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Proposed Senior Managers & Certification Regime for Financial Market Infrastructures


HM Treasury has issued a consultation paper proposing the creation of a Senior Managers & Certification Regime (SMCR) for financial market infrastructures (FMIs).

The proposed SMCR would apply to central counterparties, central securities depositories and payment systems recognised under the Banking Act 2009. It would also apply to specified service providers to such payment systems.

The proposed SMCR would 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. The Bank of England (BoE) would be responsible for making the relevant rules and for the supervision of the regime.

The consultation closes on 22 October 2021 and there is currently no target date for implementation of the SMCR. There will, however, be further public consultation from the BoE on the detail of the proposed regime.

Senior Managers Regime

The Senior Managers Regime would apply to persons who manage an aspect of the FMI's affairs which involves (or might involve) a risk of serious consequences for the FMI or for business or other interests in the UK. The BoE will be given the powers to designate such "Senior Management Functions" (SMFs) which will potentially apply in respect of persons located both in and outside the UK. Individuals carrying out SMFs (Senior Managers) would need to be fit and proper with proper personal characteristics, capability and experience to perform the relevant SMF and would need to seek prior approval from the BoE. FMIs would be required to assess the fitness and propriety of Senior Managers at least annually.

Senior Managers would also be subject to a statutory requirement to take responsible steps to prevent regulatory breaches within their area of responsibility.

FMIs would also need appropriately to document the responsibilities of Senior Managers and submit this "Statement of Responsibilities" to the BoE.

Certification Regime

The Certification Regime would require FMIs to certify as fit and proper all individuals (including employees, contractors and secondees) who perform a "specified function" that could cause significant harm to the FMI or its users. FMIs would be required to certify individuals upon recruitment and then on an annual basis.

Conduct Rules

The conduct rules would apply to all employees of the FMI and set minimum, high-level expectations for individuals' conduct.

If you would like further information or assistance in understanding the consultation paper and its potential impact, please speak to your usual Travers Smith contact or any of the individuals below.

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