Chapter VIII

Supervision of Financial Futures and Options Exchanges

97. —In this Chapter—

“an exchange” means a financial futures and options exchange and, where the context so permits or requires, includes an existing exchange or a proposed exchange;

“an existing exchange” has the meaning assigned to it by section 100 ;

“financial futures and options exchange” means a market of a financial nature where, in an organised manner and under agreed rules, members of that market trade, by way of electronic, written, oral or any other form of communication—

(a) in rights under contract for the sale or purchase of a financial product, commodity or property of any other description under which delivery is to be made, or measures equivalent to delivery are to be implemented, at a future date at a price agreed or determinable when the contract is made, or

(b) by way of option on a contract to which paragraph (a) relates or on a financial product, commodity or property of any other description, including an option to buy, sell or vary the price or quantity concerned;

“a proposed exchange” has the meaning assigned to it by section 99 ;

“rules” in relation to an existing exchange or a proposed exchange, means, respectively, the rules governing or proposed to govern the membership and operation of the exchange.

98. —For the avoidance of doubt it is hereby declared that no contract or option to which this Chapter relates shall be void or unenforceable by reason of the Gaming and Lotteries Acts, 1956 to 1986.

99. —After the passing of this Act, no financial futures and options exchange shall be established unless the persons who propose to establish the exchange (in this Chapter referred to as “a proposed exchange”) have submitted the rules for such a proposed exchange to the Bank for approval and the Bank has approved those rules.

100. —(1) Within 3 months of the passing of this Act every exchange which was established before such passing (in this Chapter referred to as “an existing exchange”) shall—

(a) submit its rules to the Bank for approval, or

(b) disestablish itself.

(2) Pending a decision by the Bank to approve or not to approve of the rules of an existing exchange submitted to it under subsection (1) (a), the Bank may—

(a) subject, where appropriate, to the other provisions of this section, impose on the exchange such conditions or requirements as it considers appropriate to impose, or

(b) issue a direction under section 105 as if the existing exchange were an exchange whose rules had been approved by the Bank.

(3) Where dealings concerning securities created by the Minister could be carried on on an existing exchange to which subsection (2) relates, the Minister may direct the Bank to impose under paragraph (a) of that subsection, and the Bank shall so impose, conditions or requirements specified in his direction (being conditions or requirements which relate to such dealings and which the Minister is satisfied, after consultation with the Bank, do not constrain the prudent regulation of the exchange).

(4) The Bank shall not impose on an existing exchange by virtue of this section a condition or requirement which relates to dealings concerning securities created by the Minister unless either—

(a) subsection (3) applies to the condition or requirement, or

(b) the Bank has notified the Minister of its intention to impose the condition or requirement on the exchange.

101. —(1) (a) Where the Bank approves the rules of an existing exchange or for a proposed exchange, it may—

(i) make its approval subject to conditions or requirements, and

(ii) at any time after approval, impose conditions or requirements on the exchange or amend or revoke any condition or requirement to which this subsection relates, whether or not previously amended by virtue of this subparagraph.

(b) Every condition or requirement imposed to which this subsection relates and every amendment thereto or revocation thereof shall be as the Bank sees fit to impose, amend or revoke in the interest of the prudent regulation of the exchange concerned and every such condition or requirement may be imposed on either or both—

(i) that exchange, and

(ii) the members of that exchange (either collectively or individually).

(c) In respect of any condition or requirement to which paragraph (a) (ii) relates, a condition or requirement shall not be imposed, amended or revoked until—

(i) the Bank has notified the exchange concerned of its intention to so impose, amend or revoke, and

(ii) the Bank has heard any representations made by that exchange or any member thereof within such time limit as the Bank may specify when notifying the exchange.

(d) Where dealings concerning securities created by the Minister could be carried on on an exchange, any condition or requirement which relates to such dealings shall not be imposed by virtue of this subsection unless the Bank has notified the Minister of its intention to so impose.

(2) (a) Where—

(i) the Bank intends to approve the rules of an existing exchange or for a proposed exchange, and

(ii) dealings concerning securities created by the Minister could be carried on on the exchange,

the Minister may direct the Bank to make its approval subject to the imposition by it of conditions or requirements specified in his direction (being conditions or requirements which relate to such dealings and which the Minister is satisfied, after consultation with the Bank, do not constrain the prudent regulation of the exchange) and, accordingly, the Bank shall make its approval subject to every condition or requirement so specified.

(b) At any time after the approval of the rules of an existing exchange or for a proposed exchange, the Minister may, in respect of dealings concerning securities created by him, direct the Bank to impose conditions or requirements on the exchange (being conditions or requirements which relate to such dealings and which the Minister is satisfied, after consultation with the Bank, do not constrain the prudent regulation of the exchange) or amend or revoke any condition or requirement to which this subsection relates, whether or not previously amended by virtue of this paragraph and, accordingly, the Bank shall so impose, amend or revoke the condition or requirement.

(3) The approval by the Bank of the rules of or for an exchange shall not constitute a warranty as to the solvency of the exchange or of any member of the exchange and the Bank shall not be liable in respect of any losses incurred through the insolvency or default of the exchange or any of its members.

(4) An application for approval of the rules of an existing exchange or for a proposed exchange shall be in such form and contain such particulars as the Bank may from time to time determine.

102. —(1) The Bank shall not refuse to approve the rules of an existing exchange or for a proposed exchange without the consent of the Minister and unless it is satisfied that the approval would not be in the interest of the orderly and proper regulation of such an exchange, and the Minister shall not consent to the refusal unless he is satisfied that the approval would not be in the interest of the orderly and proper regulation of such an exchange.

(2) Whenever the Bank proposes to refuse to approve the rules of an existing exchange or for a proposed exchange—

(a) it shall notify the exchange or (in the case of a proposed exchange) the promoter of the exchange in writing that it intends to seek the consent of the Minister to the refusal and of its reasons for the refusal and that the person may, within 21 days after the date of the giving of the notification, make representations in writing to the Minister in relation to the proposed refusal,

(b) the exchange or the promoter may make such representations in writing to the Minister within the time aforesaid, and

(c) the Minister shall, before deciding to give or withhold his consent, consider any representations duly made to him under this subsection in relation to the proposed refusal.

103. —Without prejudice to the provisions of section 101 the provisions of section 17 (which relate to books and records of holders of licences) of the Act of 1971 (as amended by this Part) shall apply as if every exchange to which this Chapter applies and every member of that exchange were the holder of a licence for the purpose of the Central Bank Acts, 1942 to 1989.

104. —(1) Subject to subsection (2), a person shall not advertise or cause to be advertised the services of an exchange or make any other solicitation in respect of those services unless the Bank has approved the rules of the exchange.

(2) Subsection (1) shall not apply—

(a) subject to any condition or requirement to the contrary imposed by the Bank under section 100 (2), to an existing exchange, or to any person acting on behalf of the exchange, during the period commencing with the submission of its rules to the Bank for approval and ending with approval or refusal to approve, or

(b) to any prospectus or other document published by or on behalf of persons who propose to establish such an exchange, where such prospectus or other document is published solely for the purpose of such a proposal.

(3) If an advertisement or other solicitation to which this section relates is published and it does not include the name and address of the person who arranged with the publisher for the advertisement or solicitation, then the Bank may, at any time within the period of 12 months after any publication of the advertisement or solicitation, request the publisher to supply the name and address of that person to the Bank and the publisher shall forthwith comply with that request.

105. —(1) Where the Bank is satisfied that an exchange or any member thereof has failed or is failing to comply with a condition or requirement under section 100 (2) (a) or 101 the Bank may give a direction to either or both—

(a) the exchange to suspend trading, and

(b) any or all of the members of the exchange to suspend trading or dealing thereon,

for a specified period or until further notice by the Bank.

(2) (a) The exchange or member or members thereof to whom the direction was given under subsection (1) may apply in a summary manner to the Court for, and the Court may grant, an order setting aside the direction.

(b) The Bank may apply in a summary manner to the Court to have a direction by it under this section confirmed by the Court.

(3) The Court when considering the matter may make such interim or interlocutory order as it considers appropriate.

(4) Where the Court is satisfied, because of the nature or the circumstances of the case or otherwise in the interests of justice, that it is desirable, the whole or any part of proceedings under this section may be heard otherwise than in public.

(5) In this section “the Court” means the High Court.

106. —(1) The Bank may—

(a) revoke an approval of the rules of an exchange if the exchange to whom it was granted so requests,

(b) with the consent of the Minister, revoke an approval of the rules of an exchange if—

(i) the exchange—

(I) has not commenced to operate within 12 months of the date on which the approval was granted, or

(II) has ceased operating and no trading or dealing has been carried on on the exchange during a period of more than 6 months immediately following the cesser,

(ii) being a company, the exchange is being wound up,

(iii) the exchange (being an existing exchange) or the promoter of a proposed exchange has obtained the approval of the Bank through false statements or any other irregular means,

(iv) the exchange becomes unable to meet its obligations to creditors or suspends payment lawfully due by the exchange or by any member thereof,

(c) with the consent of the Minister revoke the approval if, since the grant of the approval, the circumstances relevant to the grant have changed and are such that, if an application for an approval were made in the changed circumstances, it would be refused.

(2) Whenever the Bank proposes to revoke an approval (other than in pursuance of a request by the exchange to whom it was granted to do so)—

(a) it shall notify the exchange concerned that it intends to seek the consent of the Minister to the revocation and of the reasons for the revocation and that the exchange may, within 21 days after the date of the giving of the notification, make representations in writing to the Minister in relation to the proposed revocation,

(b) the exchange may make such representations in writing to the Minister within the time aforesaid, and

(c) the Minister shall, before deciding to give or withhold his consent, consider any representations duly made to him under this subsection in relation to the proposed revocation.

(3) Where an approval of the rules of an exchange is revoked and the exchange is not a company which is being wound up—

(a) the exchange and the members thereof shall continue to be subject to the duties and obligations imposed by or under this Chapter or section 18 of the Act of 1971 until all liabilities of the exchange and its members have been discharged to the satisfaction of the Bank,

(b) the exchange shall, as soon as possible after the approval is revoked, notify the Bank and such other persons (if any) as the Bank indicates are to be notified of the measures being taken or proposed to be taken to discharge in full and without undue delay the liabilities of the exchange and the members thereof,

(c) in the case where—

(i) that exchange has notified the Bank in accordance with paragraph (b) and the Bank is of the opinion that the measures being taken or proposed to be taken for the purposes of that paragraph are not satisfactory, or

(ii) that exchange has not so notified the Bank and the Bank is of the opinion that the exchange has failed to so notify as soon as possible after the approval is revoked, or

(iii) the Bank is of the opinion that that exchange has failed to take all reasonable steps to notify persons which the Bank has indicated, under paragraph (b), are to be notified,

then the Bank may give a direction in writing to that exchange or to any of its members thereof for such period, not exceeding 6 months, as may be specified therein, prohibiting the exchange or the members thereof so directed from—

(I) dealing with or disposing of any assets or specified assets of the exchange or of its members in any manner, or

(II) engaging in any transaction or class of transaction or specified transaction, or

(III) making payments,

without the prior authorisation of the Bank, and the Bank may require that exchange or any of its members to prepare and submit to it for its approval within two months of the direction, a scheme for the orderly discharge in full of the liabilities concerned.

(4) (a) Where the approval of the rules of an exchange is revoked and the exchange is a company which is being wound up, the liquidator of the company shall, in addition to his duties and obligations in respect of the winding up, be subject to the duties and obligations to which the exchange would be subject were it an exchange to which subsection (3) relates and that subsection shall, for the purpose of this subsection, be construed accordingly.

(b) Notwithstanding paragraph (a), the Bank may, where it revokes an approval and considers it appropriate in the circumstances, remove in writing the duty and obligation imposed on the liquidator concerned to comply with paragraph (b) (as construed by this subsection) of subsection (3) and may impose in writing on that liquidator such further or other duty and obligation which corresponds to that set out in the said paragraph (b).

(c) Nothing in this subsection shall be construed as affecting any duty or obligation under this Chapter of the members of the exchange concerned.

(5) The Bank shall as soon as may be after the revocation of an approval of the rules of an exchange publish a notice of the revocation in such manner as it thinks fit.

107. —(1) Any person who contravenes section 99 , 100 or 104 and an exchange or a member thereof who—

(a) commits by act or omission a breach of a condition or requirement duly imposed and which relates to the approval given by the Bank to the rules of the exchange, or

(b) fails to comply with a direction under section 105 or 106 ,

shall be guilty of an offence and shall be liable—

(i) on summary conviction, to a fine not exceeding £1,000 or, at the discretion of the court, to imprisonment for a term not exceeding 12 months, or to both, or

(ii) on conviction on indictment, to a fine not exceeding £50,000 or, at the discretion of the court, to imprisonment for a term not exceeding 5 years, or to both,

and, if the contravention, breach or failure in respect of which he was convicted is continued after conviction, he shall be guilty of an offence on every day on which the contravention, breach or failure continues after conviction in respect of the original contravention, breach or failure and for each such offence he shall be liable on summary conviction to a fine not exceeding £100 or on conviction on indictment to a fine not exceeding £5,000.

(2) In any proceedings for an offence under this section which relates to section 104 , it shall be a good defence for the accused to prove that he was, at the relevant time, a person whose business it was to publish or arrange for the publication on behalf of some other person of advertisements or other solicitations and that the relevant advertisement or other solicitation was received for publication in the ordinary course of that business and that he did not know and had no reason to suspect that to use it to advertise, or otherwise solicit could be an offence.