Feedback and further consultation on Arranging in Investment Business (Consultation No. 9 2022)

Summary

This is a Jersey Financial Services Commission consultation paper seeking industry feedback on proposed amendments to the Financial Services (Jersey) Law 1998 that would bring arranging in relation to investment business within the regulated activities regime. The amendments follow extensive prior engagement with the Jersey Funds Association and are intended to give retail investors regulatory protection when a transaction is brought about by an arranger.

The paper explains that arranging would be inserted as a financial service business under Investment Business as a subset of deals in investments, with new exemptions for professional investment clients, sophisticated and high net worth investors, and other specified cases. Scope is deliberately limited: only retail investors are in scope, the arranger must be remunerated, the deal must be one that could not have happened without the arranger, mere introducing is excluded, and deals are out of scope where investment advice is provided by an Investment Business registered person.

Other regime updates

• Derivatives definitions: Consulted with no concerns raised; will be amended together with Arranging under the same Regulations and Order.
• Exchange business: Consulted with no concerns raised on making it a financial service business, though how it would be regulated is still to be determined; will progress alongside Arranging; separate law drafting for oversight is with Government for prioritisation.
• Banning investment products: Powers to ban sale of certain products to retail clients came into force 17 May 2022, with transitional provisions to 17 August 2022; no further consultation needed.
• Investment Business Client Assets Order: Enhancements for IOSCO compliance, referenced as already addressed via earlier consultation and separate documentation.

This document is a live consultation (No. 9 2022) inviting comments on the Arranging proposals; it does not itself impose final legal obligations, but responses will shape the final legislative amendments (the Regulations and the Order).

Key obligations

• Interested parties wishing to comment on the Arranging proposals must submit written comments to the JFSC by 21 October 2022.
• Industry participants may alternatively submit comments to Jersey Finance Limited by 21 October 2022 for inclusion in a coordinated industry response.
• Industry bodies or associations responding should also provide a summary of the type of individuals and/or institutions they represent.

Applies to

registered persons under the FSJL (investment business), unregistered persons who engage in arranging activity, retail investors (as protected persons, not obligated parties), professional investment clients, sophisticated and high net worth investors, industry bodies and associations such as the Jersey Funds Association

Deadlines

• 21 October 2022: Deadline for submitting written comments on the Arranging consultation to the JFSC.
• 21 October 2022: Deadline for submitting comments to Jersey Finance Limited for the coordinated industry response.
• 17 May 2022: Date the powers to ban sale of certain products to retail clients came into force.
• 17 August 2022: End of transitional provisions relating to the banning of investment products regime.