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HM Treasury confirms new Senior Managers & Certification Regime for Financial Market Infrastructures


On 7 June 2022, HM Treasury issued its Response (Response) to its consultation in July 2021 on a Senior Managers & Certification Regime (SMCR) for financial market infrastructures (FMIs).

In its Response, HM Treasury confirmed its intention to proceed with the creation of an SMCR for FMIs and provided some high level guidance on how it envisaged that the SMCR would be developed in practice.  Although responses to the original consultation were mixed, HM Treasury feels that it is necessary to proceed with its proposals given the systemic importance of FMIs in order to regulate individual conduct and improve governance within FMIs.

We covered the original proposals in our July 2021 briefing and we discuss the Response below.

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Application of the SMCR

The Response envisages the creation of an SMCR for central counterparties (CCPs) and central securities depositories (CSDs) and, on a different, longer timeframe, the creation of an SMCR for payment systems recognised under the Banking Act 2009 (Payment Systems) and their specified service providers. In due course, the government may elect to extend the SMCR to credit ratings agencies and recognised investment exchanges.

In order to implement SMCR, there would be an SMCR "gateway" under which legislation would be enacted extending the SMCR to CCPs and CSDs (and possibly, in due course, credit ratings agencies and recognised investment exchanges). The more detailed application of the SMCR would be developed by the Bank of England in its anticipated new role, under the Future Regulatory Framework, as primary regulator for CCPs and CSDs. A separate regulatory structure would be put in place at a later date for Payment Systems and their specified service providers. 

Content of the SMCR

The proposed SMCR for FMIs is expected to be very similar to the existing SMCR regimes for banks and other authorised firms with a Senior Managers Regime, a Certification Regime and Conduct Rules. Further details on the original proposals can be found in our July 2021 briefing.

However, the proposed SMCR will involve some level of flexibility to reflect the different structure and legislative framework for different types of FMIs. Therefore the Bank of England will have the ability to adapt the detailed application of the SMCR to reflect different functions, activities and types of entity. This could be reflected, for example, through the scope of functions which are considered to be Senior Management Functions and the design of the Certification Regime.


No specific date has been given for the implementation of the SMCR.  Further details of the proposals for the SMCR for CCPs and CSDs will be published "in due course" and the Bank of England will need to consult on its own detailed implementing rules. Therefore it is unlikely that it will apply before 2023 at the earliest.

We have extensive experience of embedding SMCR for a wide range of firms subject to the current regime, taking into account both regulatory and employment matters.  For more details about our SMCR tools, or assistance in understanding the proposed SMCR for FMIs, please speak to your usual Travers Smith contact or any of the individuals below.

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