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Federal Register / Vol. 86, No. 149 / Friday, August 6, 2021 / Notices
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references to these UK requirements from the Orders list of UK requirements comparable to Exchange Act rule 18a 5 and Exchange Act rules 18a 6b1xii and b2vii which implicate record creation, except with respect to Exchange Act rule 18a 5a4, a6, a15, b3, b6, and b11 for which the Commission agrees with the commenters reasoning.465
However, the Commission is removing references to these UK requirements from the Orders list of UK requirements comparable to the remainder of Exchange Act rule 18a6.466
The commenter recommended deleting references to FCA COND at paragraphs 2C, 2D, 3B, 3C, 5D, and 5F, which set out certain minimum requirements for obtaining and maintaining PRA authorization, reasoning that they do not correspond to, and go beyond, the requirements of Exchange Act rules 18a5 and 18a6.
However, the FCA Application states that these requirements effectively require firms to have systems and controls for maintaining records which is relevant to Exchange Act rules 18a 5 and 18a6.467 Accordingly, the Commission is not removing references to this UK requirement from the Orders list of UK requirements comparable to Exchange Act rules 18a5 and 18a6, except with respect to Exchange Act rule 18a5a6, a8, a15, b6, and b11 and Exchange Act rules 18a 6b1iv and b2ii for which the Commission agrees with the commenters reasoning.468
The commenter recommended deleting references to PRA Fundamental Rules 2 and 6 and FCA PRIN 2.1.1R2
and 3, which set out certain high-level principles for businesses, reasoning that they do not correspond to, and go beyond, the requirements of Exchange Act rules 18a5 and 18a6. However, the FCA Application states that, In practice, this will require UK firms to maintain adequate records and recordkeeping systems. 469 Accordingly, the Commission is not removing references to these UK requirements from the Orders list of UK requirements comparable to Exchange Act rules 18a 465 Compare paras. f1iD1 and f1iG1
of the UK Substituted Compliance Notice and Proposed Order, with paras. f1iD1 and f1iG1 of the Order.
466 Compare paras. f2iA, f2iB, and f2iD of the UK Substituted Compliance Notice and Proposed Order, with paras. f2iA, f2iB, and f2iD of the Order.
467 See FCA Application at 12627.
468 Compare paras. f1iG1, f1iI1, and f2iD of the UK Substituted Compliance Notice and Proposed Order, with paras. f1iG1, f1iI1, and f2iD of the Order.
469 See FCA Application at 127.

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5 and 18a6, except with respect to Exchange Act rule 18a5a6, a8, a15, b6, and b11 and Exchange Act rules 18a6b1iv and b2ii for which the Commission agrees with the commenters reasoning.470
The commenter recommended deleting references to FSMA section 632A, which relates to the annual fit and proper reassessment requirement, and FSMA section 63F5, which relates to the validity of a certificate issued to a firms certification staff, and FSMA
section 632A, which relates to the annual fit and proper reassessment requirement, reasoning that they do not correspond to, and go beyond, the requirements of Exchange Act rules 18a5 and 18a6. However, the FCA
Application cites these provisions to support the statement that these certifications must be conducted annually,471 and frequency of these certifications is relevant to Exchange Act rules 18a5 and 18a6. Accordingly, the Commission is not removing references to this UK requirement from the Orders list of UK requirements comparable to Exchange Act rules 18a 5 and 18a6.
The commenter recommended deleting references to the PRA
Certification Rules, the general PRA
regime for certified employees, reasoning that they do not correspond to, and go beyond, the requirements of Exchange Act rules 18a5 and 18a6.
The Commission agrees with the commenters reasoning with respect to most of the PRA Certification Rules, but PRA Certification Rule 2.1 requires employees performing certification functions to have a valid certificate issued by the firm, which is relevant to Exchange Act rule 18a5. Accordingly, the Commission is replacing references to the PRA Certification Rules with PRA
Certification Rule 2.1 in the Orders list of UK requirements comparable to Exchange Act rules 18a5 and 18a6.472
The commenter recommended adding to paragraph f1 of the Order regarding Exchange Act rule 18a5
references to PRA Recordkeeping Rule 2.1 and FCA SYSC 9.1.1AR, which require firms to arrange for orderly records to be kept of its business and internal organization, and to arrange for records to be kept of all services, activities, and transactions undertaken 470 Compare
paras. f1iG1, f1iI1, and f2iD of the UK Substituted Compliance Notice and Proposed Order, with paras. f1iG1, f1iI1, and f2iD of the Order.
471 See FCA Application at 203.
472 Compare paras. f1iK and f2iM of the UK Substituted Compliance Notice and Proposed Order, with paras. f1iK and f2iM of the Order.

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by it, respectively. The Commission agrees these UK requirements are relevant and is therefore adding them to the Orders list of UK requirements comparable to Exchange Act rule 18a 5.473
The commenter recommended deleting from paragraphs f1 and f2
of the Order references to UK MiFID Org Reg article 59, which set out the requirement to confirm execution of an order to the client, reasoning that it does not correspond to, and goes beyond, the requirements of Exchange Act rules 18a5 and 18a6. UK MiFID Org Reg article 59 identifies specific data elements that are relevant to the records required to be created under Exchange Act rule 18a5, so the Commission is not removing references to this requirement from the Orders list of UK
requirements comparable to Exchange Act rule 18a5. However, the Commission agrees with the commenters reasoning with respect to Exchange Act rule 18a6 because UK
MiFID Org Reg article 59 relates to record creation but not record preservation and is therefore removing references to this requirement from the Orders list of UK requirements comparable to Exchange Act rule 18a 6.474
The commenter recommended deleting from paragraphs f1iK and f2iM of the Order references to PRA General Organisational Requirements Rules 5.1 and 5.2, regarding management body requirements, reasoning that they do not correspond to, and go beyond, the requirements of Exchange Act rules 18a5a10 and b8 employment application record creation and 18a 6d1 employment application record preservation. However, the FCA
Application states that a CRR Firms management body must define, oversee and be accountable for the implementation of the governance arrangements including, among other matters, ensuring the prevention of conflicts of interest with respect to PRA General Organisational Requirement 5.1 and each member of the management body of a CRR Firm must be of sufficiently good repute and possess sufficient knowledge, skills and experience to perform their duties 473 Compare paras. f1iA1, f1iB1, f1iC1, and f1iF1 of the UK
Substituted Compliance Notice and Proposed Order, with paras. f1iA1, f1iB1, f1iC1, and f1iF1 of the Order.
474 Compare paras. f2iA, f2iB, f2iD, and f2iG1 of the UK Substituted Compliance Notice and Proposed Order, with paras.
f2iA, f2iB, f2iD, and f2iG1
of the Order.

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