FCA has published its final rules on extending the SMCR to employees at benchmark administrators. The rules, bespoke to firms that undertake no other regulated activities, take effect from 7 December.
UK-based respondents to FCA’s consultation were happy with the proposals, but non-UK firms were not. These so called “Annex II” firms called for modifications such as categorising all such firms as Limited Scope and restricting application of the Conduct Rules. They were particularly concerned that applying COCON to employees who produce regulated commodity benchmarks with market commentary would create tensions with press freedom. FCA appreciates the issue, but is proceeding anyway.
The new rules:
- will assume all benchmark administrators are Core firms, but they will be able to use the waiver process to move to Limited Scope if they meet certain criteria;
- will require Core firms to apply the SMFs of Chair, Partner, CEO and Executive Director as appropriate and where individuals perform those roles. Limited Scope firms will just have the SMF29 function. The SMF16 and 17 functions will not be required;
- will require Core firms to allocate 3 prescribed responsibilities – around obligations under the SMR, Conduct Rules and responsibility for financial crime prevention;
- will not apply the Certification Regime to administrators that undertake no other regulated activities;
- will apply the Conduct Rules to all employees except ancillary staff, except for Annex II firms, in relation to whom the rules would apply only in relation to regulated benchmark activities
The effect of this is that, from 7 December, the approved persons regime will apply only to Appointed Representatives.