
CHAPTER I
Article 1 

1. This Regulation shall apply to the following:
(a) financial instruments within the meaning of point (a) of Article 2(1) that are admitted to trading on a trading venue in the United Kingdom, including such instruments when traded outside a trading venue;
(b) derivatives referred to in points (4) to (10) of Part 1 of Schedule 2 to the Regulated Activities Order 2001 that relate to a financial instrument referred to in point (a) or to an issuer of such a financial instrument, including such derivatives when traded outside a trading venue;
(c) debt instruments issued by the United Kingdom and derivatives referred to in points (4) to (10) of Part 1 of Schedule 2 to the Regulated Activities Order 2001 that relate or are referenced to debt instruments issued by the United Kingdom.
2. Articles 18, 20 and 23 to 30 shall apply to all financial instruments within the meaning of point (a) of Article 2(1).
Article 2 

1. For the purpose of this Regulation, the following definitions apply:
(a) ‘financial instrument’ means an instrument listed in Part 1 of Schedule 2 to the Regulated Activities Order 2001;
(b) ‘short sale’ in relation to a share or debt instrument means any sale of the share or debt instrument which the seller does not own at the time of entering into the agreement to sell including such a sale where at the time of entering into the agreement to sell the seller has borrowed or agreed to borrow the share or debt instrument for delivery at settlement, not including:
((i)) a sale by either party under a repurchase agreement where one party has agreed to sell the other a security at a specified price with a commitment from the other party to sell the security back at a later date at another specified price;
((ii)) a transfer of securities under a securities lending agreement; or
((iii)) entry into a futures contract or other derivative contract where it is agreed to sell securities at a specified price at a future date;
(c) ‘credit default swap’ means a derivative contract in which one party pays a fee to another party in return for a payment or other benefit in the case of a credit event relating to a reference entity and of any other default, relating to that derivative contract, which has a similar economic effect;
(d) “sovereign issuer” means the United Kingdom, including any government department, or an agency or a special purpose vehicle of the United Kingdom;
(e) ‘sovereign credit default swap’ means a credit default swap where a payment or other benefit will be paid in the case of a credit event or default relating to a sovereign issuer;
(f) ‘sovereign debt’ means a debt instrument issued by a sovereign issuer;
(g) ‘issued sovereign debt’ means the total of sovereign debt issued by a sovereign issuer that has not been redeemed;
(h) ‘issued share capital’ in relation to a company, means the total of ordinary and any preference shares issued by the company but does not include convertible debt securities;
(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(j) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(k) ‘market making activities’ means the activities of an investment firm, a credit institution, a third-country entity, or a firm as referred to in point (ka), which is a member of a trading venue or of a market in a third country, the legal and supervisory framework of which has been declared equivalent by the Commission pursuant to Article 17(2) as it had effect before IP completion day, or by the Treasury in accordance with that paragraph as amended, where it deals as principal in a financial instrument, whether traded on or outside a trading venue, in any of the following capacities:
((i)) by posting firm, simultaneous two-way quotes of comparable size and at competitive prices, with the result of providing liquidity on a regular and ongoing basis to the market;
((ii)) as part of its usual business, by fulfilling orders initiated by clients or in response to clients’ requests to trade;
((iii)) by hedging positions arising from the fulfilment of tasks under points (i) and (ii);
(ka) for the purposes of point (k), the firms referred to in this point are firms which provide investment services and/or perform investment activities consisting exclusively in dealing on own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets or which deal for the accounts of other members of those markets or make prices for them and which are guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such firms is assumed by clearing members of the same markets;
(l) “trading venue” means—
(i) a UK regulated market within the meaning of point (13A) of Article 2(1) of Regulation (EU) No 600/2014 ;
(ii) a UK multilateral trading facility within the meaning of point (14A) of Article 2(1) of Regulation (EU) No 600/2014;
(m) ‘principal venue’ in relation to a share means the venue for the trading of that share with the highest turnover;
(n) ‘authorised primary dealer’ means a natural or legal person who has signed an agreement with a sovereign issuer or who has been formally recognised as a primary dealer by or on behalf of a sovereign issuer and who, in accordance with that agreement or recognition, has committed to dealing as principal in connection with primary and secondary market operations relating to debt issued by that issuer;
(o) ‘central counterparty’ means a legal entity which interposes itself between the counterparties to the contracts traded within one or more financial markets, becoming the buyer to every seller and the seller to every buyer and which is responsible for the operation of a clearing system;
(p) “trading day” in relation to a trading venue, means a day during which the trading venue concerned is open for trading;
(q) “turnover”, in relation to a financial instrument, means the sum of the results of multiplying the number of units of that instrument exchanged between buyers and sellers in a defined period of time, pursuant to transactions taking place on a trading venue or otherwise, by the unit price applicable to each transaction;
(r) “FCA” means the Financial Conduct Authority;
(s) “competent authority” means—
(i) in relation to the United Kingdom, the FCA;
(ii) in relation to a Member State of the European Union, the authority which has been designated by that Member State as its competent authority for the purposes of Article 32 of this Regulation as it was in force immediately before IP completion day; and
(iii) in relation to a third country which is not a Member State of the European Union, the supervisory authority which exercises functions equivalent to those exercised by competent authorities in Member States under this Regulation as it was in force immediately before IP completion day;
(t) “credit institution” has the meaning given in Article 2(1)(17) of Regulation (EU) No 600/2014;
(u) “investment firm” has the meaning given in Article 2(1A) of Regulation (EU) No 600/2014;
(v) references to a  “third country”
										(including in expressions including the words  “third country”) are to be read as references to a country other than the United Kingdom;
(w) “Regulated Activities Order 2001” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 ;
(x) “PRA” means the Prudential Regulation Authority.
2. The Treasury may by regulations specify the definitions laid down in paragraph 1 of this Article, and in particular specify when a natural or legal person is considered to own a financial instrument for the purposes of the definition of short sale in point (b) of paragraph 1.
Article 3 

1. For the purposes of this Regulation, a position resulting from either of the following shall be considered to be a short position relating to issued share capital or issued sovereign debt:
(a) a short sale of a share issued by a company or of a debt instrument issued by a sovereign issuer;
(b) entering into a transaction which creates or relates to a financial instrument other than an instrument referred to in point (a) where the effect or one of the effects of the transaction is to confer a financial advantage on the natural or legal person entering into that transaction in the event of a decrease in the price or value of the share or debt instrument.
2. For the purposes of this Regulation, a position resulting from either of the following shall be considered to be a long position relating to issued share capital or issued sovereign debt:
(a) holding a share issued by a company or a debt instrument issued by a sovereign issuer;
(b) entering into a transaction which creates or relates to a financial instrument other than an instrument referred to in point (a) where the effect or one of the effects of the transaction is to confer a financial advantage on the natural or legal person entering into that transaction in the event of an increase in the price or value of the share or debt instrument.
3. For the purposes of paragraphs 1 and 2, the calculation of a short or a long position, in respect of any position held by the relevant person indirectly, including through or by way of any index, basket of securities or any interest in any exchange traded fund or similar entity, shall be determined by the natural or legal person in question acting reasonably having regard to publicly available information as to the composition of the relevant index or basket of securities, or of the interests held by the relevant exchange traded fund or similar entity. In calculating such a short or long position, no person shall be required to obtain any real-time information as to such composition from any person.For the purposes of paragraphs 1 and 2 the calculation of a short or long position relating to sovereign debt shall include any sovereign credit default swap that relates to the sovereign issuer.
4. For the purposes of this Regulation, the position remaining after deducting any long position that a natural or legal person holds in relation to the issued share capital from any short position that that natural or legal person holds in relation to that capital shall be considered a net short position in relation to the issued share capital of the company concerned.
5. For the purposes of this Regulation, the position remaining after deducting any long position that a natural or legal person holds in relation to issued sovereign debt and any long position in debt instruments of a sovereign issuer the pricing of which is highly correlated to the pricing of the given sovereign debt from any short position that that natural or legal person holds in relation to the same sovereign debt shall be considered a net short position in relation to the issued sovereign debt of the sovereign issuer concerned.
6. The calculation of sovereign debt under paragraphs 1 to 5 shall be for each single sovereign issuer even if separate entities issue sovereign debt on behalf of the sovereign issuer.
7. The Treasury may by regulations specify:
(a) cases in which a natural or legal person is considered to hold a share or debt instrument for the purposes of paragraph 2;
(b) cases in which a natural or legal person has a net short position for the purposes of paragraphs 4 and 5 and the method of calculation of such position;
(c) the method of calculating positions for the purposes of paragraphs 3, 4 and 5 when different entities in a group have long or short positions or for fund management activities relating to separate funds.For the purposes of point (c) of the first subparagraph, the method of calculation shall take into account, in particular, whether different investment strategies are pursued in relation to a particular issuer through more than one separate fund managed by the same fund manager, whether the same investment strategy is pursued in relation to a particular issuer through more than one fund, and whether more than one portfolio within the same entity is managed on a discretionary basis pursuing the same investment strategy in relation to a particular issuer.
Article 4 

1. For the purposes of this Regulation, a natural or legal person shall be considered to have an uncovered position in a sovereign credit default swap where the sovereign credit default swap does not serve to hedge against:
(a) the risk of default of the issuer where the natural or legal person has a long position in the sovereign debt of that issuer to which the sovereign credit default swap relates; or
(b) the risk of a decline of the value of the sovereign debt where the natural or legal person holds assets or is subject to liabilities, including but not limited to financial contracts, a portfolio of assets or financial obligations the value of which is correlated to the value of the sovereign debt.
2. The Treasury may by regulations specify, for the purposes of paragraph 1 of this Article:
(a) cases in which a sovereign credit default swap transaction is considered to be hedging against a default risk or the risk of a decline of the value of the sovereign debt, and the method of calculation of an uncovered position in a sovereign credit default swap;
(b) the method of calculating positions where different entities in a group have long or short positions or for fund management activities relating to separate funds.
CHAPTER II
Article 5 

1. A natural or legal person who has a net short position in relation to the issued share capital of a company that has shares admitted to trading on a trading venue shall notify the FCA, in accordance with Article 9, where the position reaches or falls below a relevant notification threshold referred to in paragraph 2 of this Article.
2. A relevant notification threshold is a percentage that equals 0,2% of the issued share capital of the company concerned and each 0,1 % above that.
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4. The Treasury may by regulations modify the thresholds referred to in paragraph 2 of this Article, taking into account the developments in financial markets.
Article 6 

1. A natural or legal person who has a net short position in relation to the issued share capital of a company that has shares admitted to trading on a trading venue shall disclose details of that position to the public, in accordance with Article 9, where the position reaches or falls below a relevant publication threshold referred to in paragraph 2 of this Article.
2. A relevant publication threshold is a percentage that equals 0,5 % of the issued share capital of the company concerned and each 0,1 % above that.
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4. The Treasury may by regulations modify the thresholds referred to in paragraph 2 of this Article, taking into account the developments in financial markets.
5. This Article is without prejudice to laws, regulations and administrative provisions adopted in relation to takeover bids, merger transactions and other transactions affecting the ownership or control of companies regulated by the Panel on Takeovers and Mergers that require disclosure of short positions beyond the requirements of this Article.
Article 7 

1. A natural or legal person who has a net short position relating to issued sovereign debt shall notify the FCA, in accordance with Article 9, where such a position reaches or falls below the relevant notification thresholds for the sovereign issuer ....
2. The relevant notification thresholds shall consist of an initial amount and then additional incremental levels in relation to the sovereign issuer, as specified in the measures taken by the Commission in accordance with paragraph 3 before IP completion day, or in regulations made by the Treasury in accordance with that paragraph as amended. The FCA shall publish on its website the notification thresholds for the United Kingdom.
3. The Treasury may by regulations specify the amounts and incremental levels referred to in paragraph 2 of this Article.The Treasury shall:
(a) ensure that the thresholds are not set at such a level as to require notification of positions which are of minimal value;
(b) take into account the total amount of outstanding issued sovereign debt for  the sovereign  issuer, and the average size of positions held by market participants relating to the sovereign debt of the sovereign issuer; and
(c) take into account the liquidity of the sovereign bond market.
Article 8 
Where the FCA suspends restrictions in accordance with Article 14(2), a natural or legal person who has an uncovered position in a sovereign credit default swap shall notify the FCA where such a position reaches or falls below the relevant notification thresholds for the sovereign issuer, as specified in accordance with Article 7.
Article 9 

1. Any notification or disclosure under Article 5, 6, 7 or 8 shall set out details of the identity of the natural or legal person who holds the relevant position, the size of the relevant position, the issuer in relation to which the relevant position is held and the date on which the relevant position was created, changed or ceased to be held.For the purposes of Articles 5, 6, 7 and 8, natural and legal persons that hold significant net short positions shall keep, for a period of 5 years, records of the gross positions which make a significant net short position.
2. The relevant time for calculation of a net short position shall be at midnight at the end of the trading day on which the natural or legal person holds the relevant position. That time shall apply to all transactions irrespective of the means of trading used, including transactions executed through manual or automated trading, and irrespective of whether the transactions have taken place during normal trading hours. The notification or disclosure shall be made not later than at 15.30 on the following trading day. The times specified in this paragraph shall be calculated according to the time in the United Kingdom.
3. The notification of information to the FCA shall ensure the confidentiality of the information and incorporate mechanisms for authenticating the source of the notification.
4. The public disclosure of information set out in Article 6 shall be made in a manner ensuring fast access to information on a non-discriminatory basis. That information shall be posted on a central website operated or supervised by the FCA. ...
5. The FCA may make technical standards specifying the details of the information to be provided for the purposes of paragraph 1.
6. For the purposes of paragraph 4, the FCA may make technical standards specifying the means by which information may be disclosed to the public.
Article 10 
The notification and disclosure requirements under Articles 5, 6, 7 and 8 apply to natural or legal persons domiciled or established within the United Kingdom or in a third country.
Article 11 
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CHAPTER III
Article 12 

1. A natural or legal person may enter into a short sale of a share admitted to trading on a trading venue only where one of the following conditions is fulfilled:
(a) the natural or legal person has borrowed the share or has made alternative provisions resulting in a similar legal effect;
(b) the natural or legal person has entered into an agreement to borrow the share or has another absolutely enforceable claim under contract or property law to be transferred ownership of a corresponding number of securities of the same class so that settlement can be effected when it is due;
(c) the natural or legal person has an arrangement with a third party under which that third party has confirmed that the share has been located and has taken measures vis-à-vis third parties necessary for the natural or legal person to have a reasonable expectation that settlement can be effected when it is due.
2. For the purposes of paragraph 1, the FCA may make implementing technical standards to determine the types of agreements, arrangements and measures that adequately ensure that the share will be available for settlement. In determining what measures are necessary to have a reasonable expectation that settlement can be effected when it is due, the FCA shall take into account, inter alia, the intraday trading and the liquidity of the shares.......
Article 13 

1. A natural or legal person may enter into a short sale of sovereign debt only where one of the following conditions is fulfilled:
(a) the natural or legal person has borrowed the sovereign debt or has made alternative provisions resulting in a similar legal effect;
(b) the natural or legal person has entered into an agreement to borrow the sovereign debt or has another absolutely enforceable claim under contract or property law to be transferred ownership of a corresponding number of securities of the same class so that settlement can be effected when it is due;
(c) the natural or legal person has an arrangement with a third party under which that third party has confirmed that the sovereign debt has been located or otherwise has a reasonable expectation that settlement can be effected when it is due.
2. The restrictions in paragraph 1 do not apply if the transaction serves to hedge a long position in debt instruments of an issuer, the pricing of which has a high correlation with the pricing of the given sovereign debt.
3. Where the liquidity of sovereign debt falls below the threshold determined in accordance with the methodology referred to in Commission Delegated Regulation (EU) No 918/2012 or in regulations made by the Treasury under paragraph 4, the restrictions referred to in paragraph 1 may be temporarily suspended by the FCA. ...A suspension shall be valid for an initial period not exceeding 6 months from the date of its publication on the website of the FCA. The suspension may be renewed for periods not exceeding 6 months if the grounds for the suspension continue to apply. If the suspension is not renewed by the end of the initial period or of any subsequent renewal period it shall automatically expire....
4. The Treasury may by regulations specify the parameters and methods for calculating the threshold of liquidity referred to in paragraph 3 of this Article in relation to issued sovereign debt.The parameters and methods ... to calculate the threshold shall be set in such a way that where it is reached, it represents a significant decline relative to the average level of liquidity for the sovereign debt concerned.The threshold shall be defined based on objective criteria specific to the relevant sovereign debt market, including the total amount of outstanding issued sovereign debt for the sovereign issuer.
5. For the purposes of paragraph 1, the FCA may make implementing technical standards to determine the types of agreements or arrangements that adequately ensure that the sovereign debt will be available for settlement. The FCA shall, in particular, take into account the need to preserve liquidity of markets, especially sovereign bond and sovereign bond repurchase markets.......
Article 14 

1. A natural or legal person may enter into sovereign credit default swap transactions only where that transaction does not lead to an uncovered position in a sovereign credit default swap as referred to in Article 4.
2. The FCA may temporarily suspend restrictions referred to in paragraph 1, where it has objective grounds for believing that its sovereign debt market is not functioning properly and that such restrictions might have a negative impact on the sovereign credit default swap market, especially by increasing the cost of borrowing for the sovereign issuer or affecting the sovereign issuer's ability to issue new debt. Those grounds shall be based on the following indicators:
(a) a high or rising interest rate on the sovereign debt;
(b) a widening of interest rate spreads on the sovereign debt compared to the sovereign debt of other sovereign issuers;
(c) a widening of the sovereign credit default swap spreads compared to the own curve and compared to other sovereign issuers;
(d) the timeliness of the return of the price of the sovereign debt to its original equilibrium after a large trade;
(e) the amounts of sovereign debt that can be traded.The FCA may also use indicators other than those set out in points (a) to (e) of the first subparagraph....A suspension shall be valid for an initial period not exceeding 12 months from the date of its publication on the website of the FCA. The suspension may be renewed for periods not exceeding 6 months if the grounds for the suspension continue to apply. If the suspension is not renewed by the end of the initial period or of any subsequent renewal period, it shall automatically expire....
Article 15 
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CHAPTER IV
Article 16 

1. Articles 5, 6, 12 and 15 shall not apply to shares of a company admitted to trading on a trading venue in the United Kingdom where the principal venue for the trading of the shares is located in a third country.
2. Where the shares of a company are traded on a trading venue in the United Kingdom and a venue located in a third country the FCA shall determine, at least every two years, whether the principal trading venue for the trading of those shares is located in a third country.Where the shares of a company traded on a trading venue in the United Kingdom and a venue located in a third country were included in the most recent list published by ESMA under Article 16.2 of this Regulation as it had effect before IP completion day, those shares are to be treated as entitled to the exemption provided for in paragraph 1 for a period of two years beginning with  IP completion day....Every 2 years the FCA shall publish the list of shares for which the principal trading venue is located in a third country. The list shall be effective for a 2-year period.
3. For the purposes of this Article, the FCA may make technical standards specifying the method for calculation of the turnover to determine the principal venue for the trading of a share.......
4. For the purposes of paragraphs 1 and 2, the FCA may make technical standards to determine:
(a) the date on which and period in respect of which any calculation determining the principal trading venue for a share is to be made;
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(c) the date from which the list is to be effective following publication by the FCA.......
Article 17 

1. Articles 5, 6, 7, 12, 13 and 14 shall not apply to transactions performed due to market making activities.
2. The Treasury may by regulations determine that the legal and supervisory framework of a third country ensures that a market authorised in that third country complies with legally binding requirements which are, for the purpose of the application of the exemption set out in paragraph 1, equivalent to the requirements under Title III of Directive 2014/65/EU and Articles 3, 4, 6 and 7 of Regulation (EU) No 600/2014, under Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April on market abuse and under Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market, and which are subject to effective supervision and enforcement in that third country.The legal and supervisory framework of a third country may be considered equivalent where that third country’s:
(a) markets are subject to authorisation and to effective supervision and enforcement on an ongoing basis;
(b) markets have clear and transparent rules regarding admission of securities to trading so that such securities are capable of being traded in a fair, orderly and efficient manner, and are freely negotiable;
(c) security issuers are subject to periodic and ongoing information requirements ensuring a high level of investor protection; and
(d) market transparency and integrity are ensured by preventing market abuse in the form of insider dealing and market manipulation.
3. Articles 7, 13 and 14 shall not apply to the activities of a natural or legal person where, acting as an authorised primary dealer pursuant to an agreement with a sovereign issuer, it is dealing as principal in a financial instrument in relation to primary or secondary market operations relating to the sovereign debt.
4. Articles 5, 6, 12, 13 and 14 of this Regulation shall not apply to a natural or legal person where it enters into a short sale of a security or has a net short position in relation to the carrying out of a stabilisation under Chapter III of Commission Delegated Regulation (EU) No 2016/1052 of 8 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the conditions applicable to buy-back programmes and stabilisation measures.
5. The exemption referred to in paragraph 1 shall apply only where the natural or legal person concerned has notified the FCA in writing that it intends to make use of the exemption. The notification shall be made not less than 30 calendar days before the natural or legal person first intends to use the exemption.
6. The exemption referred to in paragraph 3 shall apply only where the authorised primary dealer has notified the FCA in relation to the sovereign debt concerned in writing that it intends to make use of the exemption. The notification shall be made not less than 30 calendar days before the natural or legal person acting as authorised primary dealer first intends to use the exemption.
(6A. A notification made under paragraph 5 or 6 before  IP completion day  to a competent authority other than the FCA is only valid after IP completion day if a copy of that notification has been provided to the FCA not less than 30 calendar days before the day of IP completion day.
7. The FCA may prohibit the use of the exemption if it considers that the natural or legal person does not satisfy the conditions of the exemption. Any prohibition shall be imposed within the 30 calendar day period referred to in paragraph 5 or 6 or subsequently if the FCA becomes aware that there have been changes in the circumstances of the natural or legal person so that it no longer satisfies the conditions of the exemption.
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9. A natural or legal person who has given a notification under paragraph 5 shall as soon as possible notify in writing the FCA where there are any changes affecting that person’s eligibility to use the exemption, or if it no longer wishes to use the exemption.
10. A natural or legal person who has given a notification under paragraph 6 shall as soon as possible notify in writing the FCA in relation to sovereign debt concerned where there are any changes affecting that person’s eligibility to use the exemption, or if it no longer wishes to use the exemption.
11. The FCA may request information, in writing, from a natural or legal person operating under the exemptions set out in paragraph 1, 3 or 4 about short positions held or activities conducted under the exemption. The natural or legal person shall provide the information not later than 4 calendar days after the request is made.
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13. The FCA shall publish and keep up to date on its website a list of market makers and authorised primary dealers who are using the exemption.
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CHAPTER V
SECTION 1
Article 18 

1. ... The FCA may require natural or legal persons who have net short positions in relation to a specific financial instrument or class of financial instruments to notify it or to disclose to the public details of the position where the position reaches or falls below a notification threshold fixed by the FCA and where:
(a) there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the United Kingdom...; and
(b) the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.
2. Paragraph 1 of this Article shall not apply to financial instruments in respect of which transparency is already required under Articles 5 to 8. A measure under paragraph 1 may apply in circumstances or be subject to exceptions specified by the FCA. Exceptions may in particular be specified to apply to market making activities and primary market activities.
Article 19 

1. ... The FCA may take the measure referred to in paragraph 2 of this Article where:
(a) there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the United Kingdom...; and
(b) the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.
2. The FCA may require natural or legal persons engaged in the lending of a specific financial instrument or class of financial instruments to notify any significant change in the fees requested for such lending.
Article 20 

1. ... The FCA may take one or more of the measures referred to in paragraph 2 of this Article where:
(a) there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the United Kingdom...; and
(b) the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.
2. The FCA may prohibit or impose conditions relating to natural or legal persons entering into:
(a) a short sale; or
(b) a transaction other than a short sale which creates, or relates to, a financial instrument and the effect or one of the effects of that transaction is to confer a financial advantage on the natural or legal person in the event of a decrease in the price or value of another financial instrument.
3. A measure taken under paragraph 2 may apply to transactions concerning all financial instruments, financial instruments of a specific class or a specific financial instrument. The measure may apply in circumstances or be subject to exceptions specified by the FCA. Exceptions may in particular be specified to apply to market making activities and primary market activities.
Article 21 

1. ... The FCA may restrict the ability of natural or legal persons to enter into sovereign credit default swap transactions or may limit the value of sovereign credit default swap positions that those persons are permitted to enter into where:
(a) there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the United Kingdom...; and
(b) the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.
2. A measure taken under paragraph 1 may apply to sovereign credit default swap transactions of a specific class or to specific sovereign credit default swap transactions. The measure may apply in circumstances or be subject to exceptions specified by the FCA. Exceptions may in particular be specified to apply to market making activities and primary market activities.
Article 22 
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Article 23 

1. Where the price of a financial instrument on a trading venue has fallen significantly during a single trading day in relation to the closing price on that venue on the previous trading day, the FCA... shall consider whether it is appropriate to prohibit or restrict natural or legal persons from engaging in short selling of the financial instrument on that trading venue or otherwise limit transactions in that financial instrument on that trading venue in order to prevent a disorderly decline in the price of the financial instrument.Where the FCA is satisfied under the first subparagraph that it is appropriate to do so, it shall in the case of a share or a debt instrument, prohibit or restrict natural and legal persons from entering into a short sale on that trading venue or in the case of another type of financial instrument, limit transactions in that financial instrument on that trading venue in order to prevent a disorderly decline in the price of the financial instrument.
2. The measure under paragraph 1 shall apply for a period not exceeding the end of the trading day following the trading day on which the fall in price occurs. If, at the end of the trading day following the trading day on which the fall in price occurs, there is, despite the measure being imposed, a further significant fall in value of at least half of the amount specified in paragraph 5 of the financial instrument from the closing price of the first trading day, the FCA may extend the measure for a further period not exceeding 2 trading days after the end of the second trading day.
3. The measure under paragraph 1 shall apply in circumstances or be subject to exceptions specified by the FCA. Exceptions may in particular be specified to apply to market making activities and primary market activities.
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5. The fall in value shall be—
(a) 10% or more in the case of a share which is considered to have a liquid market under Article 1 of Commission Delegated Regulation (EU) No 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions; and
(b) the amount specified in Commission Delegated Regulation (EU) No 918/2012, or in regulations made by the Treasury under paragraph 7, in the case of any share which is not considered to have a liquid market, or for other classes of financial instruments.
6. ...The Treasury may by regulations modify the thresholds referred to in paragraph 5 of this Article, taking into account the developments in financial markets.
7. The Treasury may by regulations specify what constitutes a significant fall in value for financial instruments other than liquid shares, taking into account the specificities of each class of financial instrument and the differences of volatility.
8. For the purposes of this Article, the FCA may make technical standards specifying the method of calculation of the 10 % fall for liquid shares and of the fall in value specified by the Treasury as referred to in paragraph 7.......
Article 24 
A measure imposed under Article 18, 19, 20 or 21 shall be valid for an initial period not exceeding 3 months from the date of publication of the notice referred to in Article 25.
The measure may be renewed for further periods not exceeding 3 months if the grounds for taking the measure continue to apply. If the measure is not renewed by the end of such a 3-month period, it shall automatically expire.
Article 25 

1. The FCA shall publish on its website notice of any decision to impose or renew any measure referred to in Articles 18 to 23.
2. The notice shall specify at least details of:
(a) the measures imposed including the instruments and classes of transactions to which they apply and their duration;
(b) the reasons why the FCA believes it is necessary to impose the measures including the evidence supporting those reasons.
3. A measure under Articles 18 to 23 shall take effect when the notice is published or at a time specified in the notice that is after its publication and shall only apply in relation to a transaction entered into after the measure takes effect.
Article 26 
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SECTION 2
Article 27 
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Article 28 
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Article 29 
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Article 30 
The Treasury may by regulations specify the criteria and factors to be taken into account by the FCA in determining in which cases the adverse events or developments referred to in Articles 18 to 21 arise.
Article 31 
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CHAPTER VI
Article 32 
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Article 33 
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Article 34 

1. The obligation of professional secrecy shall apply to all natural or legal persons who work or who have worked for the FCA or for any authority or natural or legal person to whom the FCA has delegated tasks, including auditors and experts contracted by the FCA. Confidential information covered by professional secrecy may not be disclosed to any other natural or legal person or authority except where such disclosure is necessary for legal proceedings.
2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Article 35 
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Article 36 
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Article 37 
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Article 38 

1. The FCAmay conclude cooperation arrangements with supervisory authorities of third countries concerning the exchange of information with supervisory authorities of third countries, the enforcement of obligations arising under this Regulation in third countries and the taking of similar measures in third countries by their supervisory authorities to complement measures taken under Chapter V. These cooperation arrangements shall ensure at least an efficient exchange of information that allows the FCA to carry out its duties under this Regulation....
2. The cooperation arrangement shall contain provisions on the exchange of data and information necessary for the FCA to comply with the obligation set out in Article 16(2).
3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. The FCA may conclude cooperation arrangements on the exchange of information with the supervisory authorities of third countries only where the information disclosed is subject to guarantees of professional secrecy which are at least equivalent to those set out in Article 34. Such exchange of information shall be intended for the performance of the tasks of the FCA.
Article 39 
Nothing in this Regulation is to be taken as authorising a disclosure of personal data in contravention of Regulation (EU) No 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data or of the Data Protection Act 2018.
Article 40 
The FCA may transfer data and the analysis of data to a supervisory authority of another country where the transfer does not contravene Regulation (EU) No 2016/679 of the European Parliament and of the Council on the protection of natural persons with regard to the processing of personal data and on the free movement of such data or the Data Protection Act 2018, but such transfer may only be made on a case-by-case basis. The FCA must be satisfied that the transfer is necessary for the purposes of this Regulation. Any such transfer shall be made under agreement that the third country shall not transfer the data to the supervisory authority of another third country without the express written authorisation of the FCA.
The FCA shall disclose information which is confidential pursuant to Article 34 and which is received from a competent authority of a third country to a competent authority of another country only where the FCA has obtained the express agreement of the competent authority which transmitted the information and, where applicable, the information is disclosed solely for the purposes for which that competent authority gave its agreement.
Article 41 
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CHAPTER VII
Article 42 

(1. Any power to make regulations conferred on the Treasury by this Regulation is exercisable by statutory instrument.
(2. Such regulations may—
(a) contain incidental, supplemental, consequential and transitional provision; and
(b) may make different provision for different purposes.
(3. A statutory instrument containing regulations made under this Regulation is subject to annulment in pursuance of a resolution of either House of Parliament.
Article 43 
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CHAPTER VIII
Article 44 
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CHAPTER IX
Article 45 
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Article 46 

1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Credit default swap transactions resulting in an uncovered position in a sovereign credit default swap that have been concluded before 25 March 2012 or during a suspension of restrictions on uncovered sovereign credit default swaps in accordance with Article 14(2) may be held until the maturity date of the credit default swap contract.
Article 47 
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Article 48 
This Regulation shall enter into force on the day following its publication in the Official Journal of the European Union.
It shall apply from 1 November 2012.
However, Article 2(2), Article 3(7), Article 4(2), Article 7(3), Article 9(5), Article 11(3) and (4), Article 12(2), Article 13(4) and (5), Article 16(3) and (4), Article 17(2), Article 23(5), (7) and (8), and Articles 30, 42, 43 and 44 shall apply from 25 March 2012.
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