Quiero saber acerca de...

Federal Register / Vol. 86, No. 149 / Friday, August 6, 2021 / Notices periods.492 Based on these provisions, the FCA Application states that the UK
periodic securities count requirements provide for a comparable regulatory outcome to the Commissions periodic securities count requirements.493 The Commission believes these provisions are relevant to the requirements of rule 18a9. Accordingly, the Commission is not removing references to these UK
requirements from the Orders list of UK
requirements comparable to Exchange Act rule 18a9.
f. Exchange Act Section 15Fg
jbell on DSKJLSW7X2PROD with NOTICES2

The commenter recommended deleting from paragraph f6 references to FCA COND at paragraphs 2C, 2D, 3B, 3C, 5D, and 5F, stating that these provisions set our certain minimum requirements for obtaining and maintaining PRA authorization. The commenter also recommended removing references in paragraph f6
to PRA Fundamental Rules 2 and 6, and FCA PRIN 2.1.1R2 and 3, stating that these provisions set out certain highlevel principals for business. The commenter reasoned that these provisions do not correspond to, and go beyond, the requirements of Exchange Act section 15Fg. The Commission agrees with respect to references to FCA
COND at paragraphs 2C, 2D, 3B, 3C, 5D, and 5F. Accordingly, the Commission is removing references to FCA COND at paragraphs 2C, 2D, 3B, 3C, 5D, and 5F
from the Orders list of requirements comparable to Exchange Act section 15Fg.494 However, the FCA
Application states that pursuant to PRA
Fundamental Rules 2 and 6, and FCA
PRIN 2.1.1R2 and 3 a UK firm must conduct its business with due skill, care, and diligence, and take reasonable care to organize and control its affairs responsibly and effectively. In practice, the FCA Application states that this will require UK firms to maintain adequate records and recordkeeping systems.495
The Commission believes that these provisions are relevant to the requirements of Exchange Act section 15Fg. Accordingly, the Commission is not removing reference to these UK
requirements from the Orders list of requirements comparable to Exchange Act section 15Fg.

492 See
FCA Application at 12936.
FCA Application at 129.
494 Compare para. f6 of the UK Substituted Compliance Notice and Proposed Order, with para.
f6 of the Order.
495 See FCA Application at 102.
493 See
VerDate Sep<11>2014

20:04 Aug 05, 2021

Jkt 253001

IX. Supervisory and Enforcement Considerations A. Preliminary Analysis Exchange Act rule 3a716a2i provides that the Commissions assessments regarding the comparability of foreign requirements in part should take into account the effectiveness of the supervisory program administered, and the enforcement authority exercised by the foreign financial regulatory authority. This provision is intended to help ensure that substituted compliance is not predicated on rules that appear high-quality on paper if market participants in practice are allowed to fall short of their obligations, while also recognizing that differences among supervisory and enforcement regimes should not be assumed to reflect flaws in one regime or another.496 The FCA Application accordingly included information regarding the supervisory and enforcement framework applicable to derivatives markets and market participants in the UK.
In proposing to grant substituted compliance in connection with the UK, the Commission preliminarily concluded that the relevant supervisory and enforcement considerations were consistent with substituted compliance.
That preliminary conclusion took into account information regarding the FCAs and the PRAs roles and practices in supervising banks and investment firms located in the UK, as well as their enforcement-related authority and practices.497
B. Conclusions Commenters did not address the Commissions preliminary conclusions regarding supervisory and enforcement considerations, and the Commission continues to conclude that the relevant supervisory and enforcement considerations in the UK are consistent with substituted compliance. In particular, based on the available information regarding the FCAs and the PRAs authority and practices to oversee market participants compliance with applicable requirements and to take action in the event of violations, the Commission remains of the view that, consistent with rule 3a716, comparability determinations reflect UK
requirements as they apply in practice.
To be clear, the supervisory and enforcement considerations addressed by rule 3a716 do not mandate that the 496 See UK Substituted Compliance Notice and Proposed Order, 86 FR at 18404.
497 See UK Substituted Compliance Notice and Proposed Order, 86 FR at 1840406.

PO 00000

Frm 00053

Fmt 4701

Sfmt 4703

43369

Commission make judgments regarding the comparative merits of U.S. and foreign supervisory and enforcement frameworks, or to require specific findings regarding the supervisory and enforcement effectiveness of a foreign regime. The rule 3a716 considerations regarding supervisory and enforcement effectiveness instead address whether comparability analyses related to substituted compliance reflect requirements that market participants must follow, and for which market participants are subject to enforcement consequences in the event of violations.
Those considerations are satisfied here.
X. Conclusion It is hereby determined and ordered, pursuant to rule 3a716 under the Exchange Act, that a Covered Entity as defined in paragraph g1 of this Order may satisfy the requirements under the Exchange Act that are addressed in paragraphs b through f of this Order so long as the Covered Entity is subject to and complies with relevant requirements of the United Kingdom and with the conditions of this Order, as amended or superseded from time to time.
a General Conditions.
This Order is subject to the following general conditions, in addition to the conditions specified in paragraphs b through f:
1 Activities as UK regulated activities. For each condition in paragraphs b through f of this Order that requires the application of, and the Covered Entitys compliance with, provisions of FCA SYSC 4, 5, 6, 7, 9, and/or 10, PRA General Organisational Requirements, PRA Recordkeeping Rules, PRA Remuneration Rules, PRA
Risk Control Rules, and/or MLR 2017, the Covered Entitys relevant securitybased swap activities constitute regulated activities as defined for purposes of the relevant UK provisions, are carried on by the Covered Entity from an establishment in the United Kingdom, and fall within the scope of the Covered Entitys authorization from the FCA and/or the PRA to conduct regulated activities in the United Kingdom.
2 Activities as UK MiFID
investment services or activities. For each condition in paragraphs b through f of this Order that requires the application of, and the Covered Entitys compliance with, provisions of FCA PROD 3 and/or UK MiFID Org Reg, the Covered Entitys relevant securitybased swap activities a constitute investment services or activities, as defined in the FCA Handbook Glossary;

E:FRFM06AUN2.SGM

06AUN2