context in which the exemptions operate, the UK government reviewed the exemptions and brought forward an instrument to amend them, the 2023 Order. The 2023 Order also applied these changes in relation to the promotion of collective investment schemes, through amending the similar relevant exemptions set out in the PCIS. Following significant stakeholder concern raised about the changes to the eligibility criteria for the exemptions that were made by the 2023 Order, the 2024 Order makes further amendments to the FPO and PCIS. The 2024 Order amends the criteria to be eligible for the exemptions, and the relevant PCIS exemptions, while retaining the updated format of the investor statements introduced in the 2023 Order: (i) reducing the financial thresholds to be eligible for the high net worth individual exemption to either income of at least £100,000 in the last financial year, or net assets of at least £250,000 throughout the last financial year; (ii) amending the criteria to be eligible for the self-certified sophisticated investor exemption by reinstating the criterion of having made two or more investments in an unlisted company in the previous two years and reducing the company turnover required to satisfy the “company director” criterion to £1 million; and (iii) providing that investor statements that comply with the 2023 Order remain valid until and including 30 January 2025. After 30 January 2025, investor statements that comply with the 2023 Order will have no effect for any purpose. The 2024 Order comes into force on 27 March. The FCA has also published a statement on the changes. The FCA reiterates previous suggestions that the criteria for investors to be classified as ‘sophisticated’ should be tightened and that the UK’s definition of a high net worth investor is an international outlier with a far lower threshold than comparable jurisdictions.
BoE speech on refreshing its data and analytics strategy
On 7 March, the BoE published a speech by James Benford, BoE Executive Director for Data and Analytics Transformation and Chief Data Officer, on refreshing its data and analytics strategy. The BoE commissioned its Independent Evaluation Office to take stock on the BoE’s approach and initiated the process to refresh and update it. Its conclusions were released last October. As part of the refresh, the BoE has identified three priority business-facing programmes for the year ahead: (i) the completion of work to move the BoE’s systems for producing, storing and disseminating financial statistics to the cloud, unlocking productivity gains and new analytical capabilities; (ii) to renew the system that underpins the BoE’s management and analysis of macroeconomic and financial market data and forecasting to enhance the support provided to the BoE’s decisions on monetary policy; and (iii) to transform the BoE’s approach to regulatory data collections, through a phased approach to delivery that aligns with the planned ‘Banking Data Review’ of regulatory reporting. Mr Benford identifies its joint-FCA Transform Data Collection strategy as one the BoE’s most ambitious plans. Though its primary focus, given the imperative of the Banking Data Review, is on data collated from banks, the ambition is to build a new approach and framework that can be applied more broadly to other collections at the BoE. The BoE will publish an update to industry on its joint plans with the FCA for the coming year by the end of the month.
FCA response to FSB super-complaint – requiring personal guarantees for business loans
On 5 March, the FCA published its response to a super-complaint received from the Federation of Small Businesses (FSB) on the requirement for personal guarantees by lenders to support lending to SMEs. The FCA notes that, as the FSB acknowledged in their complaint, much of the lending they are concerned about sits outside the FCA’s regulatory perimeter. Consequently, the FCA’s ability to investigate and act is restricted. With regards to lending that falls within its regulatory perimeter, the FCA makes commitments to: (i) collect data, during April – June, from a representative group of lender firms to help it understand the number of personal guarantees in place as a proportion of total SME lending; (ii) review a representative sample of firms’ policies and procedures to better understand when lenders will require personal guarantees; (iii) test how firms’ policies and procedures comply with the obligations for firms carrying out credit regulated activities, as set out in its Consumer Credit sourcebook; and (iv) assess the volume of complaints to the FOS about guarantees for business borrowing and the proportion of these that are upheld. The FCA will then consider whether to undertake further supervisory work and engage with HMT where necessary. The FCA also provides an overview of the protections currently available for individuals who provide personal guarantees, both within and outside the regulatory perimeter. The FCA notes that if its work on lending within the perimeter identifies areas of potential harm outside its perimeter, the FCA will share any relevant information with the UK government and Parliamentary committees that have an interest in SME finance and business banking. The FCA considers that the super-complaint may be useful to HMT and its review of the CCA, which extends to questions involving its scope, including business lending.
NAO report on BOE management of legal, ethical and staff compliance risks
On 4 March, the National Audit Office (NAO) published a report on the BoE’s management of legal, conflicts of interest, business ethics, compliance and procurement risks. The report covers: (i) the BoE’s overall approach to managing compliance risks, and how it has developed this since 2017; (ii) whether the BoE has the processes and information it needs to identify, assess and monitor compliance risks effectively; and (iii) whether the BoE responds to compliance risks in a way that supports timely and effective decisions, and uses lessons to improve its approach. The NAO concludes that, following high-profile incidents in 2017 and 2019, the BoE overhauled its approach to identifying and managing non-financial risks. It has made good progress in developing new and improved systems and processes to understand the risks it faces of non-compliance with legal and ethical requirements and staff policies, and to manage these in a responsive and proportionate way. This includes a clear set of relevant metrics to monitor how risks are changing over time, which it reports regularly to appropriate decision-makers, and a range of actions to improve risk awareness and understanding among staff. However, the BoE recognises that it has more to do to ensure its systems and processes for managing compliance risks are effective in practice, and it is planning further improvements. As it takes forward its work in this area, the BoE should ensure it continues to improve the quality and consistency of the information it records on risk assessment and monitoring, and the awareness and confidence of staff to flag risks or highlight concerns.
FCA quarterly consultation No. 43
On 1 March, the FCA published its quarterly consultation No. 43. The FCA is consulting on three proposed changes to the Handbook: (i) Special Project Fees – the FCA proposes to amend FEES 3 Annex 9R to ensure that exceptional supervisory costs covered by this fee block are based on a firm’s revenue. The aim is to charge the firm directly for the additional work it is generating; (ii) critical third parties statement of policy – the FCA’s draft statement of policy sets out its approach to using its enforcement powers under the new regime for the oversight of critical third parties under FSMA 2023. It is expected that the PRA and BoE will consult on their own enforcement proposals in due course; and (iii) Training and Competence sourcebook – the FCA proposes to introduce an annual consultation cycle on qualification-related elements. This would apply to all firms who are subject to the sourcebook’s requirements. The FCA also sets out some updates to the qualification table. The deadline for comments is 8 April, except for the proposals relating to FEES 3 Annex 9R where the deadline is 11 March.
FCA Handbook Notice No. 116
On 1 March, the FCA published Handbook Notice No. 116 (dated February). The Handbook Notice describes the changes made to the FCA Handbook made by the FCA Board on 29 February as set out in the General Provisions (Interpretation) Instrument 2024. This instrument makes changes to GEN 2.2 to make all references to enactments in Handbook rules made by the FCA (including glossary terms where they are used by rules) ambulatory in nature unless there is a contrary indication. The change means that amendments to enactments will flow automatically through to Handbook rules. For instance, if a Handbook rule refers to activities specified in the RAO and the UK government amends the RAO to expand its scope, this would automatically expand the scope of the corresponding provision in the FCA Handbook. This limits the need for Handbook definitions to be updated on an ad-hoc basis and ensures that Handbook rules stay in step with legislative developments as they occur. The instrument came into force on 1 March.